Exhibit 10.1
EXECUTION COPY
LOAN AND SECURITY AGREEMENT
Dated as of March 17, 2003
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
BANK OF AMERICA, N.A.
as the Agent
BANC OF AMERICA SECURITIES LLC
as Sole Lead Arranger and Book Manager
FLEET RETAIL FINANCE INC. and
THE CIT GROUP/BUSINESS CREDIT, INC.
as Co-Syndication Agents
SPIEGEL, INC.,
XXXXX XXXXX, INC.,
SPIEGEL CATALOG, INC.,
ULTIMATE OUTLET INC. and
NEWPORT NEWS, INC.
Each as a Debtor-in-Possession Under Chapter 11 of the Bankruptcy Code
as Borrowers and Guarantors
and
THE SUBSIDIARIES OF SPIEGEL, INC. PARTY HERETO
as Guarantors
TABLE OF CONTENTS
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ARTICLE 1 INTERPRETATION OF THIS AGREEMENT .................................................... 2
1.1 Definitions ................................................................... 2
1.2 Accounting Terms .............................................................. 34
1.3 Interpretive Provisions ....................................................... 34
1.4 Interest Act (Canada) ......................................................... 35
ARTICLE 2 LOANS AND LETTERS OF CREDIT ......................................................... 35
2.1 Total Facility ................................................................ 35
2.2 Revolving Loans ............................................................... 35
2.3 Letters of Credit ............................................................. 42
2.4 Bank Products ................................................................. 49
ARTICLE 3 INTEREST AND FEES ................................................................... 50
3.1 Interest ...................................................................... 50
3.2 Conversion and Continuation Elections ......................................... 50
3.3 Maximum Interest Rate ......................................................... 52
3.4 Unused Line Fee ............................................................... 52
3.5 Letter of Credit Fee .......................................................... 53
3.6 Fee Letters ................................................................... 53
3.7 Payment of Fees ............................................................... 53
ARTICLE 4 PAYMENTS AND PREPAYMENTS ............................................................ 53
4.1 Revolving Loans ............................................................... 53
4.2 Termination or Reduction of Facility .......................................... 53
4.3 Payments by the Loan Parties .................................................. 54
4.4 Payments as Revolving Loans ................................................... 55
4.5 Apportionment and Application and Reversal of Payments ........................ 55
4.6 Indemnity for Returned Payments ............................................... 56
4.7 Agent's and Lenders' Books and Records; Monthly Statements .................... 56
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY .............................................. 57
5.1 Taxes ......................................................................... 57
5.2 Illegality .................................................................... 59
5.3 Increased Costs and Reduction of Return ....................................... 59
5.4 Funding Losses ................................................................ 60
5.5 Inability to Determine Rates .................................................. 60
5.6 Certificates of Lenders ....................................................... 60
5.7 Survival ...................................................................... 61
ARTICLE 6 COLLATERAL; ADMINISTRATIVE SUPERPRIORITY ............................................ 61
6.1 Grant of Security Interest .................................................... 61
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6.2 Perfection and Protection of Security Interest ................................ 63
6.3 Location of Collateral ........................................................ 65
6.4 Title to, Liens on, and Sale and Use of Collateral ............................ 66
6.5 [Intentionally Omitted] ....................................................... 66
6.6 Access and Examination; Promotional Materials ................................. 66
6.7 Collateral Reporting .......................................................... 67
6.8 Accounts ...................................................................... 68
6.9 Collection of Accounts; Payments .............................................. 69
6.10 Inventory; Perpetual Inventory ................................................ 70
6.11 Equipment ..................................................................... 71
6.12 [Intentionally Omitted] ....................................................... 72
6.13 Documents, Instruments, and Chattel Paper ..................................... 72
6.14 Right to Cure ................................................................. 72
6.15 Power of Attorney ............................................................. 72
6.16 The Agent's and Lenders' Rights, Duties and Liabilities ....................... 73
6.17 Patent, Trademark and Copyright Collateral .................................... 74
6.18 Grant of License to Use Intellectual Property ................................. 75
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES ................................... 75
7.1 Books and Records ............................................................. 75
7.2 Financial and Other Information ............................................... 76
7.3 Notices to the Lenders ........................................................ 80
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS .............................................. 82
8.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents ............................................. 82
8.2 Validity and Priority of Security Interest .................................... 83
8.3 Organization and Qualification ................................................ 83
8.4 Corporate Name; Prior Transactions ............................................ 83
8.5 Subsidiaries and Affiliates ................................................... 84
8.6 Financial Statements and Projections .......................................... 84
8.7 Capitalization ................................................................ 84
8.8 Reorganization Matters ........................................................ 84
8.9 Debt .......................................................................... 85
8.10 Distributions. ................................................................ 85
8.11 Title to Property ............................................................. 85
8.12 Real Estate; Leases ........................................................... 85
8.13 Proprietary Rights ............................................................ 85
8.14 Trade Names ................................................................... 86
8.15 Litigation .................................................................... 86
8.16 Restrictive Agreements ........................................................ 86
8.17 Labor Disputes ................................................................ 86
8.18 Environmental Laws ............................................................ 86
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8.19 No Violation of Law ........................................................... 88
8.20 No Default .................................................................... 88
8.21 ERISA Compliance .............................................................. 88
8.22 Taxes ......................................................................... 89
8.23 Regulated Entities ............................................................ 89
8.24 Use of Proceeds; Margin Regulations ........................................... 89
8.25 Copyrights, Patents, Trademarks and Licenses, etc. ............................ 89
8.26 No Material Adverse Change .................................................... 89
8.27 Full Disclosure ............................................................... 90
8.28 Material Agreements ........................................................... 90
8.29 Bank Accounts ................................................................. 90
8.30 Assets Necessary for Conduct of Business ...................................... 90
8.31 Existing Securitization Program ............................................... 90
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS .................................................. 91
9.1 Taxes and Other Obligations ................................................... 91
9.2 Legal Existence and Good Standing ............................................. 91
9.3 Compliance with Law and Agreements; Maintenance of Licenses ................... 91
9.4 Maintenance of Property; Inspection of Property ............................... 91
9.5 Insurance ..................................................................... 92
9.6 [Intentionally Omitted] ....................................................... 93
9.7 Environmental Laws ............................................................ 93
9.8 Compliance with ERISA ......................................................... 93
9.9 Mergers, Consolidations or Sales .............................................. 93
9.10 Distributions; Capital Change; Restricted Investments ......................... 94
9.11 [Intentionally Omitted] ....................................................... 94
9.12 Guaranties .................................................................... 94
9.13 Debt .......................................................................... 94
9.14 Prepayment .................................................................... 95
9.15 Transactions with Affiliates .................................................. 95
9.16 Investment Banking and Finder's Fees .......................................... 96
9.17 Reserved. ..................................................................... 96
9.18 Business Conducted ............................................................ 96
9.19 Liens ......................................................................... 96
9.20 Sale and Leaseback Transactions ............................................... 96
9.21 New Subsidiaries .............................................................. 97
9.22 Fiscal Year ................................................................... 97
9.23 [Intentionally Omitted] ....................................................... 97
9.24 Use of Proceeds ............................................................... 97
9.25 Interim Bankruptcy Court Order; Final Bankruptcy Court Order;
Administrative Expense Claim Priority; Lien Priority ........................ 97
9.26 Further Assurances ............................................................ 98
9.27 [Intentionally Omitted ........................................................ 98
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9.28 Obligations under Real Estate Leases, Equipment Leases
and Licenses ................................................................ 98
9.29 Reclamation Claims ............................................................ 99
9.30 Prepetition Claims ............................................................ 99
9.31 Applications to Bankruptcy Court .............................................. 99
9.32 Use of Letters of Credit ...................................................... 99
9.33 Notices ....................................................................... 99
9.34 Restructuring Advisor ......................................................... 99
9.35 Reserved ...................................................................... 99
9.36 Sourcing Arrangements ......................................................... 99
ARTICLE 10 CONDITIONS OF LENDING ............................................................... 100
10.1 Conditions Precedent to Making of Loans on the Closing Date ................... 100
10.2 Conditions Precedent to Making of Loans on and after
the Final Bankruptcy Court Order Date ....................................... 104
10.3 Conditions Precedent to Each Loan ............................................. 105
ARTICLE 11 DEFAULT; REMEDIES ................................................................... 106
11.1 Events of Default ............................................................. 106
11.2 Remedies ...................................................................... 111
ARTICLE 12 TERM AND TERMINATION ................................................................ 113
12.1 Term and Termination .......................................................... 113
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS;
ASSIGNMENTS; SUCCESSORS ............................................................. 114
13.1 No Waivers; Cumulative Remedies ............................................... 114
13.2 Amendments and Waivers ........................................................ 114
13.3 Assignments; Participations ................................................... 116
ARTICLE 14 THE AGENT ........................................................................... 118
14.1 Appointment and Authorization ................................................. 118
14.2 Delegation of Duties .......................................................... 118
14.3 Liability of Agent ............................................................ 118
14.4 Reliance by Agent ............................................................. 119
14.5 Notice of Default ............................................................. 119
14.6 Credit Decision ............................................................... 120
14.7 Indemnification ............................................................... 120
14.8 Agent in Individual Capacity .................................................. 120
14.9 Successor Agent ............................................................... 121
14.10 Withholding Tax ............................................................... 121
14.11 Reserved ...................................................................... 123
14.12 Collateral Matters ............................................................ 123
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14.13 Restrictions on Actions by Lenders; Sharing of Payments ...................... 124
14.14 Agency for Perfection ........................................................ 124
14.15 Payments by Agent to Lenders ................................................. 125
14.16 Concerning the Collateral and the Related Loan Documents ..................... 125
14.17 Field Audit and Examination Reports; Disclaimer by Lenders ................... 125
14.18 Relation Among Lenders ....................................................... 126
14.19 The Arranger and Co-Agents, Etc. ............................................. 126
ARTICLE 15 MISCELLANEOUS ....................................................................... 126
15.1 No Waivers; Cumulative Remedies .............................................. 126
15.2 Severability ................................................................. 126
15.3 Governing Law; Choice of Forum; Service of Process ........................... 126
15.4 WAIVER OF JURY TRIAL ......................................................... 127
15.5 Survival of Representations and Warranties ................................... 128
15.6 Other Security and Guaranties ................................................ 128
15.7 Fees and Expenses ............................................................ 128
15.8 Notices ...................................................................... 129
15.9 Waiver of Notices ............................................................ 130
15.10 Binding Effect ............................................................... 130
15.11 Indemnity of the Agent and the Lenders by the Loan Parties ................... 131
15.12 Limitation of Liability ...................................................... 131
15.13 Final Agreement .............................................................. 132
15.14 Counterparts ................................................................. 132
15.15 Captions ..................................................................... 132
15.16 Right of Setoff .............................................................. 132
15.17 Joint and Several Liability .................................................. 132
15.18 Confidentiality .............................................................. 134
15.19 Conflicts with Other Loan Documents .......................................... 135
15.20 Appraisals ................................................................... 135
ARTICLE 16 GUARANTEES .......................................................................... 136
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EXHIBITS
EXHIBIT A - FORM OF INTERIM BANKRUPTCY COURT ORDER
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT E - FORM OF NOTICE OF BORROWING
EXHIBIT F - FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT G - [INTENTIONALLY OMITTED]
EXHIBIT H - INITIAL DIP FORECAST
SCHEDULES
Schedule 1.1(a) COMMITMENTS
Schedule 1.1(b) EXCLUDED SUBSIDIARIES
Schedule 6.1(a)(xv) COMMERCIAL TORT CLAIMS
Schedule 6.17 INTELLECTUAL PROPERTY
Schedule 6.3 LOAN PARTIES' CHIEF EXECUTIVE OFFICE, THE LOCATION OF
ITS BOOKS AND RECORDS, THE LOCATIONS OF THE
COLLATERAL
Schedule 8.4 CORPORATE NAME; PRIOR TRANSACTIONS
Schedule 8.5 SUBSIDIARIES AND AFFILIATES
Schedule 8.7 CAPITALIZATION OF LOAN PARTIES
Schedule 8.9 DEBT
Schedule 8.11 OWNED REAL PROPERTY
Schedule 8.12 LEASES
Schedule 8.13 PROPRIETARY RIGHTS
Schedule 8.14 TRADE NAMES
Schedule 8.15 LITIGATION
Schedule 8.17 LABOR DISPUTES
Schedule 8.18 ENVIRONMENTAL ISSUES
Schedule 8.19 VIOLATIONS OF LAW
Schedule 8.21 ERISA ISSUES
Schedule 8.26 MATERIAL ADVERSE CHANGE
Schedule 8.28 MATERIAL AGREEMENTS
Schedule 8.29 BANK ACCOUNTS
Schedule 9.3 COMPLIANCE WITH LAWS
Schedule 9.12 EXISTING GUARANTIES
Schedule 9.15 TRANSACTIONS WITH AFFILIATES
Schedule 9.19 EXISTING LIENS
Schedule 10.1(m) GOOD STANDING CERTIFICATES
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LOAN AND SECURITY AGREEMENT
Loan and Security Agreement, dated as of March 17, 2003, among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), Bank of America, N.A., with an office at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, as agent for the Lenders (in its capacity as agent, together
with any successor in such capacity, the "Agent"), Banc of America Securities
LLC, as sole lead arranger and book manager (in such capacity, the "Arranger"),
Fleet Retail Finance Inc. and The CIT Group/Business Credit, Inc., as
co-syndication agents, Spiegel, Inc., a Delaware corporation and a
debtor-in-possession under Chapter 11 of the Bankruptcy Code (as hereinafter
defined) ("Spiegel", and in its capacity as authorized representative of the
Borrowers, the "Authorized Representative"), Xxxxx Xxxxx, Inc., a Delaware
corporation and a debtor-in-possession under Chapter 11 of the Bankruptcy Code
("Xxxxx Xxxxx"), Xxxxxxx Catalog, Inc., a Delaware corporation and a
debtor-in-possession under Chapter 11 of the Bankruptcy Code ("Catalog"),
Ultimate Outlet Inc., a Delaware corporation and a debtor-in-possession under
Chapter 11 of the Bankruptcy Code ("Ultimate") and Newport News, Inc., a
Delaware corporation and a debtor-in-possession under Chapter 11 of the
Bankruptcy Code ("Newport" and, together with Xxxxxxx, Xxxxx Xxxxx, Catalog and
Ultimate, jointly and severally, the "Borrowers"), and Spiegel and each of its
direct and indirect Subsidiaries that is a signatory hereto as a Guarantor (each
a "Guarantor" and collectively, the "Guarantors"), each of which is a
debtor-in-possession under Chapter 11 of the Bankruptcy Code.
W I T N E S S E T H:
WHEREAS, each of the Borrowers and Guarantors has filed in the
Bankruptcy Court (as hereinafter defined) a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (as hereinafter defined) and has continued in
the possession of its assets and in the management of its businesses pursuant to
Sections 1107 and 1108 of the Bankruptcy Code, and such reorganization cases are
being jointly administered under Case Number 03-11540 (CB) (the "Case");
WHEREAS, the Lenders have agreed to make available to the Borrowers a
debtor-in-possession revolving credit facility upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Account Debtor" means each Person obligated in any way on or in
connection with an Account, Chattel Paper or General Intangible (including a
payment intangible).
"Accounts" means, with respect to any Loan Party, all of such Loan
Party's now owned or hereafter acquired or arising accounts (as defined in the
UCC), and any other rights of such Loan Party to payment for the sale or lease
of Inventory or goods or rendition of services, whether or not they have been
earned by performance, including, without limitation, Major Credit Card
Receivables and Consumer Credit Card Receivables.
"Accounts Appraisal" means (a) prior to the Final Bankruptcy Court
Order Date, the appraisal of the Consumer Credit Card Receivables of the
Borrowers delivered to the Agent and the Lenders within 30 days after the
Interim Bankruptcy Court Order Date and prepared by an appraiser acceptable to
the Agent and the Initial Lenders and to be in form, scope and substance
satisfactory to the Agent and the Initial Lenders and (b) thereafter, each
Account Appraisal delivered pursuant to Section 15.20.
"ACH Transactions" means any cash management or related services
including the automatic clearing house transfer of funds by the Bank for the
account of any Borrower pursuant to agreement or overdrafts.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, ten percent (10%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means the Bank, solely in its capacity as agent for the
Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent-Related Persons" means the Agent and any successor agent,
together with their respective Affiliates, and the officers, directors,
employees, counsel, representatives, agents and attorneys-in-fact of such
Persons.
"Agent's Liens" means the Liens granted to the Agent, for the ratable
benefit of the Lenders, the Bank and the Agent, pursuant to this Agreement and
the other Loan Documents.
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"Aggregate Outstandings" means, at any date of determination, without
duplication: the sum of (a) the aggregate unpaid principal balance of all
Revolving Loans, (b) one hundred percent (100%) of the aggregate undrawn amount
of all outstanding Letters of Credit and (c) the aggregate amount of any unpaid
reimbursement obligations in respect of all Letters of Credit.
"Agreed Administrative Expense Claim Priorities" means the
administrative expense claims incurred by the Borrowers and shall have the
following order of priority:
first, (i) amounts payable pursuant to 28 U.S.C. (S) 1930(a)(6), (ii)
professional fees and expenses of any examiner in connection with the
Partial Final Judgment and Order of Permanent Injunction and Other
Equitable Relief entered in the matter of United States Securities and
Exchange Commission x. Xxxxxxx, Inc. on March 11, 2003 and (iii) upon the
occurrence and during the continuance of an Event of Default, unpaid
allowed fees and expenses (whether incurred prior to or subsequent to such
Event of Default) of attorneys, accountants, financial advisors,
consultants and other professionals retained by the Borrowers, or any
official creditors' committee (the "Creditors' Committee") or other
statutory committee appointed in the Case pursuant to (S)(S) 327 and 1103
of the Bankruptcy Code or any Chapter 11 or Chapter 7 trustees appointed in
the Case (except, in each case, to the extent that such fees and expenses
represent services or were incurred in the prosecution of actions, claims
or causes of action against the Bank, the Agent or any of the Lenders in
connection with a challenge to any aspect of their rights and obligations
with respect to any Loan Document) ("Professional Expenses"), but the
amount of Professional Expenses entitled to priority under clause (iii) of
this clause first ("Priority Professional Expenses") shall not exceed in
the aggregate an amount (the "Priority Professional Expense Cap") equal to
$5,000,000; provided, however, that prior to the occurrence of an Event of
Default any payments actually made to such professionals under 11 U.S.C.
(S)(S) 330 and 331 in respect of fees and expenses incurred shall not
reduce the Priority Professional Expense Cap;
second, all Obligations; and
third, all other allowed administrative expense claims.
"Agreement" means this Loan and Security Agreement.
"Agreement Value" means, for each Hedge Agreement, on any date of
determination, an amount determined by the Agent equal to: (a) in the case of a
Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross
Border) published by the International Swap and Derivatives Association, Inc.
(the "Master Agreement"), the amount, if any, that would be payable by a Loan
Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as
if (i) such Hedge Agreement was being terminated early on such date of
determination, (ii) such Loan Party or such Subsidiary was the sole "Affected
Party", and (iii) the Agent was the sole party determining such payment amount
(with the Agent making such determination pursuant to the provisions of the form
of Master
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Agreement); or (b) in the case of a Hedge Agreement traded on an exchange, the
xxxx-to-market value of such Hedge Agreement, which will be the unrealized loss
on such Hedge Agreement to a Loan Party or its Subsidiary party to such Hedge
Agreement determined by the Agent based on the settlement price of such Hedge
Agreement on such date of determination, or (c) in all other cases, the
xxxx-to-market value of such Hedge Agreement, which will be the unrealized loss
on such Hedge Agreement to a Loan Party or its Subsidiary party to such Hedge
Agreement determined by the Agent as the amount, if any, by which (i) the
present value of the future cash flows to be paid by such Loan Party or such
Subsidiary exceeds (ii) the present value of the future cash flows to be
received by such Loan Party or such Subsidiary pursuant to such Hedge Agreement;
capitalized terms used and not otherwise defined in this definition shall have
the respective meanings set forth in the above described Master Agreement.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means, with respect to Base Rate Loans and all
other Obligations (other than LIBOR Rate Loans), 1.00%; and with respect to
LIBOR Rate Loans, 3.00%.
"Appraisals" means a collective reference to the Accounts Appraisal,
the Inventory Appraisal and the Real Estate Appraisal, and "Appraisal" means any
one of them.
"Arranger" has the meaning specified in the introductory paragraph
hereof.
"Assignee" has the meaning specified in Section 13.3(a).
"Assignment and Acceptance" has the meaning specified in Section
13.3(a).
"Attorney Costs" means and includes (i) all reasonable fees, expenses
and disbursements of any law firm or other counsel engaged by the Agent and (ii)
to the extent incurred on or prior to the Final Bankruptcy Court Order Date, all
reasonable fees, expenses and disbursements of any law firm engaged by any of
the Initial Lenders (other than the Bank).
"Authorized Representative" has the meaning specified in the
introductory paragraph hereof.
"Bank" means Bank of America, N.A., a national banking association, or
any successor entity thereto.
"Bank Loan" and "Bank Loans" have the meanings specified in Section
2.2(h).
"Bank Products" means any one or more of the following types of
services or facilities extended to any Loan Party by the Bank or any Affiliate
of the Bank, or any other Lender (or any of its Affiliates) or other bank, in
each case, reasonably acceptable to the Agent (it being agreed by the Agent that
each of the Initial Lenders and their respective Affiliates is acceptable to the
Agent): (i) credit cards (including, without limitation, merchant card
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processing services); (ii) ACH Transactions; (iii) cash management, including
controlled disbursement services; and (iv) Hedge Agreements.
"Bank Product Reserves" means all reserves which the Agent from time
to time establishes in its reasonable discretion for the Bank Products then
provided or outstanding.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
(S) 101 et seq.).
"Bankruptcy Court" means the United States Bankruptcy Court for the
Southern District of New York and, to the extent the United States District
Court for the Southern District of New York sits in bankruptcy with respect to
any matter relating to the Case, then the United States District Court for the
Southern District of New York.
"Base Rate" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by the Bank in Charlotte, North
Carolina, as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"Base Rate Loan" means a Loan during any period in which it bears
interest based on the Base Rate.
"Blocked Account Agreement" means an agreement among a Loan Party, the
Agent and a Clearing Bank, in form and substance reasonably satisfactory to the
Agent, concerning the collection of payments which represent the proceeds of
Accounts or of any other Collateral.
"Borrowers" has the meaning specified in the introductory paragraph to
this Agreement.
"Borrowing" means a borrowing hereunder consisting of Loans made on
the same day by the Lenders to the Borrowers (or by the Bank in the case of a
Borrowing funded by Bank Loans) or by the Agent in the case of a Borrowing
consisting of an Agent Advance.
"Borrowing Base Certificate" means a certificate by a Responsible
Officer of each of the Borrowers and Xxxxx Xxxxx Canada, substantially in the
form of Exhibit B (or another form acceptable to the Agent) setting forth a good
faith calculation of the Combined Availability, including a good faith
calculation of each component thereof, as of the close of business no more than
three (3) Business Days prior to the date of such certificate, all in such
detail as shall be satisfactory to the Agent. All calculations of Combined
Availability in connection with the preparation of any Borrowing Base
Certificate shall originally be made by the Borrowers and
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Xxxxx Xxxxx Canada and certified to the Agent; provided, that the Agent shall
have the right to review and adjust, in the exercise of its reasonable credit
judgment, any such calculation (1) to reflect its reasonable estimate of
declines in value of any of the Collateral described therein, and (2) to the
extent that such calculation is not in accordance with this Agreement.
"Budget" means (a) on the Closing Date, the Initial Budget and (b)
thereafter, each Budget delivered pursuant to Section 6.7(i).
"Business Day" means (a) any day that is not a Saturday, Sunday, or a
day on which banks in New York, New York or Charlotte, North Carolina are
required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with the LIBOR Rate or LIBOR
Rate Loans, any day that is a Business Day pursuant to clause (a) above and that
is also a day on which trading in Dollars is carried on by and between banks in
the London interbank market.
"Canadian Effective Date" means the date on which the Agent determines
that it has a perfected first priority Lien on all the Inventory of Xxxxx Xxxxx
Canada pursuant to the Canadian Security Documents, and the Agent has received
such documents, opinions and certificates as the Agent shall have requested in
connection therewith. Prior to the Canadian Effective Date, the provisions of
this Agreement applicable solely to any Plans of the Canadian Guarantors shall
not be effective.
"Canadian Guarantees" means the Guarantees, dated as of the date
hereof, made by each of the Canadian Guarantors in favor of the Agent for the
benefit of the Agent and the Lenders.
"Canadian Guarantors" means Xxxxx Xxxxx Canada and Spiegel Canada.
"Canadian Security Agreements" means the Security Agreements, dated as
of the date hereof, between each of the Canadian Guarantors and the Agent for
the benefit of the Agent and the Lenders.
"Canadian Security Documents" means the Canadian Security Agreements
and any other agreements entered into by either of the Canadian Guarantors
pursuant to which the Agent has been granted a Lien to secure any and all of the
Obligations.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any Lender or of any corporation controlling a
Lender.
"Capital Expenditures" means all payments due (whether or not paid) in
respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in
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connection with the direct or indirect acquisition of such asset by way of
increased product or service charges or in connection with a Capital Lease.
"Capital Lease" means any lease of property by any Loan Party
which, in accordance with GAAP, should be reflected as a capital lease on the
balance sheet of such Loan Party.
"Cardholder Agreement" means the agreement (and the related
application) for any Major Credit Card Account or Consumer Credit Card Account,
as such agreement may be amended, modified or otherwise changed from time to
time in accordance with the terms thereof.
"Cardholder Guidelines" means the policies and procedures of a credit
card issuer relating to the operation of its credit card business in form and
substance satisfactory to the Agent and the Initial Lenders, including, without
limitation, the policies and procedures for determining the creditworthiness of
potential and existing credit card customers, and relating to the maintenance of
credit card accounts and collection of credit card receivables, as such policies
and procedures may be amended from time to time with the prior written consent
of the Agent.
"Carve-Out Expenses" means those amounts, fees, expenses and claims
set forth in clause first of the definition of the term "Agreed Administrative
Expense Claim Priorities."
"Carve-Out Reserve" means at any time an amount equal to $5,000,000.
"Case" has the meaning specified in the Recitals hereof.
"Catalog" has the meaning specified in the introductory paragraph of
this Agreement.
"Change of Control" means either of the following: (i) any event the
result of which is the failure of the Otto Interests to own, directly or
indirectly, free and clear of all Liens (other than Liens of the type permitted
by subsections (a), (c) or (f) of the definition of "Permitted Liens") at least
67% of the capital stock of Spiegel or (ii) Spiegel shall fail to own, directly
or indirectly, 100% of the outstanding equity interests of each other Loan
Party.
"Chattel Paper" means, with respect to any Loan Party, all of such
Loan Party's now owned or hereafter acquired chattel paper, as defined in the
UCC, including electronic chattel paper.
"Clearing Bank" means the Bank or any other banking institution with
whom a Payment Account has been established pursuant to a Blocked Account
Agreement.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute, and regulations promulgated thereunder.
7
"Collateral" has the meaning specified in Section 6.1.
"Combined Availability" of the Borrowers means, at any time:
(a) prior to the Final Bankruptcy Court Order Date:
the lesser of (i) the Maximum Revolver Amount at such time or (ii) up
to the sum of (A) the lesser of (1) 50% of the aggregate amount of
Eligible Inventory of the Borrowers and Xxxxx Xxxxx Canada (on and
after the Canadian Effective Date) at such time, calculated at the
lower of cost (on a FIFO basis) or market value and (2) 75% of the
aggregate Orderly Liquidation Value of Eligible Inventory of the
Borrowers and Xxxxx Xxxxx Canada (on and after the Canadian Effective
Date) at such time and (B) the LC Inventory Availability at such time,
on or after the Final Bankruptcy Court Order Date:
the lesser of (i) the Maximum Revolver Amount at such time or (ii) the
sum of up to (A) 85% of the aggregate Net Amount of Eligible Major
Credit Card Receivables of the Borrowers at such time, plus (B) the
lesser of (1) 65% of the aggregate amount of Eligible Inventory of the
Borrowers and Xxxxx Xxxxx Canada (on and after the Canadian Effective
Date) at such time, calculated at the lower of cost (on a FIFO basis)
or market value and (2) 85% of the aggregate Orderly Liquidation Value
of Eligible Inventory of the Borrowers and Xxxxx Xxxxx Canada (on and
after the Canadian Effective Date) at such time, plus (C) the LC
Inventory Availability at such time, plus (D) prior to the Consumer
Credit Card Account Line Expiration Date, the least of (1) 70% of the
aggregate Net Amount of Eligible Consumer Credit Card Receivables of
the Borrowers at such time, (2) the sum of (x) 85% of the aggregate
Net Liquidation Value of Eligible Consumer Credit Card Receivables of
the Borrowers at such time and (y) the lesser of $45,000,000 and the
Real Estate Availability and (3) $50,000,000 less the aggregate amount
of reductions (not to exceed $50,000,000) of the Commitments made
under Section 4.2(b), plus (E) on and after the Consumer Credit Card
Account Line Expiration Date, except during the Real Estate Seasonal
Availability Period, the lesser of (x) $15,000,000 less the aggregate
amount of reductions of the Commitments made under Section 4.2(b) that
have not been applied to reduce the amount of clause (D)(3) above and
(y) the Real Estate Availability plus (F) during the Real Estate
Seasonal Availability Period, the lesser of (x) $45,000,000 (for the
Real Estate Seasonal Availability Period in 2004, such lesser amount
as shall be agreed to by the Authorized Representative, the Agent and
Majority Lenders) less the aggregate amount of reductions of the
Commitments made under Section 4.2(b) that have not been applied to
reduce the amount of clause (D)(3) above and (y) the Real Estate
Availability, minus
(b) the sum of (i) the aggregate unpaid balance of all Revolving Loans
made to the Borrowers at such time, (ii) the aggregate amount of all
Pending Revolving
8
Loans to be made to the Borrowers at such time, (iii) the aggregate
undrawn amount of all outstanding Letters of Credit at such time, (iv)
the aggregate amount of any unpaid reimbursement Obligations in
respect of Letters of Credit at such time, (v) reserves (if any)
established by the Agent at such time for accrued interest on the
Obligations, (vi) reserves (including, without limitation, the
Carve-Out Reserve) for Carve-Out Expenses (whether or not an Event of
Default exists), claims against any Lender or the Agent under Section
506(c) of the Bankruptcy Code and other claims against any of the
Borrowers that the Agent reasonably believes could have priority over
the Obligations and (vii) all other Reserves at such time which the
Agent has established in the exercise of its reasonable credit
judgment to maintain with respect to the Borrowers' account,
including, without limitation, reserves for landlord's liens with
respect to real properties leased by a Borrower or Xxxxx Xxxxx Canada
or Inventory of a Borrower or Xxxxx Xxxxx Canada located at premises
not owned by such Borrower or Xxxxx Xxxxx Canada, as the case may be,
reserves for gift certificates, reserves for shrinkage and returns and
markdowns and reserves for any amounts which the Agent or any Lender
may be obligated to pay in the future for the account of any Borrower
or Xxxxx Xxxxx Canada.
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on Schedule 1.1(a) attached to this Agreement or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 13.3, as such
Commitment may be adjusted from time to time in accordance with the provisions
of Section 13.3 and Section 4.2, and "Commitments" means, collectively, the
aggregate amount of the commitments of all of the Lenders.
"Consumer Credit Card Account" means each credit card account issued
by a Borrower to an obligor pursuant to a Cardholder Agreement between such
Borrower and such obligor and existing pursuant to a Borrower's program of
originating private label credit card receivables from sales by such Borrower of
merchandise or services as specified in the Cardholder Guidelines for such
Borrower.
"Consumer Credit Card Account Line Expiration Date" means the date 120
days after the Final Bankruptcy Court Order Date.
"Consumer Credit Card Receivables" means, on any day in respect of any
Consumer Credit Card Account, all amounts (other than amounts which represent
finance charges, late payment fees, annual fees (if any), credit insurance
premiums, returned check charges or any other fees or charges) billed to the
obligor on such Consumer Credit Card Account with respect to sales by a Borrower
of merchandise or services. In calculating the aggregate amount of Consumer
Credit Card Receivables on any day, the amount of Consumer Credit Card
Receivables shall be reduced by the aggregate amount of credit balances in the
Consumer Credit Card Accounts on such day.
9
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"Conversion/Continuation Date" means the date of any conversion or
continuation of a Base Rate Loan or LIBOR Rate Loan, or portion thereof, as
contemplated by Section 3.2.
"Credit Support" has the meaning specified in Section 2.3(a).
"Creditors' Committee" has the meaning specified in the definition of
Agreed Administrative Expense Claim Priorities.
"DIP Orders" means and refers to the Interim Bankruptcy Court Order
and the Final Bankruptcy Court Order.
"Debt" means, without duplication, all liabilities, obligations and
indebtedness of any Loan Party to any Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, consisting of indebtedness for borrowed money or the
deferred purchase price of property, excluding trade payables, but including in
any event (a) all Obligations; (b) all obligations and liabilities of any Person
secured by any Lien on any Loan Party's property, even though such Loan Party
shall not have assumed or become liable for the payment thereof; provided,
however, that all such obligations and liabilities which are limited in recourse
to such property shall be included in Debt only to the extent of the book value
of such property as would be shown on a balance sheet of such Loan Party
prepared in accordance with GAAP; (c) all obligations or liabilities created or
arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by any Loan Party, even if
the rights and remedies of the lessor, seller or lender thereunder are limited
to repossession of such property; provided, however, that all such obligations
and liabilities which are limited in recourse to such property shall be included
in Debt only to the extent of the book value of such property as would be shown
on a balance sheet of such Loan Party prepared in accordance with GAAP; (d) all
obligations and liabilities under Guaranties; (e) the present value (discounted
at the Base Rate) of lease payments due under synthetic leases; (f) all
obligations and liabilities of any Loan Party, contingent or otherwise, as an
account party or applicant under or in respect of a letter of credit; and (g)
all obligations and liabilities of any Loan Party in respect of Hedge
Agreements, with Hedge Agreements to be valued at the Agreement Value thereof.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all
times equal to the sum of (a) the otherwise applicable Interest Rate plus (b) 2%
per annum. Each Default Rate shall
10
be adjusted simultaneously with any change in the applicable Interest Rate. In
addition, the Default Rate shall result in an increase in the Letter of Credit
Fee by two percentage points per annum.
"Defaulting Lender" has the meaning specified in Section 2.2(g)(ii).
"Distribution" means, in respect of any corporation: (a) the payment
or making of any dividend or other distribution of property in respect of
capital stock (or any options or warrants for, or other rights with respect to,
such stock) of such corporation, other than distributions in capital stock (or
any options or warrants for such stock) of the same class; or (b) the redemption
or other acquisition by such corporation of any capital stock (or any options or
warrants for such stock) of such corporation.
"Documents" means, with respect to any Loan Party, all documents as
such term is defined in the UCC, including bills of lading, warehouse receipts
or other documents of title, now owned or hereafter acquired by such Loan Party.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United
States. Unless otherwise specified, all payments under this Agreement shall be
made in Dollars.
"Xxxxx Xxxxx" has the meaning specified in the introductory paragraph
of this Agreement.
"Xxxxx Xxxxx Canada" means Xxxxx Xxxxx of Canada, Inc., a Canadian
corporation.
"Eligible Assignee" means (a) a commercial bank, commercial finance
company or other asset based lender, having total assets in excess of
$1,000,000,000, that is reasonably acceptable to the Agent and, from and after
the date that each of the Initial Lenders has a Commitment of $50,000,000 or
less and only so long as no Event of Default has occurred and is continuing,
reasonably acceptable to the Authorized Representative; (b) any Lender listed on
the signature page of this Agreement; (c) any Affiliate of any Lender; and (d)
if an Event of Default has occurred and is continuing, any other financial
institution or other Person engaged in making, purchasing or investing in
commercial loans in the ordinary course of its business that is reasonably
acceptable to the Agent.
"Eligible Consumer Credit Card Accounts" means all Consumer Credit
Card Accounts which the Agent in the exercise of its reasonable discretion
determines to be Eligible Consumer Credit Card Accounts.
11
"Eligible Consumer Credit Card Receivables" means all Consumer Credit
Card Receivables which the Agent in the exercise of its reasonable
discretion determines to be Eligible Consumer Credit Card Receivables.
"Eligible Inventory" means Inventory of a Borrower or Xxxxx Xxxxx
Canada, valued at the lower of cost (on a first-in, first-out basis) or
market, which the Agent, in its reasonable discretion, determines to be
Eligible Inventory. Without limiting the discretion of the Agent to
establish other criteria of ineligibility, Eligible Inventory shall not,
unless the Agent in its sole discretion elects, include any Inventory:
(a) that is not owned by the Borrowers or Xxxxx Xxxxx Canada;
(b) that is not subject to the Agent's Liens, which are perfected as
to such Inventory, or that are subject to any other Lien whatsoever (other
than the Liens described in clause (d), (g), (k) or (m) of the definition
of Permitted Liens provided that such Permitted Liens (i) are junior in
priority to the Agent's Liens or subject to Reserves and (ii) do not impair
directly or indirectly the ability of the Agent to realize on or obtain the
full benefit of the Collateral);
(c) that does not consist of finished goods;
(d) that consists of raw materials, work-in-process, chemicals,
samples, prototypes, supplies, or packing and shipping materials;
(e) that is not in good condition, is unmerchantable, or does not
meet all standards imposed by any Governmental Authority, having regulatory
authority over such goods, their use or sale;
(f) that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of the Borrowers' or
Xxxxx Xxxxx Canada's business, or that is slow moving or stale;
(g) that is obsolete or repossessed or used goods taken in trade or
held for return to vendors;
(h) that is located outside the United States of America (in the case
of the Borrowers) or Canada (in the case of Xxxxx Xxxxx Canada) (or that is
in-transit from vendors or suppliers);
(i) that is located in a public warehouse or in possession of a
bailee or in a facility leased by any of the Borrowers or Xxxxx Xxxxx
Canada, if the warehouseman, or the bailee, or the lessor has not delivered
to the Agent, if requested by the Agent, a subordination agreement in form
and substance satisfactory to the Agent or if a Reserve for rents or
storage charges, if the Agent so requires, has not been established for
Inventory at that location;
12
(j) that contains or bears any Proprietary Rights licensed to a
Borrower or Xxxxx Xxxxx Canada by any Person, if the Agent is not satisfied
that it may sell or otherwise dispose of such Inventory in accordance with
the terms of Section 11.2 without infringing the rights of the licensor of
such Proprietary Rights or violating any contract with such licensor (and
without payment of any royalties other than any royalties due with respect
to the sale or disposition of such Inventory pursuant to the existing
license agreement), and, as to which the applicable Borrower or Xxxxx Xxxxx
Canada, as the case may be, has not delivered to the Agent a consent or
sublicense agreement from such licensor in form and substance acceptable to
the Agent if requested;
(k) that is not reflected in the details of a current perpetual
inventory report; or
(l) that is Inventory placed on consignment.
If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible Inventory.
"Eligible Major Credit Card Accounts" means all Major Credit Card
Accounts which the Agent in the exercise of its reasonable discretion determines
to be Eligible Major Credit Card Accounts. Without limiting the discretion of
the Agent to establish criteria of eligibility and ineligibility, Eligible Major
Credit Card Accounts shall not, unless the Agent in its sole discretion elects,
include any Major Credit Card Account unless such Major Credit Card Account:
(a) is payable in Dollars;
(b) has been originated in connection with the extension of credit to
an obligor who is a natural person and whose application for the extension of
credit was processed by a Major Credit Card Company and determined to be in
compliance with the Cardholder Guidelines, including those relating to the
extension of credit;
(c) has not been classified by any Major Credit Card Company as
counterfeit, canceled or fraudulent, and with respect to which any card issued
in connection therewith has not been stolen or lost;
(d) the obligor on which has provided, as its most recent billing
address, an address which is located in the United States;
(e) has not been charged off; and
(f) with respect to which all filings, consents, licenses, approvals
and authorizations of, and registrations or declarations with, any Governmental
Authority required to be obtained, effected or given in connection with the
creation of the underlying Major Credit Card Receivable(s) in such Major Credit
Card Account or the execution, delivery and performance of the Cardholder
Agreement pursuant to which such underlying Major Credit Card
13
Receivable(s) was created, have been duly obtained, effected or given and are in
full force and effect as of such date of creation.
