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2001 LOAN AND SECURITY AGREEMENT
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FLEET RETAIL FINANCE INC.
AGENT FOR
THE LENDERS REFERENCED HEREIN
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THE CIT GROUP/ BUSINESS CREDIT, INC.
DOCUMENTATION AGENT
FOOTHILL CAPITAL CORPORATION
SYNDICATION AGENT
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HOMEBASE, INC.
THE LEAD BORROWER
FOR:
HOMEBASE, INC.
HOMECLUB INC. OF TEXAS
HOMECLUB, INC.
THE BORROWERS
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Fleet Securities Inc.
THE SYNDICATOR
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February 23, 2001
TABLE OF CONTENTS
Article 1: - DEFINITIONS:......................................................1
Article 2: - THE REVOLVING CREDIT:............................................27
21 -ESTABLISHMENT OF REVOLVING CREDIT................................27
22 -DESIGNATION OF ELIGIBLE REAL ESTATE..............................28
23 -INITIAL RESERVES. CHANGES TO RESERVES............................28
24 -ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).................29
25 -RISKS OF VALUE OF COLLATERAL.....................................29
26 -COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND
SUPPORT LETTERS OF CREDIT.................................29
27 -REVOLVING CREDIT LOAN REQUESTS...................................30
28 -MAKING OF REVOLVING CREDIT LOANS.................................31
29 -SWINGLINE LOANS..................................................31
210 -THE LOAN ACCOUNT................................................32
211 -THE REVOLVING CREDIT NOTES......................................33
212 -PAYMENT OF THE LOAN ACCOUNT.....................................33
213 -INTEREST ON REVOLVING CREDIT LOANS..............................34
214 -REVOLVING CREDIT COMMITMENT FEE.................................34
215 -AGENT'S FEE.....................................................34
216 -UNUSED LINE FEE.................................................35
217 -EARLY TERMINATION FEE...........................................35
218 -CONCERNING FEES.................................................35
219 -AGENT'S AND REVOLVING CREDIT LENDERS' DISCRETION................35
220 -PROCEDURES FOR ISSUANCE OF L/C'S................................36
221 -FEES FOR L/C'S..................................................37
222 -CONCERNING L/C'S................................................38
223 -CHANGED CIRCUMSTANCES...........................................39
224 -DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT...............39
225 -LENDERS' COMMITMENTS............................................40
Article 3: - CONDITIONS PRECEDENT:............................................41
31 -CORPORATE DUE DILIGENCE..........................................41
32 -OPINION..........................................................42
33 -ADDITIONAL DOCUMENTS.............................................42
34 -OFFICERS' CERTIFICATES...........................................42
35 -REPRESENTATIONS AND WARRANTIES...................................42
36 -ALL FEES AND EXPENSES PAID.......................................43
37 -NO BORROWER INDEFAULT............................................43
38 -NO ADVERSE CHANGE................................................43
39 -BENEFIT OF CONDITIONS PRECEDENT..................................43
Article 4: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:...............43
41 -PAYMENT AND PERFORMANCE OF LIABILITIES...........................43
42 -DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS....................44
43 -TRADE NAMES......................................................45
44 -INFRASTRUCTURE...................................................45
45 -LOCATIONS........................................................45
46 -STORES...........................................................46
47 -TITLE TO ASSETS..................................................47
48 -INDEBTEDNESS.....................................................47
49 -INSURANCE........................................................47
410 -LICENSES........................................................48
411 -LEASES..........................................................48
412 -REQUIREMENTS OF LAW.............................................48
413 -LABOR RELATIONS.................................................49
414 -PROPERTIES......................................................49
415 -TAXES...........................................................50
416 -NO MARGIN STOCK.................................................51
417 -ERISA...........................................................51
418 -HAZARDOUS MATERIALS.............................................51
419 -LITIGATION......................................................52
420 -DIVIDENDS. INVESTMENTS. CORPORATE ACTION........................52
421 -LOANS...........................................................53
422 -PROTECTION OF ASSETS............................................53