"Eligible Major Credit Card Receivables" means all Major Credit Card
Receivables which the Agent in the exercise of its reasonable discretion
determines to be Eligible Major Credit Card Receivables. Without limiting the
discretion of the Agent to establish criteria of eligibility and ineligibility,
Eligible Major Credit Card Receivables shall not, unless the Agent in its sole
discretion elects, include any Major Credit Card Receivable unless such Major
Credit Card Receivable:
(a) has arisen under an Eligible Major Credit Card Account;
(b) was created in compliance with all Requirements of Law and
pursuant to a Cardholder Agreement that complies with all Requirements of Law;
(c) is such that at the time of and at all times after the creation of
such Major Credit Card Receivable the applicable Borrower has good and
marketable title thereto, free and clear of all Liens (other than Liens enacted
hereunder in favor of the Agent);
(d) is the legal, valid and binding payment obligation of the obligor
thereon, enforceable against such obligor in accordance with its terms, subject
to bankruptcy, insolvency, moratorium, reorganization and other laws of general
application relating to or affecting creditors' rights and to general equitable
principles;
(e) constitutes an "account" or a "general intangible" under Article 9
of the UCC;
(f) complies with an aging requirement agreeable to the Borrowers, the
Agent and the Initial Lenders;
(g) is subject to a first priority and perfected security interest in
favor of the Agent for the benefit of the Agent and the Lenders; and
(h) complies with each of the representations, warranties, covenants
and agreements contained in Section 6.8 relating thereto.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"Environmental Compliance Reserve" means any reserve which the Agent
establishes in its reasonable discretion after prior written notice to the
Authorized Representative from time to time for amounts that are reasonably
likely to be expended by any of the Borrowers in order for the applicable
Borrowers and their operations and property (a) to comply with any notice from a
Governmental Authority asserting material non-compliance with Environmental
14
Laws, or (b) to correct any such material non-compliance identified in a report
delivered to the Agent and the Lenders pursuant to Section 9.7.
"Environmental Laws" means all federal, state, provincial or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (1) any liability under any Environmental Laws, or (2) damages
arising from, or costs incurred by such Governmental Authority in response to a
Release or threatened Release of a Contaminant into the environment.
"Equipment" means, with respect to any Loan Party, all of such Loan
Party's now owned and hereafter acquired machinery, equipment, furniture,
furnishings, fixtures, and other tangible personal property (except Inventory),
including embedded software, motor vehicles with respect to which a certificate
of title has been issued, aircraft, dies, tools, jigs, molds and office
equipment, as well as all of such types of property leased by such Loan Party
and all of such Loan Party's rights and interests with respect thereto under
such leases (including, without limitation, options to purchase); together with
all present and future additions and accessions thereto, replacements therefor,
component and auxiliary parts and supplies used or to be used in connection
therewith, and all substitutes for any of the foregoing, and all manuals,
drawings, instructions, warranties and rights with respect thereto; wherever any
of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with any Loan Party within the meaning of
Section 414(b) or (c) of the Code or Section 4001(a)(14) of ERISA.
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension
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) or an employer
under the PBA or a cessation of operations which is treated as such a withdrawal
under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Loan
Party or any ERISA Affiliate from a Multiemployer Plan or other law or Plan
regulated or governed by the PBA or other applicable legislation or notification
that a Multiemployer Plan or Plan regulated or governed by the PBA or other
applicable legislation is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA or other law, or the commencement of proceedings
by the PBGC or other applicable Governmental Authority to terminate a Pension
Plan or Multiemployer Plan; (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
or other
15
law for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, the PBA or other applicable legislation, upon any Loan
Party or any ERISA Affiliate, in each case, other than the commencement of the
Case or (g) with respect to any Plan of Xxxxx Xxxxx Canada, any failure to make
a mandatory contribution when due in respect of such Plan.
"Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward to the
next 1/100/th/ of 1%) in effect on such day applicable to member banks under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities"). The Offshore Rate
for each outstanding LIBOR Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"Excluded Subsidiaries" means those Subsidiaries of Spiegel listed on
Schedule 1.1(b) hereto.
"Existing Liens" means all Liens on any assets or properties of any
Loan Party in existence on the Petition Date as set forth on Schedule 9.19.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
16
"Fee Letter" means that certain fee letter dated as of the date hereof
by and among the Borrowers, the Agent and Banc of America Securities LLC, as
amended, supplemented or otherwise modified from time to time.
"Final Bankruptcy Court Order" means an order, of the Bankruptcy
Court, in form, scope and substance acceptable to the Agent and the Initial
Lenders, finally approving this Agreement and the other Loan Documents, as such
order may be amended, modified or supplemented from time to time with the
express written joinder and consent of the Agent, the Majority Lenders and the
Borrowers and the approval of the Bankruptcy Court, which order has not been
vacated, appealed, reversed, stayed, modified or supplemented.
"Final Bankruptcy Court Order Date" means the date (which shall be no
later than 45 days after the date hereof) on which the Final Bankruptcy Court
Order shall have been duly entered by the Bankruptcy Court and shall be in full
force and effect, and shall not have been reversed, stayed, modified or amended,
absent written consent of the Agent, the Majority Lenders and the Borrowers.
"Final Order" means an order of the Bankruptcy Court (a) as to which
the time to appeal, petition for certiorari or move for reargument or rehearing
has expired and as to which no appeal, petition for certiorari or other
proceedings for reargument or rehearing shall then be pending, or (b) if an
appeal, writ of certiorari, reargument or rehearing thereof has been filed or
sought, such order of the Bankruptcy Court shall have been affirmed by the
highest court to which such order was appealed, or certiorari shall have been
denied or reargument or rehearing shall have been denied or resulted in no
modification of such order, and the time to take any further appeal, petition
for certiorari or move or reargument or rehearing shall have expired; provided,
however, that the possibility that a motion under Rule 59 or Rule 60 of the
Federal Rules of Civil Procedure, or any analogous rule under the Federal Rules
of Bankruptcy Procedure, may be filed with respect to such order shall not cause
such order not to be a Final Order.
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Section 8.6 or any other financial
statements required to be given to the Lenders or the Agent pursuant to this
Agreement.
"First Day Orders" means all orders entered by the Bankruptcy Court on
the Petition Date or within five (5) Business Days of the Petition Date or based
on motions filed on the Petition Date, in each case, which are acceptable to the
Agent and the Initial Lenders.
"Fiscal Year" means the period of 52 or 53 consecutive weeks which
make up the fiscal year of Spiegel and its Subsidiaries.
"Fixed Assets" means, with respect to any Loan Party, Equipment and
Real Estate of such Loan Party.
"Funding Date" means the date on which a Borrowing occurs.
17
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession).
"General Intangibles" means, with respect to any Loan Party, all of
such Loan Party's now owned or hereafter acquired general intangibles, choses in
action and causes of action and all other intangible personal property of such
Loan Party of every kind and nature (other than Accounts), including, without
limitation, all contract rights, payment intangibles, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to such Loan Party in connection with the termination of any Plan or
other employee benefit plan or any rights thereto and any other amounts payable
to such Loan Party from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any similar
type of insurance and any proceeds thereof, proceeds of insurance covering the
lives of key employees on which such Loan Party is beneficiary, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged equity interests or Investment Property
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to such Loan Party, letter of credit, guarantee, claim,
security interest or other security held by or granted to such Loan Party.
"Governmental Authority" means any nation or government, any state,
province, municipality or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, any corporation or other entity owned or controlled,
through stock or capital ownership or otherwise, by any of the foregoing and any
department, agency, board, commission, tribunal, committee or instrumentality of
any of the foregoing.
"Guarantors" has the meaning specified in the introductory paragraph
hereof (and includes, without limitation, and in any event, the Canadian
Guarantors).
"Guaranty" or "Guarantee" means, with respect to any Person, all
obligations of such Person which in any manner directly or indirectly guarantee
or assure, or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital
18
or other balance sheet condition; or (c) to lease property or to purchase any
debt or equity securities or other property or services.
"Hedge Agreement" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provides for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging any Loan Party's exposure to fluctuations in interest
or exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.
"Initial DIP Forecast" has the meaning specified in the defined term
Latest Projections.
"Initial Lenders" means a collective reference to the Bank, Fleet
Retail Finance Inc. and The CIT Group/Business Credit, Inc. and "Initial Lender"
means any one of them.
"Instruments" means, with respect to any Loan Party, all instruments
as such term is defined in the UCC, now owned or hereafter acquired by such Loan
Party.
"Intercompany Accounts" means all assets and liabilities, however
arising, which are due to Spiegel and/or any of its Subsidiaries from, which are
due from Spiegel and/or any of its Subsidiaries to, or which otherwise arise
from any transaction by Spiegel and/or any of its Subsidiaries with, any other
of Spiegel or any of its Subsidiaries or any Affiliate of Spiegel or any of its
Subsidiaries.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two or three months thereafter as selected by the
Borrowers in their Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated
Termination Date.
19
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 3.1.
"Interim Bankruptcy Court Order" means the order dated March 17, 2003,
entered by the Bankruptcy Court, a copy of which is attached hereto as Exhibit
A, approving this Agreement, as such order may be amended, modified or
supplemented from time to time with the express written consent of the Agent,
the Initial Lenders and the Borrowers and the approval of the Bankruptcy Court.
"Interim Bankruptcy Court Order Date" means the date on which the
Interim Bankruptcy Court Order is entered by the Bankruptcy Court.
"Inventory" means, with respect to any Loan Party, all of such Loan
Party's now owned and hereafter acquired inventory, goods and merchandise,
wherever located, to be furnished under any contract of service or held for sale
or lease, all returned goods, raw materials, work in process, finished goods
(including embedded software), other materials and supplies of any kind, nature
or description which are used or consumed in such Loan Party's business or used
in connection with the packing, shipping, advertising, selling or finishing of
such goods, merchandise and such other personal property, and all documents of
title or other Documents representing them.
"Inventory Appraisal" means (a) on the Closing Date, the appraisal
prepared by Great American dated March 11, 2003 and (b) thereafter, each
Inventory Appraisal delivered pursuant to Section 15.20, as updated pursuant to
such Section.
"Investment Property" means, with respect to any Loan Party, all of
such Loan Party's right, title and interest in and to any and all: (a)
securities whether certificated or uncertificated; (b) securities entitlements;
(c) securities accounts; (d) commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Joint Venture Investments" means those investments required to be
made by Xxxxx Xxxxx under joint venture agreements with respect to Xxxxx Xxxxx
Japan, Inc. and Xxxxx Xxxxx GmBH Germany, as in effect on the date hereof, but
only so long as in any Fiscal Year the aggregate amount of such investments do
not exceed the aggregate amount received by Xxxxx Xxxxx in such Fiscal Year from
such Persons.
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to Section 7.2(f), the DIP
forecast of the consolidated financial condition, results of operations and cash
flows of each Borrower and of Spiegel and its subsidiaries, for 2003 and
delivered to the Agent prior to the Closing Date (the "Initial DIP
20
Forecast") attached hereto as Exhibit H; and (b) thereafter, the projections
most recently received by the Agent pursuant to Section 7.2(f).
"LC Inventory Availability" means, as of any date, an amount
equal to 72.25% of the sum of (1) the Orderly Liquidation Percentage for Xxxxx
Xxxxx Inventory on such date times the undrawn amount of all Letters of Credit
issued by the Bank with a term of 90 days or less (from the date of issue)
issued to secure the payment by Xxxxx Xxxxx of the purchase of overseas
Inventory by Xxxxx Xxxxx in the ordinary course of its business, (2) the Orderly
Liquidation Percentage for Spiegel Inventory on such date times the undrawn
amount of all Letters of Credit issued by the Bank with a term of 90 days or
less (from the date of issue) issued to secure the payment by Spiegel of the
purchase of overseas Inventory by Spiegel in the ordinary course of its business
and (3) the Orderly Liquidation Percentage for Newport Inventory on such date
times the undrawn amount of all Letters of Credit issued by the Bank with a term
of 90 days or less (from the date of issue) issued to secure the payment by
Newport of the purchase of overseas Inventory by Newport in the ordinary course
of its business, in each case, which Inventory is not included in Eligible
Inventory, but would otherwise constitute Eligible Inventory if such Inventory
were not in-transit.
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of any
Agent Advance outstanding and the Bank to the extent of any Bank Loan
outstanding; provided that no such Agent Advance or Bank Loan shall be taken
into account in determining any Lender's Pro Rata Share.
"Letter of Credit" means a letter of credit issued or caused
to be issued for the account of the Borrowers pursuant to Section 2.3.
"Letter of Credit Fee" has the meaning specified in Section
3.5.
"Letter of Credit Issuer" means the Bank, any affiliate of the
Bank, any other Lender or any affiliate of any such other Lender, in each
instance, that issues any Letter of Credit pursuant to this Agreement.
"LIBOR Interest Payment Date" means, with respect to a LIBOR
Rate Loan, the first day of each month and the last day of the Interest Period
applicable to such Loan.
"LIBOR Rate" means, for any Interest Period, with respect to
LIBOR Rate Loans, the rate of interest per annum determined pursuant to the
following formula:
LIBOR Rate = Offshore Base Rate
-------------------------------------------
1.00 - Eurodollar Reserve Percentage
Where:
"Offshore Base Rate" means the rate per annum appearing
on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in
21
Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not available, the
Offshore Base Rate shall be, for any Interest Period, the rate per
annum appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such
rates. If for any reason none of the foregoing rates is available, the
Offshore Base Rate shall be, for any Interest Period, the rate per
annum determined by the Agent as the rate of interest at which dollar
deposits in the approximate amount of the LIBOR Rate Loan comprising
part of such Borrowing would be offered by the Bank's London Branch to
major banks in the offshore dollar market at their request at or about
11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period.
"LIBOR Revolving Loan" or "LIBOR Rate Loan" means a Revolving
Loan during any period in which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including, without limitation, a security interest, charge, claim,
or lien arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes; (b) to the extent not included under clause (a), any
reservation, exception, encroachment, easement, right-of-way, covenant,
condition, restriction, lease or other title exception or encumbrance affecting
property; and (c) any contingent or other agreement to provide any of the
foregoing.
"Loan Account" means the loan account of the Borrowers, which
account shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Mortgages, the
Canadian Guarantees, the Canadian Security Documents, any Hedge Agreement
between a Loan Party and a Lender or an affiliate of a Lender, the Interim
Bankruptcy Court Order, the Final Bankruptcy Court Order, the Fee Letter and any
other agreements, instruments, and documents heretofore, now or hereafter
evidencing, securing, guaranteeing or otherwise relating to the Obligations, the
Collateral, or any other aspect of the transactions contemplated by this
Agreement.
"Loan Parties" means a collective reference to the Borrowers
and the Guarantors, and "Loan Party" means any one of them.
"Loans" means, collectively, all loans and advances provided
for in Article 2.
22
"Major Credit Card Account" means each credit card account
existing pursuant to a credit card issued by MasterCard, Visa, Discover or
American Express issued to an obligor pursuant to a Cardholder Agreement between
MasterCard, Visa, Discover or American Express and any Person and which is
identified by account number, obligor name, obligor address and balance.
"Major Credit Card Receivables" means all amounts (other than
amounts which represent finance charges, late payment fees, credit insurance
premiums, annual fees (if any), returned check charges or any other fees or
charges) billed to the obligor on any Major Credit Card Account with respect to
sales by a Borrower of merchandise or services and owing by the relevant credit
card issuer to such Borrower.
"Majority Lenders" means, at any time, Lenders whose Pro Rata
Shares aggregate more than 50% of the Commitments or, if no Commitments shall
then be in effect, Lenders who hold more than 50% of the aggregate principal
amount of the Loans then outstanding.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of (i) any Borrower or (ii)
Spiegel and its Subsidiaries taken as a whole or (iii) any substantial portion
of the Collateral; (b) a material impairment of the ability of the Loan Parties
to perform under any Loan Document and to avoid any Event of Default; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against the Loan Parties of any Loan Document.
"Maximum Revolver Amount" means (i) $150,000,000 at any time
prior to the Final Bankruptcy Court Order Date, (ii) $400,000,000 at any time on
or after the Final Bankruptcy Court Order Date but prior to the Consumer Credit
Card Account Line Expiration Date, and (iii) $350,000,000 at any time after the
Consumer Credit Card Account Line Expiration Date, in each case, as such amount
may be reduced from time to time in accordance with the provisions of Section
4.2.
"Mortgages" means all mortgages, deeds of trust, deeds to
secure debt, assignments and other instruments executed and delivered by any
Loan Party to or for the benefit of the Agent by which the Agent, on behalf of
the Lenders, acquires a Lien on the Real Estate or a collateral assignment of
any Loan Party's interest under a lease of Real Estate, and all amendments,
modifications and supplements thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by any Loan Party
or any ERISA Affiliate.
23
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
any Loan Party and at least one trade or business other than the Loan Party or
(b) was so maintained and in respect of which any Loan Party could have
liability under Section 4064 or 4069 of ERISA in the event such plan has been or
were to be terminated.
"Net Amount of Eligible Consumer Credit Card Receivables"
means, at any time, the gross amount of Eligible Consumer Credit Card
Receivables less sales, excise or similar taxes, and less returns, discounts,
claims, credits, allowances, accrued rebates, offsets, deductions,
counterclaims, disputes and other defenses of any nature at any time issued,
owing, granted, outstanding, available or claimed and less all finance charges,
late payment fees, annual fees (if any), credit insurance premiums, returned
check charges and any other fees or charges.
"Net Amount of Eligible Major Credit Card Receivables" means,
at any time, the gross amount of Eligible Major Credit Card Receivables less
sales, excise or similar taxes, and less returns, discounts, claims, credits,
allowances, accrued rebates, offsets, deductions, counterclaims, disputes and
other defenses of any nature at any time issued, owing, granted, outstanding,
available or claimed and less all finance charges, late payment fees, annual
fees (if any), credit insurance premiums, returned check charges and any other
fees or charges.
"Net Liquidation Value" means, with respect to the Eligible
Consumer Credit Card Receivables of a Borrower at any time, an amount equal to
the product of (i) the amount of the Eligible Consumer Credit Card Receivables
of such Borrower at such time, multiplied by (ii) the Net Liquidation Value
Percentage for such Borrower in effect at such time.
"Net Liquidation Value Percentage" means, with respect to
Consumer Credit Card Receivables of a Borrower at any time, the ratio (expressed
as a percentage) computed by dividing (i) (x) if such percentage is being
determined on the Final Bankruptcy Court Order Date or on any date thereafter
prior to the first delivery of an Accounts Appraisal pursuant to Section 15.20,
the net recovery value of the Consumer Credit Card Receivables of such Borrower
(which in any event shall give effect to all costs and expenses of liquidation
and collection) as set forth in the Accounts Appraisal delivered to the Agent
prior to the Final Bankruptcy Court Order Date and (y) if such percentage is
being determined on or after the date of the first delivery of an Accounts
Appraisal pursuant to Section 15.20, the net recovery value of the Consumer
Credit Card Receivables of such Borrower (which in any event shall give effect
to all costs and expenses of liquidation and collection) as set forth in the
Accounts Appraisal most recently delivered pursuant to Section 15.20, as updated
pursuant to such Section by (ii) the value of the Consumer Credit Card
Receivables of such Borrower as set forth in the corresponding Accounts
Appraisal (or update thereof).
"Newport" has the meaning specified in the introductory
paragraph of this Agreement.
"Notice of Borrowing" has the meaning specified in Section
2.2(b).
24
"Notice of Conversion/Continuation" has the meaning specified
in Section 3.2(b).
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by any Loan Party
to the Agent and/or any Lender (or an affiliate of any Lender), arising under or
pursuant to this Agreement or any of the other Loan Documents, whether or not
evidenced by any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all principal, interest, charges,
expenses, fees, attorneys' fees, filing fees and any other sums chargeable to
any Loan Party hereunder or under any of the other Loan Documents. "Obligations"
includes, without limitation, (a) all Revolving Loans and all debts,
liabilities, and obligations now or hereafter owing from any Loan Party to the
Agent and/or any Lender under or in connection with the Revolving Loans or the
Letters of Credit and (b) all debts, liabilities and obligations now or
hereafter arising from or in connection with Bank Products.
"Ohio Property" means the Real Estate owned by Distribution
Fulfillment Services, Inc. (DFS) located at 0000 Xxxx Xxxxx Xxxxx, Xxxxxxxxx,
Xxxx.
"OIHK" means Xxxx International (Hong Kong) Limited.
"Orderly Liquidation Percentage" means, with respect to
Inventory of a Borrower or Xxxxx Xxxxx Canada at any time, the ratio (expressed
as a percentage) computed by dividing (i) (x) if such percentage is being
determined on the Closing Date or on any date prior to the first delivery of an
Inventory Appraisal pursuant to Section 15.20, the net recovery value of the
Inventory of such Borrower or Xxxxx Xxxxx Canada, as the case may be (which in
any event shall give effect to all costs and expenses of liquidation) as set
forth in the Inventory Appraisal delivered to the Agent prior to the Closing
Date and (y) if such percentage is being determined on or after the date of the
first delivery of an Inventory Appraisal pursuant to Section 15.20, the net
recovery value of the Inventory of such Borrower or Xxxxx Xxxxx Canada, as the
case may be (which in any event shall give effect to all costs and expenses of
liquidation) as set forth in the Inventory Appraisal most recently delivered
pursuant to Section 15.20, as updated pursuant to such Section by (ii) the value
of the Inventory of such Borrower as set forth in the corresponding Inventory
Appraisal (or update thereof).
"Orderly Liquidation Value" means, with respect to the
Eligible Inventory of a Borrower or Xxxxx Xxxxx Canada at any time, an amount
equal to the product of (i) the value of the Eligible Inventory of such Borrower
or Xxxxx Xxxxx Canada, as the case may be, at such time valued at the lower of
cost (on a first-in, first-out basis) or market, multiplied by (ii) the Orderly
Liquidation Percentage for such Borrower or Xxxxx Xxxxx Canada, as the case may
be, in effect at such time.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made
25
hereunder or from the execution, delivery or registration of, or otherwise with
respect to this Agreement or any other Loan Documents.
"Otto Interests" means (i) Xxxxxx Xxxx of Hamburg, Germany,
his spouse and any of his lineal descendants (including, without limitation, Dr.
Xxxxxxx Xxxx) and their respective spouses (collectively, the "Otto Family"),
any Subsidiary of any members of the Otto Family, and any personal
representative, trustee or other fiduciary acting in respect of the estate of
any member of the Otto Family, (ii) any trust which is solely for the benefit of
one or more members of the Otto Family (whether or not any member of the Otto
Family is a trustee of such trust) or principally for the benefit of one or more
members of the Otto Family (provided that a member of the Otto Family is a
trustee of such trust), (iii) Otto, and (iv) Xxxx-Xxxxxxx Finance G.m.b.H. & Co.
KG.
"Participating Lender" means any Person who shall have been
granted the right by any Lender to participate in the financing provided by such
Lender under this Agreement, and who shall have entered into a participation
agreement in form and substance satisfactory to such Lender.
"Payment Account" means each blocked bank account established
pursuant to Section 6.9, to which the funds of a Loan Party (including, without
limitation, proceeds of Accounts and other Collateral) are deposited or
credited, and which is maintained in the name and under the sole dominion and
control of the Agent on terms acceptable to the Agent.
"PBA" means the Pension Benefits Act of Ontario and all
regulations thereunder as amended from time to time and any successor
legislation.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means at any time, the aggregate
principal amount of all Revolving Loans requested by the Borrowers in any
Notice(s) of Borrowing received by the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA (other than a Multiemployer Plan) or
a defined benefit plan maintained in any non-U.S. jurisdiction, in each case
which any Loan Party sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a Multiple Employer Plan has
made contributions at any time during the immediately preceding five (5) plan
years.
"Permitted Liens" means the following Liens (to the extent,
with respect to any Loan Party or any of its assets or properties, the same are
valid, perfected and non-avoidable in accordance with applicable law):
26
(a) Liens for taxes and assessments not delinquent encumbering
assets or properties of any Loan Party (other than Liens encumbering
Accounts, Inventory, Real Estate) or proceeds thereof that are prior to
the Agent's Liens therein) or statutory Liens for taxes encumbering
assets or properties of any Loan Party (other than Liens encumbering
Accounts, Inventory, Real Estate or proceeds thereof that are prior to
the Agent's Liens therein), provided that the payment of such taxes
which are due and payable (other than those taxes owing prior to the
Petition Date that cannot be paid as a result of a Loan Party's status
as a debtor-in-possession) is being contested in good faith and by
appropriate proceedings diligently pursued and as to which adequate
financial reserves have been established on the relevant Loan Party's
books and records and a stay of enforcement of any such Lien is in
effect;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the ordinary course
of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids, tenders
or contracts (other than for the repayment of Debt) or to secure
indemnity, performance or other similar bonds for the performance of
bids, tenders or contracts (other than for the repayment of Debt) or to
secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds (including, without limitation,
customs bonds, utility bonds and lease bonds) in the ordinary course of
business;
(d) Liens imposed by law securing the claims or demands (in
each case, arising in the ordinary course of business) of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons,
provided that the payment of such claims or demands (other than those
claims or demands in existence on the Petition Date that cannot be paid
as a result of a Loan Party's status as a debtor-in-possession) are not
overdue by more than forty-five (45) days or are being contested in
good faith and by appropriate proceedings diligently pursued and for
which adequate reserves have been provided in accordance with GAAP and,
in each instance, a stay of enforcement of any such Lien which arises
from the nonpayment of any such claims or demands is in effect and if
any such Lien arises from the nonpayment of such claims or demand when
due, such claims or demands are not material in the aggregate;
(e) reservations, exceptions, encroachments, easements, rights
of way, covenants running with the land, and other similar title
exceptions or encumbrances affecting any Real Estate; provided that
they do not in the aggregate materially detract from the value of the
Real Estate or materially interfere with its use in the ordinary
conduct of any Loan Party's business;
(f) Liens arising from judgments and attachments in connection
with court proceedings provided that the attachment or enforcement of
such Liens would not
27
result in an Event of Default hereunder and such Liens are being
contested in good faith by appropriate proceedings, adequate reserves
have been set aside and no material property or asset is subject to a
material risk of loss or forfeiture and the claims in respect of such
Liens are fully covered by insurance (subject to ordinary and customary
deductibles) and a stay of execution pending appeal or proceeding for
review is in effect;
(g) Existing Liens;
(h) with respect to the Borrowers, Carve-Out Expenses (it
being understood that no Person that is entitled to Carve-out Expenses
shall be entitled to a Lien on any Collateral to secure same);
(i) purchase money Liens in Fixed Assets securing Debt
permitted under Section 9.13(e) (including the interest of a lessor
under a Capital Lease and purchase money Liens to which any capital
property is subject at the time of acquisition thereof, and limited in
each case to the capital property purchased with the proceeds thereof
or subject to such Capital Lease);
(j) interests of licensees in trademarks and copyrights;
(k) Liens in favor of OIHK to secure the continuing sourcing
arrangements for Inventory for the Borrowers after the Petition Date on
terms satisfactory to the Agent and the Initial Lenders (Majority
Lenders, on or after the Final Bankruptcy Court Order Date);
(l) extensions, renewals or replacements of any Liens referred
to in clauses (g) and (i) of this definition; provided, that the
principal amount of the obligations secured thereby is not increased
and that any such extension, renewal or replacement is limited to the
property originally encumbered thereby; and
(m) to the extent in effect from time to time, an adequate
protection Lien in favor of OIHK subordinated to the Agent's Liens
pursuant to the DIP Orders.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other entity.
"Petition Date" means March 17, 2003.
"Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA (other than a Multiemployer Plan) or the applicable laws of any other
jurisdiction) which any Loan Party sponsors or maintains or to which such Loan
Party makes, is making, or is obligated to make contributions and includes any
Pension Plan.
28
"PPSA" means the Personal Property Security Act of Ontario (or any
successor statute) or similar legislation of any other jurisdiction the laws of
which are required by such legislation to be applied in connection with the
issue, perfection, enforcement, validity or effect of security interests.
"Premises" means the land identified by addresses on Schedules 8.11
and 8.12, together with all buildings, improvements and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way appertaining
thereto, and which constitutes all of the real property in which any Loan Party
has any interests on the Closing Date.
"Priority Professional Expense Cap" has the meaning specified in
the definition of the term "Agreed Administrative Expense Claim Priorities."
"Priority Professional Expenses" has the meaning specified in the
definition of the term "Agreed Administrative Expense Claim Priorities."
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders, in each case after giving effect
to a Lender's participation in Bank Loans and Agent Advances.
"Professional Expenses" has the meaning specified in the definition
of the term "Agreed Administrative Expense Claim Priorities."
"Proprietary Rights" means, with respect to any Loan Party, all of
such Loan Party's now owned and hereafter arising or acquired: licenses,
franchises, permits, patents, patent rights, copyrights, works which are the
subject matter of copyrights, trademarks, service marks, trade names, trade
styles, patent, trademark and service xxxx applications, and all licenses and
rights related to any of the foregoing, including, without limitation, those
patents, trademarks, service marks, trade names and copyrights set forth on
Schedule 8.13 hereto, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present and future infringement of any of the foregoing.
"Real Estate" means, with respect to any Loan Party, all of such
Loan Party's now or hereafter owned or leased estates in real property,
including, without limitation, all fees, leaseholds and future interests,
together with all of such Loan Party's now or hereafter owned or leased
interests in the improvements thereon, the fixtures attached thereto and the
easements appurtenant thereto.
"Real Estate Appraisal" means (a) prior to the Final Bankruptcy
Court Order Date, an appraisal of the owned Real Estate of each of the Borrowers
(other than the Ohio
29
Property and any other Real Estate encumbered by a Lien, other than a Permitted
Lien described in clause (e) of such defined term) delivered to the Agent and
the Lenders not later than five days prior to the Final Bankruptcy Court Order
Date and prepared by an appraiser acceptable to the Agent and the Initial
Lenders and to be in form and substance reasonably satisfactory to the Agent and
the Initial Lenders and (b) thereafter, each Real Estate Appraisal delivered
pursuant to Section 15.20, as updated pursuant to such Section.
"Real Estate Availability" means 50% of the quick sale value of
owned unencumbered Real Estate of the Borrowers as of the Closing Date, as
determined by an appraisal firm satisfactory to the Agent, provided that the
fair market value of the Borrowers' owned unencumbered Real Estate may be
revised from time to time by such appraisal firm at the request of the Agent.
"Real Estate Seasonal Availability Period" means in each year,
during the period from July 1 through and including November 30, a period not to
exceed 90 consecutive days selected by the Authorized Representative in a
writing delivered to the Agent not later than five Business Days prior to the
commencement of such period; provided that during 2003, such consecutive day
period shall not commence prior to the Consumer Credit Card Account Line
Expiration Date.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC, and other than the commencement of the Case, or events
resulting from actions approved by the Bankruptcy Court, the Agent and the
Majority Lenders, on or prior to the date of confirmation of a plan of
reorganization.
"Required Lenders" means, at any time, Lenders whose Pro Rata
Shares aggregate more than 66-2/3% of the Commitments or, if no Commitments
shall then be in effect, Lenders who hold more than 66-2/3% of the aggregate
principal amount of the Loans then outstanding.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Reserves" means reserves that limit the availability of credit
hereunder, consisting of reserves against Combined Availability, Eligible
Consumer Credit Card Receivables, Eligible Major Credit Card Receivables,
Eligible Inventory or Real Estate Availability, established by the Agent from
time to time in the Agent's reasonable credit
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judgment exercised in good faith. Without limiting the generality of the
foregoing, the following reserves shall be deemed to be a reasonable exercise of
the Agent's credit judgment: (a) Bank Product Reserves, (b) a reserve for
accrued, unpaid interest on the Obligations, (c) reserves for rent at leased
locations subject to statutory or contractual landlord liens, (d) Inventory
shrinkage and returns, (e) Environmental Compliance Reserves, (f) customs
charges, (g) dilution, and (h) warehousemen's or bailees' charges.
"Responsible Officer" means the chief executive officer or the
president of any Borrower, as appropriate, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants and the preparation of the Borrowing Base
Certificate, the chief financial officer, chief accounting officer, the
controller or the treasurer of such Borrower, or any other officer having
substantially the same authority and responsibility.
"Restricted Investment" means, as to any Loan Party, any
acquisition of property by such Loan Party in exchange for cash or other
property, whether in the form of an acquisition of stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any other
property, or a loan, advance, capital contribution, or subscription, except the
following: (a) acquisitions of Equipment to be used in the business of such Loan
Party; (b) acquisitions of Inventory in the ordinary course of business of such
Loan Party; (c) acquisitions of current assets acquired in the ordinary course
of business of such Loan Party; (d) direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the United States
of America, provided that such obligations mature within one year from the date
of acquisition thereof; (e) acquisitions of certificates of deposit maturing
within one year from the date of acquisition, bankers' acceptances, Eurodollar
bank deposits, or overnight bank deposits, in each case issued by, created by,
or with a bank or trust company organized under the laws of the United States of
America or any state thereof having capital and surplus aggregating at least
$100,000,000; (f) acquisitions of commercial paper given a rating of "A2" or
better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x Investors
Service, Inc. and maturing not more than 90 days from the date of creation
thereof; (g) shares of money market mutual or similar funds which invest
substantially all their assets in assets satisfying the requirements of clauses
(d) through (f) of this definition; (h) Hedge Agreements entered into by such
Loan Party in the ordinary course of its business and not for speculative
purposes; (i) Joint Venture Investments, (j) intercompany loans to and
investments in other Loan Parties, so long as any such loan or investment is (i)
useful for the ordinary conduct of the recipient's business, (ii) made in the
ordinary course of business and (iii) consistent with past practices (except
with respect to Gemini Credit Services, Inc., in which case such investment
shall constitute the unfinanced portion of Consumer Credit Card Receivables) and
(k) loans to and investments in Excluded Subsidiaries not to exceed $1,000,000
in the aggregate during the term of this Agreement.
"Revolving Loans" has the meaning specified in Section 2.2 and
includes each Agent Advance and Bank Loan.
"Securitization Facility" means (i) Master Indenture, dated as of
December 1, 2000, by and between Spiegel Credit Card Master Note Trust, as
Issuer, and The Bank of New
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York, as Indenture Trustee; (ii) Series 2000-A Indenture Supplement, dated as of
December 1, 2000, by and between Spiegel Credit Card Master Note Trust, as
Issuer, and The Bank of New York, as Indenture Trustee; (iii) Series 2001-A
Indenture Supplement, dated as of July 19, 2001, by and between Spiegel Credit
Card Master Note Trust, as Issuer, and The Bank of New York, as Indenture
Trustee; (iv) 2001-VFN Indenture Supplement, dated as of October 17, 2001, by
and between Spiegel Credit Card Master Note Trust, as Issuer, and The Bank of
New York, as Indenture Trustee; (v) Master Indenture, dated as of March 1, 2001,
amended and restated as of December 31, 2001, by and between First Consumers
Credit Card Master Note Trust, as Issuer, and The Bank of New York, as Indenture
Trustee; (vi) Series 2001-A Indenture Supplement, dated as of March 1, 2001, by
and between First Consumers Credit Card Master Note Trust, as Issuer, and The
Bank of New York, as Indenture Trustee; (vii) Series 2001-VFN Indenture
Supplement, dated as of October 17, 2001, by and between First Consumers Credit
Card Master Note Trust, as Issuer, and The Bank of New York, as Indenture
Trustee; (viii) Omnibus Amendment to Series 2000-A Indenture Supplement and
Series 2001-A Indenture Supplement dated as of October 31, 2002 by and between
Spiegel Credit Card Master Note Trust, as Issuer and The Bank of New York, as
Indenture Trustee; (ix) Series 1999-A Supplement to Amended and Restated Pooling
and Servicing Agreement, dated as of February 1, 1999, by and between First
Consumers National Bank, as Seller and Servicer, and Xxxxxx Trust and Savings
Bank, as Trustee on behalf of the Series 1999-A Certificateholders; and (x)
Series 1999-A Supplement to Amended and Restated Pooling and Servicing
Agreement, dated as of February 1, 1999, by and between First Consumers National
Bank, as Seller and Servicer, and Xxxxxx Trust and Savings Bank, as Trustee on
behalf of the Series 1999-A Certificateholders.
"Settlement" and "Settlement Date" have the meanings specified in
Section 2.2(j)(i).
"Spiegel" has the meaning specified in the introductory paragraph
of this Agreement.
"Spiegel Canada" means Spiegel Group Teleservices-Canada, Inc., a
Canadian corporation.
"Stated Termination Date" means the earlier of (i) March 17, 2005
and (ii) May 1, 2003 if the Final Bankruptcy Court Order Date shall not have
occurred on or before such date.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than fifty percent (50%) of the voting stock or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references to a "Subsidiary" refer to a Subsidiary
of Spiegel. For all purposes of the Loan Documents other than any financial
reporting requirements set forth in this Agreement, any financial covenants set
forth in this Agreement and any provisions in this Agreement which relate to any
financial statements or related report or statement of Spiegel (including,
without limitation, any Financial Statements), the term "Subsidiary" shall not
include any Excluded Subsidiary.
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"Supporting Obligations" means all supporting obligations as such
term is defined in the UCC, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments
or Investment Property.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, now or hereafter imposed, levied, collected, withheld or assessed by
any Governmental Authority.
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the confirmation date of a plan of reorganization for any
of the Borrowers, provided that in the event an order of confirmation of such
plan of reorganization has been entered which provides for (A) the termination
of all Lenders' Commitments and payment in full in cash of all Obligations and
the cash collateralization or return of all Letters of Credit in a manner
satisfactory to the Agent and the Lenders (collectively, the "Termination of the
DIP Financing") on or before the effective date of such plan of reorganization
(as such term is used in Section 1129 of the Bankruptcy Code) and (B) until the
Termination of the DIP Financing, the continuity and priority of the Liens of
the Agent in the Collateral, the superpriority administrative expense claim
status of the claims of the Agent and the Lenders under the Loan Documents and
the other rights and remedies of the Agent and the Lenders under the Loan
Documents, in each instance, to the same extent as is provided in the Final
Bankruptcy Court Order, then the effective date of such plan of reorganization,
(iii) the date the Total Facility is terminated either by the Borrowers pursuant
to Section 4.2 or by the Majority Lenders pursuant to Section 11.2, and (iv) the
date this Agreement is otherwise terminated for any reason whatsoever pursuant
to the terms of this Agreement.
"Total Facility" has the meaning specified in Section 2.1.
"UCC" means the Uniform Commercial Code, as in effect from time
to time, of the State of New York or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests, provided, that to the extent that the UCC is
used to define any term herein or in any other documents and such term is
defined differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9 shall govern.
"Ultimate" has the meaning specified in the introductory
paragraph of this Agreement.
"Unfunded Pension Liability" of a Pension Plan means (i) with
respect to a Pension Plan subject to Title IV of ERISA, the excess, if any, of
the projected benefit obligation of such Pension Plan over the fair value of the
assets of such Pension Plan, as determined pursuant to Statement of Financial
Accounting Standards No. 87 and, with respect to the Closing Date, as reflected
in the Financial Statements described in Section 8.6(a), and thereafter, as
reflected in the most recent audited Financial Statements required to be
delivered to the Agent pursuant to Section 7.2(a), and (ii) in the case of any
Pension Plan regulated by the PBA or the
33
applicable laws of any jurisdiction, any unfunded liability or solvency
deficiency as determined under the PBA or other applicable law.
"Unused Letter of Credit Subfacility" means an amount equal to
$75,000,000 (prior to the Final Bankruptcy Court Order Date) and $150,000,000
(on and after the Final Bankruptcy Court Order Date) minus, in either case, the
sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit
plus, without duplication, (b) the aggregate unpaid reimbursement obligations
with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 3.4.
1.2 Accounting Terms. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.
1.3 Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including, without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including."
(iv) The word "or" is not exclusive.
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
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(e) The captions and headings of this Agreement and other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) For purposes of Article XI, a breach of a financial
covenant contained in any Section of Article IX shall be deemed to have occurred
as of any date of determination thereof by the Agent on or after the last day of
any specified measuring period, regardless of when the Financial Statements
reflecting such breach are delivered to the Agent.
(h) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Borrowers and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent merely
because of the Agent's or Lenders' involvement in their preparation.
1.4 Interest Act (Canada). For the purposes of this Agreement,
whenever interest or fees to be paid hereunder is calculated on the basis of any
period of time less than a calendar year, the yearly rate of interest or the
yearly fee to which the rate determined pursuant to such calculation is
equivalent is the rate so determined multiplied by the actual number of days in
the calendar year in which the same is to be ascertained and divided by such
other period of time.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility. Subject to all of the terms and conditions of
this Agreement and subject to the Interim Bankruptcy Court Order and the entry
of the Final Bankruptcy Court Order, as the case may be, the Lenders severally
agree to make available a total credit facility of up to $400,000,000 (the
"Total Facility") for the Borrowers' use from time to time during the term of
this Agreement. The Total Facility shall be comprised of a revolving line of
credit consisting of revolving loans and letters of credit up to the Maximum
Revolver Amount, as described in Sections 2.2 and 2.3.
2.2 Revolving Loans.
(a) Amounts. Subject to the satisfaction of the conditions
precedent set forth in Article 10 and subject to the Interim Bankruptcy Court
Order and the Final Bankruptcy Court Order, as the case may be, each Lender
severally agrees, upon the Borrowers' request from time to time on any Business
Day during the period from the Closing Date to but excluding the Termination
Date, to make revolving loans (the "Revolving Loans") to the Borrowers, in
amounts not to exceed (except for the Bank with respect to Bank Loans or Agent
Advances) such
35
Lender's Pro Rata Share of the Combined Availability. The Lenders, however, in
their discretion, may elect to make Revolving Loans to the Borrowers or
participate (as provided for in Section 2.3(f)) in the credit support or
enhancement provided through the Agent to the issuers of Letters of Credit in
excess of the Combined Availability on one or more occasions, but if they do so,
neither the Agent nor the Lenders shall be deemed thereby to have changed the
limits of the Maximum Revolver Amount or the Combined Availability or to be
obligated to exceed such limits on any other occasion. If the Combined
Availability is equal or less than zero, the Lenders may refuse to make or
otherwise restrict the making of Revolving Loans as the Lenders determine until
the Combined Availability is greater than zero, subject to the Agent's
authority, in its sole discretion, to make Agent Advances pursuant to the terms
of Section 2.2(i). Subject to the terms and conditions set forth herein, the
Borrowers may borrow, prepay and reborrow Revolving Loans.
(b) Procedure for Borrowing. Each Borrowing by the Borrowers
shall be made upon irrevocable written notice of the Authorized Representative
on behalf of the Borrowers (which notice shall be deemed a notice by all the
Borrowers of such Borrowing) delivered to the Agent in the form of a Notice of
Borrowing substantially in the form of Exhibit E or another form acceptable to
the Agent (each, a "Notice of Borrowing") together with a Borrowing Base
Certificate reflecting sufficient Combined Availability (which must be received
by the Agent (i) prior to 12:00 noon. (New York City time) three Business Days
prior to the requested Funding Date, in the case of LIBOR Rate Loans and (ii) no
later than 12:00 noon on the requested Funding Date, in the case of Base Rate
Loans), specifying:
(A) the amount of the Borrowing (which Borrowing, in
the case of a request for a LIBOR Rate Loan, shall be in the
amount of $1,000,000 or an integral multiple of $1,000,000 in
excess thereof);
(B) the requested Funding Date, which shall be a
Business Day;
(C) whether the Revolving Loans requested are to be
Base Rate Loans or LIBOR Revolving Loans (and if not specified,
it shall be deemed a request for a Base Rate Loan); and
(D) the duration of the Interest Period if the
requested Revolving Loans are to be LIBOR Revolving Loans. If the
Notice of Borrowing fails to specify the duration of the Interest
Period for any Borrowing comprised of LIBOR Rate Loans, such
Interest Period shall be one month;
provided, however, that with respect to the new Borrowings to be made on the
Closing Date, such Borrowings will consist of Base Rate Loans only.
(2) After giving effect to any Borrowing, there may not
be more than eight (8) different Interest Periods in effect for the Borrowers in
the aggregate.
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(3) With respect to any request for Base Rate Loans, in
lieu of delivering the above-described Notice of Borrowing, the Authorized
Representative on behalf of the Borrowers may give the Agent telephonic notice
of such request by the required time with such telephonic notice to be confirmed
in writing within 24 hours of the giving of such notice but the Agent shall be
entitled to rely on the telephonic notice in making such Revolving Loans.
(4) The Borrowers shall have no right to request a LIBOR
Rate Loan while a Default or Event of Default has occurred and is continuing.
(c) Reliance upon Authority. On or prior to the Closing Date
and thereafter prior to any change with respect to any of the information
contained in the following clauses (i) and (ii), the Authorized Representative
on behalf of the Borrowers shall deliver to the Agent a writing setting forth
(i) the account or accounts of the Borrowers to which the Agent is authorized to
transfer the proceeds of the Revolving Loans requested pursuant to this Section
2.2 (each such account, a "Designated Account"), and (ii) the names of the
officers and any other designated representatives of the Authorized
Representative authorized to request Revolving Loans on behalf of the Borrowers,
and shall provide the Agent with a specimen signature of each such officer and
other designated representatives. All such Designated Accounts must be
reasonably satisfactory to the Agent. The Agent shall be entitled to rely
conclusively on such officer's or designated representatives' authority to
request Revolving Loans on behalf of the Borrowers, the proceeds of which are to
be transferred to any of the accounts specified by the Authorized Representative
on behalf of the Borrowers pursuant to the immediately preceding sentence, until
the Agent receives written notice to the contrary. The Agent shall have no duty
to verify the identity of any individual representing him or herself as one of
the officers or designated representatives authorized by the Authorized
Representative to make such requests on behalf of the Borrowers.
(d) No Liability. The Agent shall not incur any liability to
any Borrower as a result of acting upon any notice referred to in Sections
2.2(b) and (c), which notice the Agent believes in good faith to have been given
by an officer duly authorized by the Authorized Representative to request
Revolving Loans or for otherwise acting in good faith under this Section 2.2,
and the crediting of Revolving Loans to the applicable Borrower's deposit
account, or transmittal to such Person as the Authorized Representative on
behalf of the Borrowers shall direct, shall conclusively establish the
obligation of the Borrowers to repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and
the Borrowers shall be bound to borrow the funds requested therein in accordance
therewith.
(f) Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to Section 2.2(b), the
Agent shall elect, in its discretion, (i) to have the terms of Section 2.2(g)
apply to such requested Borrowing, or (ii) to request the Bank to make a Bank
Loan pursuant to the terms of Section 2.2(h) in the amount of the requested
Borrowing; provided, however, that if the Bank declines in its sole discretion
to
37
make a Bank Loan pursuant to Section 2.2(h), the Agent shall elect to have the
terms of Section 2.2(g) apply to such requested Borrowing.
(g) Making of Revolving Loans. (i) In the event that the Agent
shall elect to have the terms of this Section 2.2(g) apply to a requested
Borrowing as described in Section 2.2(f), then promptly after receipt of a
Notice of Borrowing or telephonic notice pursuant to Section 2.2(b), the Agent
shall notify the Lenders by telecopy, telephone or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to the Agent
in same day funds, to such account of the Agent as the Agent may designate, not
later than 2:00 p.m. (New York City time) on the Funding Date applicable
thereto. After the Agent's receipt of the proceeds of such Revolving Loans, upon
satisfaction of the applicable conditions precedent set forth in Article 10, the
Agent shall make the proceeds of such Revolving Loans available to the Borrowers
on the applicable Funding Date by transferring same day funds equal to the
proceeds of such Revolving Loans received by the Agent to the account of the
Borrowers, designated in writing by the Authorized Representative on behalf of
the Borrowers and acceptable to the Agent; provided, however, that the amount of
Revolving Loans so made on any date shall in no event exceed the Combined
Availability on such date.
(ii) Unless the Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that such
Lender will not make available as and when required hereunder to the Agent that
Lender's Pro Rata Share of the Borrowing, the Agent may assume that each Lender
has made such amount available to the Agent in immediately available funds on
the Funding Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Borrowers on such date a
corresponding amount. If and to the extent any Lender shall not have made its
full amount available to the Agent in immediately available funds and the Agent
in such circumstances has made available to the Borrowers such amount, that
Lender shall on the Business Day following such Funding Date make such amount
available to the Agent, together with interest at the Federal Funds Rate for
each day during such period. A notice of the Agent submitted to any Lender with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the Agent
shall constitute such Lender's Loan on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the
Business Day following the Funding Date, the Agent will notify the Authorized
Representative on behalf of the Borrowers of such failure to fund and, upon
demand by the Agent, the Borrowers shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing. The failure of
any Lender to make any Loan on any Funding Date (any such Lender, prior to the
cure of such failure, being hereinafter referred to as a "Defaulting Lender")
shall not relieve any other Lender of any obligation hereunder to make a Loan on
such Funding Date, but no Lender shall be responsible for the failure of any
other Lender to make the Loan to be made by such other Lender on any Funding
Date.
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(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by any Borrower to the Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. The Agent may hold and, in its
discretion, re-lend to the Borrowers the amount of all such payments received or
retained by it for the account of such Defaulting Lender. Any amounts so re-lent
to the Borrowers shall bear interest at the rate applicable to Base Rate Loans
and for all other purposes of this Agreement shall be treated as if they were
Revolving Loans, provided, however, that for purposes of voting or consenting to
matters with respect to the Loan Documents and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a "Lender". Until a Defaulting
Lender cures its failure to fund its Pro Rata Share of any Borrowing (1) such
Defaulting Lender shall not be entitled to any portion of the Unused Line Fee
and (2) the Unused Line Fee shall accrue in favor of the Lenders which have
funded their respective Pro Rata Shares of such requested Borrowing, shall be
allocated among such performing Lenders ratably based upon their relative
Commitments. This section shall remain effective with respect to such Lender
until such time as the Defaulting Lender shall no longer be in default of any of
its obligations under this Agreement. The terms of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by any Borrower of its duties and obligations
hereunder.
(h) Making of Bank Loans. (i) In the event the Agent shall elect,
with the consent of the Bank, to have the terms of this Section 2.2(h) apply to
a requested Borrowing as described in Section 2.2(f), the Bank shall make a
Revolving Loan in the amount of such Borrowing (any such Revolving Loan made
solely by the Bank pursuant to this Section 2.2(h) being referred to as a "Bank
Loan" and such Revolving Loans being referred to collectively as "Bank Loans")
available to the Borrowers on the Funding Date applicable thereto by
transferring same day funds to an account of the Borrowers, designated in
writing by the Authorized Representative on behalf of the Borrowers and
acceptable to the Agent. Each Bank Loan is a Revolving Loan hereunder and shall
be subject to all the terms and conditions applicable to other Revolving Loans
except that all payments thereon shall be payable to the Bank solely for its own
account (and for the account of the holder of any participation interest with
respect to such Revolving Loan). The Agent shall not request the Bank to make
any Bank Loan if the Agent shall have received written notice from any Lender
that one or more of the applicable conditions precedent set forth in Article 10
will not be satisfied on the requested Funding Date for the applicable
Borrowing. The Bank shall not otherwise be required to determine whether the
applicable conditions precedent set forth in Article 10 have been satisfied or
the requested Borrowing would exceed the Combined Availability on the Funding
Date applicable thereto prior to making, in its sole discretion, any Bank Loan.
(ii) The Bank Loans shall be repayable as provided herein
(including without limitation Section 2.2(j)) and secured by the Collateral,
shall constitute Revolving Loans and Obligations hereunder, and shall bear
interest at the rate applicable to Base Rate Loans from time to time.
39
(i) Agent Advances. (i) Subject to the limitations set forth
in the provisos contained in this Section 2.2(i), the Agent is hereby authorized
by the Borrowers and the Lenders, from time to time in the Agent's sole
discretion, (1) after the occurrence of a Default or an Event of Default, or (2)
at any time that any of the other applicable conditions precedent set forth in
Article 10 have not been satisfied, to make Revolving Loans to the Borrowers on
behalf of the Lenders which the Agent, in its reasonable business judgment,
deems necessary or desirable (A) to preserve or protect the Collateral, or any
portion thereof, (B) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (C) to pay any other amount
chargeable to any Borrower pursuant to the terms of this Agreement, including,
without limitation, costs, fees and expenses as described in Section 15.7 (any
of the advances described in this Section 2.2(i) being hereinafter referred to
as "Agent Advances"); provided, that (w) the Required Lenders may at any time
revoke the Agent's authorization contained in this Section 2.2(i) to make Agent
Advances, any such revocation to be in writing and to become effective
prospectively upon the Agent's receipt thereof, (x) the Agent shall not make an
Agent Advance which would cause the Aggregate Revolver Outstandings to exceed
Combined Availability, (y) the Agent shall not make an Agent Advance which,
together with all other Agent Advances then outstanding, would aggregate an
amount in excess of 5% of the Combined Availability (without giving effect to
the Maximum Revolver Amount) at the time such Agent Advance is made and (z) no
Agent Advance shall be made if at such time an Agent Advance has been
outstanding for more than 45 consecutive days.
(ii) The Agent Advances shall be repayable on demand and
secured by the Collateral, shall constitute Revolving Loans and Obligations
hereunder, and shall bear interest at the rate applicable to the Base Rate Loans
from time to time.
(j) Settlement. It is agreed that each Lender's funded
portion of the Revolving Loan is intended by the Lenders to be equal at all
times to such Lender's Pro Rata Share of the outstanding Revolving Loans.
Notwithstanding such agreement, the Agent, the Bank, and the other Lenders agree
(which agreement shall not be for the benefit of or enforceable by any Borrower)
that in order to facilitate the administration of this Agreement and the other
Loan Documents, settlement among them as to the Revolving Loans, the Bank Loans
and the Agent Advances shall take place on a periodic basis in accordance with
the following provisions:
(i) The Agent shall request settlement ("Settlement")
with the Lenders on a weekly basis, or on a more frequent basis if so
determined by the Agent, (1) on behalf of the Bank, with respect to
each outstanding Bank Loan, (2) for itself, with respect to each Agent
Advance, and (3) with respect to collections received, in each case, by
notifying the Lenders of such requested Settlement by telecopy,
telephone or other similar form of transmission, of such requested
Settlement, no later than 1:00 p.m. (New York City time) on the date of
such requested Settlement (the "Settlement Date"). Each Lender (other
than the Bank, in the case of Bank Loans) shall make the amount of such
Lender's Pro Rata Share of the outstanding principal amount of Bank
Loans and Agent Advances with respect to which Settlement is requested
available to the Agent, for itself or for the account of the Bank, in
same day funds, to such account of the Agent as the Agent may
designate, not later than 3:00 p.m. (New York City time), on the
Settlement
40
Date applicable thereto. Settlement may start during the continuation
of a Default or an Event of Default and whether or not the applicable
conditions precedent set forth in Article 10 have then been satisfied.
Such amounts made available to the Agent shall be applied against the
amounts of the applicable Bank Loan or Agent Advance and, together with
the portion of such Bank Loan or Agent Advance representing the Bank's
Pro Rata Share thereof, shall constitute Revolving Loans of such
Lenders. If any such amount is not made available to the Agent by any
Lender on the Settlement Date applicable thereto, the Agent shall be
entitled to recover such amount on demand from such Lender together
with interest thereon at the Federal Funds Rate for the first three
days from and after the Settlement Date and thereafter at the Interest
Rate then applicable to the Revolving Loans (A) on behalf of the Bank,
with respect to each outstanding Bank Loan, and (B) for itself, with
respect to each Agent Advance.
(ii) Notwithstanding the foregoing, not more than one
Business Day after demand is made by the Agent (whether before or after
the occurrence of a Default or an Event of Default and regardless of
whether the Agent has requested a Settlement with respect to a Bank
Loan or Agent Advance), each other Lender shall irrevocably and
unconditionally purchase and receive from the Bank or the Agent, as
applicable, without recourse or warranty, an undivided interest and
participation in such Bank Loan or Agent Advance to the extent of such
Lender's Pro Rata Share thereof by paying to the Agent, in same day
funds, an amount equal to such Lender's Pro Rata Share of such Bank
Loan or Agent Advance. If such amount is not in fact made available to
the Agent by any Lender, the Agent shall be entitled to recover such
amount on demand from such Lender together with interest thereon at the
Federal Funds Rate for the first three days from and after such demand
and thereafter at the Interest Rate then applicable to the Revolving
Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Bank Loan or
Agent Advance pursuant to subsection (ii) above, the Agent shall
promptly distribute to such Lender at such address as such Lender may
request in writing, such Lender's Pro Rata Share of all payments of
principal and interest and all proceeds of Collateral received by the
Agent in respect of such Bank Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the extent no
Agent Advances or Bank Loans are outstanding, may pay over to the Bank
any payments received by Agent, which in accordance with the terms of
this Agreement would be applied to the reduction of the Revolving Loans
for application to the Bank's other outstanding Revolving Loans. If, as
of any Settlement Date, collections received since the then immediately
preceding Settlement Date have been applied to the Bank's other
outstanding Revolving Loans other than to Bank Loans or Agent Advances,
as provided for in the previous sentence, the Bank shall pay to the
Agent for the accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each Lender shall,
upon receipt of such amount, have, as of such Settlement Date, its Pro
Rata Share of the Revolving Loans. During the period between Settlement
Dates, the Bank with respect to Bank Loans, the Agent with respect to
Agent Advances,
41
and each Lender with respect to the Revolving Loans other than Bank
Loans and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the actual
average daily amount of funds employed by the Bank, the Agent and the
other Lenders.
(k) Notation. The Agent shall record on its books the principal
amount of the Revolving Loans owing to each Lender, including the Bank Loans
owing to the Bank, and the Agent Advances owing to the Agent, from time to time.
In addition, each Lender is authorized, at such Lender's option, to note the
date and amount of each payment or prepayment of principal of such Lender's
Revolving Loans in its books and records, including computer records, such books
and records constituting rebuttably presumptive evidence, absent manifest error,
of the accuracy of the information contained therein.
(l) Lenders' Failure to Perform. All Loans (other than Bank Loans
and Agent Advances) shall be made by the Lenders simultaneously and in
accordance with their Pro Rata Shares. It is understood that (a) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Loans hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligation to make any Loans hereunder, (b) no failure by any Lender to perform
its obligation to make any Loans hereunder shall excuse any other Lender from
its obligation to make any Loans hereunder, and (c) the obligations of each
Lender hereunder shall be several, not joint and several.
2.3 Letters of Credit.
(a) Agreement to Cause Issuance. Subject to the terms and
conditions of this Agreement and subject to the Interim Bankruptcy Court Order
and the Final Bankruptcy Court Order, as the case may be, and in reliance upon
the representations and warranties of the Borrowers herein set forth, the Agent
agrees to (1) cause the Letter of Credit Issuer to issue for the joint and
several account of the Borrowers and/or (2) to provide credit support or other
enhancement to Letter of Credit Issuer acceptable to the Agent, which issue
Letters of Credit for the joint and several account of the Borrowers (any such
credit support or enhancement being herein referred to as a "Credit Support") in
accordance with this Section 2.3 from time to time during the term of this
Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have any
obligation to cause to be issued any Letter of Credit or to provide Credit
Support for any Letter of Credit at any time if: (1) the maximum undrawn amount
of the requested Letter of Credit is greater than the Unused Letter of Credit
Subfacility at such time; (2) the maximum undrawn amount of the requested Letter
of Credit and all commissions, fees, and charges due from the Borrowers in
connection with the opening thereof exceed the Combined Availability at such
time; (3) in the case of a standby Letter of Credit, the maximum undrawn amount
of the requested standby Letter of Credit, together will all other standby
Letters of Credit issued for the account of one or more of the Borrowers,
exceeds $20,000,000; or (4) such Letter of Credit has an expiration date later
than 30 days prior to the Stated Termination Date or more than
42
12 months from the date of issuance for standby letters of credit and 180 days
for documentary letters of credit. With respect to any Letter of Credit which
contains any "evergreen" or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless any such Lender
shall have provided to the Agent, written notice that it declines to consent to
any such extension or renewal at least thirty days prior to the date on which
the Letter of Credit Issuer is entitled to decline to extend or renew the Letter
of Credit. If all of the requirements of this Section 2.3 are met and no Default
or Event of Default has occurred and is continuing, no Lender shall decline to
consent to any such extension or renewal.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 10 and
subject to the Interim Bankruptcy Court Order and the Final Bankruptcy Court
Order, as the case may be, the obligation of the Agent to cause to be issued any
Letter of Credit or to provide Credit Support for any Letter of Credit is
subject to the following conditions precedent having been satisfied in a manner
satisfactory to the Agent:
(1) The Borrowers shall have delivered to the Letter of
Credit Issuer, at such times and in such manner as such Letter of Credit
Issuer may prescribe, an application in form and substance reasonably
satisfactory to such Letter of Credit Issuer and the Agent for the
issuance of the Letter of Credit and such other documents as may be
required pursuant to the terms thereof, and the form and terms of the
proposed Letter of Credit shall be reasonably satisfactory to the Agent
and such Letter of Credit Issuer;
(2) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin
or restrain money center banks generally from issuing letters of credit
of the type and in the amount of the proposed Letter of Credit, and no
law, rule or regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed Letter of Credit
Issuer refrain from, the issuance of letters of credit generally or the
issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(1) Request for Issuance. The Authorized Representative on
behalf of the Borrowers shall give the Agent three Business Days' prior written
notice of the Borrowers' request for the issuance of a Letter of Credit. Such
notice shall be irrevocable and shall specify the original face amount of the
Letter of Credit requested, that such Letter of Credit is for the joint and
several account of the Borrowers, the effective date (which date shall be a
Business Day) of issuance of such requested Letter of Credit, whether such
Letter of Credit may be drawn in a single or in partial draws, the date on which
such requested Letter of Credit is to expire (which date shall be a Business
Day), the purpose for which such Letter of Credit is to be issued, and the
beneficiary of the requested Letter of Credit. The Authorized Representative on
behalf of the Borrowers shall attach to such notice the proposed form of the
Letter of Credit.
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(2) Responsibilities of the Agent; Issuance. The Agent
shall determine, as of the Business Day immediately preceding the requested
effective date of issuance of the Letter of Credit set forth in the notice from
the Authorized Representative on behalf of the Borrowers pursuant to Section
2.3(d)(1), (i) the amount of the applicable Unused Letter of Credit Subfacility
and (ii) the Combined Availability as of such date. If (i) the undrawn amount of
the requested Letter of Credit is not greater than the applicable Unused Letter
of Credit Subfacility and (ii) the issuance of such requested Letter of Credit
and all commissions, fees, and charges due from the Borrowers in connection with
the opening thereof would not exceed the Combined Availability, the Agent shall,
subject to the terms and conditions hereof, cause the Letter of Credit Issuer to
issue the requested Letter of Credit on such requested effective date of
issuance so long as the other conditions here are met.
(3) No Extensions or Amendment. The Agent shall not be
obligated to cause the Letter of Credit Issuer to extend or amend any Letter of
Credit issued pursuant hereto unless the requirements of this Section 2.3(d) are
met as though a new Letter of Credit were being requested and issued.
(4) Notice of Issuance. On each Settlement Date, the Agent
shall give notice to each Lender of the issuance of all Letters of Credit issued
since the last Settlement Date.
(e) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. Each Borrower
agrees jointly and severally to reimburse (i) the Letter of Credit Issuer for
any draw under any Letter of Credit and (ii) the Agent for the account of the
Lenders upon any payment pursuant to any Credit Support immediately when due,
and to pay the Letter of Credit Issuer the amount of all other obligations and
other amounts payable to such issuer under or in connection with any Letter of
Credit immediately when due, irrespective of any claim, setoff, defense or other
right which such Borrower may have at any time against such issuer or any other
Person. Each drawing under any Letter of Credit shall constitute a request by
the Borrower to the Agent for a Borrowing of a Base Rate Loan in the amount of
such drawing. The Funding Date with respect to such borrowing shall be the date
of such drawing.
(f) Participations.
(1) Purchase of Participations. Immediately upon issuance
of any Letter of Credit in accordance with Section 2.3(d), each Lender shall be
deemed to have irrevocably and unconditionally purchased and received without
recourse or warranty, an undivided interest and participation equal to such
Lender's Pro Rata Share of the face amount of such Letter of Credit or the
Credit Support provided through the Agent to the Letter of Credit Issuer, if not
the Bank, in connection with the issuance of such Letter of Credit (including,
without limitation, all obligations of the Borrowers with respect thereto, and
any security therefor or guaranty pertaining thereto).
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(2) Sharing of Reimbursement Obligation Payments. Whenever
the Agent receives a payment from any Borrower on account of reimbursement
obligations in respect of a Letter of Credit or Credit Support as to which the
Agent has previously received for the account of the Letter of Credit Issuer
thereof payment from a Lender pursuant to Section 2.3(e)(2), the Agent shall
promptly pay to such Lender such Lender's Pro Rata Share of such payment from
such Borrower in Dollars. Each such payment shall be made by the Agent on the
next Settlement Date.
(3) Documentation. Upon the request of any Lender, the
Agent shall furnish to such Lender copies of any Letter of Credit, Credit
Support for any Letter of Credit, reimbursement agreements executed in
connection therewith, applications for any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.
(4) Obligations Irrevocable. The obligations of each
Lender to make payments to the Agent with respect to any Letter of Credit or
with respect to their participation therein or with respect to any Credit
Support for any Letter of Credit or with respect to the Revolving Loans made as
a result of a drawing under a Letter of Credit and the obligations of the
Borrowers to make payments to the Agent, for the account of the Lenders, shall
be irrevocable and shall not be subject to any qualification or exception
whatsoever, including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which any Borrower may have at any time against a beneficiary named
in a Letter of Credit or any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), any Lender, the
Agent, the issuer of such Letter of Credit, or any other Person, whether
in connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transactions between any Borrower or any other Person and the
beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(v) the occurrence of any Default or Event of Default; or
(vii) the failure of any Borrower to satisfy the applicable
conditions precedent set forth in Article 10.
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(g) Recovery or Avoidance of Payments; Refund of Payments in
Error. In the event any payment by or on behalf of any Loan Party received by
the Agent with respect to any Letter of Credit or Credit Support provided for
any Letter of Credit (or any guaranty by any Loan Party or reimbursement
obligation of any Borrower relating thereto) and distributed by the Agent to the
Lenders on account of their respective participations therein is thereafter set
aside, avoided or recovered from the Agent in connection with any receivership,
liquidation or bankruptcy proceeding, the Lenders shall, upon demand by the
Agent, pay to the Agent their respective Pro Rata Shares of such amount set
aside, avoided or recovered, together with interest at the rate required to be
paid by the Agent upon the amount required to be repaid by it. Unless the Agent
receives notice from the Authorized Representative prior to the date on which
any payment is due to the Lenders that the Borrowers will not make such payment
in full as and when required, the Agent may assume that the Borrowers have made
such payment in full to the Agent on such date in immediately available funds
and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrowers have not made
such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.
(h) Compensation for Letters of Credit.
(1) Letter of Credit Fee. Each Borrower agrees, jointly and
severally, to pay to the Agent with respect to each Letter of Credit, for the
account of the Lenders, the Letter of Credit Fee specified in, and in accordance
with the terms of, Section 3.5.
(2) Issuer Fees and Charges. Each Borrower shall jointly
and severally pay to the issuer of any Letter of Credit, or to the Agent, for
the account of the issuer of any such Letter of Credit, solely for such issuer's
account, such fees and other charges as are charged by such issuer for letters
of credit issued by it, including, without limitation, its standard fees for
issuing, administering, amending, renewing, paying and canceling letters of
credit and all other fees associated with issuing or servicing letters of
credit, as and when assessed.
(i) Indemnification by Lenders. To the extent not reimbursed by
the Borrowers and without limiting the obligations of the Borrowers hereunder,
the Lenders agree to indemnify the issuer of any Letter of Credit ratably in
accordance with their respective Pro Rata Shares, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees) or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against such issuer
in any way relating to or arising out of any Letter of Credit issued by such
issuer or the transactions contemplated thereby or any action taken or omitted
by such issuer under any Letter of Credit issued by such issuer or any Loan
Document in connection therewith; provided that no Lender shall be liable for
any of the foregoing to the extent it arises from the gross negligence or
willful misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse the issuer of any Letter of Credit
promptly upon demand for its Pro Rata Share of any costs or expenses payable by
a Borrower to such issuer, to the extent that such
46
issuer is not promptly reimbursed for such costs and expenses by the Borrowers.
The agreement contained in this Section shall survive payment in full of all
other Obligations.
(j) Indemnification; Exoneration; Power of Attorney.
(1) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 2.3, each Borrower hereby agrees, jointly and
severally, to protect, indemnify, pay and save the Lenders and the Agent
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees) which
any Lender or the Agent may incur or be subject to as a consequence, direct or
indirect, of the issuance of any Letter of Credit or the provision of any credit
support or enhancement in connection therewith. The agreement in this Section
2.3(j)(1) shall survive payments of all Obligations.
(2) Assumption of Risk by the Borrowers. As among the
Borrowers, the Lenders, and the Agent, each Borrower assumes all risks of the
acts and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Lenders and the Agent shall not be responsible
for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any Person in connection with the application for
and issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Letter of Credit to comply
duly with conditions required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; (H) any consequences arising from causes
beyond the control of the Lenders or the Agent, including, without limitation,
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto Governmental Authority; or (I) any Letter of Credit issuer's
honor of a draw for which the draw or any certificate fails to comply in any
respect with the terms of the Letter of Credit. None of the foregoing shall
affect, impair or prevent the vesting of any rights or powers of the Agent or
any Lender under this Section 2.3(j).
(3) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action taken or
omitted by the Agent or any Lender under or in connection with any of the
Letters of Credit or any related certificates shall not put the Agent or any
Lender under any resulting liability to any Borrower or relieve any Borrower of
any of its obligations hereunder to any such Person.
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(4) Rights Against Letter of Credit Issuer. Nothing
contained in this Agreement is intended to limit the Borrowers' rights, if any,
with respect to the issuer of a Letter of Credit which arise as a result of the
letter of credit application and related documents executed by and between a
Borrower and such issuer.
(5) Power of Attorney. In connection with all Inventory
financed by Letters of Credit, each Borrower hereby appoints the Agent, or the
Agent's designee, as its attorney, with full power and authority: (a) to sign
and/or endorse such Borrower's name upon any warehouse or other receipts; (b) to
sign such Borrower's name on bills of lading and other negotiable and
non-negotiable documents; (c) to clear Inventory through customs in the Agent's
or such Borrower's name, and to sign and deliver to customs officials powers of
attorney in such Borrower's name for such purpose; (d) to complete in such
Borrower's or the Agent's name, any order, sale, or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds thereof;
and (e) to do such other acts and things as are necessary in order to enable the
Agent to obtain possession of the Inventory and to obtain payment of the
Obligations. Neither the Agent nor its designee, as any Borrower's attorney,
will be liable for any acts or omissions, nor for any error of judgement or
mistakes of fact or law. This power, being coupled with an interest, is
irrevocable until all Obligations have been paid and satisfied.
(6) Account Party. Each Borrower hereby authorizes and
directs any issuer of a Letter of Credit to name such Borrower as an "Account
Party" therein and to deliver to the Agent, with notice thereof to the
Authorized Representative on behalf of the Borrowers, all instruments, documents
and other writings and property received by the issuer pursuant to the Letter of
Credit, and to accept and rely upon the Agent's instructions and agreements with
respect to all matters arising in connection with the Letter of Credit or the
application therefor.
(7) Control of Inventory. In connection with all Inventory
financed by Letters of Credit, each Borrower will, at the Agent's request during
the continuance of an Event of Default, instruct all suppliers, carriers,
forwarders, warehouses or others receiving or holding Inventory, documents or
instruments in which the Agent holds a security interest to deliver them to the
Agent and/or subject to the Agent's order, and if they shall come into such
Borrower's possession, to deliver them, upon request, to the Agent in their
original form. Each Borrower shall also, at the Agent's request, designate the
Agent as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
(k) Cash Collateral; Supporting Letter of Credit. If,
notwithstanding the provisions of Section 2.3(b) and Section 12.1, any Letter of
Credit or Credit Support is outstanding upon the termination of this Agreement,
then upon such termination, the Borrowers shall deposit with the Agent, for the
ratable benefit of the Agent and the Lenders, with respect to each Letter of
Credit or Credit Support then outstanding, cash in the amount of 105% of the
face amount of such Letter of Credit or a standby letter of credit (a
"Supporting Letter of Credit") in form and substance satisfactory to the Agent,
issued by an issuer reasonably satisfactory to the Agent in an amount equal to
the greatest amount for which such Letter of Credit or such Credit Support may
be drawn plus any fees and expenses associated with such Letter of Credit or
such Credit Support, under which Supporting Letter of Credit the Agent is
entitled to draw amounts
48
necessary to reimburse the Agent and the applicable Lenders for payments to be
made by the Agent and such Lenders under such Letter of Credit or Credit Support
and any fees and expenses associated with such Letter of Credit or Credit
Support. Such Supporting Letter of Credit shall be held by the Agent, for the
ratable benefit of the Agent and the applicable Lenders, as security for, and to
provide for the payment of, the aggregate undrawn amount of such Letters of
Credit or such Credit Support remaining outstanding. Such deposit of cash or
Supporting Letter of Credit, as applicable, shall be held by the Agent, for the
ratable benefit of the Agent and the Lenders, as security for, and to provide
for the payment of, the aggregate undrawn amount of such Letters of Credit or
Credit Support remaining outstanding until such time as such Letters of Credit
shall have been terminated or canceled and all of the Obligations owing from the
Borrowers in respect of the Letters of Credit and/or Credit Support have been
paid in full.
2.4 Bank Products. The Authorized Representative may request on behalf
of any of the Borrowers and the Agent (in the case of the Bank and its
Affiliates) or another Lender (in the case of such other Lender and its
Affiliates) may, in its sole and absolute discretion, arrange for the Borrowers
to obtain from the Bank or any of its Affiliates (in the case of the Agent) or
such other Lender or its Affiliates (in the case of such other Lender) Bank
Products although such Borrower is not required to do so. If Bank Products are
provided by an Affiliate of the Bank or another Lender, the Borrowers jointly
and severally agree to indemnify and hold the Agent, the Bank and the other
Lenders harmless from any and all costs and obligations now or hereafter
incurred by the Agent, the Bank or any other Lender which arise from any
indemnity given by the Agent or such other Lender, as the case may be, to its
Affiliates related to such Bank Products; provided, however, (x) nothing
contained herein is intended to limit the Borrowers' rights, with respect to the
Bank, another Lender or their respective Affiliates, if any, which arise as a
result of the execution of documents by and between any Borrower and the Bank or
another Lender, as applicable, which relate to Bank Products and (y) Bank
Products consisting of cash management services, including controlled
disbursement services, and ACH Transactions may only be provided to a Borrower
by the Bank or an Affiliate of the Bank or another bank acceptable to the Agent.
The agreement contained in this Section shall survive termination of this
Agreement. Each Borrower acknowledges and agrees that the obtaining of Bank
Products from the Bank, another Lender or any of their respective Affiliates (a)
is in the sole and absolute discretion of the Bank, such other Lender or the
applicable Affiliate of the Bank or such other Lender, as the case may be, and
(b) is subject to all rules and regulations of the Bank, such other Lender or
the applicable Affiliate of the Bank or such other Lender, as the case may be.
The agreement contained in this Section shall survive termination of this
Agreement. Each Borrower acknowledges and agrees that the obtaining of Bank
Products from the Bank or the Bank's Affiliates (a) is in the sole and absolute
discretion of the Bank or the Bank's Affiliates, and (b) is subject to all rules
and regulations of the Bank or the Bank's Affiliates.
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ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made
until paid in full in cash at a rate determined by reference to the Base Rate or
the LIBOR Rate and Sections 3.1(a)(i) or (ii), as applicable, but not to exceed
the Maximum Rate described in Section 3.3. Subject to the provisions of Section
3.2, any of the Loans may be converted into, or continued as, Base Rate Loans or
LIBOR Rate Loans in the manner provided in Section 3.2. If at any time Loans are
outstanding with respect to which notice has not been delivered to the Agent in
accordance with the terms of this Agreement specifying the basis for determining
the interest rate applicable thereto, then those Loans shall be Base Rate Loans
and shall bear interest at a rate determined by reference to the Base Rate until
notice to the contrary has been given to the Agent in accordance with this
Agreement and such notice has become effective. Except as otherwise provided
herein, the outstanding Obligations shall bear interest as follows:
(i) For all Base Rate Loans and other Obligations (other
than LIBOR Revolving Loans) at a fluctuating per annum rate equal to the
Base Rate plus the Applicable Margin; and
(ii) For all LIBOR Revolving Loans at a per annum rate equal
to the LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate described
in (i) above as of the effective date of such change. All interest charges shall
be computed on the basis of a year of 360 days and actual days elapsed (which
results in more interest being paid than if computed on the basis of a 365-day
year). The Borrowers, jointly and severally, shall pay to the Agent, for the
ratable benefit of the Lenders (x) interest accrued on all Base Rate Loans in
arrears on the first day of each month hereafter and on the Termination Date and
(ii) interest on all LIBOR Revolving Loans in arrears on each LIBOR Interest
Payment Date.
(b) Default Rate. If any Default or Event of Default occurs and is
continuing and the Agent or the Majority Lenders in their discretion so elect,
then, while any such Default or Event of Default is continuing, all of the
Obligations shall bear interest at the Default Rate applicable thereto.
3.2 Conversion and Continuation Elections. (a) The Authorized
Representative on behalf of the Borrowers may, upon irrevocable written notice
to the Agent in accordance with Subsection 3.2(b):
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(i) elect, as of any Business Day, in the case of Base Rate
Loans to convert any such Loans (or any part thereof in an amount not
less than $1,000,000, or that is in an integral multiple of $1,000,000 in
excess thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Rate Loans having Interest Periods expiring
on such day (or any part thereof in an amount not less than $1,000,000,
or that is in an integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, provided further that if the notice
shall fail to specify the duration of the Interest Period, such Interest Period
shall be one month and on and after such date the right of the Borrowers to
continue such Loans as, and convert such Loans into, LIBOR Rate Loans, as the
case may be, shall terminate.
(b) The Authorized Representative on behalf of the Borrowers shall
deliver a Notice of Conversion/Continuation (substantially in the form of
Exhibit F or another form acceptable to the Agent) (each, a "Notice of
Conversion/Continuation") to be received by the Agent not later than 11:00 a.m.
(New York City time) at least three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as LIBOR Rate Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
(iii) the type of Loans resulting from the proposed conversion
or continuation; and
(iv) the duration of the requested Interest Period, provided,
however, the Borrower may not select an Interest Period that ends after
the Stated Termination Date.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Rate Loans, the Borrowers have failed to timely select a new Interest
Period to be applicable to LIBOR Rate Loans or if any Event of Default then
exists, the Borrowers shall be deemed (without the giving of a Notice of
Conversion/Continuation) to have elected to convert such LIBOR Rate Loans into
Base Rate Loans effective as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt of a
Notice of Conversion/Continuation. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.