423 -LINE OF BUSINESS................................................53
424 -AFFILIATE TRANSACTIONS..........................................53
425 -FURTHER ASSURANCES..............................................53
426 -ADEQUACY OF DISCLOSURE..........................................54
000 -XX XXXXXXXXXXXX XX LIABILITIES..................................55
428 -OTHER COVENANTS.................................................55
Article 5: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:.....................55
51 -MAINTAIN RECORDS.................................................55
52 -ACCESS TO RECORDS................................................56
53 -NOTICE TO AGENT..................................................56
54 -BORROWING BASE CERTIFICATE.......................................57
55 -MONTHLY REPORTS..................................................57
56 -QUARTERLY REPORTS................................................57
57 -ANNUAL REPORTS...................................................58
58 -OFFICERS' CERTIFICATES...........................................58
59 -INVENTORIES, APPRAISALS, AND AUDITS..............................58
510 -ADDITIONAL FINANCIAL INFORMATION................................59
511 -FINANCIAL PERFORMANCE COVENANTS.................................60
Article 6: - USE OF COLLATERAL:...............................................61
61 -USE OF INVENTORY COLLATERAL......................................61
62 -INVENTORY QUALITY................................................61
63 -ADJUSTMENTS AND ALLOWANCES.......................................61
64 -VALIDITY OF ACCOUNTS.............................................61
65 -NOTIFICATION TO ACCOUNT DEBTORS..................................62
Article 7: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:.........................62
71 -THE BLOCKED ACCOUNT..............................................62
72 -THE CONCENTRATION AND OPERATING ACCOUNTS.........................63
73 -PAYMENT OF LIABILITIES...........................................63
74 -THE OPERATING ACCOUNT............................................64
Article 8: - GRANT OF SECURITY INTEREST:......................................64
81 -GRANT OF SECURITY INTEREST.......................................64
82 -EXTENT AND DURATION OF SECURITY INTEREST.........................65
83 -PERMITTED REAL ESTATE TRANSACTIONS...............................65
Article 9: - AGENT AS BORROWER'S ATTORNEY-IN-FACT:............................65
91 -APPOINTMENT AS ATTORNEY-IN-FACT..................................65
92 -NO OBLIGATION TO ACT.............................................66
Article 10: - EVENTS OF DEFAULT:..............................................66
101 -FAILURE TO PAY REVOLVING CREDIT.................................66
102 -FAILURE TO MAKE OTHER PAYMENTS..................................67
103 -FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD)......67
104 -FINANCIAL REPORTING REQUIREMENTS................................67
105 -FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD).........67
106 -MISREPRESENTATION...............................................68
107 -ACCELERATION OF OTHER DEBT. BREACH OF LEASE.....................68
108 -DEFAULT UNDER OTHER AGREEMENTS..................................68
109 -UNINSURED LOSS..................................................68
1010 -ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS....................68
1011 -BUSINESS FAILURE...............................................68
1012 -BANKRUPTCY.....................................................69
1013 -DEFAULT BY GUARANTOR OR AFFILIATE..............................69
1014 -INDICTMENT - FORFEITURE........................................69
1015 -TERMINATION OF GUARANTY........................................69
1016 -CHALLENGE TO LOAN DOCUMENTS....................................70
1017 -CHANGE IN CONTROL..............................................70
Article 11: - RIGHTS AND REMEDIES UPON DEFAULT:...............................70
111 -Acceleration....................................................70
112 -RIGHTS OF ENFORCEMENT...........................................70
113 -SALE OF COLLATERAL..............................................71
114 -OCCUPATION OF BUSINESS LOCATION.................................71
115 -GRANT OF NONEXCLUSIVE LICENSE...................................72
116 -ASSEMBLY OF COLLATERAL..........................................72
117 -RIGHTS AND REMEDIES.............................................72
Article 12: - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:....................72
121 -REVOLVING CREDIT FUNDING PROCEDURES.............................72
122 -SWINGLINE LOANS.................................................73
123 -AGENT'S COVERING OF FUNDINGS:...................................73
124 -ORDINARY COURSE DISTRIBUTIONS...................................75
Article 13: - ACCELERATION AND LIQUIDATION:...................................76
131 -ACCELERATION NOTICES............................................76