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(e) During the existence of an Event of Default, the Borrowers may
not elect to have a Loan converted into or continued as a LIBOR Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, there may not be more than eight (8) different Interest Periods in effect
with respect to the Borrowers in the aggregate.
3.3 Maximum Interest Rate. In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by the Lenders under
applicable law for loans of the type provided for hereunder (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations, the
total amount of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would, but for this Section 3.3,
have been paid or accrued if the interest rates otherwise set forth in this
Agreement had at all times been in effect, then the Borrowers shall, to the
extent permitted by applicable law, pay the Agent, for the account of the
Lenders, an amount equal to the difference between (a) the lesser of (i) the
amount of interest which would have been charged if the Maximum Rate had, at all
times, been in effect or (ii) the amount of interest which would have accrued
had the interest rates otherwise set forth in this Agreement, at all times, been
in effect and (b) the amount of interest actually paid or accrued under this
Agreement. In the event that a court determines that the Agent and/or any Lender
has received interest and other charges hereunder in excess of the Maximum Rate,
such excess shall be deemed received on account of, and shall automatically be
applied to reduce, the Obligations other than interest, in the inverse order of
maturity, and if there are no Obligations outstanding, the Agent and/or such
Lender shall refund to the Authorized Representative on behalf of the Borrowers
such excess.
3.4 Unused Line Fee. Until the Obligations have been paid in full and
this Agreement is terminated, the Borrowers agree, jointly and severally, to
pay, on the first day of each month and on the Termination Date, to the Agent,
for the ratable account of the Lenders, an unused line fee (the "Unused Line
Fee") equal to 0.5% per annum on the amount by which the average daily Maximum
Revolver Amount exceeded the sum of the average daily outstanding amount of
Revolving Loans, the average daily aggregate undrawn face amount of all
outstanding Letters of Credit plus the average daily aggregate amount of any
unpaid reimbursement Obligations in respect of Letters of Credit, during the
immediately preceding month or shorter period if calculated on the Termination
Date. The Unused Line Fee shall be computed on the basis of a 360-day year for
the actual number of days elapsed. All payments received by the Agent on account
of Accounts or as proceeds of other Collateral shall be deemed to be credited to
the Borrowers' Loan Account immediately upon receipt for purposes of calculating
the unused line fee pursuant to this Section 3.4.
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3.5 Letter of Credit Fee. The Borrowers agree, jointly and severally, to
pay to the Agent, for the ratable account of the Lenders, for each Letter of
Credit, a fee (the "Letter of Credit Fee") equal to 3.0% per annum of the
average daily outstanding undrawn face amount of such Letter of Credit, plus all
out-of-pocket costs, fees and expenses incurred by the Agent in connection with
the application for, issuance of, or amendment to such Letter of Credit, which
costs, fees and expenses will also include a "fronting fee" of 25 basis points
times the face amount of such Letter of Credit at the time of issuance. The
Letter of Credit Fee shall be payable by the Borrowers monthly in arrears on the
first day of each month following any month in which a Letter of Credit was
issued and/or in which a Letter of Credit remains outstanding. The Letter of
Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed. If any Event of Default occurs and is continuing, then
the Letter of Credit Fee shall be 5.0% per annum (plus bank charges) and shall
be payable on demand.
3.6 Fee Letters. The Borrowers jointly and severally agree to pay the
Agent all fees set forth in the Fee Letter.
3.7 Payment of Fees. The Borrowers jointly and severally agree that all
fees described in this Article 3, including without limitation the fees payable
pursuant to the terms of the Fee Letter, shall be fully earned when accrued and
non-refundable for any reason whatsoever and shall be due and payable on the due
dates set forth in this Agreement.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrowers shall repay the outstanding principal
balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on
the Termination Date. The Borrowers may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement; provided, however, that with
respect to any LIBOR Revolving Loans prepaid by any Borrower prior to the
expiration date of the Interest Period applicable thereto, the Borrowers promise
to pay, jointly and severally, to the Agent for account of the Lenders the
amounts described in Section 5.4. In addition, and without limiting the
generality of the foregoing, upon demand (within three days of demand if as a
result of the imposition of a new Reserve, increase in a Reserve or a change in
eligibility criteria) the Borrowers promise to pay to the Agent, for the account
of the Lenders, the amount, without duplication, by which the Combined
Availability is less than zero.
4.2 Termination or Reduction of Facility. (a) The Borrowers may jointly
(but not individually) terminate this Agreement upon at least 10 Business Days'
written notice from the Authorized Representative to the Agent and the Lenders,
upon (a) the payment in full of all outstanding Revolving Loans, together with
accrued interest thereon, and the cancellation and return of all outstanding
Letters of Credit or the provision of collateral support for such Letters of
Credit as provided in Section 2.3(g), (b) the payment in full in cash of all
other Obligations together with accrued interest thereon, and (c) with respect
to any LIBOR Rate Loans prepaid in
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connection with such termination prior to the expiration date of the Interest
Period applicable thereto, the payment of the amounts described in Section 5.4.
(b) The Borrowers shall have the right, upon not less than three
(3) Business Days' written notice from the Authorized Representative to the
Agent to, from time to time on or after the Final Bankruptcy Court Order Date,
permanently reduce the Maximum Revolver Amount; provided, that (i) any such
reduction in the Maximum Revolver Amount shall result in a Dollar-for-Dollar
decrease in the aggregate amount of the Commitments then in effect, (ii) the
aggregate amount of reductions of the Maximum Revolver Amount pursuant to this
Section 4.2(b) shall not exceed $150,000,000 and (iii) no such reduction of the
Maximum Revolver Amount shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Loans on the effective date thereof,
Combined Availability would be less than zero. Any such reduction shall be in an
amount equal to $25,000,000 or a multiple of $5,000,000 in excess thereof, and
shall reduce the aggregate Commitments then in effect pro rata among the
Lenders. Prior to the Consumer Credit Card Account Line Expiration Date, the
aggregate amount of reductions under this Section 4.2(b) shall not exceed
$50,000,000. In no event shall the Borrowers be permitted to reduce the Maximum
Revolver Amount pursuant to this Section 4.2(b) to an amount less than
$250,000,000; provided that the Borrowers may terminate this Agreement pursuant
to Section 4.2(a).
4.3 Payments by the Loan Parties. (a) All payments to be made by any
Loan Party shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by any Loan Party shall be
made to the Agent for the account of the Lenders at the Agent's address set
forth in Section 15.8, and shall be made in Dollars and in immediately available
funds, no later than 2:00 p.m. (New York City time) on the date specified
herein. Any payment received by the Agent later than 2:00 p.m. (New York City
time) shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrowers prior to
the date on which any payment is due to the Lenders that the Borrowers will not
make such payment in full as and when required, the Agent may assume that the
Borrowers have made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrowers have not made such payment in full to the Agent, each Lender shall
repay to the Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
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4.4 Payments as Revolving Loans. At the election of the Agent, all
payments of principal, interest, reimbursement obligations in connection with
Letters of Credit, fees, premiums and other sums payable hereunder, including
all reimbursement for expenses pursuant to Section 15.7, may be paid from the
proceeds of Revolving Loans made hereunder, whether made following a request by
the Borrowers pursuant to Section 2.2 or a deemed request as provided in this
Section 4.4. Each Borrower hereby irrevocably authorizes the Agent to charge the
Loan Account for the purpose of paying all amounts due and payable hereunder,
and agrees that all such amounts charged shall constitute Revolving Loans
(including Bank Loans and Agent Advances) and that all such Revolving Loans so
made shall be deemed to have been requested by the Borrowers pursuant to Section
2.2. With respect to reimbursement of expenses for which the Borrowers are
obligated hereunder, the Agent will not charge the Loan Account of the Borrowers
prior to giving the Borrowers at least two Business Days notice of each such
reimbursable expense and, if the invoice for such reimbursable expense provides
for a due date, then the Agent will not charge the Loan Account prior to the due
date thereof.
4.5 Apportionment and Application and Reversal of Payments. Principal
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Loans to which such payments relate held
by each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders. All payments shall be remitted to the Agent and all
such payments not relating to principal or interest of specific Loans, or not
constituting payment of specific fees, and all proceeds of Accounts or other
Collateral received by the Agent, shall be applied, ratably, subject to the
provisions of this Agreement, first, to pay any fees, indemnities or expense
reimbursements relating to Bank Products of the type specified in clauses (ii)
and (iii) of the definition thereof then due to any Lender or any of its
Affiliates from any of the Borrowers (but only if no Event of Default is
continuing at such time; it being agreed that if an Event of Default is
continuing, clause first shall not be applicable); second, to pay any fees or
expense reimbursements then due to the Lenders from any of the Borrowers; third,
to pay interest due in respect of all Revolving Loans, including Bank Loans and
Agent Advances; fourth, to pay or prepay principal of Bank Loans and Agent
Advances; fifth, to pay or prepay principal of the Revolving Loans (other than
Bank Loans and Agent Advances) and unpaid reimbursement obligations in respect
of Letters of Credit; sixth, to pay an amount to Agent equal to all outstanding
Obligations (contingent or otherwise) with respect to Letters of Credit to be
held as cash collateral for such Obligations; seventh, to the payment of any
Obligations then due and owing of any Borrower in respect of Bank Products (to
the extent not paid pursuant to clause first above) and eighth, to the payment
of any other Obligation due to the Agent or any Lender by the Borrowers.
Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by the Borrowers, or unless an Event of Default is outstanding, neither
the Agent nor any Lender shall apply any payments which it receives to any LIBOR
Revolving Loan, except (a) on the expiration date of the Interest Period
applicable to any such LIBOR Revolving Loan or (b) in the event, and only to the
extent, that there are no outstanding Base Rate Loans and, in any event, the
Borrower shall pay LIBOR breakage losses in accordance with Section 5.4. The
Agent and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the
Obligations.
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4.6 Indemnity for Returned Payments. If, after receipt of any payment
of, or proceeds applied to the payment of, all or any part of the Obligations,
the Agent, any Lender, the Bank or any Affiliate of the Bank is for any reason
compelled to surrender such payment or proceeds to any Person, because such
payment or application of proceeds is invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds, or for any other reason, then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent or such Lender, and the Borrowers shall be liable,
jointly and severally, to pay to the Agent and the Lender, and hereby do
indemnify the Agent and the Lenders and hold the Agent and the Lenders harmless
for, the amount of such payment or proceeds surrendered. The provisions of this
Section 4.6 shall be and remain effective notwithstanding any contrary action
which may have been taken by the Agent or any Lender in reliance upon such
payment or application of proceeds, and any such contrary action so taken shall
be without prejudice to the Agent's and the Lenders' rights under this Agreement
and shall be deemed to have been conditioned upon such payment or application of
proceeds having become final and irrevocable. The provisions of this Section 4.6
shall survive the termination of this Agreement.
4.7 Agent's and Lenders' Books and Records; Monthly Statements. The
Agent shall record the principal amount of the Loans owing to each Lender, the
undrawn face amount of all outstanding Letters of Credit and the aggregate
amount of unpaid reimbursement obligations outstanding with respect to the
Letters of Credit from time to time on its books. In addition, each Lender may
note the date and amount of each payment or prepayment of principal of such
Lender's Loans in its books and records. Failure by Agent or any Lender to make
such notation shall not affect the obligations of the Borrowers with respect to
the Loans or the Letters of Credit. Each Borrower agrees that the Agent's and
each Lender's books and records showing the Obligations and the transactions
pursuant to this Agreement and the other Loan Documents shall be admissible in
any action or proceeding arising therefrom, and shall constitute rebuttably
presumptive proof thereof, irrespective of whether any Obligation is also
evidenced by a promissory note or other instrument. The Agent will provide to
the Authorized Representative on behalf of the Borrowers a monthly statement of
Loans, payments, and other transactions pursuant to this Agreement. Such
statement shall be deemed correct, accurate, and binding on the Borrowers and an
account stated (except for reversals and reapplications of payments made as
provided in Section 4.6 and corrections of errors discovered by the Agent),
unless the Borrowers notify the Agent in writing to the contrary within 30 days
after such statement is rendered. In the event a timely written notice of
objections is given by the Borrowers, only the items to which exception is
expressly made will be considered to be disputed by the Borrowers.
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ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes. (a) Except as provided in Section 5.1(c), any and all
payments by any Borrower to each Lender or the Agent under this Agreement and
any other Loan Document shall be made free and clear of, and without deduction
or withholding for any Taxes (excluding the following Taxes ("Excluded Taxes"):
(i) Taxes imposed on, or measured by, the recipient's overall net income or
overall gross income imposed by the jurisdiction under the laws of which such
recipient is incorporated or otherwise organized, in which such recipient is a
resident for income tax purposes, or in which such recipient's principal
executive office or lending office is located, in each case, including any
political subdivision thereof, (ii) branch profits taxes, franchise taxes, or
similar taxes imposed on the recipient, and (iii) any Taxes that would not have
been imposed but for the activities of the recipient in the jurisdiction
imposing such Tax other than the execution, delivery, performance, filing,
recording, and enforcement of, and the other activities contemplated in, this
Agreement and the other Loan Documents, and the recipient's participation in the
transactions contemplated by this Agreement and the other Loan Documents (all
Taxes other than Excluded Taxes, "Indemnified Taxes")). In addition, the
Borrowers shall, jointly and severally, pay all Other Taxes.
(b) Each Borrower agrees, jointly and severally, to indemnify and
hold harmless each Lender and the Agent for the full amount of Indemnified Taxes
or Other Taxes (including any Indemnified Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the Lender or the
Agent and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within 30 days after the date such
Lender or the Agent makes written demand therefor.
(c) If any Borrower shall be required by law to deduct or withhold
any Indemnified Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) such Lender or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) such Borrower shall make such deductions and
withholdings;
(iii) such Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
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(iv) such Borrower shall also pay to each Lender or the Agent
for the account of such Lender, at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary to
preserve the after-tax yield such Lender would have received if such
Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by any Borrower
of Indemnified Taxes or Other Taxes, such Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment reasonably satisfactory to the Agent.
(e) If any Borrower is required to pay additional amounts to any
Lender or the Agent pursuant to subsection (c) of this Section, then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its lending office so as to eliminate any such
additional payment by such Borrower which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.
(f) If any Borrower is required to pay any amounts pursuant to the
provisions of this Section 5.1, and if thereafter any Lender or the Agent (as
the case may be) shall receive or be granted a credit against or remission for
Indemnified Taxes or Other Taxes payable by such Lender or the Agent (as the
case may be) in respect of the amounts so paid by such Borrower, such Lender or
the Agent (as the case may be) shall to the extent that it can do so without
prejudice to the retention of the amount of such credit or remission, pay to
such Borrower 30 days after the date on which such Lender or the Agent
effectively obtains the benefit of such credit or remission an amount which it
reasonably determines to be equal to such credit or remission less any sum which
it is required by law to deduct therefrom. Such Lender or the Agent (as the case
may be) may, in its sole discretion, determine the order of utilization of all
charges, deductions, credits and expenses which reduce Taxes imposed on its net
income. Nothing in this Section 5.1(f) shall be construed as requiring any
Lender or the Agent (as the case may be) to conduct its business or to arrange
or alter in any respect its Tax or financial affairs so that it is entitled to
receive such credit or remission, other than performing any ministerial acts
necessary to be entitled to receive such credit or remission.
(g) In the event that any Lender or the Agent receives written
communication from any Tax authority with respect to an assessment or proposed
assessment of any Indemnified Taxes or Other Taxes, such Lender or the Agent (as
the case may be) shall promptly notify the Borrowers in writing and provide a
copy of such communication to the Borrowers. In the event that an administrative
or judicial proceeding is commenced involving any Lender or the Agent which, if
determined adversely to it, would result in the payment of Indemnified Taxes or
Other Taxes, such Lender or the Agent (as the case may be) shall promptly notify
the Borrowers and shall permit the Borrowers to consult with such Lender or
Agent regarding such proceeding and the preparation of submissions in
connections with such proceeding; provided, however, that in the event that such
Lender or the Agent (as the case may be) fails to comply with this provision,
with respect to any communication, or administrative or judicial proceeding, the
Borrowers shall continue to have liability to indemnify such Lender or the Agent
(as the case may be) hereunder with respect to Indemnified Taxes or Other Taxes
that are the subject of such communication or
58
proceeding, except to the extent that the Borrowers were prejudiced and incurred
liability solely as a result of such failure.
5.2 Illegality. (a) If any Lender determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable lending office to make
LIBOR Rate Loans, then, on notice thereof by the Lender to the Authorized
Representative on behalf of the Borrowers through the Agent, any obligation of
that Lender to make LIBOR Rate Loans shall be suspended until the Lender
notifies the Agent and the Authorized Representative on behalf of the Borrowers
that the circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrowers shall, upon their or the Authorized
Representative's receipt of notice of such fact and demand from such Lender
(with a copy to the Agent), prepay in full such LIBOR Rate Loans of that Lender
then outstanding, together with interest accrued thereon and amounts required
under Section 5.4, either on the last day of the Interest Period thereof, if the
Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if the Lender may not lawfully continue to maintain such LIBOR Rate
Loan. If the Borrowers are required to so prepay any LIBOR Rate Loan, then
concurrently with such prepayment, such Borrowers shall borrow from the affected
Lender, in the amount of such repayment, a Base Rate Loan.
5.3 Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change in the
interpretation of any law or regulation or (ii) the compliance by that Lender
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 such Lender of agreeing to make or making, funding or maintaining
any LIBOR Rate Loans (in each case, other than Taxes, which shall be governed
exclusively by Section 5.1), then the Borrowers shall be liable for, and shall
from time to time, upon demand (with a copy of such demand to be sent to the
Agent), pay to the Agent for the account of such Lender, additional amounts as
are sufficient to compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the introduction
of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
such Lender or any corporation or other entity controlling such Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation or other
entity controlling such Lender and (taking into consideration such Lender's or
such corporation's or other entity's policies with respect to capital adequacy
and such Lender's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon demand of such Lender to the
Authorized Representative on behalf of the Borrowers through the Agent, the
Borrowers shall, jointly and
59
severally, pay to such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender for such increase.
5.4 Funding Losses. The Borrowers shall, jointly and severally,
reimburse each Lender and hold each Lender harmless from any loss or expense
which the Lender may sustain or incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrowers to borrow, continue or convert a
Loan after the Borrowers have given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the prepayment or other payment (including after acceleration
thereof) of a LIBOR Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans or from fees payable to terminate the deposits from which such
funds were obtained. The Borrowers shall also pay any customary administrative
fees charged by any Lender in connection with the foregoing.
5.5 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will promptly so notify the Authorized
Representative on behalf of the Borrowers and each Lender. Thereafter, the
obligation of the Lenders to make or maintain LIBOR Rate Loans hereunder shall
be suspended until the Agent revokes such notice in writing. Upon receipt of
such notice, the Borrowers may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Borrowers do not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Borrowers, in the amount specified in the applicable notice submitted by
the Borrowers, but such Loans shall be made, converted or continued as Base Rate
Loans instead of LIBOR Rate Loans.
5.6 Certificates of Lenders. If any Lender claims reimbursement or
compensation under this Article 5 the Agent shall determine the amount thereof
and shall deliver to the Authorized Representative on behalf of the Borrowers
(with a copy to the affected Lender) within 90 days of demand a certificate
setting forth in reasonable detail the amount payable to the affected Lender and
such certificate shall be conclusive and binding on the Borrowers in the absence
of manifest error.
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5.7 Survival. The agreements and obligations of the Borrowers in this
Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL; ADMINISTRATIVE SUPERPRIORITY
6.1 Grant of Security Interest. (a) As security for all present and
future Obligations, each Loan Party hereby grants to the Agent, for the ratable
benefit of the Agent and the Lenders, a continuing security interest in, lien
on, and right of set-off against, all of the following property of such Loan
Party, whether now owned or existing or hereafter acquired or arising,
regardless of where located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights;
(iv) all Chattel Paper;
(v) all Documents;
(vi) all Instruments;
(vii) all Supporting Obligations;
(viii) all General Intangibles;
(ix) all Equipment;
(x) all Investment Property;
(xi) all money, cash, cash equivalents, securities and
other property of any kind of such Loan Party held directly or indirectly
by the Agent or any Lender;
(xii) all of such Loan Party's deposit accounts, credits,
and balances with and other claims against the Agent or any Lender or any
of their Affiliates or any other financial institution with which such
Loan Party maintains deposits, including any Payment Accounts;
(xiii) all other assets and property of such Loan Party;
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(xiv) all books, records and other property related to or
referring to any of the foregoing, including, without limitation, books,
records, account ledgers, data processing records, computer software and
other property and General Intangibles at any time evidencing or relating
to any of the foregoing;
(xv) the following commercial tort claims listed on
Schedule 6.1(a)(xv); and
(xvi) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not limited
to, proceeds of any insurance policies, claims against third parties, and
condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with the property or interests therein covered by
the DIP Orders, and all other property of any Loan Party or other Person in
which the Agent or any Lender may at any time be granted a Lien to secure any or
all of the Obligations, is herein collectively referred to as the "Collateral";
provided, that notwithstanding anything to the contrary herein, no security
interest, lien or right of set-off exists in any avoidance action or the
proceeds therefrom under the Bankruptcy Code.
(b) As security for all Obligations, the DIP Orders create a Lien
in favor of the Agent, for the ratable benefit of the Agent and the Lenders, on
all real property, improvements thereon and interests therein now or hereafter
owned or acquired by any Loan Party. To more fully effectuate such Lien, each
Loan Party shall, to the extent requested at any time during the term of this
Agreement by the Agent or the Majority Lenders, execute and deliver to the Agent
Mortgage(s) on the Real Estate of such Loan Party; provided that in the event a
mortgage recording tax based on the indebtedness secured thereby is payable upon
recordation of any Mortgage then the amount secured under each such Mortgage(s)
shall be limited to an amount not greater than 125% of the appraised value of
the Real Estate subject to such Mortgage(s).
(c) All of the Obligations shall be secured by all of the
Collateral.
(d) Each Loan Party hereby agrees that the Obligations shall
constitute allowed administrative expense claims in its respective Case having
priority pursuant to Section 364(c)(1) of the Bankruptcy Code over all
administrative expense claims and unsecured claims against such Borrower now
existing or hereafter arising, of any kind or nature whatsoever, including,
without limitation, all administrative expense claims of the kind specified in
Sections 503(b) and 507(b) of the Bankruptcy Code, subject, as to priority, only
to Carve-Out Expenses, the establishment of which super-priority shall have been
approved and authorized by the Bankruptcy Court.
Each of the Loan Parties hereby represents and warrants that the
Obligations of Loan Parties constitute allowed administrative expense claims in
such Loan Party's Case.
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(e) The Agent's Liens and the super-priority administrative
expense claim granted pursuant to clause (d) above have been independently
granted by the Loan Documents, and may be independently granted by other Loan
Documents heretofore or hereafter entered into. The Agent's Liens and the
super-priority administrative expense claim granted pursuant to clause (d)
above, this Agreement, the Interim Bankruptcy Court Order, the Final Bankruptcy
Court Order and the other Loan Documents supplement each other, and the grants,
priorities, rights and remedies of the Lenders and the Agent hereunder and
thereunder are cumulative. In the event of a direct conflict between the Interim
Bankruptcy Court Order or the Final Bankruptcy Court Order, on the one hand, and
any other Loan Document, on the other hand, the Interim Bankruptcy Court Order
or the Final Bankruptcy Court Order, as the case may be, shall control.
(f) The Agent agrees that, with respect to any Liens of the Agent
in any item or items of Collateral (other than Accounts, Inventory, Real Estate
or proceeds thereof) which is also encumbered by a Permitted Lien described in
clause (g) of such definition, the Agent's Lien therein shall be subordinate and
junior in all respects to such Permitted Lien therein and the Agent shall not
exercise any of its rights or remedies to foreclose or otherwise realize upon
such item or items of Collateral unless (i) the relevant Debt secured by such
Permitted Lien on such item or items of Collateral is paid in full or (ii) the
Agent obtains the prior written consent of the requisite holders of such Debt;
provided that the foregoing shall in no event prohibit the Agent from receiving
the proceeds of any such Collateral as a junior lienholder therein in connection
with the exercise of rights or remedies with respect to such Collateral by the
holder of any such Permitted Lien.
6.2 Perfection and Protection of Security Interest. (a) Each Loan Party
shall, at its expense, perform all steps requested by the Agent at any time to
more fully effectuate, perfect, maintain, protect, and enforce the Agent's
Liens, including, without limitation, at the request of the Agent: (i)
executing, delivering and/or filing and recording of the Mortgage(s) and any
additional security agreements or assignments with respect to Property Rights of
such Loan Party and filing or authorizing the Agent to file financing or
continuation statements, and amendments thereof, in form and substance
satisfactory to the Agent; (ii) delivering to the Agent the originals of all
Instruments, Documents, and Chattel Paper of such Loan Party, and all other
Collateral of which the Agent determines it should have physical possession in
order to perfect and protect the Agent's security interest therein, duly
pledged, endorsed or assigned to the Agent without restriction; (iii) delivering
to the Agent warehouse receipts covering any portion of the Collateral located
in warehouses and for which warehouse receipts are issued and certificates of
title covering any portion of the Collateral for which certificates of title
have been issued; (iv) when an Event of Default exists and is continuing,
transferring its Inventory to warehouses designated by the Agent; (v) placing
notations on such Loan Party's books of account to disclose the Agent's security
interest; (vi) obtaining control agreements from securities intermediaries with
respect to financial assets in the possession of securities intermediaries;
(vii) obtaining control agreements from banks and other financial institutions
with respect to deposit accounts (as defined in the UCC) maintained at such bank
or other financial institution; (viii) assigning and delivering to the Agent all
Supporting Obligations, including letters of credit on which such Loan Party is
named beneficiary with the written consent of the issuer thereof; (ix) taking
such other
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steps as are deemed necessary or desirable by the Agent to maintain and protect
the Agent's Liens. Each Loan Party hereby authorizes the Agent to file one or
more financing statements disclosing the Agent's Liens. Each Loan Party agrees
that a carbon, photographic, photostatic, or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
(b) If any Collateral of a Loan Party is at any time in the
possession or control of any warehouseman, bailee or any of a Loan Party's
agents or processors, then such Loan Party shall notify the Agent thereof and
shall use commercially reasonable efforts if requested by the Agent obtain a
bailee letter acknowledged by the bailee that notifies such Person of the
Agent's security interest in such Collateral and instructs such Person to hold
all such Collateral for the Agent's account subject to the Agent's instructions.
If at any time any Collateral is located in any operating facility of a Loan
Party that is leased by such Loan Party, then such Loan Party shall use
commercially reasonable efforts if requested by the Agent obtain written
landlord lien waivers or subordinations, in form and substance reasonably
satisfactory to the Agent, that waives or subordinates all present and future
Liens which the owner or lessor of such premises may be entitled to assert
against such Collateral and permits the Agent to have access to such leased
premises in connection with the exercise by the Agent of rights and remedies
with respect to the Collateral located therein.
(c) From time to time, each Loan Party shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to the
Agent, for the ratable benefit of the Agent and the Lenders, the Collateral in
which such Loan Party has an interest, but such Loan Party's failure to do so
shall not affect or limit the Agent's security interest or any other rights of
the Agent or any Lender in and to the Collateral with respect to such Loan
Party. So long as this Agreement is in effect and until all Obligations have
been fully satisfied, the Agent's Liens shall continue in full force and effect
in all Collateral (whether or not deemed eligible for the purpose of calculating
the Combined Availability or as the basis for any advance, loan, extension of
credit, or other financial accommodation).
(d) Notwithstanding anything to the contrary contained herein or
elsewhere:
(i) The Agent's Liens shall be deemed valid and perfected by
entry of the Interim Bankruptcy Court Order and the Final Bankruptcy
Court Order, as the case may be. The Agent and the Lenders shall not be
required to file any financing statements, mortgages, notices of lien or
similar instruments in any jurisdiction or filing office, or to take
possession of any Collateral or to take any other action in order to
validate or perfect the Liens granted by or pursuant to this Agreement,
the Interim Bankruptcy Court Order, the Final Bankruptcy Court Order or
any other Loan Document. If the Agent or the Majority Lenders shall, in
its or their sole discretion, from time to time elect to file any such
financing statements, mortgages, notices of lien or similar instruments,
take possession of any Collateral or take any other action to further
validate the perfection of all or any portion of the Agent's Liens, all
such documents and actions shall be deemed to have been filed or recorded
or taken at the time and on the Interim Bankruptcy Court Order Date.
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(ii) The Liens, lien priorities, super-priority administrative
expense claims and other rights and remedies granted to the Agent and the
Lenders pursuant to this Agreement, the Interim Bankruptcy Court Order,
the Final Bankruptcy Court Order or the other Loan Documents
(specifically including, but not limited to, the existence, perfection
and priority of the Liens provided for herein and therein, and the
administrative expense claim priority provided herein and therein) shall
not be modified, altered or impaired in any manner by any other financing
or extension of credit or incurrence of debt by any Loan Party (pursuant
to Section 364 of the Bankruptcy Code or otherwise), or by dismissal or
conversion of the Case, or by any other act or omission whatsoever.
Without limiting the generality of the foregoing, notwithstanding any
such order, financing, extension, incurrence, dismissal, conversion, act
or omission:
(A) except for the Carve-Out Expenses, no costs or
expenses of administration which have been or may be incurred in the
Case or any conversion of the same or in any other proceedings
related thereto, and no priority claims, are or will be prior to or
on a parity with any claim of any Lenders, the Bank or the Agent
against any Loan Party in respect of any Obligation;
(B) the Agent's Liens shall constitute valid and
perfected first priority Liens subject and subordinate only, (x) in
the case of the Agent's Liens encumbering Collateral not consisting
of Inventory, Accounts, Real Estate (other than the Ohio Property)
and the proceeds thereof, to Permitted Liens described in clauses
(d), (e), (g), (h) and (i) of the definition thereof and (y) in the
case of the Agent's Liens encumbering Collateral consisting of
Inventory, Accounts, Real Estate (other than the Ohio Property) and
the proceeds thereof, Carve-Out Expenses and the Liens set forth on
Schedule 9.19(b), and in each case under clauses (x) and (y) above
shall be prior to all other Liens, now existing or hereafter
arising, in favor of any other creditor or other Person; and
(C) the Agent's Liens shall continue to be valid and
perfected without the need for the Agent to file financing
statements or mortgages or to otherwise perfect the Agent's Liens
under applicable nonbankruptcy law.
6.3 Location of Collateral. Each Loan Party represents and warrants to
the Agent and the Lenders that: (a) Schedule 6.3 is a correct and complete list
of such Loan Party's and each of its Subsidiaries' chief executive office, the
location of its books and records, the locations of the Collateral in which such
Loan Party has an interest, and the locations of all of its other places of
business; and (b) Schedule 8.12 correctly identifies any of such facilities and
locations that are not owned by such Loan Party or such Subsidiary and sets
forth the names of the owners and lessors or sublessors of such facilities and
locations. Each Loan Party covenants and agrees that it will not (and will cause
each of its Subsidiaries not to) (i) maintain any Collateral in which it has an
interest at any location other than those locations listed for such Loan Party
on Schedule 6.3 (ii) otherwise change or add to any of such locations, or (iii)
change the location of its chief executive office from the location identified
in Schedule 6.3, unless it gives the Agent at
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least 30 days' prior written notice thereof and executes any and all financing
statements and other documents that the Agent reasonably requests in connection
therewith. Without limiting the foregoing, each Loan Party represents that all
of its and its Subsidiaries' Inventory (other than Inventory in transit) is, and
covenants that all of its Inventory will be, located either (a) on premises
owned by such Loan Party or the relevant Subsidiary, (b) on premises leased by
such Loan Party or the relevant Subsidiary, provided that the Agent has received
an executed landlord waiver from the landlord of such premises in form and
substance satisfactory to the Agent, or (c) in a warehouse or with a bailee,
provided that the Agent has received an executed bailee letter from the
applicable Person in form and substance satisfactory to the Agent.
6.4 Title to, Liens on, and Sale and Use of Collateral. Each Loan Party
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) all of its and its Subsidiaries' Collateral is and
will continue to be owned by such Loan Party or the relevant Subsidiary, as
applicable, free and clear of all Liens whatsoever, except for Permitted Liens;
(b) the Agent's Liens in such Collateral will not be subject to any prior Lien
other than Permitted Liens described in clauses (c), (d) and (e) of the
definition thereof; (c) such Loan Party will (and will cause each of its
Subsidiaries to) use, store, and maintain such Collateral with all reasonable
care and will use such Collateral for lawful purposes only; and (d) such Loan
Party will not (and will cause each of its Subsidiaries not to) except as
otherwise permitted by this Agreement, without the Agent's prior written
approval, sell, or dispose of or permit the sale or disposition of any of such
Collateral except for sales of Inventory in the ordinary course of business and
sales of Equipment as permitted by Section 6.11. The inclusion of proceeds in
the Collateral shall not be deemed to constitute the Agent's or any Lender's
consent to any sale or other disposition of the Collateral except as expressly
permitted herein.
6.5 [Intentionally Omitted].
6.6 Access and Examination; Promotional Materials. (a) The Agent,
accompanied by any Lender which so elects, may at all reasonable times during
regular business hours (and at any time when a Default or Event of Default
exists) have access to, examine, audit, make extracts from or copies of and
inspect any or all of each Loan Party's and its Subsidiaries' records, files,
and books of account and the Collateral, and discuss each Loan Party's and its
Subsidiaries' affairs with each Loan Party's and its Subsidiaries' officers and
management. Each Loan Party will (and will cause each of its Subsidiaries to)
deliver to the Agent any instrument necessary for the Agent to obtain records
from any service bureau maintaining records for such Loan Party and its
Subsidiaries. If any of a Loan Party's or any of its Subsidiaries' records or
reports of the Collateral are prepared by an accounting service or other agent,
such Loan Party hereby authorizes (and shall cause each of its Subsidiaries to
authorize) and, upon the request of the Agent, shall cause such service or agent
to deliver such records, reports, and related documents to the Agent, for
distribution to the Lenders, and/or, as the Agent shall choose, provide access
to the Agent thereto. The Agent may, and at the direction of the Majority
Lenders shall, at any time when a Default or Event of Default exists, and at the
Loan Parties' expense, make copies of all of any Loan Party's and its
Subsidiaries' books and records, or require a Loan Party to deliver (or cause to
be delivered) such copies to the Agent. The Agent may, without expense to the
Agent, use a Loan Party's supplies and premises as may be reasonably necessary
for maintaining or
66
enforcing the Agent's Liens and each Loan Party shall cooperate and make
available its personnel for such purposes. The Agent shall have the right, at
any time, in the Agent's name or in the name of a nominee of the Agent, to
verify the validity, amount or any other matter relating to the Accounts,
Inventory, or other Collateral of a Loan Party, by mail, telephone, or
otherwise.
(b) Each Loan Party agrees that, subject to such Loan Party's or
Subsidiary's, as the case may be, prior consent for uses other than in a
traditional tombstone, which consent shall not be unreasonably withheld or
delayed, the Agent and each Lender may use such Loan Party's or such
Subsidiary's name in advertising and promotional material.
6.7 Collateral Reporting. Each Loan Party (or in the case of clause (h)
below, each Loan Party which is a Borrower and Xxxxx Xxxxx Canada) shall provide
the Agent with the following documents at the following times in form
satisfactory to the Agent: (a) on a monthly basis, or more frequently if
requested by the Agent, a schedule of such Loan Party's and its Subsidiaries'
respective Accounts created, credits given, cash collected and other adjustments
to Accounts of such Loan Party since the last such schedule; (b) on a monthly
basis, or more frequently if requested by the Agent, an aging of such Loan
Party's and its Subsidiaries' respective Accounts, together with a
reconciliation to the previous month's aging of such Loan Party's and its
Subsidiaries' respective Accounts and to such Loan Party's and its Subsidiaries'
respective general ledgers, and, in the case of the Borrowers, to the
corresponding Borrowing Base and, in each case, accompanied by such supporting
detail and documentation as shall be requested by the Agent in its reasonable
discretion; (c) upon request of the Agent, a report of open vouchers payable by
vendor; (d) on a monthly basis (or more frequently if requested by the Agent),
within fifteen Business Days of the last day of each month, Inventory reports by
category, with additional detail showing additions to and deletions from the
Inventory, together with a reconciliation to such Loan Party's general ledger
and, in the case of the Borrowers, to the Combined Availability; (e) upon
request, copies of invoices in connection with such Loan Party's and its
Subsidiaries' respective Accounts, customer statements, credit memos, remittance
advices and reports, deposit slips, shipping and delivery documents in
connection with such Loan Party's and its Subsidiaries' respective Accounts and
for Inventory and Equipment acquired by such Loan Party or any of its
Subsidiaries, purchase orders and invoices; (f) upon request, a statement of the
balance of each of the Intercompany Accounts; (g) such other reports as to the
Collateral of such Loan Party and its Subsidiaries as the Agent shall reasonably
request from time to time; (h) on a weekly basis (not later than the third
Business Day after the last Business Day of the previous week with the
information thereon to be as of the last Business Day of such previous week), a
Borrowing Base Certificate; provided that prior to the Final Bankruptcy Court
Order Date, the Borrowers and Xxxxx Xxxxx Canada shall not be required to
deliver a Borrowing Base Certificate so long as Combined Availability (without
giving effect to the Maximum Revolver Amount) is greater than $150,000,000 and
in the event such Borrowing Base Certificate is not delivered for any week, the
Borrowers and Xxxxx Xxxxx Canada are deemed to have represented that such
condition has been satisfied; (i) on a monthly basis, by the 15th day of the
following month, a detailed calculation of Eligible Major Credit Card
Receivables, Eligible Consumer Credit Card Receivables and Eligible Inventory of
such Loan Party; provided that if on any day of any week either (x) Combined
Availability is less than $100,000,000 or (y) the Aggregate Outstandings are
greater than $100,000,000, then such calculation shall be delivered for such
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week at the time the Borrowing Base Certificate for such week is required to be
delivered (or would be required to be delivered absent the proviso in clause
(h)); and (j) with the delivery of each of the foregoing, a certificate of such
Loan Party executed by an officer thereof certifying as to the accuracy and
completeness of the foregoing.
6.8 Accounts. (a) Each Loan Party hereby represents and warrants to the
Agent and the Lenders, with respect to such Loan Party's and its Subsidiaries'
respective Accounts, that: (i) each existing Account represents, and each future
Account will represent, a bona fide sale or lease and delivery of goods by such
Loan Party or the relevant Subsidiary, as applicable, or rendition of services
by such Loan Party or the relevant Subsidiary, as applicable, in the ordinary
course of such Loan Party's or such Subsidiary's respective business; (ii) each
existing Account is, and each future Account will be, for a liquidated amount
payable by the Account Debtor thereon on the terms set forth in the invoice
therefor or in the schedule thereof delivered to the Agent, without any offset,
deduction, defense, or counterclaim except those known to such Loan Party and
reported to the Agent and the Lenders pursuant to this Agreement; (iii) no
payment will be received with respect to any Account, and no credit, discount,
or extension, or agreement therefor will be granted on any Account, except as
reported to the Agent and the Lenders in accordance with this Agreement or
properly reflected in a Borrowing Base Certificate; (iv) each copy of an invoice
delivered to the Agent by such Loan Party or any of its Subsidiaries will be a
genuine copy of the original invoice sent to the Account Debtor named therein;
and (v) all goods described in each invoice will have been delivered to the
Account Debtor and all services of such Loan Party or the relevant Subsidiary,
as applicable, described in each invoice will have been performed.
(b) Neither any Loan Party nor any of its Subsidiaries shall
re-date any invoice or sale or make sales on extended dating beyond that
customary in such Loan Party's or the relevant Subsidiary's, as applicable,
business or modify any Account or extend any Account. If any Loan Party becomes
aware of any matter materially adversely affecting the collectability of any
Account or Account Debtor involving an amount greater than $250,000, including
information regarding the Account Debtor's creditworthiness, such Loan Party
will promptly so advise the Agent and if such Loan Party is a Borrower, exclude
such Account from its Eligible Accounts.
(c) Neither any Loan Party nor any of its Subsidiaries shall
accept any note or other instrument (except a check or other instrument for the
immediate payment of money) with respect to any Account without the Agent's
written consent. If the Agent consents to the acceptance of any such instrument,
it shall be considered as evidence of the Account and not payment thereof and
such Loan Party will promptly deliver or cause to be delivered such instrument
to the Agent, endorsed by such Loan Party or the relevant Subsidiary, as
applicable, to the Agent in a manner satisfactory in form and substance to the
Agent. Regardless of the form of presentment, demand or notice of protest with
respect thereto, the applicable Loan Party or Subsidiary shall remain liable
thereon until such instrument is paid in full.
(d) Each Loan Party shall notify the Agent promptly of all
disputes and claims in excess of $250,000 with any Account Debtor, and agrees
(and shall cause each of its
68
Subsidiaries to agree) to settle, contest, or adjust such dispute or claim at no
expense to the Agent or any Lender. No discount, credit or allowance shall be
granted by any Loan Party or any of its Subsidiaries to any such Account Debtor
without the Agent's prior written consent, except for discounts, credits and
allowances made or given in the ordinary course of such Loan Party's or the
relevant Subsidiary's, as applicable, business when no Event of Default exists
hereunder. Each Loan Party shall send (or cause to be sent to) the Agent a copy
of each credit memorandum in excess of $250,000 as soon as issued and, if such
Loan Party is a Borrower, such Loan Party shall promptly report that credit on
Borrowing Base Certificates submitted by it. The Agent may, and at the direction
of the Majority Lenders shall, at all times when an Event of Default exists
hereunder, settle or adjust disputes and claims directly with Account Debtors
for amounts and upon terms which the Agent or the Majority Lenders, as
applicable, shall consider advisable and, in all cases, the Agent will credit
the Borrowers' Loan Account with only the net amounts received by the Agent in
payment of any such Loan Party's or Subsidiary's, as applicable, Accounts.
(e) If an Account Debtor (other than a retail customer in the
ordinary course of business) returns any Inventory to a Loan Party when no Event
of Default exists, then such Loan Party shall promptly determine the reason for
such return and shall issue a credit memorandum to the Account Debtor in the
appropriate amount. Each such report shall indicate the reasons for the returns
and the locations and condition of the returned Inventory. In the event any
Account Debtor (other than a retail customer in the ordinary course of business)
returns Inventory to a Loan Party or any of its Subsidiaries when an Event of
Default exists, such Loan Party, upon request of the Agent, shall (and shall
cause such Subsidiary to): (i) hold the returned Inventory in trust for the
Agent; (ii) segregate all returned Inventory from all of its other property;
(iii) dispose of the returned Inventory solely according to the Agent's written
instructions; and (iv) not issue any credits or allowances with respect thereto
without the Agent's prior written consent. All returned Inventory shall be
subject to the Agent's Liens thereon. Whenever any Inventory is returned, the
related Account shall be deemed ineligible to the extent of the amount owing by
the Account Debtor with respect to such returned Inventory and such returned
Inventory shall not, in the case of a Loan Party which is a Borrower, be
Eligible Inventory of such Loan Party.
6.9 Collection of Accounts; Payments. (a) Subject to the following
sentence, each Loan Party shall make collection of all of its Accounts and other
Collateral for the Agent, shall receive all payments as the Agent's trustee, and
shall immediately deliver all payments in their original form duly endorsed in
blank into a Payment Account established for the account of such Loan Party,
subject to a Blocked Account Agreement. As soon as practicable (but in any event
not later than 15 days following the Closing Date with respect to bank accounts
at the Bank and not later than 20 days following the Closing Date with respect
to bank accounts at any other bank), each Loan Party shall have established a
Payment Account and a related lock-box service for collections of its Accounts
at the Bank or another Clearing Bank acceptable to the Agent and, in each case,
subject to a Blocked Account Agreement and other documentation acceptable to the
Agent and shall have instructed each Account Debtor (other than an Account
Debtor under a Consumer Credit Card Receivable) to make all payments directly to
such Payment Account or to the address established for such lock-box service and
shall provide evidence to the Agent,
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satisfactory to the Agent, that such instructions have been given. If,
notwithstanding such instructions, a Loan Party receives any proceeds of
Accounts or if a Loan Party receives any payments on account of any other
Collateral or any other payments of any source, it shall receive such payments
as the Agent's trustee, and shall immediately (and not less often then daily)
deliver such payments to the Agent in their original form or deposit such
payments into the applicable Payment Account. All collections and other payments
received in any such lock-box or Payment Account or directly by a Loan Party or
the Agent and all funds in any Payment Account or other account to which such
collections or payments are deposited shall be subject to the Agent's sole
dominion and control and withdrawals by the applicable Loan Party shall not be
permitted. The Agent or the Agent's designee may, at any time after the
occurrence and during the continuance of an Event of Default, notify Account
Debtors of a Loan Party that the Accounts of such Loan Party have been assigned
to the Agent and of the Agent's security interest therein, and may collect them
directly and charge the collection costs and expenses to the Borrowers' Loan
Account as a Revolving Loan. So long as an Event of Default has occurred and is
continuing, each Loan Party, at the Agent's request, shall execute and deliver
to the Agent such documents as the Agent shall require to grant the Agent access
to any post office lock-box in which collections of Accounts of such Loan Party
are received.
(b) If sales of Inventory of a Loan Party are made or services are
rendered for cash, the applicable Loan Party shall immediately deliver to the
Agent or deposit into a Payment Account the cash which such Loan Party receives.
(c) All payments, including immediately available funds received
by the Agent at a bank designated by it, received by the Agent on account of
Accounts of a Loan Party or as proceeds of other Collateral will be the Agent's
sole property for its benefit and the benefit of the Lenders and will be
credited to the Borrowers' Loan Account (conditional upon final collection)
after allowing one (1) Business Day for collection; provided, however, that such
payments shall be deemed to be credited to the Borrowers' Loan Account
immediately upon receipt for purposes of (i) determining Combined Availability,
(ii) calculating the unused line fee pursuant to Section 3.4, and (iii)
calculating the amount of interest accrued thereon solely for purposes of
determining the amount of interest to be distributed by the Agent to the Lenders
(but not the amount of interest payable by the Borrowers).
(d) In the event one or more of the Borrowers or Loan Parties
repay all of the Obligations upon the termination of this Agreement or upon
acceleration of the Obligations, other than through the Agent's receipt of
payments on account of the Accounts of any of the Loan Parties or proceeds of
the other Collateral, such payment will be credited (conditional upon final
collection) to the Borrowers' Loan Account one (1) Business Day after the
Agent's receipt of immediately available funds.
6.10 Inventory; Perpetual Inventory. (a) Each Loan Party represents and
warrants to the Agent and the Lenders and agrees with the Agent and the Lenders
that all of the Inventory owned by such Loan Party and each of its Subsidiaries
is and will be held for sale or lease (and in the case of raw materials and work
in process for further processing into finished goods to be held for sale), or
to be furnished in connection with the rendition of services, in the ordinary
70
course of such Loan Party's or such Subsidiary's, as applicable, business and is
and will be fit for such purposes. Each Loan Party will keep (and will cause
each of its Subsidiaries to keep) its Inventory in good and marketable condition
consistent with past practice, at its own expense. Each Loan Party and its
Subsidiaries will not, without the prior consent of the Agent, acquire or accept
any Inventory on consignment or appraisal. Each Loan Party agrees that all
Inventory produced in the United States will be produced in accordance with the
Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. Each Loan Party will conduct (or cause to be
conducted) a physical count of its Inventory at least once per Fiscal Year, and
after and during the continuation of an Event of Default, at such other times as
the Agent requests. Each Loan Party will at all times maintain (and will cause
each of its Subsidiaries at all times to maintain) a perpetual inventory
reporting system at all times. Each Loan Party will not (and will cause its
Subsidiaries not to), without the Agent's written consent, sell any Inventory on
a xxxx-and-hold, guaranteed sale, sale and return, sale on approval,
consignment, or other repurchase or return basis and no such Inventory sold on
any such basis will be deemed to be Eligible Inventory. Any inventory of others
which is on the premises of any Loan Party for processing, cutting,
manufacturing, finishing or otherwise, shall be segregated and shall not be
reported or included on any Borrowing Base Certificate as Inventory or Eligible
Inventory of a Borrower.
(b) In connection with all Inventory of a Loan Party financed by
Letters of Credit, such Loan Party will, at the Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, Documents or Instruments of such Loan Party
in which the Agent holds a security interest to deliver them to the Agent and/or
subject to the Agent's order, and if they shall come into such Loan Party's
possession, to deliver them, upon request, to the Agent in their original form.
Each Loan Party shall also, at the Agent's request, designate the Agent as the
consignee on all bills of lading and other negotiable and non-negotiable
documents of such Loan Party.
6.11 Equipment. (a) Each Loan Party represents and warrants to the Agent
and the Lenders and agrees with the Agent and the Lenders that the Equipment
owned by such Loan Party and each of its Subsidiaries is and will be used or
held for use in such Loan Party's or such Subsidiary's respective business, and
is and will be fit for such purposes. Each Loan Party shall (and shall cause
each of its Subsidiaries to) keep and maintain its Equipment in good operating
condition and repair (ordinary wear and tear excepted) and shall make all
necessary replacements thereof consistent with past practice.
(b) Each Loan Party shall promptly inform the Agent of any
material additions to or deletions from its Equipment. Such Loan Party shall not
(and shall cause each of its Subsidiaries not to) permit any of its Equipment to
become a fixture with respect to real property or to become an accession with
respect to other personal property with respect to which real or personal
property the Agent does not have a Lien.
(c) The Loan Parties shall not (and shall cause each of their
respective Subsidiaries not to), without the Majority Lenders' written consent,
sell, lease as a lessor, or otherwise dispose of any of the Equipment of a Loan
Party or any of its Subsidiaries except as
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permitted by Section 9.9. Except as provided in clause (ii) of Section 9.9, all
net cash proceeds of each such sale shall, subject to Existing Liens (if any)
thereon, be remitted to the Agent for application to the Revolving Loans (to the
extent any Revolving Loans are then outstanding). All replacement Equipment
purchased by any Loan Party or any of its Subsidiaries shall be free and clear
of all Liens except Permitted Liens.
6.12 [Intentionally Omitted].
6.13 Documents, Instruments, and Chattel Paper. Each Loan Party represents
and warrants to the Agent and the Lenders that (a) all Documents, Instruments,
and Chattel Paper of such Loan Party describing, evidencing, or constituting
Collateral, and all signatures and endorsements thereon, are and will be
complete, valid, and genuine, and (b) all goods evidenced by such Documents,
Instruments and Chattel Paper are and will be owned by such Loan Party or its
relevant Subsidiary, as applicable, free and clear of all Liens other than
Permitted Liens.
6.14 Right to Cure. The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of a
Loan Party hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which a Loan Party fails to pay or do (or cause to be paid or
done), including, without limitation, payment of any judgment against a Loan
Party or any of its Subsidiaries, any insurance premium, any warehouse charge,
any finishing or processing charge, any landlord's or bailee's claim, and any
other Lien upon or with respect to any of the Collateral. All payments that the
Agent makes under this Section 6.14 and all out-of-pocket costs and expenses
that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Borrowers' Loan Account as a Base Rate Loan.
Any payment made or other action taken by the Agent under this Section 6.14
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed thereafter as herein provided.
6.15 Power of Attorney. Each Loan Party hereby appoints the Agent and the
Agent's designee as such Loan Party's attorney, with power: (a) to endorse such
Loan Party's name on any checks, notes, acceptances, money orders, or other
forms of payment or security that come into the Agent's or any Lender's
possession; (b) to sign such Loan Party's name on any invoice, xxxx of lading,
warehouse receipt or other negotiable or non-negotiable Document constituting
Collateral, on drafts against customers, on assignments of Accounts of such Loan
Party, on notices of assignment, financing statements and other public records
and to file any such financing statements by electronic means with or without a
signature as authorized or required by applicable law or filing procedure; (c)
to ask, demand, collect, xxx for, recover, compound, receive and give
acquittance and receipts for moneys, due or to become due under or with respect
to any of the Collateral; (d) so long as any Event of Default has occurred and
is continuing, to notify the post office authorities to change the address for
delivery of such Loan Party's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to such Loan Party; (e) to send
requests for verification of Accounts of such Loan Party to customers or Account
Debtors; (f) to complete in such Loan Party's name or the Agent's name, any
order, sale or transaction, obtain the necessary Documents in connection
therewith, and collect the proceeds thereof; (g) to clear Inventory of such Loan
Party through customs in such Loan Party's name,
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the Agent's name or the name of the Agent's designee, and to sign and deliver to
customs officials powers of attorney in such Loan Party's name for such purpose;
and (h) to do all things necessary to carry out this Agreement. Each Loan Party
ratifies and approves all acts of such attorney. None of the Lenders or the
Agent nor their attorneys will be liable for any acts or omissions or for any
error of judgment or mistake of fact or law, except for the willful misconduct
of the Agent or such Lender. This power, being coupled with an interest, is
irrevocable until this Agreement has been terminated and the Obligations have
been fully satisfied.
6.16 The Agent's and Lenders' Rights, Duties and Liabilities. (a) Each
Loan Party assumes all responsibility and liability arising from or relating to
the use, sale or other disposition of the Collateral. The Obligations shall not
be affected by any failure of the Agent or any Lender to take any steps to
perfect the Agent's Liens or to collect or realize upon any of the Collateral,
nor shall loss of or damage to any of the Collateral release any Loan Party from
any of the Obligations. Following the occurrence and continuation of an Event of
Default, the Agent may (but shall not be required to), and at the direction of
the Majority Lenders shall, without notice to or consent from any of the Loan
Parties, xxx upon or otherwise collect, extend the time for payment of, modify
or amend the terms of, compromise or settle for cash, credit, or otherwise upon
any terms, grant other indulgences, extensions, renewals, compositions or
releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any insurance
applicable thereto, or any Person liable directly or indirectly in connection
with any of the foregoing, without discharging or otherwise affecting the
liability of any Loan Party for the Obligations or under this Agreement or any
other agreement now or hereafter existing between the Agent and/or any Lender
and any Loan Party.
(b) It is expressly agreed by each Loan Party that, anything herein to
the contrary notwithstanding, such Loan Party shall remain liable under each of
its leases, agreements, contracts and licenses (each a "Contract" and
collectively, the "Contracts") to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. Each Loan Party
further agrees to enforce the terms and provisions of its Contracts in
accordance with their terms, and not to waive, amend or modify any provision
thereof in any manner other than in the ordinary course of business of such Loan
Party in accordance with past practices and for a valid economic or other
business reason benefitting such Loan Party (provided that in no event may any
waiver, amendment or modification be made that could reasonably be expected to
have a Material Adverse Effect). At the request of the Agent, a Loan Party will
deliver copies of each material Contract to which it is a party and each
material amendment or modification thereof to the Agent promptly upon the
execution and delivery thereof. Neither the Agent nor any Lender shall have any
obligation or liability under any Contract by reason of or arising out of this
Agreement or the granting herein of a Lien thereon or the receipt by the Agent
or any Lender of any payment relating to any Contract pursuant hereto. Neither
the Agent nor any Lender shall be required or obligated in any manner to perform
or fulfill any of the obligations of a Loan Party under or pursuant to any
Contract, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract, or to present or file any claims,
73
or to take any action to collect or enforce any performance or the payment of
any amounts which may have been assigned to it or to which it may be entitled at
any time or times.
(c) The Agent may at any time after an Event of Default shall have
occurred and be continuing, without prior notice to the applicable Loan Party,
notify Account Debtors, parties to the Contracts of such Loan Party and obligors
in respect of Instruments and Chattel Paper of such Loan Party, that the
Accounts of such Loan Party and the right, title and interest of such Loan Party
in and under such Contracts, Instruments and Chattel Paper have been assigned to
the Agent, and that payments shall be made directly to the Agent, for itself and
the benefit of the Lenders. Upon the request of the Agent, a Loan Party shall so
notify Account Debtors, parties to Contracts of such Loan Party and obligors in
respect of Instruments and Chattel Paper of such Loan Party.
(d) The Agent may at any time during the continuance of a Default or
Event of Default in the Agent's own name or in the name of the applicable Loan
Party communicate with Account Debtors, parties to Contracts, obligors in
respect of Instruments and obligors in respect of Chattel Paper to verify with
such Persons, to the Agent's satisfaction, the existence, amount and terms of
any such Accounts, Contracts, Instruments or Chattel Paper. If a Default or
Event of Default shall have occurred and be continuing, each Loan Party, at its
own expense, shall cause the independent certified public accountants then
engaged by such Loan Party to prepare and deliver to the Agent and each Lender
at any time and from time to time promptly upon the Agent's request the
following reports with respect to such Loan Party: (i) a reconciliation of all
Accounts of such Loan Party; (ii) an aging of all Accounts of such Loan Party;
(iii) trial balances; and (iv) a test verification of such Accounts of such Loan
Party as the Agent may request. Each Loan Party, at its own expense, shall
deliver to the Agent the results of each physical verification, if any, which
such Loan Party may in its discretion have made, or caused any other Person to
have made on its behalf, of all or any portion of its Inventory.
6.17 Patent, Trademark and Copyright Collateral. (a) No Loan Party has any
interest in, or title to, any material patent or trademark except as set forth
in Schedule 6.17 hereto. This Agreement is effective to create a valid and
continuing Lien on each Loan Party's patents, trademarks and copyrights and such
Liens are enforceable as such as against any and all creditors of and purchasers
from such Loan Party.
(b) Each Loan Party shall notify the Agent immediately if it knows
or has reason to know that any application or registration relating to any
material patent or trademark (now or hereafter existing) may become abandoned or
dedicated, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office or any court) regarding such Loan
Party's ownership of such patent or trademark, its right to register the same,
or to keep and maintain the same.
(c) Each Loan Party shall deliver to the Agent, together with each
delivery of financial statements pursuant to Sections 7.2(a) and (c), a list of
all patents, trademarks and copyrights for which an application for registration
has been filed with the United States Patent
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and Trademark Office, the United States Copyright Office or any similar office
or agency during the period covered in such financial statements, and, upon
request of the Agent, such Loan Party shall execute and deliver any and all
patent security agreements, copyright security agreements, trademark security
agreements or assignment documents as the Agent may request to evidence the
Agent's Lien on all of such Loan Party's patents, trademarks and copyrights, and
the General Intangibles of such Loan Party relating thereto or represented
thereby.
(d) Each Loan Party shall take all commercially reasonable actions
requested by the Agent to maintain and pursue each filed application, to obtain
the relevant registration and to maintain the registration of each of the
material patents, trademarks and copyrights (now or hereafter existing),
including the filing of applications for renewal, affidavits of use, affidavits
of noncontestability and opposition and interference and cancellation
proceedings.
(e) In the event that, in the reasonable opinion of the applicable
Loan Party, any of the material patent, trademark or copyright Collateral is
infringed upon, or misappropriated or diluted by a third party, the Authorized
Representative shall notify the Agent promptly after any Loan Party learns
thereof. Such Loan Party shall, unless it shall reasonably determine that such
patent, trademark or copyright Collateral is in no way material to the conduct
of its business or operations, promptly xxx for infringement, misappropriation
or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as the Agent
shall deem appropriate under the circumstances to protect such patent, trademark
or copyright Collateral.
6.18 Grant of License to Use Intellectual Property. For the purpose of
enabling the Agent to exercise rights and remedies hereunder (including in order
to take possession of, hold, preserve, process, assemble, prepare for sale,
market for sale, sell or otherwise dispose of Collateral) at such time as the
Agent shall be lawfully entitled to exercise such rights and remedies pursuant
to Section 11.2 or either DIP Order, each Loan Party hereby grants to the Agent,
for the benefit of the Agent and Lenders, an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to any Loan Party)
to use, license or sublicense any Proprietary Rights now owned or hereafter
acquired by such Loan Party, and wherever the same may be located, and including
in such license access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records. Each Loan Party shall maintain (and shall cause
each of its Subsidiaries to maintain), at all times, correct and complete books,
records and accounts in which complete, correct and timely entries are made of
its transactions in all material respects in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a). Each Loan Party shall (and shall cause each of its
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Subsidiaries to), by means of appropriate entries, reflect in such accounts and
in all Financial Statements liabilities and reserves for all taxes and
provisions for depreciation and amortization of property and bad debts, all in
accordance with GAAP. Each Loan Party shall maintain (and shall cause each of
its Subsidiaries to maintain) at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all payments
received and all credits and extensions granted with respect to the Accounts and
(b) the return, rejection, repossession, stoppage in transit, loss, damage, or
destruction of any Inventory.
7.2 Financial and Other Information. Each Loan Party shall promptly
furnish to each Lender, all such financial information as the Agent or any
Lender shall reasonably request. Without limiting the foregoing, each Loan Party
will furnish to the Agent, in sufficient copies for distribution by the Agent to
each Lender, in such detail as the Agent or the Lenders shall request, the
following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, (x) a consolidated
audited balance sheet and a consolidated audited statement of operations,
cash flow and of stockholders' equity for Spiegel and its consolidated
Subsidiaries for such Fiscal Year, and the accompanying notes thereto,
setting forth in each case in comparative form figures for the previous
Fiscal Year, all in reasonable detail, fairly presenting the financial
position and the results of operations of Spiegel and its consolidated
Subsidiaries as at the date thereof and for the Fiscal Year then ended and
prepared in accordance with GAAP and (y) consolidating unaudited balance
sheets and consolidating unaudited statements of operations, cash flow and
of stockholders' equity for Spiegel and its consolidated Subsidiaries for
such Fiscal Year, setting forth in each case in comparative form figures
for the previous Fiscal Year, all in reasonable detail, fairly presenting
the financial position and the results of operations of Spiegel and its
consolidated Subsidiaries as at the date thereof and for the Fiscal Year
then ended and prepared in accordance with GAAP. Such consolidated
statements shall be examined in accordance with generally accepted auditing
standards by and, in the case of such statements performed on a
consolidated basis, accompanied by a report thereon unqualified in any
respect (except for a going concern qualification and, with respect to the
December 2002 audited financial statements, a scope limitation due to the
pending SEC investigation of Spiegel) by independent certified public
accountants or chartered accountants selected by Spiegel and reasonably
satisfactory to the Agent. Spiegel, simultaneously with retaining such
independent public accountants to conduct such annual audit, shall send a
letter (in form acceptable to the Agent) to such accountants, with a copy
to the Agent and the Lenders, notifying such accountants that one of the
primary purposes for retaining such accountants' services and having
audited financial statements prepared by them is for use by the Agent and
the Lenders. Each of the Loan Parties hereby authorizes the Agent to
communicate directly with such Loan Party's certified public accountants or
chartered accountants and discuss directly with such accountants the
finances and affairs of such Loan Party and its consolidated Subsidiaries
and by this provision authorizes those accountants to disclose to the Agent
any and all financial statements of such Loan Party and its consolidated
Subsidiaries and
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other supporting financial documents and schedules relating to such Loan
Party and its consolidated Subsidiaries ; provided, however, that (i) the
Agent shall notify such Loan Party (or Spiegel on behalf of such Loan
Party) of the Agent's intention to discuss with such Loan Party's certified
public or chartered accountants the finances and affairs of such Loan Party
and (ii) an officer of such Loan Party shall have the right to be present
during any such discussion between its certified public or chartered
accountants and the Agent. Spiegel shall certify by a certificate signed by
its chief financial officer that all such consolidating statements present
fairly in all material respects the financial position of Spiegel and its
consolidated Subsidiaries as at the date thereof and the results of
operation of Spiegel and its consolidated Subsidiaries for the Fiscal Year
then ended, in conformity with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to this Section
7.2(a).
(b) As soon as available, but in any event not later than
thirty (30) days after the end of each fiscal month, consolidated and
consolidating unaudited balance sheets of Spiegel and its consolidated
Subsidiaries as at the end of such fiscal month, and consolidated and
consolidating unaudited statements of income and cash flow for Spiegel and
its consolidated Subsidiaries for such fiscal month and for the period from
the beginning of the Fiscal Year to the end of such fiscal month, all in
reasonable detail, fairly presenting the financial position and results of
operations of Spiegel and its consolidated Subsidiaries as at the date
thereof and for such periods, and, in each case, in comparable form,
figures for the corresponding period in the prior Fiscal Year and in the
Loan Parties' budget, and prepared in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a) (except for any reclassifications required to be
made to conform with GAAP). Spiegel shall certify by a certificate signed
by its chief financial officer that all such statements present fairly the
financial position and results of operations of Spiegel and its
consolidated Subsidiaries as at the dates thereof and the results of
operation of Spiegel and its consolidated Subsidiaries for the periods then
ended in conformity with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 7.2(a).
(c) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter other than the
fourth quarter of a Fiscal Year, consolidated and consolidating unaudited
balance sheets of Spiegel and its consolidated Subsidiaries as at the end
of such quarter, and consolidated and consolidating unaudited statements of
income and statements of cash flow for Spiegel and its consolidated
Subsidiaries for such quarter and for the period from the beginning of the
Fiscal Year to the end of such quarter, all in reasonable detail, fairly
presenting the financial position and results of operations of Spiegel and
its consolidated Subsidiaries as at the date thereof and for such periods,
and, in each case, in comparable form, figures for the corresponding period
in the prior Fiscal Year and in the Loan Parties' budget, and prepared in
accordance with GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to Section 7.2(a). Spiegel
shall certify by a certificate signed by its chief financial officer that
all such statements present fairly, subject to
77
normal year-end adjustments, the financial position of Spiegel and its
consolidated Subsidiaries as at the dates thereof and the results of
operations of Spiegel and the consolidated Subsidiaries for the periods
then ended in conformity with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 7.2(a).
(d) With each of the audited Financial Statements delivered
pursuant to Section 7.2(a), a certificate of the independent certified
public accountants that examined such statement to the effect that they
have reviewed and are familiar with this Agreement and that, in examining
such Financial Statements, they did not become aware of any fact or
condition which then constituted a Default or Event of Default with respect
to a financial covenant, except for those, if any, described in reasonable
detail in such certificate.
(e) With each of the annual audited Financial Statements
delivered pursuant to Section 7.2(a), and within forty-five (45) days after
the end of each fiscal quarter, a certificate of the chief financial
officer of Spiegel setting forth in reasonable detail the calculations
required to establish that the Borrowers were in compliance with any
covenants set forth in Article IX, if applicable, during the period covered
in such Financial Statements and as at the end thereof. Within thirty (30)
days after the end of each month, a certificate of the chief financial
officer of Spiegel stating that, except as explained in reasonable detail
in such certificate, (A) all of the representations and warranties of the
Loan Parties contained in this Agreement and the other Loan Documents are
correct and complete in all material respects as at the date of such
certificate as if made at such time; (B) the Loan Parties are, at the date
of such certificate, in compliance in all material respects with all of
their respective covenants and agreements in this Agreement and the other
Loan Documents; (C) no Default or Event of Default then exists or existed
during the period covered by such Financial Statements for such month; (D)
describing and analyzing in reasonable detail all material trends, changes,
and developments in each and all Financial Statements; and (E) explaining
the variances of the figures in the corresponding budgets and prior Fiscal
Year financial statements. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant
has not been complied with, or that a Default or Event of Default existed
or exists, such certificate shall set forth what action the Loan Parties
have taken or propose to take with respect thereto.
(f) (i) Within 16 days of the Closing Date, the updated Initial
DIP Forecast (to include forecasted consolidated and consolidating balance
sheets, income statements and cash flow statements) for Spiegel and its
Subsidiaries as at the end of and for each month of Fiscal Years 2003 and
2004 in form and substance satisfactory to the Agent and the Initial
Lenders, (ii) within 90 days of the Closing Date, an operating plan through
March 2005 in form and substance satisfactory to the Agent and the Majority
Lenders, (iii) no sooner than 60 days and not less than 30 days after the
beginning of each Fiscal Year, annual forecasts (to include a forecasted
consolidated and consolidating balance sheet, statement of income and
statement of cash flow) for Spiegel and its
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Subsidiaries (x) as at the end of and for each month of such Fiscal Year
and (y) as at the end of and for each Fiscal Year thereafter through and
including the Fiscal Year in which the Stated Termination Date will occur
and (iv) within 16 days of the Closing Date, a cash flow forecast in form
and substance satisfactory to the Agent and the Initial Lenders (which
shall include provision for the payment of any pre-petition claims and
administrative claims, including, without limitation, payments with respect
to reclamation claims and utility deposits, intended to be paid during the
period specified in such forecast) and thereafter, together with each of
the financial statements to be delivered pursuant to Sections 7.2(a) and
(c), a new cash flow forecast, in a form consistent with the prior forecast
and in form and substance satisfactory to the Agent and the Majority
Lenders.
(g) Promptly after filing with the PBGC and the IRS, a copy of
each material annual report or other filing filed with respect to each Plan
of any Loan Party.
(h) Promptly upon the filing thereof, copies of all reports, if
any, to or other documents filed by Spiegel or any of its Subsidiaries with
the Securities and Exchange Commission under the Exchange Act.
(i) As soon as available, but in any event not later than 15 days
after any Loan Party's or any of its Subsidiaries' receipt thereof, a copy
of all management reports and management letters prepared for any Loan
Party or any of its Subsidiaries by any independent certified public or
chartered accountants of any Loan Party or any of its Subsidiaries.
(j) Promptly after their preparation, copies of any and all proxy
statements, financial statements, and reports which any Loan Party or any
of its Subsidiaries makes available to its public shareholders.
(k) If requested by the Agent, promptly after filing with the IRS,
a copy of each federal tax return filed by Spiegel or by any of its
Subsidiaries.
(l) Copies of all pleadings, motions, applications, plans,
disclosure statements, schedules, reports, financial information and other
materials and documents filed in connection with the Case (other than
notices of appearance and motions and orders relating to pro hac vice
admissions) promptly following the filing thereof.
(m) Promptly upon its receipt or receipt by Xxxxx Xxxxx Canada, a
copy of any audited financial statements prepared for Xxxxx Xxxxx Canada.
(n) Promptly upon receipt from or following the delivery thereof
to the Securities and Exchange Commission or the Independent SEC Examiner
(as defined in the Interim Bankruptcy Court Order), copies of all reports,
notices or other documents received or delivered with respect to the
current investigation involving Spiegel.
79
(o) Promptly upon receipt from or following the delivery thereof
to the Office of the Comptroller of the Currency, copies of all reports,
notices or other documents received or delivered by any Loan Party with
respect to First Consumers National Bank to the extent permitted to be
disclosed by applicable law, rule or regulation.
(p) Such additional information as the Agent and/or any Lender may
from time to time reasonably request regarding the financial and business
affairs of any Loan Party or any Subsidiary thereof.
7.3 Notices to the Lenders. Each Loan Party shall notify the Agent, in
writing, of the following matters at the following times:
(a) Immediately after becoming aware of any Default or Event of
Default.
(b) Promptly (but in any event not more than 2 Business Days)
after becoming aware of the assertion by the holder of any capital stock of
such Loan Party or any of its Subsidiaries or of any material post-petition
Debt thereof that a default exists with respect thereto or that such Loan
Party or Subsidiary is not in compliance with the terms thereof, or the
threat or commencement by such holder of any enforcement action because of
such asserted default or non-compliance.
(c) Promptly (but in any event not more than 2 Business Days)
after becoming aware of any event or circumstance which could reasonably be
expected to have a Material Adverse Effect.
(d) Promptly (but in any event not more than 2 Business Days)
after becoming aware of any pending or threatened action, suit, proceeding,
or counterclaim by any Person, or any pending or threatened investigation
by a Governmental Authority, which could reasonably be expected to have a
Material Adverse Effect.
(e) Promptly (but in any event not more than 2 Business Days)
after becoming aware of any pending or threatened strike, work stoppage,
unfair labor practice claim, or other labor dispute affecting any Loan
Party or any of its Subsidiaries in a manner which could reasonably be
expected to have a Material Adverse Effect.
(f) Promptly (but in any event not more than 2 Business Days)
after becoming aware of any violation of any law, statute, regulation, or
ordinance of a Governmental Authority affecting any Loan Party or any of
its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
(g) Promptly (but in any event not more than 2 Business Days)
after receipt of any notice of any violation by any Loan Party or any of
its Subsidiaries of any Environmental Law which could reasonably be
expected to have a Material Adverse
80
Effect or that any Governmental Authority has asserted that any Loan Party
or any of its Subsidiaries is not in compliance with any Environmental Law
which could reasonably be expected to have a Material Adverse Effect or is
investigating any Loan Party's or any of its Subsidiaries' compliance
therewith.
(h) Promptly (but in any event not more than two Business Days)
after receipt of any written notice that any Loan Party or any of its
Subsidiaries is or may be liable to any Person as a result of the Release
or threatened Release of any Contaminant or that such Loan Party or
Subsidiary is subject to investigation by any Governmental Authority
evaluating whether any remedial action is needed to respond to the Release
or threatened Release of any Contaminant which, in either case, is
reasonably likely to give rise to liability in excess of $1,000,000.
(i) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of any Loan Party
or any of its Subsidiaries.
(j) Any organization change in any Loan Party's or any of its
Subsidiaries' name as it appears in its state or other jurisdiction of
incorporation or other organization, state or other jurisdiction of
incorporation or organization, type of entity, organizational
identification number, locations of Collateral, or form of organization,
trade names or styles under which such Loan Party or any of its
Subsidiaries will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, in each case at
least thirty (30) days prior thereto.
(k) Within ten (10) Business Days after any Loan Party, any of its
Subsidiaries or any ERISA Affiliate knows or has reason to know, that an
ERISA Event has occurred, and, when known, any action taken or threatened
by the IRS, the DOL or the PBGC with respect thereto.
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within
three (3) Business Days after the filing thereof with the PBGC, the DOL or
the IRS, as applicable, copies of the following: (i) each annual report
(form 5500 series), including Schedule B thereto, filed with the PBGC, the
DOL or the IRS with respect to each Plan, (ii) a copy of each funding
waiver request filed with the PBGC, the DOL or the IRS with respect to any
Plan and all communications received by any Loan Party, any of its
Subsidiaries, or any ERISA Affiliate of any Loan Party from the PBGC, the
DOL or the IRS with respect to such request, and (iii) a copy of each other
filing or notice filed with the PBGC, the DOL or the IRS, with respect to
each Plan by any Loan Party, any of its Subsidiaries or any ERISA Affiliate
of any Loan Party.
(m) Upon request and to the extent available, copies of each
actuarial report for any Plan or Multiemployer Plan and annual report for
any Multiemployer Plan; and within three (3) Business Days after receipt
thereof by any Borrower or any of its Subsidiaries or ERISA Affiliates,
copies of the following: (i) any notices of the PBGC's
81
or other authority's intention to terminate a Plan as to have a trustee
appointed to administer such Plan, (ii) any unfavorable determination
letter from the IRS regarding the qualification of a Plan under Section
401(a) of the Code (and, upon request, any favorable IRS determination
letter), or (iii) any notice from a Multiemployer Plan regarding the
imposition of withdrawal liability.
(n) Within three (3) Business Days after the occurrence thereof,
(i) any failure by any Loan Party, any of its Subsidiaries or any ERISA
Affiliate to make one or more required installments or any other required
payments under Section 412 of the Code or the applicable laws of any other
jurisdiction on or before the due date for such installment or payment,
which, in the aggregate, equal or exceed $1,000,000.
(o) Within three (3) Business Days after any Loan Party or any of
its Subsidiaries on an ERISA Affiliates knows or has reason to know that
any of the following events has or will occur: (i) a Multiemployer Plan has
been or will be terminated; (ii) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan; (iii) the
PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan; or (iv) with respect to any Plan
of a Canadian Guarantor, any Lien arises with respect to such Plan (save
for contribution amounts not yet due).
Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that any Loan
Party, its Subsidiary, or any ERISA Affiliate, as applicable, has taken or
proposes to take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to the Agent and the Lenders
that except as hereafter disclosed to and accepted by the Agent and the Majority
Lenders:
8.1 Authorization, Validity, and Enforceability of this Agreement and the
Loan Documents. Each of such Loan Party and its Subsidiaries has the corporate
power and authority to execute, deliver and perform this Agreement and the other
Loan Documents to which it is a party, to incur the Obligations, and to grant to
the Agent Liens upon and security interests in the Collateral owned by it. Each
of such Loan Party and its Subsidiaries has taken all necessary corporate action
(including, without limitation, obtaining approval of its stockholders if
necessary) to authorize its execution, delivery, and performance of this
Agreement and the other Loan Documents to which it is a party. No consent,
approval, or authorization of, or declaration or filing with, any Governmental
Authority, and no consent of any other Person, is required in connection with
such Loan Party's or any of its Subsidiary's execution, delivery and performance
of this Agreement and the other Loan Documents to which it is a party, except
for the Final Bankruptcy Court Order and those orders already duly obtained.
This Agreement and the other Loan Documents have been duly executed and
delivered by each of the Loan Parties and its
82
Subsidiaries party thereto, and, subject to the DIP Orders, constitute the
legal, valid and binding obligations of each of the Loan Parties and its
Subsidiaries party thereto, enforceable against each such Loan Party and its
Subsidiaries in accordance with their respective terms without defense, set-off
or counterclaim. Such Loan Party's and Subsidiary's execution, delivery, and
performance of this Agreement and the other Loan Documents to which it is a
party do not and will not conflict with, or constitute a violation or breach of,
or constitute a default under, or, except for Liens created under the Loan
Documents, result in the creation or imposition of any Lien upon the property of
such Loan Party or any of its Subsidiaries by reason of the terms of (a) any
contract, mortgage, Lien, lease, agreement, indenture, or instrument to which
such Loan Party or any of its Subsidiaries is a party or which is binding upon
it to which the automatic stay provisions of the Bankruptcy Code do not apply,
(b) any Requirement of Law applicable to such Loan Party or any of its
Subsidiaries (including, without limitation, any court order entered in the
Case), or (c) the certificate or articles of incorporation or by-laws,
amendment, continuation, amalgamation or other organizational documents of such
Loan Party or any of its Subsidiaries.
8.2 Validity and Priority of Security Interest. Subject to the entry of
the Interim Bankruptcy Court Order, the provisions of this Agreement and the
other Loan Documents create legal and valid Liens on all the Collateral in favor
of the Agent, for the ratable benefit of the Agent and the Lenders, and such
Liens constitute perfected and continuing Liens on all the Collateral, having
priority over all other Liens (x) other than, in the case of Collateral not
consisting of Inventory, Accounts, Real Estate (other than the Ohio Property)
and the proceeds thereof, Permitted Liens pursuant to clauses (d), (e), (g), (h)
and (i) of the definition thereof, and (y) other than, in the case of Collateral
consisting of Inventory, Accounts, Real Estate (other than the Ohio Property)
and the proceeds thereof, Carve-Out Expenses and Liens set forth on Schedule
9.19(b), in each case, securing all the Obligations, and enforceable against
such Loan Party and its Subsidiaries, as applicable, and all third parties.
Except as set forth on Schedule 9.19(b), no Liens encumber any Collateral
consisting of Inventory, Accounts, Real Estate (other than the Ohio Property) or
the proceeds thereof.
8.3 Organization and Qualification. Each of such Loan Party and its
Subsidiaries (a) is duly organized incorporated or amalgamated, as the case may
be, and validly existing in good standing under the laws of the jurisdiction of
its organization, incorporation or amalgamation, as the case may be, (b) is
qualified to do business as a foreign corporation and is in good standing in the
jurisdictions in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed, except where the failure to
so qualify or be licensed is not reasonably likely to have a Material Adverse
Effect and (c) has all requisite power and authority to conduct its business and
to own its property.