132 -ACCELERATION....................................................76
133 -INITIATION OF LIQUIDATION.......................................77
134 -ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION.............77
135 -AGENT'S CONDUCT OF LIQUIDATION..................................77
136 -DISTRIBUTION OF LIQUIDATION PROCEEDS:...........................78
137 -RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION..................78
Article 14: - THE AGENT:......................................................78
141 -APPOINTMENT OF THE AGENT........................................78
142 -RESPONSIBILITIES OF AGENT.......................................79
143 -CONCERNING DISTRIBUTIONS BY THE AGENT...........................80
144 -DISPUTE RESOLUTION:.............................................80
145 -DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS.......................81
146 -CONFIDENTIAL INFORMATION........................................81
147 -RELIANCE BY AGENT...............................................81
148 -NON-RELIANCE ON AGENT AND OTHER REVOLVING CREDIT LENDERS........81
149 -INDEMNIFICATION.................................................82
1410 -RESIGNATION OF AGENT...........................................83
Article 15: - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:.............83
151 -ADMINISTRATION OF CREDIT FACILITIES.............................83
152 - ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS.......84
153 -ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS......84
154 - ACTION REQUIRING CERTAIN CONSENT............................84
155 -ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT..............85
156 -ACTIONS REQUIRING SWINGLINE LENDER CONSENT......................86
157 -ACTIONS REQUIRING AGENT'S CONSENT...............................86
158 -MISCELLANEOUS ACTIONS...........................................86
159 -ACTIONS REQUIRING LEAD BORROWER'S CONSENT.......................87
1510 -NONCONSENTING REVOLVING CREDIT LENDER..........................87
1511 -REPLACEMENT OF DELINQUENT REVOLVING CREDIT LENDER..............88
Article 16: - ASSIGNMENTS BY REVOLVING CREDIT LENDERS:......................90
161 -ASSIGNMENTS AND ASSUMPTIONS:....................................90
162 -ASSIGNMENT PROCEDURES...........................................90
163 -EFFECT OF ASSIGNMENT............................................91
Article 17: - NOTICES:........................................................92
171 -NOTICE ADDRESSES................................................92
172 -NOTICE GIVEN....................................................92
Article 18: - TERM:...........................................................93
181 -TERMINATION OF REVOLVING CREDIT.................................93
182 -ACTIONS ON TERMINATION..........................................93
Article 19: - GENERAL:........................................................94
191 -PROTECTION OF COLLATERAL........................................94
192 -PUBLICITY.......................................................94
193 -SUCCESSORS AND ASSIGNS..........................................94
194 -SEVERABILITY....................................................94
195 -AMENDMENTS. COURSE OF DEALING..................................94
196 -POWER OF ATTORNEY...............................................95
197 -APPLICATION OF PROCEEDS.........................................95
198 -INCREASED COSTS.................................................95
199 -COSTS AND EXPENSES OF THE AGENT.................................96
1910 -COPIES AND FACSIMILES..........................................97
1911 -MASSACHUSETTS LAW..............................................97
1912 -CONSENT TO JURISDICTION........................................97
1913 -INDEMNIFICATION................................................97
1914 -RULES OF CONSTRUCTION..........................................98
1915 -INTENT.........................................................99
1916 -PARTICIPATIONS:................................................99
1917 -RIGHT OF SET-OFF..............................................100
1918 -PLEDGES TO FEDERAL RESERVE BANKS:.............................100
1919 -MAXIMUM INTEREST RATE.........................................100
1920 -WAIVERS.......................................................100
EXHIBITS
1:1-1 : Availability Schedule
2:2-9(c) : SwingLine Note
2:2-11 : Revolving Credit Note
2:2-13 : Pricing Grid
2:2-25 : Revolving Credit Lenders' Commitments
3:3-3(a) : Specimen Mortgage
4:4-2 : Corporate Information
4:4-3 : Trade Names
4:4-5 : Locations, Leases, and Landlords
4:4-7 : Encumbrances
4:4-7(c) : Equipment Usage Agreement
4:4-8 : Indebtedness
4:4-9 : Insurance Policies
4:4-11 : Capital Leases
4:4-15 : Taxes
4:4-19 : Litigation
5:5-4 : Borrowing Base Certificate
5:5-5 : Monthly Financial Reporting Requirements
5:5-11 : Financial Performance Covenants
16:16-2 : Assignment / Assumption
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LOAN AND SECURITY AGREEMENT Fleet Retail Finance Inc.