8.4 Corporate Name; Prior Transactions. Except as set forth on Schedule
8.4 neither such Loan Party nor any of its Subsidiaries has, during the past
five (5) years, been known by or used any other corporate or fictitious name, or
been a party to any merger, consolidation or amalgamation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
outside of the ordinary course of business.
83
8.5 Subsidiaries and Affiliates. Schedule 8.5 is a true and correct list
of the name and relationship to Spiegel of each and all of Spiegel's
Subsidiaries and other Affiliates.
8.6 Financial Statements and Projections. (a) Spiegel has delivered to the
Agent and the Lenders the audited consolidated balance sheet and related
consolidated statements of income, cash flows, and changes in stockholders
equity for Spiegel and its consolidated Subsidiaries as of December 31, 2001,
and for the Fiscal Year then ended, accompanied by the report thereon by
Spiegel's independent certified public accountants. Spiegel has also delivered
to the Agent and the Lenders the unaudited consolidated and consolidating
balance sheet and related statements of income and cash flows for Spiegel and
its consolidated Subsidiaries for the fiscal quarter of Spiegel ending September
2002. Such financial statements are attached hereto as Exhibit C. All such
financial statements have been prepared in accordance with GAAP and present
accurately and fairly in all material respects the financial position of Spiegel
and its consolidated Subsidiaries as at the dates thereof and their results of
operations for the periods then ended in conformity with GAAP.
(b) The Latest Projections when submitted to the Lenders as required
herein represent Spiegel's best estimates of the future financial performance of
Spiegel and its consolidated Subsidiaries for the periods set forth therein on
the date when submitted. The Latest Projections have been prepared on the basis
of the assumptions set forth therein, which Spiegel believes are fair and
reasonable in light of current and reasonably foreseeable business conditions at
the time such Latest Projections are submitted to the Lenders.
8.7 Capitalization. On the Closing Date, the capitalization of each of the
Loan Parties and its Subsidiaries is as shown on Schedule 8.7.
8.8 Reorganization Matters. (a) Pursuant to and to the extent permitted in
the Interim Bankruptcy Court Order and the Final Bankruptcy Court Order, the
Obligations will constitute allowed administrative expense claims in the Case
having priority over all administrative expense claims and unsecured claims
against the Loan Parties now existing or hereafter arising, of any kind
whatsoever, including, without limitation, all administrative expense claims of
the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code, subject
and subordinate, as to priority, only to Carve-Out Expenses.
(b) Pursuant to and to the extent permitted under the DIP Orders, the
Obligations will be secured by a valid and perfected Lien on all of the
Collateral.
(c) (i) The Interim Bankruptcy Court Order (with respect to the
period prior to the Final Bankruptcy Court Order Date) shall have been entered,
shall be in full force and effect and shall not have been reversed, stayed,
modified or amended absent express written joinder and consent of the Initial
Lenders and the Agent.
(ii) The Final Bankruptcy Court Order (with respect to the period
on or after the Final Bankruptcy Court Order Date), as the case may be, shall
have been entered, shall
84
be in full force and effect and shall not have been reversed, stayed, modified
or amended absent express written joinder and consent of the Majority Lenders
and the Agent.
8.9 Debt. After giving effect to the making of the Revolving Loans to be
made on the Closing Date, the Loan Parties and their Subsidiaries have no Debt,
except (a) the Obligations, and (b) Debt described on Schedule 8.9.
8.10 Distributions. Since December 31, 2001, no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of Spiegel or any of its Subsidiaries.
8.11 Title to Property. Each Loan Party and each of its Subsidiaries has
good and marketable title in fee simple to its real property, if any, listed in
Schedule 8.11 hereto as being owned by such Loan Party or Subsidiary, and each
of such Loan Party and Subsidiary has good title to all of its other property
(including, without limitation, the assets reflected on the December 31, 2002
Financial Statements delivered to the Agent and the Lenders, in each case,
except as disposed of in the ordinary course of business since the date thereof
and property subject to capital leases), free of all Liens except Permitted
Liens.
8.12 Real Estate; Leases. Schedule 8.12 sets forth a correct and complete
list of all leases and subleases of real or personal property by such Loan Party
or any of its Subsidiaries as lessee or sublessee (other than leases of personal
property as to which such Borrower or Subsidiary, as applicable, is lessee or
sublessee for which the value of such personal property is less than $25,000,
and all leases and subleases of real or personal property by such Loan Party or
Subsidiary, as applicable, as lessor, lessee, sublessor or sublessee. Each of
such leases and subleases is valid and enforceable in accordance with its terms
and is in full force and effect, and no default by such Loan Party or
Subsidiary, as applicable, or, to the knowledge of such Loan Party, any other
party to any such lease or sublease exists, except for any lease or sublease
where the lack of validity and enforceability thereof or of any default
thereunder is not reasonably likely to have a Material Adverse Effect. Each Loan
Party and each of its Subsidiaries have good and marketable title in fee simple
to the Real Estate identified on Schedule 8.12 as owned by such Loan Party or
Subsidiary, or valid leasehold interests in all Real Estate designated therein
as "leased" by such Loan Party or Subsidiary and such Loan Party or Subsidiary
has good, indefeasible, and merchantable title to all of its other property
reflected on the September, 2002 Financial Statements delivered to the Agent and
the Lenders, except as disposed of in the ordinary course of business since the
date thereof, free of all Liens except Permitted Liens.
8.13 Proprietary Rights. Schedule 8.13 sets forth a correct and complete
list of all of such Loan Party's and each of its Subsidiaries' material
Proprietary Rights (other than copyrights). None of the material Proprietary
Rights is subject to any licensing agreement or similar arrangement except as
set forth on Schedule 8.13. To the best of such Loan Party's knowledge, none of
the material Proprietary Rights infringes on or conflicts with any other
Person's property, and no other Person's property infringes on or conflicts with
the material Proprietary Rights. Such Loan Party and each of its Subsidiaries
has all Proprietary Rights necessary to the conduct of such Loan Party's and its
Subsidiaries' respective businesses.
85
8.14 Trade Names. All trade names or styles under which such Loan Party or
any of its Subsidiaries will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Schedule
8.14.
8.15 Litigation. Except as set forth on Schedule 8.15, there is no
pending, or to the best of such Loan Party's knowledge threatened, action, suit,
proceeding, or counterclaim by any Person, or investigation by any Governmental
Authority, or any basis for any of the foregoing, which could reasonably be
expected to have a Material Adverse Effect.
8.16 Restrictive Agreements. None of such Loan Party nor any of its
Subsidiaries is a party to any contract or agreement, or subject to any charter
or other corporate restriction, which affects its ability to execute, deliver,
and perform the Loan Documents and repay the Obligations or which materially and
adversely affects or, insofar as such Loan Party can reasonably foresee, could
reasonably be expected to materially and adversely affect, the property,
business, operations, or condition (financial or otherwise) of such Loan Party
or Subsidiary, or would in any respect have a Material Adverse Effect.
8.17 Labor Disputes. Except as set forth on Schedule 8.17, (a) there is
no collective bargaining agreement or other labor contract covering employees of
such Loan Party or any of its Subsidiaries, (b) no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of this
Agreement, (c) to the best of such Loan Party's knowledge, no union or other
labor organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of such Loan Party or any of its Subsidiaries or
for any similar purpose, and (d) there is no pending or (to the best of such
Loan Party's knowledge) threatened, strike, work stoppage, material unfair labor
practice claim, or other material labor dispute against or affecting such Loan
Party or any of its Subsidiaries or its employees.
8.18 Environmental Laws. Except as otherwise disclosed on Schedule 8.18:
(a) Such Loan Party and its Subsidiaries are in compliance in
all material respects with all Environmental Laws and neither such Loan
Party nor any of its Subsidiaries nor any of its presently owned real
property or presently conducted operations, nor to the best of such Loan
Party's knowledge, its previously owned real property or prior operations,
is subject to any enforcement order from or liability agreement with any
Governmental Authority or private Person respecting (i) compliance with any
Environmental Law or (ii) any potential liabilities and costs or remedial
action arising from the Release or threatened Release of a Contaminant.
(b) Such Loan Party and each of its Subsidiaries have obtained
all permits necessary for their respective current operations under
Environmental Laws, and all such permits are in good standing and such Loan
Party and each of its Subsidiaries are in compliance with all terms and
conditions of such permits.
86
(c) Neither such Loan Party nor any of its Subsidiaries, nor,
to the best of such Loan Party's knowledge, any of their respective
predecessors in interest, has in violation of applicable law stored,
treated or disposed of any hazardous waste.
(d) Neither such Loan Party nor any of its Subsidiaries have
received any summons, complaint, order or similar written notice indicating
that they are not currently in compliance with, or that any Governmental
Authority is investigating their compliance with, any Environmental Laws or
that it is or may be liable to any other Person as a result of a Release or
threatened Release of a Contaminant.
(e) None of the present or, to such Loan Party's knowledge, past
operations of such Loan Party or any of its Subsidiaries is the subject of
any investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to a Release or threatened Release of
a Contaminant.
(f) There is not now, nor to the best of such Loan Party's
knowledge has there ever been, (i) on or in any Real Estate owned by any
Loan Party or (ii) on or in any of the Real Estate leased by any Loan
Party, to the extent caused by such Loan Party or any of its Subsidiaries
or to the extent the remediation costs incurred or to be incurred by the
Loan Parties or any of their Subsidiaries in connection therewith exceed or
could reasonably be expected to exceed $1,000,000 in the aggregate:
(1) any underground storage tanks or surface impoundments,
(2) any asbestos-containing material, or
(3) any polychlorinated biphenyls (PCBs) used in hydraulic oils,
electrical transformers or other equipment.
(g) Neither such Loan Party nor any of its Subsidiaries has
filed any notice under any requirement of Environmental Law reporting a
spill or accidental and unpermitted Release or discharge of a Contaminant
into the environment that has not been cured to the satisfaction of the
relevant Governmental Authority.
(h) Neither such Loan Party nor any of its Subsidiaries has
entered into any negotiations or settlement agreements with any Person
(including, without limitation, the prior owner of their respective
property) imposing material obligations or liabilities on such Loan Party
or any of its Subsidiaries with respect to any remedial action in response
to the Release of a Contaminant or environmentally related claim.
(i) No Environmental Lien has attached to any owned Real Estate
of any of the Loan Parties or, to the best of such Loan Party's knowledge,
any leased Real Estate of any of the Loan Parties.
87
8.19 No Violation of Law. Except as set forth on Schedule 8.19, neither
such Loan Party nor any of its Subsidiaries is in violation of (or, due to the
filing of the Case, is exempted from compliance with) any law, statute,
regulation, ordinance, judgment, order, or decree applicable to it, which
violation could reasonably be expected to have a Material Adverse Effect.
8.20 No Default. Neither such Loan Party nor any of its Subsidiaries is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement entered into on or after the Petition Date to which
such Borrower or Subsidiary is a party or by which it is bound, which default
could reasonably be expected to have a Material Adverse Effect.
8.21 ERISA Compliance. Except as specifically disclosed in Schedule 8.21:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code, the PBA and other federal,
provincial or state law.
(b) Each Plan which is intended to qualify under Section 401(a)
of the Code has received a favorable determination letter from the IRS and
to the best knowledge of such Loan Party, nothing has occurred which would
cause the loss of such qualification.
(c) Such Loan Party, each of its Subsidiaries and each ERISA
Affiliate has made all required contributions to any Plan subject to
Section 412 of the Code and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(d) No Plan is a Multiemployer Plan as of the Closing Date.
(e) There are no pending or, to the knowledge of such Loan
Party, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(f) There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted
or could reasonably be expected to result in a Material Adverse Effect.
(g) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability in excess of
$25,000,000; (iii) neither such Loan Party, any of its Subsidiaries nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
such Loan Party, any of its Subsidiaries nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability)
88
under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan;
and (v) to the knowledge of such Loan Party, neither such Loan Party, any
of its Subsidiaries, nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
8.22 Taxes. Such Loan Party and its Subsidiaries has filed all federal,
state, foreign, provincial and other tax returns and reports required to be
filed, and has paid all federal and other taxes, assessments, fees and other
governmental charges levied or imposed upon it or its properties, income or
assets otherwise due and payable, except for taxes with respect to periods prior
to the Petition Date for which payment cannot be made as a result of such
Borrower's or Subsidiary's status as a debtor-in-possession and except for
Permitted Liens described in clause (a) of the definition thereof.
8.23 Regulated Entities. None of such Loan Party, any of its Subsidiaries
or any Person controlling such Loan Party, or any Subsidiary, is an "Investment
Company" within the meaning of the Investment Company Act of 1940. None of such
Loan Party nor any of its Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or law, or any other federal or
state statute or regulation limiting its ability to incur indebtedness.
8.24 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for working capital purposes. Neither such Loan Party nor any
of its Subsidiaries is engaged in the business of purchasing or selling Margin
Stock or extending credit for the purpose of purchasing or carrying Margin
Stock.
8.25 Copyrights, Patents, Trademarks and Licenses, etc. To the best
knowledge of such Loan Party, such Loan Party and each of its Subsidiaries owns
or is licensed or otherwise has the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual franchises, licenses, rights
of way, authorizations and other rights that are reasonably necessary for the
operation of its businesses, without conflict with the Proprietary Rights of any
other Person. To the best knowledge of such Loan Party, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now intended to be employed, by such Loan Party or any
Subsidiary infringes upon any material Proprietary Rights held by any other
Person. No claim or litigation regarding any of the foregoing is pending or, to
the knowledge of such Loan Party, threatened, and, to the knowledge of such Loan
Party, no patent, invention, device, application, principle or any statute, law,
rule, regulation, standard or code is pending or proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
8.26 No Material Adverse Change. Except as set forth on Schedule 8.26, no
Material Adverse Effect has occurred since December 31, 2001 other than (i) the
commencement of the Case and (ii) the continuation of the circumstances giving
rise to the filing thereof.
89
8.27 Full Disclosure. None of the representations or warranties made by
such Loan Party or any of its Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
information or statements contained in any exhibit, report, statement,
certificate or other writing furnished by or on behalf of such Loan Party or any
of its Subsidiaries or otherwise made available by or on behalf of such Loan
Party or any of its Subsidiaries to the Agent or any Lender in connection with
the Loan Documents (including the offering and disclosure materials delivered by
or on behalf of such Loan Party or any of its Subsidiaries to the Lenders prior
to the Closing Date), contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
information or statements made therein, in light of the circumstances under
which they are made, not misleading in any material respect as of the time when
made or delivered.
8.28 Material Agreements. Schedule 8.28 hereto sets forth all material
agreements and contracts to which such Loan Party or any of its Subsidiaries is
a party or is bound as of the date hereof.
8.29 Bank Accounts. Schedule 8.29 contains a complete and accurate list of
all material bank accounts maintained by such Borrower or any of its
Subsidiaries with any bank or other financial institution.
8.30 Assets Necessary for Conduct of Business. Neither Spiegel Holdings,
Inc. nor any other Affiliate of the Xxxx Interests (other than a Loan Party or
an Excluded Subsidiary) owns any assets necessary for the conduct of the
business of Spiegel or any of its Subsidiaries as presently conducted or
contemplated to be conducted in the future.
8.31 Existing Securitization Program. The program under the Securitization
Facility has been terminated. Since such termination, no Consumer Credit Card
Receivables, Major Credit Card Receivables or related assets have been or will
be transferred by any of the Loan Parties under the Securitization Facility.
There are no, and no basis for any, secured claims against Spiegel or any of its
Subsidiaries in connection with the Securitization Facility and there are no,
and no basis for any, claims in connection with the Securitization Facility
which would be equal or prior to the Agent's Liens or the superpriority claim
granted to the Agent and the Lenders. Spiegel and its Subsidiaries have no
liabilities or obligations under the Securitization Facility and no Liens have
been granted by Spiegel or any of its Subsidiaries on the Collateral in
connection with the Securitization Facility. There are no, and no basis for any,
secured claims against Spiegel or any of its Subsidiaries in connection with the
pending investigation being conducted by the Office of the Comptroller of the
Currency with respect to First Consumers National Bank, and there are no, and no
basis for any, claims in connection with such investigation which would be equal
or prior to the Agent's Liens or the superpriority claim granted to the Agent
and the Lenders.
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ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Loan Party covenants to the Agent and each Lender that, so long
as any of the Obligations remain outstanding or this Agreement is in effect:
9.1 Taxes and Other Obligations. Such Loan Party shall, and shall cause
each of its Subsidiaries to, (a) file when due all foreign, federal, provincial,
state and other tax returns and other reports which it is required to file; (b)
pay, or provide for the payment, when due, of all taxes, fees, assessments and
other governmental charges against it or upon its property, income and
franchises, make all required withholding and other tax deposits, and establish
adequate reserves for the payment of all such items, that in each case arises
after the Petition Date or are the subject of a First Day Order, and provide to
the Agent and the Lenders, upon request, satisfactory evidence of its timely
compliance with the foregoing; and (c) pay when due all Debt owed by it and all
claims of materialmen, mechanics, carriers, warehousemen, landlords, processors
and other like Persons, and all other indebtedness owed by it and perform and
discharge in a timely manner all other obligations undertaken by it (in each
instance under this clause (c), other than pre-petition Debt, claims and other
obligations and indebtedness except as permitted by Section 9.30); provided,
however, so long as the Authorized Representative has notified the Agent in
writing, neither such Loan Party nor any of its Subsidiaries need pay any tax,
fee, assessment or governmental charge that (i) it is contesting in good faith
by appropriate proceedings diligently pursued, (ii) as to which such Loan Party
or Subsidiary, as the case may be, has established proper reserves for as
provided in GAAP, and (iii) no Lien (other than a Permitted Lien) results from
such non-payment.
9.2 Legal Existence and Good Standing. Such Loan Party shall, and shall
cause each of its Subsidiaries to, maintain its legal existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
9.3 Compliance with Law and Agreements; Maintenance of Licenses. Except as
set forth on Schedule 9.3, such Loan Party shall, and shall cause each of its
Subsidiaries to, comply in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act and all Environmental Laws).
Such Loan Party shall, and shall cause each of its Subsidiaries to, obtain and
maintain all material licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as
conducted on the Closing Date. Neither such Loan Party nor any of its
Subsidiaries shall modify, amend or alter its certificate or article of
incorporation or other organizational documents other than in a manner which
does not adversely affect the rights of the Lenders or the Agent.
9.4 Maintenance of Property; Inspection of Property. (a) Such Loan Party
shall, and shall cause each of its Subsidiaries to, maintain all of its property
necessary and useful in the conduct of its business, in good operating condition
and repair, ordinary wear and tear excepted
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unless such Loan Party or Subsidiary, as the case may be, determines in good
faith that the continued maintenance of any of its properties is no longer
economically desirable.
(b) Such Loan Party shall permit representatives and independent
contractors of the Agent (at the expense of such Loan Party not to exceed three
(3) times per year unless an Event of Default has occurred and is continuing) to
visit and inspect any of its properties, to examine its corporate, financial and
operating records, and make copies thereof or abstracts therefrom and to discuss
its affairs, finances and accounts with its directors, officers and independent
public accountants, at such reasonable times during normal business hours and as
soon as may be reasonably desired, upon reasonable advance notice to such Loan
Party; provided, however, when an Event of Default exists, the Agent or any
Lender may do any of the foregoing at the expense of such Loan Party at any
reasonable time without advance notice.
9.5 Insurance. (a) Such Loan Party shall, and shall cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers having a
rating of at least A+ or better by Best Rating Guide, the insurance coverage
maintained by such Loan Party and its Subsidiaries on the Closing Date and such
additional coverage as the Agent or the Majority Lenders may request from time
to time. Without limiting the foregoing, in the event that any improved Real
Estate covered by the Mortgages is determined to be located within an area that
has been identified by the Director of the Federal Emergency Management Agency
as a Special Flood Hazard Area ("SFHA") such Loan Party shall purchase and
maintain flood insurance on the improved Real Estate and any Equipment and
Inventory located on such Real Estate, in an amount to be reasonably determined
by the Agent, and shall comply with the applicable federal regulations as
required by the Flood Disaster Protection Act of 1973, as amended. Upon the
Majority Lenders' request, such Loan Party or Subsidiary, as appropriate, shall
maintain flood insurance for its Inventory and Equipment which is, at any time,
located in a SFHA.
(b) Such Loan Party shall, and shall cause each of its Subsidiaries
to, cause the Agent, for the ratable benefit of the Agent and the Lenders, to be
named in each such policy as secured party or mortgagee and sole loss payee or
additional insured, in a manner acceptable to the Agent. Each policy of
insurance shall contain a clause or endorsement requiring the insurer to give
not less than 30 days' prior written notice to the Agent in the event of
modification or cancellation of the policy for any reason whatsoever and, on or
within ten (10) days after the Interim Bankruptcy Court Order Date, a clause or
endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of any Loan Party, any of its Subsidiaries or
the owner of any premises for purposes more hazardous than are permitted by such
policy. All premiums for such insurance shall be paid by such Loan Party or
Subsidiary, as appropriate, when due, and certificates of insurance and
photocopies of the policies shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the Lenders. If
such Loan Party or Subsidiary, as appropriate, fails to procure such insurance
or to pay the premiums therefor when due, the Agent may, and at the direction of
the Majority Lenders shall, do so from the proceeds of Revolving Loans.
(c) Such Loan Party shall, and shall cause each of its Subsidiaries
to, promptly notify the Agent and the Lenders of any loss, damage, or
destruction to any material portion of
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the Collateral, whether or not covered by insurance. The Agent is hereby
authorized to collect all insurance and condemnation proceeds in respect of
Collateral directly, and to apply or remit them as follows:
(i) With respect to insurance and condemnation proceeds relating
to Collateral other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.5.
(ii) With respect to insurance and condemnation proceeds relating
to Collateral consisting of Fixed Assets, the applicable Loan Party shall apply
such insurance and condemnation proceeds first, to satisfy any debt that is
secured by a Lien (other than the Agent's Lien) encumbering such Fixed Asset
which is superior in priority to the Agent's Lien, and second, ratably, to the
reduction of the Obligations in the order provided for in Section 4.5.
9.6 [Intentionally Omitted].
9.7 Environmental Laws. Such Loan Party shall, and shall cause each of its
Subsidiaries to, conduct its business in material compliance with all
Environmental Laws applicable to it, including, without limitation, those
relating to the generation, handling, use, storage, and disposal of any
Contaminant. Such Loan Party shall, and shall cause each of its Subsidiaries to,
take prompt and appropriate action to respond to any material non-compliance
with Environmental Laws and shall regularly report to the Agent on such
response. Such Loan Party shall provide such information and certifications
which the Agent may reasonably request from time to time to evidence compliance
with this Section.
9.8 Compliance with ERISA. Such Loan Party shall, and shall cause each of
its Subsidiaries and ERISA Affiliates to: (a) maintain each Plan in compliance
in all material respects with the applicable provisions of ERISA, the Code, the
PBA and other federal, provincial or state law; (b) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such qualification; (c)
make all required contributions to any Plan subject to Section 412 of the Code,
except for such contributions, if any, with respect to any periods prior to the
Petition Date that such Loan Party or Subsidiary does not make as a result of
its status as a debtor-in-possession in the Case; (d) use its best efforts not
to engage in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA which could reasonably be expected to have a Material Adverse Effect; and
(e) with respect to any Plan of a Canadian Guarantor, not permit any Lien to
arise or exist in connection with such Plan (save for contributions not yet
due).
9.9 Mergers, Consolidations or Sales. Such Loan Party shall not, and
shall not suffer or permit any of its Subsidiaries to, enter into any
transaction of merger, amalgamation, reorganization (other than the Case), or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing or petition the Bankruptcy Court for authority to do any of the
foregoing, except (i) for sales of Inventory in the ordinary course of its
business, (ii) sales or other dispositions on a non-recourse basis of Consumer
Credit Card Receivables pursuant to a securitization program
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that is acceptable to the Agent and Majority Lenders; (iii) sales or closings by
a Borrower or Xxxxx Xxxxx Canada of its retail and outlet stores; provided, that
(x) in the case of any such sales (including "going out of business" sales in
connection with the closing down of a retail or outlet store) which include
assets consisting of Consumer Credit Card Receivables, Major Credit Card
Receivables, Inventory or Real Estate, the net cash proceeds received by such
Borrower or Xxxxx Xxxxx Canada from such sale shall be in an aggregate amount
not less than the proceeds from Revolving Loans that any Borrower would be able
to receive in respect of such Consumer Credit Card Receivables, Major Credit
Card Receivables, Inventory or Real Estate, as the case may be, if such Consumer
Credit Card Receivables, Major Credit Card Receivables, Inventory or Real Estate
were included in the calculation of Combined Availability (without giving effect
to any Commitment, the Maximum Revolver Amount or any other limits included in
the calculation of Combined Availability) and (y) the aggregate number of retail
or outlet stores sold or closed during the term of this Agreement shall not
exceed 80 stores; (iv) for sales or other dispositions of Equipment in the
ordinary course of business that are obsolete or no longer useable by such Loan
Party or Subsidiary in its business with an aggregate fair market value not to
exceed $2,500,000 in any Fiscal Year (exclusive of any net cash proceeds from
any such sale or other disposition made in such Fiscal Year which is reinvested
in Equipment within 90 days of such sale or other disposition) and (v) for other
sales of stores by a Borrower or Xxxxx Xxxxx Canada having an aggregate book
value not to exceed $5,000,000 during the term of this Agreement. Following each
such Equipment sale or disposition, such Loan Party or Subsidiary, as the case
may be, shall apply such proceeds first, to satisfy any debt that is secured by
a lien (other than the Agent's Lien) encumbering such asset which is superior in
priority to the Agent's, and second, to the Loans in accordance with Section
4.5. All Equipment purchased with such proceeds shall be free and clear of all
Liens, except the Agent's Liens and other Permitted Liens (except those
Permitted Liens under clause (i) of such defined term).
9.10 Distributions; Capital Change; Restricted Investments. Such Loan
Party shall not, and shall not suffer or permit any of its Subsidiaries to, (i)
directly or indirectly declare or make, or incur any liability to make, any
Distribution, except a Distribution to a Loan Party, (ii) make any change in its
capital structure which could have a Material Adverse Effect or issue any
capital stock other than common stock or (iii) make any Restricted Investment.
9.11 [Intentionally Omitted].
9.12 Guaranties. Except as set forth on Schedule 9.12, such Loan Party
shall not, and shall not suffer or permit any of its Subsidiaries to, make,
issue, or become liable on any Guaranty, except (i) Guaranties of the
Obligations in favor of the Agent, (ii) unsecured Guaranties of Debt permitted
to be incurred pursuant to Section 9.13 and (iii) Joint Venture Investments
constituting Guaranties.
9.13 Debt. Such Loan Party shall not, and shall not suffer or permit any
of its Subsidiaries to, incur or maintain any Debt, other than:
(a) the Obligations;
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(b) other Debt existing on the Petition Date;
(c) Debt contemplated by the Interim Bankruptcy Court Order or Final
Bankruptcy Court Order;
(d) Debt owing to a Loan Party;
(e) Capital Leases of Equipment and purchase money secured Debt
incurred to purchase Fixed Assets; provided, that (i) Liens securing the same
attach only to the Fixed Asset acquired by the incurrence of such Debt and (ii)
the aggregate amount of such Debt (including Capital Leases) outstanding does
not at any time exceed $10,000,000;
(f) Debt evidencing a refunding, renewal or extension of the Debt
referred to in clause (e) of this Section 9.13; provided, that (i) the principal
amount thereof is not increased, (ii) the Liens, if any, securing such refunded,
renewed or extended Debt do not attach to any assets in addition to those
assets, if any, securing the Debt to be refunded, renewed or extended, (iii) no
Person that is not an obligor or guarantor of such Debt as of the Closing Date
shall become an obligor or guarantor thereof and (iv) the covenants, repayment
provisions, events of default and subordination provisions, if any, of such
refunding, renewal or extension are no less favorable to the applicable Loan
Party, the Agent or the Lenders than the original Debt;
(g) Joint Venture Investments;
(h) unsecured Debt under Hedge Agreements entered into in the
ordinary course of business and not for speculative purposes; and
(i) other unsecured Debt in an aggregate principal amount not to
exceed $25,000,000 at any time outstanding.
9.14 Prepayment. Subject to Section 9.30, such Loan Party shall not, and
shall not suffer or permit any of its Subsidiaries to, voluntarily prepay,
acquire or defease any Debt, except the Obligations in accordance with the terms
of this Agreement.
9.15 Transactions with Affiliates. Except as set forth below or on
Schedule 9.15, such Loan Party shall not, and shall not suffer or permit any of
its Subsidiaries to, sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature (including,
but not limited to, any fees or expenses for management services), to any
Affiliate (other than a Loan Party), or lend or advance money or property to any
Affiliate (other than a Loan Party), or invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness, or any property,
of any Affiliate, or become liable on any Guaranty of the indebtedness,
dividends, or other Obligations of any Affiliate. Notwithstanding the foregoing,
(i) while no Event of Default has occurred and is continuing, such Loan Party or
Subsidiary may engage in transactions with other Affiliates in the ordinary
course of business, in amounts and upon terms fully disclosed to the Agent and
the Lenders, and no less favorable to such Loan Party or Subsidiary than would
be obtained in a comparable arm's-length transaction
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with a third party who is not an Affiliate and (ii) such Loan Party shall not
engage in any transactions with Spiegel Holdings, Inc. or any of the Excluded
Subsidiaries, except that (x) Spiegel Holdings, Inc, and the Loan Parties may
provide each other with accounting, administrative, tax and human resource
services, in each instance, in the ordinary course of business and consistent
with past practices, and, in the case of services provided to Spiegel Holdings,
Inc., such services are incidental to the status of Spiegel Holdings, Inc. as a
holding company and the aggregate amount paid to Spiegel Holdings, Inc. for all
services provided by it to the Loan Parties shall not exceed $500,000 in any
Fiscal Year and (y) any Loan Party may enter into servicing arrangements with
one or more Excluded Subsidiaries in connection with the collection of Consumer
Credit Card Receivables on terms and conditions fully disclosed and satisfactory
to the Agent and the Initial Lenders (Majority Lenders on and after the Final
Bankruptcy Court Order Date) and approved by the Bankruptcy Court.
9.16 Investment Banking and Finder's Fees. Such Borrower shall not, and
shall not suffer or permit any of its Subsidiaries to, pay or agree to pay, or
reimburse any other party with respect to, any investment banking or similar or
related fee, underwriter's fee, finder's fee, or broker's fee to any Person in
connection with this Agreement except for the fees payable to Xxxxxx Xxxxxxxx
Xxxxx & Co., LLC and Xxxxxxx & Marsal. Such Loan Party shall defend and
indemnify the Agent and the Lenders against and hold them harmless from all
claims of any Person that such Loan Party or any of its Subsidiaries is
obligated to pay for any such fees, and all costs and expenses (including
without limitation, attorneys' fees) incurred by the Agent and/or any Lender in
connection therewith.
9.17 Reserved.
9.18 Business Conducted. Such Loan Party shall not, and shall not suffer
or permit any of its Subsidiaries to, modify or alter in any material manner the
nature and type of its business as conducted at or prior to the Closing Date or
the manner in which such business is conducted.
9.19 Liens. Such Loan Party shall not, and shall not suffer or permit any
of its Subsidiaries to, create, incur, assume, or permit to exist any Lien on
any property now owned or hereafter acquired by it, except Permitted Liens.
Schedule 9.19 sets forth as of the date hereof all tax, judgment, ERISA and
other Liens of the type for which a notice thereof is filed or recorded in any
public record and all consensual perfected Existing Liens the perfection of
which is evidenced by filing, recordation or possession. None of the Liens set
forth in Schedule 9.19 encumbers any Accounts, Inventory, Real Estate (other
than the Ohio Property) or proceeds thereof except as set forth on Schedule
9.19(b).
9.20 Sale and Leaseback Transactions. Such Loan Party shall not (and
shall not suffer or permit any of its Subsidiaries to), directly or indirectly,
enter into any arrangement with any Person providing for such Loan Party or
Subsidiary to lease or rent property that such Loan Party or Subsidiary, as
appropriate, has sold or will sell or otherwise transfer to such Person.
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9.21 New Subsidiaries. Such Loan Party shall not (and shall not suffer or
permit any of its Subsidiaries to), directly or indirectly, organize, create,
acquire or permit to exist any Subsidiary other than any Subsidiary set forth on
Schedule 8.5 as in effect on the Closing Date.
9.22 Fiscal Year. Such Loan Party shall not, and shall not suffer or
permit any of its Subsidiaries to, change its Fiscal Year.
9.23 [Intentionally Omitted].
9.24 Use of Proceeds. Such Loan Party shall not use any portion of the
Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of such Loan Party or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act. Such Loan Party shall use the Loan proceeds received hereunder,
exclusively, for general corporate purposes permitted hereunder and to fund the
working capital needs of the Loan Party and to make payments permitted by
Section 9.30.
9.25 Interim Bankruptcy Court Order; Final Bankruptcy Court Order;
Administrative Expense Claim Priority; Lien Priority. (a) Such Loan Party shall
not, and shall not suffer or permit any of its Subsidiaries to, at any time
seek, consent to or suffer to exist any modification, stay, vacation or
amendment (x) of the Interim Bankruptcy Court Order except for modifications and
amendments mutually agreed to in writing by the Initial Lenders, the Loan
Parties and the Agent or (y) of the Final Bankruptcy Court Order, except for
modifications and amendments mutually agreed to in writing by the Majority
Lenders (or the Lenders as required by Section 13.2) the Loan Parties and the
Agent.
(b) Such Loan Party shall not, and shall not suffer or permit any
of its Subsidiaries to, at any time suffer to exist a priority for any
administrative expense claim or unsecured claim against such Loan Party or
Subsidiary (now existing or hereafter arising of any kind or nature whatsoever,
including without limitation any administrative expense claim of the kind
specified in Sections 503(b) and 507(b) of the Bankruptcy Code) equal or
superior to the priority of the Lenders and the Agent in respect of the
Obligations, except for the Carve-Out Expenses.
(c) Such Loan Party shall not, and shall not suffer or permit any
of its Subsidiaries to, at any time suffer to exist any Lien on any properties,
assets or rights (including, without limitation, Inventory and other Collateral)
of such Loan Party or Subsidiary having a priority equal or superior to the
Agent's Liens, except (i) in the case of Collateral not consisting of Inventory,
Accounts, Real Estate (other than the Ohio Property) or the proceeds thereof,
Permitted Liens pursuant to clauses (d), (e), (g), (h) and (i) of the definition
thereof for Permitted Liens and (ii) in the case of Collateral consisting of
Inventory, Accounts, Real Estate (other than the Ohio Property) or the proceeds
thereof, Carve-Out Expenses and those Liens set forth on Schedule 9.19(b).
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(d) Prior to the date on which the Obligations have been paid in
full in cash and the Lenders' Commitments have been terminated, such Loan Party
shall not, and shall not suffer or permit any of its Subsidiaries to, pay any
administrative expense claims except (i) Priority Professional Expenses, (ii)
other administrative expense claims incurred in the ordinary course of the
business of such Loan Party or Subsidiary, in each case to the extent and having
the order of priority set forth in the term "Agreed Administrative Expense Claim
Priorities", (iii) the fees and expenses of attorneys, accountants, financial
advisors and consultants retained by the Lenders and the Agent, except to the
extent the Majority Lenders and the Agent consent in writing to the payment of
any such claims and (iv) cure payments acceptable to the Agent and the Initial
Lenders (to the extent made prior to the Final Bankruptcy Court Order Date) or
the Agent and the Majority Lenders (to the extent made on or after the Final
Bankruptcy Court Order Date) in connection with the assumption of executory
contracts or unexpired leases pursuant to the Bankruptcy Code, but in any event
only to the extent budgeted in the cash flow forecast delivered pursuant to
Section 7.2(f)(iv) covering the period in which such payment is to be made.
(e) Notwithstanding the foregoing, such Loan Party or Subsidiary,
as appropriate, shall be permitted to pay as the same may become due and payable
(i) administrative expenses of the kind specified in section 503(b) of the
Bankruptcy Code incurred in the ordinary course of its business, (ii)
compensation and reimbursement of expenses to professionals allowed and payable
under section 330 and 331 of the Bankruptcy Code, subject, after the occurrence
of an Event of Default to the Priority Professional Expense Cap, and (iii)
payments permitted to be made by Section 9.30 pursuant to the First Day Orders
and other orders reviewed by and acceptable to the Agent and the Initial Lenders
(in the case of orders entered prior to the Final Bankruptcy Court Order Date)
or the Agent and the Majority Lenders (in the case of orders entered on or after
the Final Bankruptcy Court Order Date).
9.26 Further Assurances. Such Loan Party shall, and shall cause each of
its Subsidiaries to, execute and deliver, or cause to be executed and delivered,
to the Agent and/or the Lenders such documents and agreements, and shall take or
cause to be taken such actions, as the Agent or any Lender may, from time to
time, request to carry out the terms and conditions of this Agreement and the
other Loan Documents.
9.27 [Intentionally Omitted].
9.28 Obligations under Real Estate Leases, Equipment Leases and Licenses.
Such Loan Party shall, and shall cause each of its Subsidiaries to, pay all
post-petition obligations under its real estate leases, equipment leases and
licenses of intellectual property, if any, as required by the Bankruptcy Code or
the Bankruptcy Court, except to the extent (i) such Loan Party is contesting any
such obligations in good faith by appropriate proceedings, (ii) such Loan Party
has established proper reserves as required under GAAP and (iii) the nonpayment
of which does not result in the imposition of a Lien (other than a Permitted
Lien), provided, however, that without the consent of the Majority Lenders, such
Loan Party or Subsidiary may reject or permit to expire any of its real estate
leases (in a manner consistent with a maximization of the value of the assets of
such Loan Party or Subsidiary).
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9.29 Reclamation Claims. Such Loan Party shall, and shall cause each of
its Subsidiaries to, promptly furnish the Agent and the Lenders with information
and notices regarding any material reclamation claims (including amount and
claimant) upon such Loan Party's or Subsidiary's receipt thereof. Neither such
Loan Party nor any of its Subsidiaries shall incur any Liens related to
reclamation claims encumbering any Accounts, Inventory, Real Estate or any
proceeds thereof.
9.30 Prepetition Claims. Such Loan Party shall not, and shall not suffer
or permit any of its Subsidiaries to, pay Debt or other prepetition claims (by
offset, pursuant to Section 546(g)* of the Bankruptcy Code or otherwise) which
were incurred prior to the Petition Date; provided, however, that such Loan
Party or Subsidiary may (i) pay pre-Petition Date obligations to employees and
payroll taxes, sales and similar taxes to taxing authorities to the extent
approved by order of the Bankruptcy Court; and (ii) pay pre-petition claims
pursuant to any First Day Orders or other orders reviewed by and acceptable to
the Agent and the Initial Lenders (in the case of orders entered prior to the
Final Bankruptcy Court Order Date) or the Agent and the Majority Lenders (in the
case of orders entered on or after the Final Bankruptcy Court Order Date), but
in any event only to the extent budgeted in the cash flow forecast delivered
pursuant to Section 7.2(f)(iv) covering the period in which such payment is to
be made. Notwithstanding any provision herein to the contrary, the Loan Parties
may pay any franchise (and similar) taxes incurred prior to the Petition Date
necessary to maintain their existence and qualification or good standing in the
respective jurisdictions of their incorporation and in all other jurisdictions
in which qualification to do business as a foreign corporation is necessary.
9.31 Applications to Bankruptcy Court. Such Loan Party shall not, and
shall not suffer or permit any of its Subsidiaries to, apply to the Bankruptcy
Court for authority to take any action prohibited by this Article 9.
9.32 Use of Letters of Credit. Such Loan Party shall not use documentary
Letters of Credit issued hereunder for the purchase of inventory from domestic
vendors.
9.33 Notices. Such Loan Party shall promptly give to the Agent notice of
any motions regarding this Agreement.
9.34 Restructuring Advisor. Such Loan Party shall maintain as its
restructuring advisor in connection with the Case the firm of Xxxxxxx & Marsal
or another restructuring advisor reasonably acceptable to the Agent.
9.35 Reserved.
9.36 Sourcing Arrangements. Such Loan Party shall, and shall cause each
of its Subsidiaries to, maintain at all times its existing sourcing arrangements
or a replacement thereof which shall allow such Loan Party or Subsidiary, as the
case may be, to maintain an uninterrupted flow of Inventory from overseas as
reflected in the Initial DIP Forecast.
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ARTICLE 10
CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of Loans on the Closing Date. The
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to cause the Letter of Credit Issuer to
issue any Letter of Credit on the Closing Date, are subject to the following
conditions precedent having been satisfied in a manner satisfactory to the Agent
and each Lender (and in the case of any documents, agreements or other
deliveries, such documents, agreements and deliveries shall be in form and
substance satisfactory to the Agent and the Initial Lenders):
(a) This Agreement and the other Loan Documents have been
executed by each party thereto and each Loan Party shall have performed and
complied with all covenants, agreements and conditions contained herein and
in the other Loan Documents which are required to be performed or complied
with by such Loan Party before or on such Closing Date.
(b) Upon making the Revolving Loans (including such Revolving
Loans made as reimbursement for fees, costs and expenses then payable under
this Agreement) and with all their obligations current, the Borrowers shall
have Combined Availability (without giving effect to the Maximum Revolver
Amount) of at least $150,000,000.
(c) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct as of the Closing Date
as if made on such date (both immediately prior to, and after giving effect
to, such extension of credit).
(d) No Default or Event of Default shall exist on the Closing
Date, or would exist after giving effect to the Loans to be made on such
date or the Letters of Credit to be issued or the Credit Support to be
provided on such date.
(e) The Agent and the Lenders shall have received such
opinions of counsel (concerning, among other things, entry of the DIP
Orders and proper notice having been given in accordance with the DIP
Orders) for the Loan Parties as the Agent or any Lender shall request, each
such opinion to be in a form, scope, and substance satisfactory to the
Agent, the Lenders, and their respective counsel.
(f) The Borrowers shall have paid all fees and expenses of
the Agent and the Initial Lenders and the Attorney Costs incurred in
connection with any of the Loan Documents and the transactions contemplated
thereby.
(g) The Agent shall have received evidence, in form, scope,
and substance, reasonably satisfactory to the Agent, of all insurance
coverage as required by the Agreement.
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(h) The Agent and the Lenders shall have had an opportunity, if
they so choose, to examine the books of account and other records and files
of the Loan Parties and to make copies thereof, and to conduct a
pre-closing audit which shall include, without limitation, verification of
Inventory, Accounts, and Combined Availability, and the results of such
examination and audit shall have been satisfactory to the Agent and the
Lenders in all respects.
(i) No order shall have been entered by the Bankruptcy Court
(i) for appointment of a trustee or examiner with enlarged powers
substantially similar to those of a trustee, or (ii) converting the Case to
a Chapter 7 case or dismissing the Case or (iii) terminating prior to any
expiration date the Loan Parties' exclusive time period to file a plan of
reorganization and, with respect to clauses (i) through (iii) above, no
such order shall have been requested by the Borrowers or other parties in
interest.
(j) All proceedings taken in connection with the execution of
this Agreement, all other Loan Documents and all documents and papers
relating thereto shall be satisfactory in form, scope, and substance to the
Agent and the Lenders.
(k) The Agent shall have received the results of a search of
tax and other Liens, and judgments and of the Uniform Commercial Code
filings with respect to each of the Loan Parties (other than the Canadian
Guarantors) in its state or other jurisdiction or of incorporation and in
the jurisdictions in which each Loan Party (other than the Canadian
Guarantors) is doing business and/or in which any Collateral is located and
in which Uniform Commercial Code filings have been made against any Loan
Party (other than the Canadian Guarantors).
(l) The Agent shall have received a copy of the certificate or
articles of incorporation or other constitutive documents, in each case
amended to date, of each of the Loan Parties, certified as of a recent date
by the Secretary of State or other appropriate official of the state or
other jurisdiction of its organization and dated as of a recent date; a
certificate of the Secretary of each of the Loan Parties, dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy
of such Loan Party's By-laws as in effect on the date of such certificate
and at all times since a date prior to the date of the resolution described
in item (B) below, (B) that attached thereto is a true and complete copy of
a resolution adopted by such Loan Party's Board of Directors (or in the
case of a Loan Party that is not a corporation, the equivalent governing
body) authorizing the execution, delivery and performance of this Agreement
and the other Loan Documents to which it is a party and that such
resolution has not been modified, rescinded or amended and is in full force
and effect, (C) that such Loan Party's certificate or articles of
incorporation or other constitutive documents have not been amended since
the date of the last amendment thereto shown on the certificate of good
standing furnished hereinabove, and (D) as to the incumbency and specimen
signature of each of such Loan Party's officers executing this Agreement or
any other Loan Document
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delivered in connection herewith or therewith, as applicable; a certificate
of another of such Loan Party's officers as to incumbency and signature of
its Secretary.
(m) The Agent shall have received certificates of good standing,
existence or its equivalent with respect to each Loan Party certified as of
a recent date by the appropriate Governmental Authorities of the state or
other jurisdiction of incorporation or organization and in each other
jurisdiction listed on Schedule 10.1(m).
(n) There shall be no material adverse change in the business,
operations, assets, properties, liabilities, profits, prospects or
financial position of the Borrowers as determined by the Agent and the
Lenders in their sole discretion other than (i) the commencement of the
Case and (ii) the continuation of the circumstances giving rise to the
filing thereof, so long as the Agent and the Lenders have been made aware
as of the date hereof of all such circumstances.
(o) The Agent and the Initial Lenders shall have completed their
interim due diligence with respect to this Agreement, including, without
limitation, a review satisfactory to the Agent and the Initial Lenders of
the identities, Loan Parties' books and records, systems and control and
analysis of the accounts receivable and inventory and environmental matters
with respect to the Loan Parties and their properties and the financial and
business condition of the Loan Parties. The results of such review shall be
in form and substance satisfactory to the Agent and the Initial Lenders.
(p) The Lenders shall be fully satisfied with the compliance by
the Loan Parties with any and all applicable laws, statutes, rules and
regulations relating to the conduct and operations of the business and
properties of the Loan Parties.
(q) The Agent and the Initial Lenders shall be satisfied with
the terms and conditions of all material Debt and other agreements of the
Loan Parties and their Subsidiaries to remain outstanding after the Closing
Date (including, without limitation, any subordination or other
intercreditor provisions contained therein or applicable thereto).
(r) The Agent and the Initial Lenders shall be reasonably
satisfied with the all intercompany arrangements relating to the
acquisition, ownership and transfer of Inventory of a Loan Party or
otherwise.
(s) The Agent and the Initial Lenders shall be reasonably
satisfied with the corporate and legal structure and capitalization of
Spiegel and each of its Subsidiaries, including, without limitation, the
charter and bylaws of Spiegel and each of its Subsidiaries and each
agreement and instrument relating thereto.
(t) The Agent and the Initial Lenders shall have received
evidence reasonably satisfactory to them that all material requisite
governmental and material third party consents and approvals (including,
without limitation, consents with respect to each
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Loan Party and each of its Subsidiaries) to the transactions contemplated
by this Agreement and the other Loan Documents have been obtained, and
remain in full force and effect; all applicable waiting periods shall have
expired without any action being taken by any competent authority; and no
law or regulation shall be applicable in the judgment of the Agent and the
Lenders that restrains, prevents or imposes materially adverse conditions
upon any of the Loan Documents or any of the transactions contemplated
thereby.
(u) The Agent and the Initial Lenders shall have received a copy
of the Inventory Appraisal made with respect to the Inventory of each of
the Loan Parties described therein.
(v) The terms of all sourcing arrangements among the Loan
Parties and their suppliers shall have been fully disclosed to the Agent
and the Lenders and there shall have been a resolution satisfactory to the
Agent of any liens arising from any such supply arrangements.
(w) The Interim Bankruptcy Court Order shall be in full force
and effect and shall not have been reversed, stayed, modified or amended
absent prior written consent of the Agent, the Initial Lenders and the Loan
Parties.
(x) Any First Day Orders or other orders entered at the time of
commencement of the Case shall be reasonably satisfactory in form and
substance to the Agent and the Initial Lenders and the order approving the
Loan Parties' cash management system and maintenance of bank accounts shall
have been entered together with such other First Day Orders that the Agent
and the Initial Lenders require to be entered.
(y) Without limiting the generality of the items described
above, each Borrower and each Person guarantying or securing payment of the
Obligations shall have delivered or caused to be delivered to the Agent (in
form and substance reasonably satisfactory to the Agent), the financial
statements, instruments, resolutions, documents, agreements, certificates,
opinions and other items set forth on the "Closing Checklist" delivered by
the Agent to the Authorized Representative prior to the Closing Date.
The acceptance by any of the Borrowers of any Loans made or Letters
of Credit issued on the Closing Date shall be deemed to be a representation and
warranty made by all of the Borrowers to the effect that all of the conditions
precedent to the making of such Loans or the issuance of such Letters of Credit
have been satisfied, with the same effect as delivery to the Agent and the
Lenders of a certificate signed by a Responsible Officer of the Borrowers, dated
the Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this Section 10.1 have been fulfilled to the
satisfaction of such Lender, (ii) the decision of such Lender to execute and
deliver to the Agent an executed counterpart of this Agreement was made
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by such Lender independently and without reliance on the Agent or any other
Lender as to the satisfaction of any condition precedent set forth in this
Section 10.1, and (iii) all documents sent to such Lender for approval, consent
or satisfaction were acceptable to such Lender.
10.2 Conditions Precedent to Making of Loans on and after the Final
Bankruptcy Court Order Date. The obligation of the Lenders to make Revolving
Loans on or after the Final Bankruptcy Court Order Date, and the obligation of
the Agent to cause the Letter of Credit Issuer to issue any Letter of Credit on
or after the Final Bankruptcy Court Order Date, are subject to the following
conditions precedent having been satisfied on or prior to the Final Bankruptcy
Court Order Date in a manner satisfactory to the Agent and each Lender (and in
the case of any documents, agreements or other deliveries, such documents,
agreements and deliveries shall be in form and substance satisfactory to the
Agent and the Initial Lenders):
(a) The Agent and Lenders shall have completed a due
diligence investigation of each Loan Party and its Subsidiaries in scope,
and with results, satisfactory to the Agent and the Lenders and shall have
been given such access to the management, records, books of account,
contracts and properties of the Loan Parties and their respective
Subsidiaries and shall have received such financial, business and other
information regarding the Loan Parties and their respective Subsidiaries as
they shall have requested and all other related documentation regarding
contingent liabilities (including, without limitation, tax matters,
environmental matters (including, without limitation, a Phase I report and
other site assessments on each owned Real Estate of any Loan Party included
in Real Estate Availability), obligations under ERISA and welfare plans)
collective bargaining agreements and other arrangements with employees.
(b) The Agent shall have received a copy of the Accounts
Appraisal made with respect to the Consumer Credit Card Receivables of each
of the Loan Parties described therein and a copy of the Real Estate
Appraisal made with respect to the Real Estate of each of the Loan Parties
described therein.
(c) The Agent and the Lenders shall have received the
2003-2004 projections of the Loan Parties and the updated Initial DIP
Forecast referred to in Section 7.2(f)(i).
(d) The Agent shall have received the results of a title
search with respect to all Real Estate owned by a Loan Party included in
Real Estate Availability.
(e) The Agent, the Lenders and the Loan Parties shall have
entered into an amendment or an amendment and restatement of this Agreement
which shall contain, among things, eligibility criteria for Consumer Credit
Card Receivables and financial covenants and other modifications to this
Agreement based upon, among other things, due diligence conducted by the
Agent and the Initial Lenders.
(f) Within forty-five (45) days following the entry of the
Interim Bankruptcy Court Order, the Agent shall have received the Final
Bankruptcy Court Order,
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which shall be in full force and effect and shall not have been reversed,
stayed, modified or amended absent the prior written consent of the Agent,
the Majority Lenders and the Loan Parties.
10.3 Conditions Precedent to Each Loan. The obligation of the Lenders to
make each Loan, including the initial Revolving Loans on the Closing Date and
any Loans made on and after the Interim Bankruptcy Court Order Date, and the
obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter
of Credit, shall be subject to the further conditions precedent that on and as
of the date of any such extension of credit (and in the case of any documents,
agreements or other deliveries, such documents, agreements and deliveries shall
be in form and substance satisfactory to the Agent and the Majority Lenders):
(a) The following statements shall be true, and the
acceptance by any Borrower of any extension of credit shall be deemed to be
a statement by Borrower each to the effect set forth in clauses (i), (ii)
and (iii), with the same effect as the delivery to the Agent and the
Lenders of a certificate signed by a Responsible Officer, dated the date of
such extension of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of such extension of credit as though made
on and as of such date (both immediately prior to, and after giving effect
to, such extension of credit), other than any such representation or
warranty which relates to a specified prior date and except to the extent
the Agent and the Lenders have been notified in writing by the Authorized
Representative that any representation or warranty is not true and correct
and the Majority Lenders have explicitly waived in writing compliance with
such representation or warranty; and
(ii) No event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an Event of
Default; and
(iii) No event has occurred and is continuing, or would result
from such extension of credit, which has had or would have a Material
Adverse Effect.
(b) No such Borrowing shall exceed the amount of the
Combined Availability, provided, however, that the foregoing conditions
precedent are not conditions to each Lender participating in or reimbursing
the Bank or the Agent for such Lenders' Pro Rata Share of any Bank Loan or
Agent Advance as provided in Sections 2.2(h), (i) and (j).
(c) The Interim Bankruptcy Court Order (if such date is on
or after the Interim Bankruptcy Court Order Date but is prior to the Final
Bankruptcy Court Order Date) or the Final Bankruptcy Court Order (if such
date is on or after the Final Bankruptcy Court Order Date), as the case may
be, shall be in full force and effect and shall not have been reversed,
stayed, modified or amended, except for such modifications
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and amendments mutually agreed to by the Borrowers, the Agent and the
Majority Lenders, and there shall have been no material objections
(determined (x) in the case of objections made prior to the Final
Bankruptcy Court Order Date, by the Agent and the Initial Lenders in their
reasonable discretion and (y) in the case of objections made on or after
the Final Bankruptcy Court Order Date, by the Agent and the Majority
Lenders in their reasonable discretion) to the Final Bankruptcy Court Order
by the United States Trustee or any major creditors or interested parties,
which contests any finding in the Final Bankruptcy Court Order that the
Agent or the Lenders are entitled to the benefits of Section 364(e) of the
Bankruptcy Code and which remain subject to appeal.
(d) The Agent shall have received a Notice of Borrowing from
the Authorized Representative to the extent required by Section 2.2(b).
(e) No administrative claim that is senior to or pari passu
with the superpriority claims of the Agent and the Lenders shall exist,
except the Carve-Out Expenses.
ARTICLE 11
DEFAULT; REMEDIES
11.1 Events of Default. It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) (i) any failure by the Borrowers to pay the principal of or
interest or premium on any of the Obligations hereunder when due, whether
upon demand or otherwise, or (ii) any failure by the Borrowers to pay any
fee or other amount owing hereunder when due, whether upon demand or
otherwise and such failure to pay shall continue for two Business Days;
(b) any representation or warranty (other than in Section 8.21
(b)) made or deemed made by any Loan Party in this Agreement or by any Loan
Party in any of the other Loan Documents, any Financial Statement, or any
certificate furnished by any Loan Party at any time to the Agent or any
Lender shall prove to be untrue in any material respect as of the date on
which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance or
performance of any of the covenants and agreements contained in this
Agreement or any other Loan Documents and such default (other than in
respect of any of Article 6 or 7 or any of Section 9.5, 9.9, 9.10, 9.12,
9.13, 9.14, 9.15, 9.18, 9.19, 9.20, 9.21, 9.22, 9.24, 9.25, 9.29, 9.30,
9.31, 9.32, 9.33, or 9.36 as to each of which provisions no grace period
shall be applicable) shall continue unremedied for a period of thirty (30)
or more days (or in the case of Section 9.8(e), shall continue unremedied
for a period of five (5) or more days) or (ii) if this Agreement or any
other Loan Document shall terminate (other than in
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accordance with its terms or the terms hereof or with the written consent
of the Agent and the Majority Lenders) or become void or unenforceable,
without the written consent of the Agent and the Majority Lenders;
(d) default shall occur with respect to any Debt created or
incurred after the Petition Date (other than the Obligations) in an
outstanding principal amount which exceeds $5,000,000, or under any
agreement or instrument entered into on or after the Petition Date (or
assumed by any Loan Party on or after the Petition Date or effective
thereafter in accordance with applicable law) under or pursuant to which
any such Debt may have been issued, created, assumed, or guaranteed by any
Loan Party, and such default shall continue for more than the period of
grace, if any, therein specified, if the effect thereof (with or without
the giving of notice or further lapse of time or both) is to accelerate, or
to permit the holders of any such Debt to accelerate, the maturity of any
such Debt or any such Debt shall be declared due and payable or be required
to be prepaid (other than by a regularly scheduled required prepayment)
prior to the stated maturity thereof; or any such Debt shall not be paid on
the maturity date therefor;
(e) any Loan Party shall file a certificate of dissolution or
like process under applicable state or provincial law or shall be
liquidated, dissolved or wound-up or shall commence or have commenced
against it any action or proceeding for dissolution, winding-up or
liquidation, or shall take any corporate action in furtherance thereof;
(f) all or any material part of the property of the Loan
Parties taken as a whole shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such property or
of any Loan Party shall be assumed by any Governmental Authority or any
court of competent jurisdiction at the instance of any Governmental
Authority, except where contested in good faith by proper proceedings
diligently pursued where a stay of enforcement is in effect;
(g) any Loan Document shall be terminated, revoked or declared
void or invalid or unenforceable or challenged by any Borrower or any other
Loan Party;
(h) one or more judgments, orders or decrees is entered against
any Loan Party or one or more fines, penalties or awards is entered or
levied by any Governmental Authority against any Loan Party involving in
the aggregate liability (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) as
to any single or related or unrelated series of transactions, incidents or
conditions, of $5,000,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of 30 days after the
entry thereof;
(i) any loss, theft, damage or destruction of any item or items
of Collateral or other property of any Loan Party occurs which could
reasonably be expected to have a Material Adverse Effect and is not
adequately covered by insurance;
(j) [Intentionally Omitted.]
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(k) there is filed against any Loan Party or any of its
Subsidiaries any criminal action, suit or proceeding under any federal
or state racketeering statute (including, without limitation, the
Racketeer Influenced and Corrupt Organization Act of 1970), which
action, suit or proceeding (1) is not dismissed within 120 days, and
(2) could reasonably be expected to result in the confiscation or
forfeiture of any material portion of the Collateral;
(l) for any reason (i) any Loan Document ceases to be in full
force and effect, (ii) any Lien with respect to any portion of the
Collateral intended to be secured thereby (A) ceases to be, or is not,
valid, perfected and prior to all other Liens (other than Permitted
Liens) described in clause (d), (e), (g) or (h) of the definition
thereof, or (B) is terminated, revoked or declared void, or (iii) any
Lien (other than Permitted Liens) exists with respect to any portion of
the Collateral;
(m) (i) one or more ERISA Events shall occur with respect to
any Pension Plans or Multiemployer Plans which have resulted or could
reasonably be expected to result in liability of any Loan Party under
Title IV of ERISA or under the PBA to the Pension Plan, Multiemployer
Plan, the PBGC or other applicable Governmental Authority in an
aggregate amount for all such Pension Plans and Multiemployer Plans in
excess of $5,000,000; or (ii) any Loan Party or any ERISA Affiliate
shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an
aggregate amount, together with all other such amounts not paid by such
Borrower or ERISA Affiliate when due, in excess of $1,000,000; or (iii)
with respect to any Plan of a Canadian Guarantor, any Lien arises with
respect to such Plan (save for contribution amounts not yet due);
provided, however, that with respect to clauses (i) and (ii), any
liabilities under Title IV of ERISA and any missed installment payments
to a Multiemployer Plan shall only be included to the extent that they
constitute post-petition claims;
(n) there occurs a Change of Control;
(o) an order with respect to the Case shall be entered by the
Bankruptcy Court (i) appointing a trustee or (ii) appointing an
examiner with enlarged powers substantially similar to those of a
trustee;
(p) an order with respect to the Case shall be entered by the
Bankruptcy Court converting such Case to a case under Chapter 7 of the
Bankruptcy Code which does not contain a provision for termination of
all of the Lenders' Commitments and payment in full in cash of all
Obligations and the cash collateralization or return of all Letters of
Credit in a manner satisfactory to the Agent and the Lenders upon such
conversion;
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(q) (i) an order shall be entered by the Bankruptcy Court
confirming a plan of reorganization in the Case which does not (x)
contain a provision for termination of all of the Lenders' Commitments
and payment in full in cash of all Obligations and the cash
collateralization or return of all Letters of Credit on the date of
effectiveness of such plan and otherwise in a manner satisfactory to
the Agent and the Lenders on or before the effective date of such plan
and (y) provide for the continuation of the Agent's Liens and
priorities until such effective date or (ii) any Borrower shall have
filed such a plan of reorganization in the Case;
(r) an order shall be entered by the Bankruptcy Court
dismissing the Case which does not contain a provision for termination
of all of the Lenders' Commitments and payment in full in cash of all
Obligations and the cash collateralization or return of all Letters of
Credit in a manner satisfactory to the Agent and the Lenders upon such
dismissal;
(s) an order with respect to the Case shall be entered, in
each case without the express prior written consent of the Agent and
the Lenders, (i) to revoke, vacate, reverse, stay, modify, supplement
or amend the credit facility herein contemplated, any Loan Document or
either of the DIP Orders, as the case may be, or (ii) to permit any
administrative expense claim or any claim (now existing or hereafter
arising, of any kind or nature whatsoever) to have administrative
priority as to any Borrower equal or superior to the priority of the
Lenders and the Agent in respect of the Obligations, except for allowed
administrative expense claims having priority over the Obligations to
the extent set forth in the definition of the term "Agreed
Administrative Expense Claim Priorities" or (iii) to grant or permit
the grant of any administrative claim or Lien (other than the Permitted
Liens), which is senior to or pari passu with the superpriority claim
of the Agent and the Lenders on any Collateral;
(t) an application for any of the orders described in clause
(o), (p), (q), (r) or (s) above shall be made by any Loan Party or any
other Person and such application (if made by any Person other than
such Loan Party) is not contested by such Borrower in good faith or the
relief requested is granted in an order that is not stayed pending
appeal;
(u) an order shall be entered by the Bankruptcy Court that is
not stayed pending appeal granting relief from the automatic stay to
the holder or holders of any Liens on any assets of any Loan Party and
the Agent and the Majority Lenders shall determine that a Material
Adverse Effect is reasonably likely to result from the entry of such
order;
(v) (i) any Person files a plan of reorganization in the Case
which does not contain a provision for termination of all Lenders'
Commitments and payment in full in cash of all Obligations and the cash
collateralization or return of all Letters of Credit in a manner
satisfactory to the Agent and the Lenders on or before the effective
date of such plan and (ii) an order shall be entered by the Bankruptcy
Court approving the disclosure statement with respect to any such plan;
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(w) an order is entered by the Bankruptcy Court which impairs
in any material respect, invalidates or reduces the Agent's or any
Lender's claims against any Loan Party or impairs in any material
respect, invalidates, challenges or subordinates any Lien on any
Collateral or to subject any Collateral to assessment pursuant to
Section 506(c) of the Bankruptcy Code or otherwise;
(x) there shall be any payment on, or application by a Loan
Party for authority to pay, any prepetition claim, other than as
permitted by Section 9.30, in each instance without the express prior
written consent of the Agent and the Initial Lenders (if such payment
or application is made prior to the Final Bankruptcy Court Order Date)
or the Agent and the Majority Lenders (if such payment or application
is made on or after the Final Bankruptcy Court Order Date);
(y) a Final Order shall be entered by the Bankruptcy Court
with respect to the Case granting any creditor relief from the
automatic stay which, in the Majority Lenders' reasonable judgment, has
any material and adverse impact on the Lenders or the Collateral;
(z) (i) The Final Bankruptcy Court Order shall not have been
entered on or before the date that is forty-five (45) days following
the Interim Bankruptcy Court Order Date, (ii) such Final Bankruptcy
Court Order shall not be in form and substance acceptable to the Agent
and the Majority Lenders, (iii) such Final Bankruptcy Court Order is
not in all material respects in form and substance satisfactory to the
Agent and the Lenders, (iv) such Final Bankruptcy Court Order or the
Interim Bankruptcy Court Order or the Interim Bankruptcy Court Order
shall have been reversed, vacated, modified, amended (except for
modifications and amendments that are acceptable to the Agent and the
Initial Lenders (in the case of modification and amendments made prior
to the Final Bankruptcy Court Order Date) or the Agent and the Majority
Lenders (in the case of modification and amendments made on or after
the Final Bankruptcy Court Order Date)) or stayed (or any application
for any of the foregoing shall have been filed which contests any
finding in such order that the Agent and the Lenders are entitled to
the benefits of Section 364(e) of the Bankruptcy Code) or (v) the Agent
shall not have received a copy of such Final Bankruptcy Court Order
certified by the Bankruptcy Court within two Business Days of its being
entered;
(aa) all conditions precedent set forth in Section 10.2 shall
not have been satisfied on the Final Bankruptcy Court Order Date;
(bb) any Loan Party shall cease to have the exclusive right
pursuant to section 1121 of the Bankruptcy Code to file a plan of
reorganization in the Case;
(cc) an order shall have been entered modifying the adequate
protection granted to OIHK in either DIP Order without the consent of
the Agent and the Majority Lenders;
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(dd) any Canadian Guarantor shall (i) file a voluntary
petition in bankruptcy or file a voluntary petition or an answer or
file any proposal or notice of intent to file a proposal or otherwise
commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the
Bankruptcy and Insolvency Act of Canada, the Companies' Creditors
Arrangement Act of Canada, or under any other bankruptcy or insolvency,
liquidation, winding-up or similar act or law, state, provincial,
federal or foreign, now or hereafter existing, or consent to, approve
of, or acquiesce in, any such petition, proposal, action or proceeding
(other than ancillary to the Case); (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator,
custodian, monitor, administrator, trustee or similar officer for it or
for all or any part of its property; (iii) make an assignment for the
benefit of creditors; or (iv) be unable generally to pay its debts as
they become due or shall admit in writing its inability to pay its
debts generally as they become due;
(ee) an involuntary petition shall be filed or an action
or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of either of the Canadian
Guarantors or for any other relief under the Bankruptcy and Insolvency
Act of Canada, the Companies' Creditors Arrangement Act of Canada, or
under any other bankruptcy or insolvency, liquidation, winding-up or
similar act or law, state, provincial, federal or foreign, now or
hereafter existing and such petition or proceeding shall not be
dismissed within forty-five (45) days after the filing or commencement
thereof or an order of relief shall be entered with respect thereto;
(ff) a receiver, assignee, liquidator, sequestrator,
custodian, monitor, administrator, trustee or similar officer for
either of the Canadian Guarantors or for all or any substantial part of
its property shall be appointed or a warrant of attachment, execution
or similar process shall be issued against any part of the property of
either of the Canadian Guarantors or any distress or analogous process
is levied against any part of property of either of the Canadian
Guarantors, which in any case constitutes a material portion of the
property of the Loan Parties taken as a whole; or
(gg) an order shall have been entered by the Bankruptcy
Court avoiding or requiring disgorgement by the Agent or any of the
Lenders of any amounts received in respect of any of the Obligations.
11.2 Remedies. Notwithstanding the provisions of Section 362 of the
Bankruptcy Code and without order of or application or motion to the Bankruptcy
Court:
(a) If a Default or Event of Default exists and is continuing,
the Agent may, in its discretion, and shall (and, in either case, without
limiting any other remedies available), at the direction of the Majority
Lenders, do one or more of the following at any time or times and in any order
during such continuance, upon three (3) days' written (including facsimile)
notice to the Loan Parties, their counsel and the Creditors' Committee (and the
Final Bankruptcy Court
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Order shall provide for the lifting of the automatic stay under Section 362 of
the Bankruptcy Code with respect to any and all such actions) (provided that no
such notice shall be required to restrict the amount of or refuse to make Loans
or arrange for or provide Letters of Credit or Credit Support): (i) reduce the
Maximum Revolver Amount, or the advance rates against the Net Amount of Eligible
Major Credit Card Receivables, the Net Amount of Eligible Consumer Credit Card
Receivables, Real Estate Availability and/or Eligible Inventory used in
computing the Combined Availability, or reduce one or more of the other elements
used in computing the Combined Availability; (ii) without limiting Section 10.3,
restrict the amount of or refuse to make Revolving Loans; (iii) without limiting
Section 10.3, restrict or refuse to arrange for or provide Letters of Credit or
Credit Support. If an Event of Default exists, the Agent shall, at the direction
of the Majority Lenders, do one or more of the following, in addition to the
actions described in the preceding sentence, at any time or times and in any
order, without notice to or demand on any Loan Party: (A) terminate the
Commitments and this Agreement; (B) declare any or all Obligations to be
immediately due and payable; (C) set-off against any outstanding Obligations,
amounts in the accounts of any Loan Party maintained by or with any Lender or
any agent or bailee thereof and otherwise exercise any and all rights and
remedies with respect to the Collateral; (D) demand cash collateral equal to
105% of the face amount of all outstanding Letters of Credit; and (E) pursue its
other rights and remedies under the Loan Documents and applicable law.
(b) Without limitation to the foregoing but subject to any
applicable notice requirements set forth in Section 11.2(a), if an Event of
Default exists and is continuing: (i) the Agent shall have for the benefit of
the Agent and the Lenders, in addition to all other rights of the Agent and the
Lenders, the rights and remedies of a secured party under the UCC, the PPSA, the
Civil Code of Quebec and other applicable laws; (ii) the Agent may, at any time,
take possession of the Collateral and keep it on the Loan Parties' premises, at
no cost to the Agent or any Lender, or remove any part of it to such other place
or places as the Agent may desire, or the Loan Parties shall, upon the Agent's
demand, at the Loan Parties' cost, assemble the Collateral and make it available
to the Agent at a place reasonably convenient to the Agent; (iii) the Agent may
sell and deliver any Collateral at public or private sales, for cash, upon
credit or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, and may, if the Agent deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale; and (iv) at the Agent's request, the Loan Parties will engage a
liquidator to conduct a "going out of business" or similar sale on terms and
conditions satisfactory to the Agent and the Majority Lenders and to file with
the Bankruptcy Court motions for sale of leases. Without in any way requiring
notice to be given in the following manner, the Loan Parties agree that any
notice by the Agent of sale, disposition or other intended action hereunder or
in connection herewith, whether required by the UCC, the PPSA, the Civil Code of
Quebec or otherwise, shall constitute reasonable notice to the Loan Parties if
such notice is mailed by registered or certified mail, return receipt requested,
postage prepaid, or is delivered personally against receipt, at least 4 Business
Days prior to such action to the Loan Parties' address specified in or pursuant
to Section 15.8. If any Collateral is sold on terms other than payment in full
at the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to the
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Loan Parties. In the event the Agent seeks to take possession of all or any
portion of the Collateral by judicial process, the Loan Parties irrevocably
waive: (a) the posting of any bond, surety or security with respect thereto
which might otherwise be required; (b)any demand for possession prior to the
commencement of any suit or action to recover the Collateral; and (c) any
requirement that the Agent retain possession and not dispose of any Collateral
until after trial or final judgment. The Loan Parties agree that the Agent has
no obligation to preserve rights to the Collateral or marshal any Collateral for
the benefit of any Person. The Agent is hereby granted a license or other right
to use, without charge, the Loan Parties' labels, patents, copyrights, name,
trade secrets, trade names, trademarks, and advertising matter, or any similar
property, in completing production of, advertising or selling any Collateral,
and the Loan Parties' rights under all licenses and all franchise agreements
shall inure to the Agent's benefit for such purpose. The proceeds of sale shall
be applied first to all expenses of sale, including attorneys' fees, and then to
the Obligations in whatever order the Agent elects. The Agent will return any
excess to the Borrowers and the Borrowers shall remain liable for any
deficiency.
(c) If an Event of Default occurs, the Loan Parties hereby
waive, except to the extent expressly provided otherwise herein, all rights to
notice and hearing prior to the exercise by the Agent of the Agent's rights to
repossess the Collateral without judicial process or to replevy, attach or levy
upon the Collateral without notice or hearing.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall end on
the Termination Date. The Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence and during the
continuance of an Event of Default. Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including, without
limitation, all unpaid principal, accrued interest and any early termination or
prepayment fees or penalties) shall become immediately due and payable and the
Borrowers shall immediately arrange for the cancellation and return of all
Letters of Credit then outstanding (or cash collateralization thereof, on terms
acceptable to the Agent, at 105% of the face amount of such Letters of Credit).
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in cash, the Borrowers shall remain
bound by the terms of this Agreement or under any other Loan Document and shall
not be relieved of any of their Obligations hereunder, and the Agent and the
Lenders shall retain all their rights and remedies hereunder (including, without
limitation, the Agent's Liens (including, without limitation, the superpriority
status thereof) in and all rights and remedies with respect to all then existing
and after-arising Collateral).
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ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 No Waivers; Cumulative Remedies. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
any Loan Party and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will not operate as a waiver thereof. No waiver
by the Agent or any Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by the Agent or the Lenders on
any occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrowers of any provision of
this Agreement. The Agent's and each Lender's rights under this Agreement will
be cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have.
13.2 Amendments and Waivers. (a) No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by any Borrower or other Loan Party therefrom, shall be effective
unless the same shall be in writing and signed by the Majority Lenders (or by
the Agent at the written request of the Majority Lenders) and the Borrowers or
other Loan Parties party thereto and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Lenders and the Loan Parties and
acknowledged by the Agent, do any of the following:
(i) increase or extend the Commitment of any Lender;
(ii) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(iii) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;
(iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Lenders
or any of them to take any action hereunder;
(v) increase any of the percentages set forth in the
definition of Combined Availability or amend the definitions of Combined
Availability, Eligible Inventory, Eligible Consumer Credit Card Receivables,
Eligible Major Credit Card Receivables or Real Estate Availability in a manner
which will increase the amount of Combined Availability from that in effect
immediately prior to such amendment; provided that nothing herein shall limit or
restrict the Agent's discretion as set forth in such definitions;
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(vi) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(vii) release any Guaranties of the Obligations or release
Collateral other than as permitted by Section 14.12;
(viii) change the definitions of "Majority Lenders" or "Required
Lenders"; or
(ix) extend the date of the Consumer Credit Card Account Line
Expiration Date to a date later than 120 days after the Final Bankruptcy Court
Order Date
provided, however, the Agent may, in its sole discretion and notwithstanding the
limitations contained in clause (v) above and any other terms of this Agreement,
make Agent Advances in accordance with Section 2.2(i) and, provided further,
that no amendment, waiver or consent shall, unless in writing and signed by the
Agent, affect the rights or duties of the Agent under this Agreement or any
other Loan Document and provided further, that Schedule 1.1(a) hereto may be
amended from time to time by Agent alone to reflect assignments of Commitments
in accordance herewith.
(b) If any fees are paid to the Lenders as consideration for
amendments, waivers or consents with respect to this Agreement, at the Agent's
election, such fees may be paid only to those Lenders that agree to such
amendments, waivers or consents within the time specified for submission
thereof.
(c) If, in connection with any proposed amendment, waiver or consent
(a "Proposed Change"):
(i) requiring the consent of all Lenders, the consent of
Required Lenders is obtained, but the consent of other Lenders is not obtained
(any such Lender whose consent is not obtained as described in this clause (i)
and in clause (ii) below being referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Required Lenders, the consent of
Majority Lenders is obtained,
then, so long as the Agent is not a Non-Consenting Lender, at the Borrower's
request, the Agent or an Eligible Assignee shall have the right (but not the
obligation) with the Agent's approval, to purchase from the Non-Consenting
Lenders, and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders' Commitments for an amount equal to the principal
balances thereof and all accrued interest and fees with respect thereto through
the date of sale pursuant to Assignment and Acceptance Agreement(s), without
premium or discount.
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13.3 Assignments; Participations. (a) Any Lender may, with the written
consent of the Agent (which consent shall not be unreasonably withheld) assign
and delegate to one or more Eligible Assignees (provided that no consent of the
Agent shall be required in connection with any assignment and delegation by a
Lender to an Affiliate of such Lender) (each an "Assignee") all, or any ratable
part of all, of the Loans, the Commitments and the other rights and obligations
of such Lender hereunder, in a minimum amount of $10,000,000 and, if the
remaining Commitment of such Lender would be less than $10,000,000, the entire
amount of such Lender's Commitment; provided, however, that the Borrowers and
the Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Borrowers
and the Agent by such Lender and the Assignee; (ii) such Lender and its Assignee
shall have delivered to the Borrowers and the Agent an Assignment and Acceptance
in the form of Exhibit D ("Assignment and Acceptance") and (iii) the assignor
Lender or Assignee has paid to the Agent a processing fee in the amount of
$3,500.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received a duly executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations,
including, but not limited to, the obligation to participate in Letters of
Credit and Credit Support have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement and the other Loan Documents
(and in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien granted
by any Loan Party to the Agent or any Lender in the Collateral; (2) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Loan Parties or
the performance or observance by the Loan Parties of any of their Obligations
under this Agreement or any other Loan Document furnished pursuant hereto; (3)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (4) such Assignee will, independently and without reliance upon the
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall
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deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (5) such Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof, together with such powers, including
discretionary rights and incidental power, as are reasonably incidental thereto;
and (6) such Assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other Loan
Documents are required to be performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements of Section
13.3(a) and each Assignee making its processing fee payment under the Assignment
and Acceptance, this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(e) Any Lender may, with the written consent of the Agent, at any
time sell to one or more commercial banks, financial institutions, or other
Persons not a Loan Party or an Affiliate of any Loan Party (a "Participant")
participating interests in any Loans, the Commitment of that Lender and the
other interests of that Lender (the "originating Lender") hereunder and under
the other Loan Documents; provided, however, that (i) the originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) the Borrowers and the Agent shall continue to deal solely and directly
with the originating Lender in connection with the originating Lender's rights
and obligations under this Agreement and the other Loan Documents and (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document (except to the extent
that such amendment, waiver or consent both directly affects the Participant and
would (x) increase or extend the Commitment of the originating Lender, (y)
postpone or delay any date fixed by this Agreement or any other Loan Document
for any payment of principal, interest, fees or other amounts due to the
originating Lender hereunder or under any other Loan Document or (z) reduce the
principal of, or the rate of interest specified herein on, any Revolving Loan
owing to the originating Lender or any fees or other amounts payable to the
originating Lender hereunder or under any other Loan Document), and all amounts
payable by any Borrower hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the
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Federal Reserve Bank or U.S. Treasury Regulation 31 CFR (S)203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
ARTICLE 14
THE AGENT
14.1 Appointment and Authorization. Each Lender hereby designates and
appoints Bank as its Agent under this Agreement and the other Loan Documents and
each Lender hereby irrevocably authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. The Agent agrees to act as such on
the express conditions contained in this Article 14. The provisions of this
Article 14 are solely for the benefit of the Agent and the Lenders and the
Borrowers shall have no rights as a third party beneficiary of any of the
provisions contained herein. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including, without
limitation, (a) the determination of the applicability of ineligibility criteria
with respect to the calculation of the Combined Availability, (b) the making of
Agent Advances pursuant to Section 2.2(i), and (c) the exercise of remedies
pursuant to Section 11.2, and any action so taken or not taken shall be deemed
consented to by the Lenders.