AGENT
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February 23, 2001
THIS AGREEMENT is made between
Fleet Retail Finance Inc. (in such capacity, herein the
"Agent"), a Delaware corporation with offices at 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, as agent for the ratable benefit of the
"Revolving Credit Lenders", who are, at present, those financial
institutions identified on the signature pages of this Agreement and
who in the future are those Persons (if any) who become "Revolving
Credit Lenders" in accordance with the provisions of Section 2:2-25,
below;
and
The Revolving Credit Lenders;
and
HomeBase, Inc. (in such capacity, the "Lead Borrower"), a
Delaware corporation with its principal executive offices at 0000
Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000 as agent for the following
(individually, a "Borrower" and collectively, the "Borrowers"):
HomeBase, Inc.;
HomeClub, Inc. of Texas, a Delaware corporation with
its principal executive offices at 0000 Xxxxxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000; and
HomeClub, Inc., a Nevada corporation with its
principal executive offices at 0000 Xxxxxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxx 00000,
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom and with the intention that this Agreement constitute an
amendment and restatement of the 1999 Loan Agreement (as hereinafter defined),
WITNESSETH:
Article 1: - DEFINITIONS:
As used herein, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:
"1997 Subordinated Notes": The 5.25% Convertible Subordinated Notes
due 2004 issued by the Borrower on or about November 10, 1997
in the aggregate principal amount of up to $100,000,000.
"1999 Loan Agreement": The December 3, 1999 Loan and Security
Agreement (as amended to date) between (among others) the
Agent (then known as "BankBoston Retail Finance Inc.") and the
Revolving Credit Lenders referred to therein, on the one hand,
and the Lead Borrower and the Borrowers on the other, of which
this Agreement is an amendment and restatement.
"Acceleration": The making of demand or declaration that any
indebtedness, not otherwise due and payable, is due and
payable, provided that such demand or declaration is
authorized under the Loan Documents. Derivations of the word
"Acceleration" (such as "Accelerate") are used with like
meaning in this Agreement.
"Acceleration Notice": Written notice as follows:
(a) From the Agent to the Revolving Credit
Lenders, as provided in 13:13-1(a).
(b) From the SuperMajority Lenders to the Agent,
as provided in Section 13:13-1(b).
"Account Debtor": Has the meaning given that term in the UCC.
"Accounts" and "Accounts Receivable" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, receivables, and rights to payment
(whether or not earned by performance) for: property that has
been or is to be sold, leased, licensed, assigned, or
otherwise disposed of; services rendered or to be rendered; a
policy of insurance issued or to be issued; a secondary
obligation incurred or to be incurred; energy provided or to
be provided; for the use or hire of a vessel; arising out of
the use of a credit or charge card or information contained on
or used with that card; winnings in a lottery or other game of
chance; and also all Inventory which gave rise thereto, and
all rights associated with such Inventory, including the right
of stoppage in transit; all reclaimed, returned, rejected or
repossessed Inventory (if any) the sale of which gave rise to
any Account.
"ACH": Automated clearing house.
"Affiliate": (a) Each Subsidiary.
(b) With respect to any two Persons, a relationship
in which (i) one holds, directly or indirectly, not less than
Twenty Five Percent (25%) of the capital stock, beneficial
interests, partnership interests, or other equity interests of
the other; or (ii) one has, directly or indirectly, the right,
under ordinary circumstances, to vote for the election of a
majority of the directors (or other body or Person who has
those powers customarily vested in a board of directors of a
corporation); or (iii) not less than Twenty Five Percent (25%)
of their respective ownership is directly or indirectly held
by the same third Person.
(c) Any corporation, limited liability company,
trust, partnership, joint venture, or other enterprise which:
is a parent, brother-sister, subsidiary, or affiliate, of a
Borrower; could have such enterprise's tax returns or
financial statements consolidated with that Borrower's; could
be a member of the same controlled group of corporations
(within the meaning of Section 1563(a)(1), (2) and (3) of the
Internal Revenue Code of 1986, as amended from time to time)
of which any Borrower is a member; controls or is controlled
by any Borrower.
"Agent": Is referred to in the Preamble.
" Agent's Cover": Defined in Section 12:12-3(c)(i).
" Agent's Fee": Is defined in Section 2:2-15.
" Agent's Rights and Remedies": Is defined in Section 11:11-7.
"Applicable Law": As to any Person:(i) All statutes, rules,
regulations, orders, or other requirements having the force of
law and (ii) all court orders and injunctions, arbitrator's
decisions, and/or similar rulings, in each instance ((i) and
(ii)) of or by any federal, state, municipal, and other
governmental authority, or court, tribunal, panel, or other
body which has or claims jurisdiction over such Person, or any
property of such Person, or of any other Person for whose
conduct such Person would be responsible.
"Appraised Inventory Liquidation Value": The net recovery, as
reflected on an Inventory Appraisal, as recoverable on the
Borrowers' Inventory in the event of the conduct of a
liquidation of the Borrowers' Inventory pursuant to an in-
store liquidation.
"Appraised Inventory Percentage": 85%.
"Assigning Revolving Credit Lender": Defined in Section 16:16-1(a).
"Assignment and Acceptance": Defined in Section 16:16-2.
"Availability": The lesser of (a) or (b), where
(a) is the result of
(i) The Revolving Credit Ceiling
Minus
(ii) The aggregate unpaid balance of the
Loan Account Minus (iii) The aggregate
undrawn Stated Amount of all then
outstanding L/C's.
Minus
(iv) The aggregate of the Availability
Reserves.
(b) is the result of
(i) The Borrowing Base
Minus
(ii) The aggregate unpaid balance of the
Loan Account
Minus
(iii) The aggregate undrawn Stated Amount
of all then outstanding L/C's.
Minus
(iv) The aggregate of the Availability
Reserves.
"Availability Reserves": Such reserves as the Agent from time to time
determines in the Agent's discretion as being appropriate to
reflect the impediments to the Agent's ability to realize upon
the Collateral. Without limiting the generality of the
foregoing, Availability Reserves may include (but are not
limited to) reserves based on the following:
(i) Rent (based upon past due rent and whether
or not a Landlord's Waiver, acceptable to
the Agent, has been received by the Agent
for Stores in Pennsylvania, Virginia, and
Washington in which more than a de minimis
amount of the Borrower's Inventory is
located).
(ii) Customer Credit Liabilities.
(iii) Taxes and other governmental charges,
including, ad valorem, personal property,
and other taxes which might have priority
over the Collateral Interests of the Agent
in the Collateral.
(iv) L/C Landing Costs.
"Availability Schedule: Is annexed hereto as EXHIBIT 1:1-1.
"Availability Trigger Cure: The Borrowers having Excess Availability
of at least $75 Million for five (5) consecutive Business Days
"Availability Trigger Event:" : The Borrowers not having Excess
Availability of at least $45 Million for five (5) consecutive
Business Days.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Base": The Base Rate announced from time to time by Fleet National
Bank (or any successor in interest to Fleet National Bank). In
the event that said bank (or any such successor) ceases to
announce such a rate, "Base" shall refer to that rate or index
announced or published from time to time as the Agent, in good
faith, designates as the functional equivalent to said Base
Rate. Any change in "Base" shall be effective, for purposes of
the calculation of interest due hereunder, when such change is
made effective generally by the bank on whose rate or index
"Base" is being set.
"Base Margin Loan": Each Revolving Credit Loan while bearing
interest at the Base Margin Rate.
"Base Margin": The then applicable Base Margin as determined from
the applicable Pricing Grid.
"Base Margin Rate": The aggregate of Base plus the then applicable
Base Margin.
"Blocked Account Agreement": The Agreement, styled "Restricted Account
Agreement," dated January 10, 2000, amongst Xxxxx Fargo Bank,
N.A., the Lead Borrower, and BankBoston Retail Finance Inc.,
as Agent and any other agreement, in form satisfactory to the
Agent, with the Lock Box Bank, which agreement recognizes the
Agent's security interest in all Receivables Collateral and
provides that, on notice from the Agent, the Lock Box Bank
will forward directly to the Agent proceeds of all Receivables
Collateral from time to time received by the Lock Box Bank.
"Borrower" and "Borrowers": Is defined in the Preamble.
"Borrowing Base": The aggregate of the following:
(a) Advances against Eligible Inventory:
(i) Until the conditions of Subsection (ii) are
satisfied:
The Inventory Advance Rate of the
Cost of Eligible Inventory (Net of
Inventory Reserves)
(ii) The earlier of (A) January 31, 2002 or (B)
that date on which Excess Availability is
less than $60 Million, the lesser of:
(A) The Inventory Advance Rate of
the Cost of Eligible Inventory (Net of
of Inventory Reserves)
Or
(B) The Appraised Inventory
Percentage of the Appraised Inventory
Liquidation Value.