14.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
14.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for
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any recital, statement, representation or warranty made by any Loan Party, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Loan Party or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party.
14.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the Loan
Parties), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Lenders (or all Lenders if so required by Section 13.2) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 10.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender.
14.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, unless the Agent
shall have received written notice from a Lender or any Borrower referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Section 11; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
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14.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Loan Parties, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Lender. Each Lender represents to the Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan
Parties, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrowers. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Loan Parties
which may come into the possession of any of the Agent-Related Persons.
14.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrowers or any
other Loan Party and without limiting the obligation of the Borrowers and any
other Loan Parties to do so), in accordance with their Pro Rata Shares, from and
against any and all Indemnified Liabilities as such term is defined in Section
15.11; provided, however, that no Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon demand
for its Pro Rata Share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Borrowers or any other Loan Parties. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of the Agent.
14.8 Agent in Individual Capacity. The Bank and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with any of the Loan Parties
and its Affiliates as though the Bank were not the Agent hereunder and without
notice to or consent of the Lenders. The Bank or its Affiliates may receive
information regarding the Loan Parties (including information that may be
subject to
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confidentiality obligations in favor of the Loan Parties) and the Lenders
acknowledge that the Agent and the Bank shall be under no obligation to provide
such information to them. With respect to its Loans, the Bank shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Agent, and the terms "Lender" and "Lenders"
include the Bank in its individual capacity.
14.9 Successor Agent. The Agent may resign as Agent upon at least 30
days' notice to the Lenders and the Borrowers. If the Agent resigns under this
Agreement, the Majority Lenders shall appoint from among the Lenders a successor
agent for the Lenders reasonably satisfactory to the Borrowers. If no successor
agent is appointed prior to the effective date of the resignation of the Agent,
the Agent may appoint, after consulting with the Lenders and the Borrowers, a
successor agent from among the Lenders. Upon the acceptance of its appointment
as successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Agent" shall mean
such successor agent and the retiring Agent's appointment, powers and duties as
Agent shall be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 14 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is thirty (30) days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Agent hereunder until
such time, if any, as the Majority Lenders appoint a successor agent as provided
for above.
14.10 Withholding Tax.
(a) Each Lender that is not a "United States person," within the
meaning of the Internal Revenue Code, shall, on or prior to the date of its
execution and delivery of this Agreement in the case of each Lender and on the
date of the Assignment and Acceptance pursuant to which it becomes a Lender in
the case of each Assignee, and from time to time thereafter as reasonably
requested in writing by the Borrowers (but only so long thereafter as such
Lender or Assignee remains lawfully able to do so), provide each of the Agent
and the Borrowers with two original Internal Revenue Service Forms W-8BEN or
W-8ECI or a certification in writing to the Agent and the Borrowers that it is
not (i) a "bank" (as defined in Section 881(c)(3)(A) of the Internal Revenue
Code), (ii) a 10-percent shareholder (within the meaning of Section 871(h)(3)(B)
of the Internal Revenue Code) of any Borrower or (iii) a controlled foreign
corporation related to any Borrower (within the meaning of Section 864(d)(4) of
the Internal Revenue Code), along with an Internal Revenue Service Form W-8BEN,
as appropriate, or any successor or other form prescribed by the Internal
Revenue Service, certifying that such Lender or Assignee is exempt from or
entitled to a reduced rate of United States withholding tax on payments pursuant
to this Agreement or the Notes or any other Loan Document or, in the case of a
Lender or Assignee that has certified that it is not a "bank" as described
above, certifying that such Lender or Assignee is a foreign corporation,
partnership, estate or trust. If the forms provided by a Lender or Assignee at
the time such Lender or Assignee first becomes a party to this Agreement
indicate a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from
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Indemnified Taxes unless and until such Lender or Assignee provides the
appropriate forms certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate only shall be considered excluded from Indemnified Taxes
for periods governed by such forms; provided, however, that if, at the effective
date of the Assignment and Acceptance pursuant to which an Assignee becomes a
party to this Agreement, the assignor Lender was entitled to payments under
Section 5.1 in respect of United States withholding tax with respect to interest
paid at such date, then, to such extent, the term Indemnified Taxes shall
include (in addition to withholding taxes that may be imposed in the future or
other amounts otherwise includable in Indemnified Taxes) United States
withholding tax, if any, applicable with respect to the Assignee on such date.
If any form or document referred in this subsection (a) requires the disclosure
of information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service Form W-8BEN
or W-8ECI or the related certificate described above, that the applicable Lender
or Assignee reasonably considers to be confidential, such Lender or Assignee
shall give notice thereof to the Borrowers and shall not be obligated to include
in such form or document such confidential information.
(b) For any period with respect to which a Lender or Assignee has
failed to provide the Borrowers and the Agent with the appropriate form,
certificate or other document described in subsection (a) above (other than if
such failure is due to a change in law, or in the interpretation or application
thereof, occurring after the date on which a form, certificate or other document
originally was required to be provided or if such form, certificate or other
document otherwise is not required under subsection (a) above), such Lender or
Assignee shall not be entitled to additional amounts or indemnification under
Section 5.1 with respect to Indemnified Taxes imposed by the United States by
reason of such failure; provided, however, that should a Lender or Assignee
become subject to Indemnified Taxes because of its failure to deliver a form,
certificate or other document required hereunder, the Borrowers shall take steps
as such Lender of Assignee shall reasonably request to assist such Lender or
Assignee to recover such Indemnified Taxes.
(c) If any Lender determines, as a result of any change after the
date hereof in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrowers and the Agent any form or certificate that such Lender is obligated to
submit pursuant to Section 14.10(a) or that such Lender is required to withdraw
or cancel any such form or certificate previously submitted or any such form or
certificate otherwise becomes ineffective or inaccurate, such Lender shall
promptly notify the Borrowers and the Agent of such fact and the Lender shall to
that extent not be obligated to provide any such form or certificate and will be
entitled to withdraw or cancel any affected form or certificate, as applicable.
(d) If the IRS or any other Governmental Authority of the United
States of America or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender shall indemnify the Agent fully for all
amounts
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paid, directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section 14.10, together with all
costs and expenses (including Attorney Costs). The obligation of the Lenders
under this subsection shall survive the payment of all Obligations and the
resignation or replacement of the Agent.
14.11 Reserved.
14.12 Collateral Matters. (a) The Lenders hereby irrevocably authorize the
Agent, at its option and in its sole discretion, to release any Agent's Lien
upon any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by the Borrowers of all Loans and reimbursement obligations
in respect of Letters of Credit and Credit Support, and the termination of all
outstanding Letters of Credit (whether or not any of such Obligations are due)
and payment of all other obligations; (ii) constituting property being sold or
disposed of if the Borrowers certify to the Agent that the sale or disposition
is made in compliance with Section 9.9 (and the Agent may rely conclusively on
any such certificate, without further inquiry); (iii) constituting property in
which the Loan Parties owned no interest at the time the Lien was granted or at
any time thereafter; or (iv) constituting property leased to any Loan Party
under a lease which has expired or been terminated in a transaction permitted
under this Agreement. Except as provided above, the Agent will not release any
of the Agent's Liens without the prior written authorization of the Lenders;
provided that the Agent may, in its discretion and without the prior written
authorization of the Lenders, release the Agent's Liens on (x) Accounts,
Inventory and other Collateral in which the Agent has a first priority Lien
valued in the aggregate not in excess of $5,000,000 and (y) Collateral in which
the Agent does not have a first priority Lien without limitation as to amount if
the holder of the prior Lien therein releases its Lien in such Collateral and
receives any proceeds from the sale or other disposition of such Collateral.
Upon request by the Agent or any Loan Party at any time, the Lenders will
confirm in writing the Agent's authority to release any Agent's Liens upon
particular types or items of Collateral pursuant to this Section 14.12.
(b) Upon receipt by the Agent of any authorization required
pursuant to Section 14.12(a) from the Lenders of the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral, and upon
at least 5 Business Days' prior written request by the Borrowers, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Agent's Liens upon
such Collateral; provided, however, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
any Loan Party in respect of) all interests retained by any Loan Party,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by any of the Loan
Parties or is cared for, protected
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or insured or has been encumbered, or that the Agent's Liens have been properly
or sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
the Agent pursuant to any of the Loan Documents, it being understood and agreed
that in respect of the Collateral, or any act, omission or event related
thereto, the Agent may act in any manner it may deem appropriate, in its sole
discretion given the Agent's own interest in the Collateral in its capacity as
one of the Lenders and that the Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing.
14.13 Restrictions on Actions by Lenders; Sharing of Payments. (a) Each of
the Lenders agrees that it shall not, without the express consent of all
Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of all Lenders, set off against the Obligations, any amounts owing
by such Lender to any of the Loan Parties or any accounts of any of the Loan
Parties now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by the
Agent, take or cause to be taken any action to enforce its rights under this
Agreement or against any of the Loan Parties, including, without limitation, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of any Loan Party to such Lender arising under,
or relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (1) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
14.14 Agency for Perfection. Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
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14.15 Payments by Agent to Lenders. All payments to be made by the Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance)
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans, or otherwise.
14.16 Concerning the Collateral and the Related Loan Documents. Each Lender
authorizes and directs the Agent to enter into this Agreement and the other Loan
Documents relating to the Collateral, for the ratable benefit of the Agent and
the Lenders. Each Lender agrees that any action taken by the Agent, Majority
Lenders, Required Lenders or all Lenders, as applicable, in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral,
and the exercise by the Agent, the Majority Lenders, the Required Lenders or all
Lenders, as applicable, of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders. The Lenders acknowledge that the Revolving
Loans, Agent Advances, Bank Loans, Hedge Agreements, Bank Products and all
interest, fees and expenses hereunder constitute one Debt, secured pari passu by
all of the Collateral.
14.17 Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared
by or on behalf of the Agent;
(b) expressly agrees and acknowledges that neither the Bank nor
the Agent (i) makes any representation or warranty as to the accuracy of
any Report, or (ii) shall be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank or other
party performing any audit or examination will inspect only specific
information regarding the Loan Parties and will rely significantly upon the
Loan Parties' books and records, as well as on representations of the Loan
Parties' personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and
any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or
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conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to any Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's
purchase of, a loan or loans of any Borrower; and (ii) to pay and protect,
and indemnify, defend and hold the Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including, without
limitation Attorney Costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
14.18 Relation Among Lenders. The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Agent) authorized to act for, any
other Lender.
14.19 The Arranger and Co-Agents, Etc. Neither the Arranger nor any
co-agent, co-arranger, syndication agent or documentation agent in its capacity
as such shall not have any right, power, obligation, liability, responsibility
or duty under this Agreement.
ARTICLE 15
MISCELLANEOUS
15.1 No Waivers; Cumulative Remedies. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
any Loan Party and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. No waiver by
the Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by any of the Loan Parties of any
provision of this Agreement. The Agent and the Lenders may proceed directly to
collect the Obligations without any prior recourse to the Collateral. The
Agent's and each Lender's rights under this Agreement will be cumulative and not
exclusive of any other right or remedy which the Agent or any Lender may have.
15.2 Severability. The illegality or unenforceability of any provision of
this Agreement or any other Loan Document or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement, any other Loan
Document or any instrument or agreement required hereunder.
15.3 Governing Law; Choice of Forum; Service of Process. THIS AGREEMENT
SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF
LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES
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WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR
CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW
YORK; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) EXCEPT FOR MATTERS WITHIN THE EXCLUSIVE JURISDICTION OF THE
BANKRUPTCY COURT, ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY, THE AGENT AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EXCEPT FOR MATTERS WITHIN THE EXCLUSIVE
JURISDICTION OF THE BANKRUPTCY COURT, EACH LOAN PARTY, THE AGENT AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING
AND EXCEPT FOR MATTERS WITHIN THE EXCLUSIVE JURISDICTION OF THE BANKRUPTCY
COURT: (1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF
THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
(c) EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FOUR (4) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS
TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
15.4 WAIVER OF JURY TRIAL. EACH LOAN PARTY, THE LENDERS AND THE AGENT EACH
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
127
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
EACH LOAN PARTY, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
15.5 Survival of Representations and Warranties. All of the Borrowers'
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
15.6 Other Security and Guaranties. The Agent, may, without notice or
demand and without affecting any Loan Party's obligations hereunder or under any
other Loan Document, from time to time: (a) take from any Person and hold
collateral (other than the Collateral) for the payment of all or any part of the
Obligations and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of all
or any part of the Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.
15.7 Fees and Expenses. Each Borrower agrees, jointly and severally, to
pay to the Agent, for its benefit, on demand, all costs and expenses that Agent
pays or incurs in connection with the negotiation, preparation, syndication,
consummation, administration, enforcement, and termination of this Agreement and
any of the other Loan Documents and each Borrower agrees to pay to each Lender
all reasonable costs and expenses that such Lender pays or incurs in connection
with the enforcement of this Agreement and the other Loan Documents, including,
in each case, without limitation: (a) Attorney Costs; (b) costs and expenses
(including attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien and title searches and title insurance; (d) taxes, fees and other charges
for recording mortgages, filing financing statements and continuations, and
other actions to perfect, protect, and continue the Agent's Liens (including
costs and expenses paid or incurred by the Agent in connection with the
consummation of Agreement); (e) sums paid or incurred to pay any amount or take
any action required of any Borrower or other Loan Party under the Loan Documents
that such Borrower or other Loan Party fails to pay or take; (f) costs of
appraisals, inspections, and verifications of the Collateral, including, without
limitation, travel, lodging, and meals for inspections of the Collateral and the
Loan Parties' operations by the Agent
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plus the Agent's then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $750 per day (or
portion thereof) for each Person retained or employed by the Agent with respect
to each field examination or audit); (g) costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining Payment Accounts and lock boxes; and (h) costs and expenses of
preserving and protecting the Collateral. In addition, each Borrower agrees,
jointly and severally, to pay costs and expenses incurred by the Agent
(including Attorneys' Costs) to the Agent, for its benefit, on demand, and to
the other Lenders for their benefit, on demand, and all reasonable fees,
expenses and disbursements incurred by such other Lenders for one law firm
retained by such other Lenders, in each case, paid or incurred to obtain payment
of the Obligations, enforce the Agent's Liens, sell or otherwise realize upon
the Collateral, and otherwise enforce the provisions of the Loan Documents, or
to defend any claims made or threatened against the Agent or any Lender arising
out of the transactions contemplated hereby (including without limitation,
preparations for and consultations concerning any such matters). Without
limiting the foregoing, the Borrowers shall also pay on demand, jointly and
severally, directly or at the option of the Agent through direct charges to the
outstanding balance of the Loan all reasonable costs and expenses incurred by
the Agent or any Lender in connection with any litigation, contest, dispute,
suit or proceeding relating to this Agreement or any other Loan Document. The
foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by any Borrower. All of the
foregoing costs and expenses shall be charged to the Borrowers' Loan Account as
Revolving Loans as described in Section 4.4.
15.8 Notices. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) four (4) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted,
in each case addressed to the party to be notified as follows:
if to the Agent or to the Bank:
Bank of America, N.A.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Business Credit - Account Executive
Telecopy No. (000) 000-0000
with copies to:
000
Xxxx xx Xxxxxxx, N.A.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
Telecopy No. (000) 000-0000
and:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No. (000) 000-0000
if to any Loan Party:
c/o Spiegel, Inc
0000 Xxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Telecopy No. (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9 Waiver of Notices. Unless otherwise expressly provided herein, each
Loan Party waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, notice of intent to accelerate the Obligations and
notice of acceleration of the Obligations, as well as any and all other notices
to which it might otherwise be entitled. No notice to or demand on any Loan
Party which the Agent or any Lender may elect to give shall entitle such Loan
Party to any or further notice or demand in the same, similar or other
circumstances.
15.10 Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by any Borrower without prior written consent of the Agent and each
Lender. The rights and benefits of the Agent and the Lenders hereunder shall, if
such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.
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15.11 Indemnity of the Agent and the Lenders by the Loan Parties. (a) Each
Loan Party agrees, jointly and severally, to defend, indemnify and hold the
Agent-Related Persons, and each Lender and each of its respective officers,
directors, employees, counsel, representatives, agents and attorneys-in-fact
(each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including the Cases or any appellate
proceeding) related to or arising out of this Agreement, any other Loan
Document, or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Loan Parties shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the willful misconduct of such Indemnified
Person. The agreements in this Section shall survive payment of all other
Obligations.
(b) Each Loan Party, jointly and severally, hereby indemnifies,
defends and holds harmless the Indemnified Persons from any loss or liability
directly or indirectly arising out of the use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal or
presence of a hazardous substance. This indemnity will apply whether the
hazardous substance is on, under or about any of such Loan Party's property or
operations or property leased to such Loan Party or property to which such Loan
Party has sent any hazardous substance. The indemnity includes but is not
limited to Attorneys' Costs. The indemnity extends to the Agent-Related Persons,
and each Lender, its parent, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys and assigns. "Hazardous Substances"
means any substance, material or waste that is or becomes designated or
regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar
designation or regulation under any federal, state or local law (whether under a
common law, statute, regulation or otherwise) or judicial or administrative
interpretation of such, including without limitation petroleum or natural gas.
This indemnity will survive termination of the Agreement and the repayment of
all other Obligations.
15.12 Limitation of Liability. NO CLAIM MAY BE MADE BY ANY LOAN PARTY, ANY
LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS, ADVISORS OR
ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER
THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY AND EACH LENDER HEREBY
WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY
131
CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.
15.13 Final Agreement. This Agreement and the other Loan Documents are
intended by the Loan Parties, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement among them. Upon execution
and except to the extent the Bankruptcy Court orders otherwise, this Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof except for the Fee Letter. No modification, rescission, waiver,
release, or amendment of any provision of this Agreement or any other Loan
Document shall be made, except in accordance with the terms of this Agreement or
any other Loan Document. All borrowings made and letters of credit issued under
the Interim Agreement shall, upon execution hereof, be deemed Borrowings
hereunder or Letters of Credit issued hereunder, and all terms and conditions
hereof shall apply to such borrowings and letters of credit, and to the parties
hereto with respect to such borrowings and letters of credit.
15.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each of the Loan Parties in
separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.
15.15 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
15.16 Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Loan Party, any such notice being waived by each
Loan Party to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of any Loan Party
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Lender agrees promptly to notify the Authorized
Representative and the Agent after any such set-off and application made by such
Lender; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO
LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST
ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH
LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
15.17 Joint and Several Liability. The Borrowers shall be liable for all
amounts due to the Agent and/or any Lender under this Agreement, regardless of
which Borrower actually receives Loans or other extensions of credit hereunder
(including the issuance of Letters of Credit for the account of such Borrowers)
or the amount of such Loans received or Letters of Credit
132
issued or the manner in which the Agent and/or such Lender accounts for such
Loans or other extensions of credit on its books and records. Each Borrower's
Obligations with respect to Loans made to it and Letters of Credit issued for
its account, and each Borrower's Obligations arising as a result of the joint
and several liability of the Borrowers hereunder, with respect to Loans made to
the other Borrowers and Letters of Credit issued for the account of such other
Borrowers hereunder, shall be separate and distinct Obligations, but all such
Obligations shall be primary Obligations of each Borrower.
Each Borrower's Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Loans or other
extensions of credit made to the other Borrowers hereunder (including the
issuance of Letters of Credit for the account of such Borrowers) shall, to the
fullest extent permitted by law, be unconditional irrespective of (i) the
validity or enforceability, avoidance or subordination of the Obligations of any
or all of the other Borrowers or of any promissory note or other document
evidencing all or any part of the Obligations of any or all other Borrowers,
(ii) the absence of any attempt to collect the Obligations from any or all of
the other Borrowers, any Guarantor, or any other security therefor, or the
absence of any other action to enforce the same, (iii) the waiver, consent,
extension, forbearance or granting of any indulgence by the Agent and/or any
Lender with respect to any provision of any instrument evidencing the
Obligations of any or all of the other Borrowers, or any part thereof, or any
other agreement now or hereafter executed by any or all of the other Borrowers
and delivered to the Agent and/or any Lender, (iv) the failure by the Agent
and/or any Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Obligations of any or all of the other Borrowers, (v) the Agent's and/or any
Lender's election, in any proceeding instituted under the Bankruptcy Code, of
the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing
or grant of a security interest by any or all of the other Borrowers, as
debtors-in-possession under Section 364 of the Bankruptcy Code, or (vii) any
other circumstances which might constitute a legal or equitable discharge or
defense of a Guarantor or of any or all of the other Borrowers. With respect to
the Borrowers' Obligations arising as a result of the joint and several
liability of the Borrowers hereunder with respect to Loans or other extensions
of credit made to or for the account of any or all other Borrowers hereunder
(including the issuance of Letters of Credit for the account of a Borrower),
each Borrower waives, until the Obligations shall have been paid in full and
this Agreement shall have been terminated, any right to enforce any right of
subrogation or any remedy which the Agent and/or any Lender now has or may
hereafter have against any other Borrower, any endorser or any guarantor of all
or any part of the Obligations, and any benefit of, and any right to participate
in, any security or collateral given to the Agent and/or any Lender to secure
payment of the Obligations or any other liability of any Borrower to the Agent
and/or any Lender.
Upon any Event of Default (but subject to any applicable notice
requirements set forth in Section 11.2(a)), the Agent may proceed directly and
at once, without notice, against any Borrower to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against any
other Borrower, any Guarantor or any other Person, or against any security or
collateral for the Obligations. Each Borrower consents and agrees that the Agent
shall
133
be under no obligation to marshal any assets in favor of any Borrower or other
Loan Party or against or in payment of any or all of the Obligations.
Each Loan Party hereby irrevocably designates and appoints Spiegel as
the "Authorized Representative" under this Agreement to deliver and receive all
notices and written notices on behalf of such Loan Party and to receive on
behalf of such Loan Party and distribute all distributions of the Loan Parties
in accordance with the respective interests of the Loan Parties. Each Loan Party
hereby unconditionally releases the Agent, the Bank, the Lenders and any of
their Affiliates with respect to any claims, obligations or duties that such
Persons may otherwise have been deemed to possess absent the designation and
appointment set forth in the preceding sentence.
15.18 Confidentiality.
(a) Each Loan Party hereby consent that the Agent and each Lender
may issue and disseminate to the public general information describing the
credit accommodations entered into pursuant to this Agreement, including the
name and address of such Loan Party and a general description of such Loan
Party's business and may use such Loan Party's name in advertising and other
promotional material.
(b) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by any of the Loan Parties
and provided to the Agent or such Lender by or on behalf of such Loan Party,
under this Agreement or any other Loan Document, except to the extent that such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than such Loan Party,
provided that such source is not bound by a confidentiality agreement with such
Loan Party known to the Agent or such Lender; provided, however, that the Agent
and any Lender may disclose such information (1) at the request or pursuant to
any requirement of any Governmental Authority to which the Agent or such Lender
is subject or in connection with an examination of the Agent or such Lender by
any such Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions of any
applicable Requirement of Law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Agent, any Lender or their respective
Affiliates may be party; (5) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (6)
to the Agent's or such Lender's independent auditors, accountants, attorneys and
other professional advisors; (7) to any prospective Participant or Assignee
under any Assignment and Acceptance, actual or potential, provided that such
prospective Participant or Assignee agrees to keep such information confidential
to the same extent required of the Agent and the Lenders hereunder; (8) as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which such Loan Party is party or is deemed party with the
Agent or such Lender, and (9) to its Affiliates.
134
(c) Notwithstanding anything to the contrary in this Agreement or
the Other Loan Documents, each of the parties, its subsidiaries and their
respective representatives, affiliates, employees, officers, directors or other
agents are hereby authorized to disclose to any and all persons, without
limitation of any kind the tax treatment and tax structure of the transactions
contemplated hereunder (and any transactions related thereto), to the extent
required to comply with any present or future laws, rules or regulations.
15.19 Conflicts with Other Loan Documents. Unless otherwise expressly
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this Agreement conflicts with any provision of any other Loan
Document, the provision contained in this Agreement shall govern and control
(other than the Canadian Guarantees, in which case the Canadian Guarantees shall
govern).
15.20 Appraisals. (a) The Agent may engage an appraiser to conduct and
deliver an Inventory Appraisal of the Inventory of each Borrower and Xxxxx Xxxxx
Canada once each year (with quarterly updates thereof), each such Inventory
Appraisal (and quarterly update) to be in form, scope and substance satisfactory
to the Agent.
(b) Prior to the Final Bankruptcy Court Order, the Agent may engage
an appraiser to conduct and deliver a Real Estate Appraisal of the owned Real
Estate of each Borrower (with quarterly updates thereof), each such Real Estate
Appraisal (and quarterly update) to be in form, scope and substance satisfactory
to the Agent.
(c) The Agent may engage an appraiser to conduct and deliver an
Accounts Appraisal of the Consumer Credit Card Receivables of each Borrower (x)
during the period commencing on the Final Bankruptcy Court Order Date and ending
120 days thereafter, once each month and (y) thereafter, at such more frequent
intervals as the Agent shall determine in its sole discretion, each such
Accounts Appraisal to be in form, scope and substance satisfactory to the Agent.
(d) Notwithstanding the provisions of clauses (a) through (c) of
this Section 15.20, whenever an Event of Default exists, the Agent may engage an
appraiser to conduct and deliver appraisals or updates thereof of any or all of
the Collateral, each such appraisal or update thereof to be in form, scope and
substance satisfactory to the Agent.
The Borrowers agree, jointly and severally, to pay the Agent on
demand the cost of each appraisal or update thereof conducted pursuant to this
Section 15.20.
135
ARTICLE 16
GUARANTEES
Each Guarantor party hereto unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally with each other
Guarantor party hereto, the due and punctual payment of the principal of and
interest on the Revolving Loans and of all other Obligations, when and as due,
whether at maturity, by acceleration, by notice or prepayment or otherwise. Each
Guarantor party hereto further agrees that the Obligations may be extended and
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligations.
To the fullest extent permitted by law, each Guarantor party hereto
waives presentment to, demand of payment from and protest to the Borrowers or
any other Person of any of the Obligations, and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. To the fullest extent
permitted by law, the obligations of a Guarantor party hereto hereunder shall
not be affected by (a) the failure of the Agent or any Lender to assert any
claim or demand or to enforce any right or remedy against any Borrower or any
other Guarantor under the provisions of this Agreement or any of the other Loan
Documents or otherwise; (b) any rescission, waiver, amendment or modification of
any of the terms or provisions of this Agreement, any of the other Loan
Documents, any guarantee or any other agreement; (c) the release of any security
held by the Agent or any Lender for the Obligations or any of them; or (d) the
failure of the Agent or any Lender to exercise any right or remedy against any
other Guarantor of the Obligations.
Each Guarantor party hereto further agrees that its guarantee
constitutes a guarantee of payment when due and not of collection, and waives
any right to require that any resort be had by the Agent or any Lender to any
security (if any) held for payment of the Revolving Loan or to any balance of
any deposit account or credit on the books of the Agent or any Lender in favor
of any Borrower or any other Person.
To the fullest extent permitted by law, the obligations of each
Guarantor party hereto hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including, without
limitation, any claim of waiver, release, surrender, alteration or compromise,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Obligations or otherwise. Without limiting the
generality of the foregoing, to the fullest extent permitted by law, the
obligations of each Guarantor party hereto hereunder shall not be discharged or
impaired or otherwise affected by the failure of the Agent or any Lender to
assert any claim or demand or to enforce any remedy under this Agreement or
under any other Loan Document, any guarantee or any other agreement, by any
waiver or modification of any provision thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by any
other act or omission which may or might in any manner or to any extent vary the
risk of such Guarantor or otherwise operate as a discharge of such Guarantor as
a matter of law or equity.
136
Each Guarantor party hereto further agrees that its guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal or of interest on any Revolving Loan
or any other Obligations is rescinded or must otherwise be returned by the Agent
or any Lender upon the bankruptcy or reorganization of any Guarantor (other than
the Case) or otherwise.
Each Guarantor party hereto hereby waives and releases all rights of
subrogation against each Loan Party and its property and all rights of
indemnification, contribution and reimbursement from each Loan Party and its
property, in each case in connection with this guarantee and any payments made
hereunder, and regardless of whether such rights arise by operation of law,
pursuant to contract or otherwise.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this paragraph shall be subordinate
and subject in right of payment to the Obligations until such time as the
Obligations have been paid in full and all Commitments have been terminated, and
none of the Guarantors shall exercise any right or remedy under this paragraph
against any other Guarantor until the Obligations have been paid in full and all
Commitments have been terminated. For purposes of this paragraph, (a) "Excess
Payment" shall mean the amount paid by any Guarantor in excess of its Pro Rata
Share of any Obligations; (b) "Pro Rata Share" shall mean, for any Guarantor in
respect of any payment of Obligations by such Guarantor, the ratio (expressed as
a percentage) as of the date of such payment of Obligations of (i) the amount by
which the aggregate present fair salable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Guarantors hereunder) of the
Guarantors; provided, however, that, for purpose of calculating the Pro Rata
Shares of the Guarantors in respect of any payment of Obligations, any Guarantor
that became a Guarantor subsequent to the date of any such payment shall be
deemed to have been a Guarantor on the date of such payment and the financial
information for such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such payment; and (c)
"Contribution Share" shall mean, for any Guarantor in respect of any Excess
Payment made by any other Guarantor, the ratio (expressed as a percentage) as of
the date of such Excess Payment of (i) the amount by which the aggregate present
fair salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of the Guarantors other than
the maker of such Excess Payment exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Guarantors hereunder) of the
Guarantors other than the maker of such Excess
137
Payment; provided, however, that, for purposes of calculating the Contribution
Shares of the Guarantors in respect of any Excess Payment, any Guarantor that
became a Guarantor subsequent to the date of any such Excess Payment shall be
deemed to have been a Guarantor on the date of such Excess Payment and the
financial information for such Guarantor as of the date such Guarantor became a
Guarantor shall be utilized for such Guarantor in connection with such Excess
Payment.
[Signature pages to follow.]
138
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
"BORROWERS"
SPIEGEL, INC., Debtor-in-Possession, for itself
and as Authorized Representative
By /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
XXXXX XXXXX, INC., Debtor-in-Possession
By /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
SPIEGEL CATALOG, INC., Debtor-in-Possession
By /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
ULTIMATE OUTLET INC., Debtor-in-Possession
By /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
NEWPORT NEWS, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
"GUARANTORS"
NEWPORT NEWS, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
SPIEGEL, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
SPIEGEL CATALOG, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
ULTIMATE OUTLET INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
XXXXX XXXXX, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, Treasurer
SPIEGEL PUBLISHING CO.,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
SPIEGEL CATALOG SERVICES, LLC,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
SPIEGEL MARKETING CORPORATION,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
SPIEGEL MANAGEMENT GROUP, INC.,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
XXXXX XXXXX DIVERSIFIED SALES,
LLC, Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
XXXXX XXXXX INTERNATIONAL DEVELOPMENT,
LLC, Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
XXXXX XXXXX SERVICES, LLC,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
XXXXX XXXXX OF CANADA, INC.,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
NEWPORT NEWS SERVICES, LLC,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
NEW HAMPTON REALTY CORP.,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
DISTRIBUTION FULFILLMENT SERVICES,
INC. (DFS), Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
SPIEGEL GROUP TELESERVICES, INC.,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
----------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
SPIEGEL GROUP TELESERVICES-CANADA,
INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
RETAILER FINANCIAL PRODUCTS, INC.,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
GEMINI CREDIT SERVICES, INC.,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President,
Treasurer
"AGENT"
BANK OF AMERICA, N.A. as the Agent
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President
"LENDERS"
BANK OF AMERICA, N.A., as a Lender
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President
FLEET RETAIL FINANCE INC., as a Lender
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: Managing Director
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
SCHEDULE 1.1(a)
Commitments
Commitments
From Final Bankruptcy
Court Order Date to the On and After
Prior to Final Consumer Credit Consumer Credit
Bankruptcy Court Card Account Line Card Account Line
Lender Order Date Expiration Date Expiration Date
------------------------------------ ----------------- ----------------------- --------------------
Bank of America, N.A. $ 50,000,000.00 $ 133,333,333.34 $ 116,666,666.67
Fleet Retail Finance Inc. $ 50,000,000.00 $ 133,333,333.33 $ 116,666,666.67
The CIT Group/Business Credit, Inc. $ 50,000,000.00 $ 133,333,333.33 $ 116,666,666.66
TOTAL $ 150,000,000.00 $ 400,000,000.00 $ 350,000,000.00
WAIVER AGREEMENT NO. 1
TO
LOAN AND SECURITY AGREEMENT
WAIVER AGREEMENT NO. 1, dated as of March 27, 2003 (this "Agreement"),
to that certain Loan and Security Agreement (as amended, modified, restated or
supplemented from time to time, the "Loan Agreement"), dated as of March 17,
2003, made by and among Spiegel, Inc., a Delaware corporation and a
debtor-in-possession under Chapter 11 of the Bankruptcy Code ("Spiegel"), Xxxxx
Xxxxx, Inc., a Delaware corporation and a debtor-in-possession under Chapter 11
of the Bankruptcy Code ("Xxxxx Xxxxx"), Xxxxxxx Catalog, Inc., a Delaware
corporation and a debtor-in-possession under Chapter 11 of the Bankruptcy Code
("Catalog"), Ultimate Outlet Inc., a Delaware corporation and a
debtor-in-possession under Chapter 11 of the Bankruptcy Code ("Ultimate"),
Newport News, Inc., a Delaware corporation and a debtor-in-possession under
Chapter 11 of the Bankruptcy Code ("Newport"; and together with Xxxxxxx, Xxxxx
Xxxxx, Catalog and Ultimate, each a "Borrower" and collectively, the
"Borrowers"), the financial institutions party thereto from time to time (the
"Lenders"), Bank of America, N.A., as agent (in such capacity, together with any
successor in such capacity, the "Agent"), the Guarantors party thereto, each of
which is a debtor-in-possession under Chapter 11 of the Bankruptcy Code, Banc of
America Securities LLC, as sole lead arranger and book manager, and Fleet Retail
Finance Inc. and The CITGroup/Business Credit, Inc., as co-syndication agents.
The Borrowers, the Guarantors, the Lenders and the Agent desire to
waive a certain provision of the Loan Agreement.
NOW, THEREFORE, subject to the condition precedent set forth in
Section 3 hereof, the Borrowers, the Guarantors, the Lenders and the Agent
hereby agree as follows:
SECTION 1 CAPITALIZED TERMS.
1.1 Capitalized terms used herein and not defined herein shall have the
respective meanings assigned to such terms in the Loan Agreement.
SECTION 2 WAIVER TO THE LOAN AGREEMENT.
2.1 The Agent and the Lenders hereby waive the requirement under Section
7.2(a) of the Loan Agreement that the financial statements referred to
therein for the Fiscal Year of Spiegel ended December 28, 2002 be
delivered to the Agent and the Lenders within 90 days after the close
of such Fiscal Year; provided, that the Loan Parties shall have
delivered to the Agent and the Lenders (i) on or prior to April 15,
2003 consolidated unaudited balance sheets and consolidated unaudited
statements of operations, cash flow and of stockholders' equity for
Spiegel and its consolidated Subsidiaries for such Fiscal Year and
unaudited balance sheets and unaudited statements of operations, cash
flow and of stockholders' equity for each of Xxxxx Xxxxx, Catalog and
Newport for
such Fiscal Year, setting forth in each case in comparative form
figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of
Spiegel and its consolidated Subsidiaries (or of Xxxxx Xxxxx, Catalog
or Newport, as the case maybe) as at the date thereof and for the
Fiscal Year then ended and prepared in accordance with GAAP, together
with the certificate required by the last sentence of such Section
7.2(a) for such statements of Xxxxx Xxxxx, Catalog and Newport
(instead of the consolidating statements for Spiegel and its
consolidated Subsidiaries) and additionally for such consolidated
statements and (ii) as soon as available, the financial statements
referred to in clause (x) of such Section 7.2(a) for such Fiscal Year.
The parties hereto acknowledge that, without limiting the definition
of Subsidiary, references to consolidated Subsidiaries with respect to
the above consolidated unaudited financial statements includes,
without limitation, the Excluded Subsidiaries.
SECTION 3 CONDITION PRECEDENT. This Agreement shall become effective on
such date as counterparts of this Agreement executed by the Borrowers, the
Guarantors, the Lenders and the Agent shall have been delivered to the Agent.
SECTION 4. MISCELLANEOUS
4.1 Except as herein expressly waived, nothing herein shall be deemed to
be a waiver of any covenant or agreement contained in the Loan
Agreement, and each Loan Party hereby agrees that all of the covenants
and agreements contained in the Loan Agreement and the other Loan
Documents are hereby ratified and confirmed in all respects and shall
remain in full force and effect in accordance with their respective
terms.
4.2 All references to the Loan Agreement in the Loan Agreement or any
other Loan Document and the other documents and instruments delivered
pursuant to or in connection therewith shall mean the Loan Agreement
as modified hereby and as the Loan Agreement may in the future be
amended, restated, supplemented or modified from time to time.
4.3 This Agreement may be executed by the parties hereto individually or
in combination, in one or more counterparts, each of which shall be an
original and all of which shall constitute one and the same agreement.
4.4 Delivery of an executed counterpart of a signature page by telecopier
shall be effective as delivery of a manually executed counterpart.
2
4.5 This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWERS"
SPIEGEL, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: Senior Vice President, Treasurer
--------------------------------
XXXXX XXXXX, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: Vice President, Treasurer
--------------------------------
SPIEGEL CATALOG, INC., Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: Vice President, Treasurer
--------------------------------
ULTIMATE OUTLET INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: Vice President, Treasurer
--------------------------------
NEWPORT NEWS, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
"GUARANTORS"
NEWPORT NEWS, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
SPIEGEL, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Senior Vice President, Treasurer
----------------------------------
SPIEGEL CATALOG, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
ULTIMATE OUTLET INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
XXXXX XXXXX, INC., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
SPIEGEL PUBLISHING CO., Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
SPIEGEL CATALOG SERVICES, LLC, Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
SPIEGEL MARKETING CORPORATION, Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
SPIEGEL MANAGEMENT GROUP, INC., Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Senior Vice President, Treasurer
----------------------------------
XXXXX XXXXX DIVERSIFIED SALES, LLC, Debtor-
in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Treasurer
----------------------------------
XXXXX XXXXX INTERNATIONAL DEVELOPMENT, LLC,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Treasurer
----------------------------------
XXXXX XXXXX SERVICES, LLC, Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
XXXXX XXXXX OF CANADA, INC., Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
NEWPORT NEWS SERVICES, LLC, Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: Vice President, Treasurer
----------------------------------
NEW HAMPTON REALTY CORP., Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Vice President, Treasurer
-----------------------------------
DISTRIBUTION FULFILLMENT SERVICES, INC.(DFS),
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Vice President, Treasurer
-----------------------------------
SPIEGEL GROUP TELESERVICES, INC., Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Vice President, Treasurer
-----------------------------------
SPIEGEL GROUP TELESERVICES-CANADA, INC.,
Debtor-in-Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Vice President, Treasurer
-----------------------------------
RETAILER FINANCIAL PRODUCTS, INC., Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Vice President, Treasurer
-----------------------------------
GEMINI CREDIT SERVICES, INC., Debtor-in-
Possession
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Assistant Treasurer
-----------------------------------
"AGENT"
BANK OF AMERICA, N.A. as the Agent
By /s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxxxx Xxxxxxxx
-----------------------------------
Title: Senior Vice President, Treasurer
-----------------------------------
"LENDERS"
BANK OF AMERICA, N.A., as a Lender
By /s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxxxx Xxxxxxxx
-----------------------------------
Title: Senior Vice President, Treasurer
-----------------------------------
FLEET RETAIL FINANCE INC., as a Lender
By /s/ Xxxxx Xxxxxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC., as a
Lender
By /s/ Xxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxx
-----------------------------------
Title: Vice President, Team Leader
-----------------------------------