Plus
(b) Advances Against Eligible Credit Card Receivables:
The Credit Card Advance Rate of the face amount of
Eligible Credit Card Receivables.
Plus
(c) Advances Against Eligible Real Estate:
The least of
(i) $40 Million.
(ii) That amount which, when added to the amounts
determined pursuant to (a) and (b) of this
Definition, does not exceed 20% of the
resulting sum.
(iii) The Real Estate Advance Rate of the Real
Estate Appraised Value of Eligible Real
Estate.
"Borrowing Base Certificate": Is defined in Section 5:5-4.
"Boston Concentration Account": Is defined in Section 7:7-2.
"BusinessDay": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts or in Los Angeles,
California, generally are not open to the general public for
the purpose of conducting commercial banking business; or (c)
a day on which the principal office of the Agent is not open
to the general public to conduct business.
"Business Plan": The Borrowers' December 1, 2000 business plan provided
to the Agent and any revision, amendment, or update of such
business plan to which the Agent has provided its written
sign-off.
"Capital Expenditures": The expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.
"Capital Lease": Any lease which may be capitalized in accordance with
GAAP.
"Change in Control": The occurrence of any of the following:
(a) The failure of the Parent to own,
beneficially and of record, 100% of the capital stock of
all other Borrowers.
(b) The acquisition, by any group of persons
(within the meaning of the Securities Exchange Act of 1934, as
amended) or by any Person, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission) of 40% or more of the issued and outstanding
capital stock of the Parent having the right, under ordinary
circumstances, to vote for the election of directors of the
Parent.
(c) More than half of the persons who were directors
of the Parent on the first day of any period consisting of
Twelve (12) consecutive calendar months (the first of which
Twelve (12) month periods commencing with the first day of the
month during which this Agreement was executed), cease, for
any reason other than death or disability, to be directors of
the Parent and are not replaced by Directors approved by vote
of not less than two thirds of the Directors who are then in
office and who either were Directors on the date on which this
Agreement was executed or whose election to the Parent's Board
was likewise so approved.
"Chattel Paper": Has the meaning given that term in the UCC.
"Collateral": The totality of (a) the assets and property described
in Section 8:8-1; (b) the Real Estate Collateral; and (c) any
other property in which the Agent may in the future be granted
a Collateral interest.
"Collateral Interest": Any interest in property to secure an
obligation, including, without limitation, a security
interest, mortgage, and deed of trust.
"Collateral Interest Restrictions":Any restriction to the creation of a
Collateral Interest to the extent that such restriction is not
made ineffective by UCC9'99 Sections 9-401, 9-407, 9-408, or
9-409.
"Consent": Actual consent given by the Revolving Credit Lender from
whom such consent is sought; or the passage of Seven (7)
Business Days from receipt of written notice to a Revolving
Credit Lender from the Agent of a proposed course of action to
be followed by the Agent without such Revolving Credit
Lender's giving the Agent written notice of that Revolving
Credit Lender's objection to such course of action, provided
that the Agent may rely on such passage of time as consent by
a Revolving Credit Lender only if such written notice states
that consent will be deemed effective if no objection is
received within such time period.
"Consolidated": When used to modify a financial term, test, statement,
or report, refers to the application or preparation of such
term, test, statement or report (as applicable) based upon the
consolidation, in accordance with GAAP, of the financial
condition or operating results of the Borrowers.
"Cost": The lower of (a) or (b), where:
(a) is the calculated cost of purchases, based upon
the Borrowers' accounting practices, known to the Agent, which
practices are in effect on the date on which this Agreement
was executed as such calculated cost is determined from:
invoices received by the Borrowers; the Borrowers' purchase
journal; or the Borrowers' stock ledger.
(b) is the cost equivalent of the lowest ticketed or
promoted price at which the subject Inventory is offered to
the public, after all xxxx-xxxxx (whether or not such price is
then reflected on the Borrowers' accounting system), which
cost equivalent is determined in accordance with the retail
method of accounting, reflecting the Borrowers' historic
business practices.
("Cost" does not include inventory capitalization
costs or other non-purchase price charges (such as freight)
used in the Borrowers' calculation of cost of goods sold).
"Costs of Collection": Includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred
by the Agent's attorneys, and all reasonable out-of-pocket
costs incurred by the Agent in the administration of the
Liabilities and/or the Loan Documents, including, without
limitation, reasonable costs and expenses associated with
travel on behalf of the Agent, where such costs and expenses
are directly or indirectly related to or in respect of the
Agent's: administration and management of the Liabilities;
negotiation, documentation, and amendment of any Loan
Document; or efforts to preserve, protect, collect, or enforce
the Collateral, the Liabilities, and/or the Agent's Rights and
Remedies and/or any of the rights and remedies of the Agent
against or in respect of any guarantor or other person liable
in respect of the Liabilities (whether or not suit is
instituted in connection with such efforts). "Costs of
Collection" also includes the reasonable fees and expenses of
Lenders' Special Counsel. The Costs of Collection are
Liabilities, and at the Agent's option may bear interest at
the then effective Base Margin Rate.
"Credit Card Advance Rate": 85%
"Customer Credit Liability": Gift certificates, customer deposits,
merchandise credits, layaway obligations, frequent shopping
programs, and similar liabilities of any Borrower to its
retail customers and prospective customers.
"DDA": Any checking or other demand daily depository account
maintained by any Borrower.
"Delinquent Revolving Credit Lender": Defined in Section 12:12-3(c).
"Deposit Account": Has the meaning given that term in the UCC.
"Documents": Has the meaning given that term in the UCC.
"Documents of Title": Has the meaning given that term in the UCC.
"Eligible Assignee": A bank, insurance company, or company engaged in
the business of making commercial loans having a combined
capital and surplus in excess of $300 Million or any Affiliate
of any Revolving Credit Lender, or any Person to whom a
Revolving Credit Lender assigns its rights and obligations
under this Agreement as part of a programmed assignment and
transfer of such Revolving Credit Lender's rights in and to a
material portion of such Revolving Credit Lender's portfolio
of asset based credit facilities.
"Eligible Credit Card Receivables": Under 7 business day accounts due
on a non-recourse basis from major credit card processors
(which, if due on account of a private label credit card
program, are deemed in the discretion of the Agent to be
eligible).
"Eligible Inventory": The following:
(a) Such of a Borrower's Inventory (without
duplication of Eligible L/C Inventory ), as to which the Agent
has a perfected security interest which is prior and superior
to all security interests, claims, and all Encumbrances other
than Permitted Encumbrances, but exclusive of those Permitted
Encumbrances listed in subparagraphs (l) and (n) of the
definition of Permitted Encumbrances. "Eligible Inventory"
does not include: any non-merchandise inventory (such as
labels, bags, and packaging materials); damaged goods; return
to vendor merchandise; packaways; consigned inventory; and
other similar categories of Goods.
(b) Eligible L/C Inventory.
"EligibleL/C Inventory": Inventory (without duplication of Eligible
Inventory), the purchase of which is supported by a
documentary L/C then having an initial expiry of Sixty (60) or
less days (as determined either empirically or through a
commercially reasonable estimation process), provided that the
Agent has received a customs brokers agreement in form
reasonably satisfactory to the Agent.
"EligibleReal Estate": Such of the Lead Borrower's real estate,
designated from time to time by the Lead Borrower as Eligible
Real Estate, as to which the Real Estate Parameters are
satisfied.
"Employee Benefit Plan": As defined in ERISA.
"Encumbrance": Each of the following:
(a) A Collateral Interest or agreement to create or
grant a Collateral Interest; the interest of a lessor under a
Capital Lease; conditional sale or other title retention
agreement; sale of accounts receivable or chattel paper; or
other arrangement pursuant to which any Person is entitled to
any preference or priority with respect to the property or
assets of another Person or the income or profits of such
other Person; each of the foregoing whether consensual or
non-consensual and whether arising by way of agreement,
operation of law, legal process or otherwise.
(b) The filing of any financing statement under the
UCC or comparable law of any jurisdiction, which filing has
been authorized by a Borrower.
"End Date": The date upon which both (a) all Liabilities have been
paid in full and (b) all obligations of any Revolving Credit
Lender to make loans and advances and to provide other
financial accommodations to the Borrowers hereunder shall have
been irrevocably terminated.
"Environmental Laws": All of the following:
(a) Applicable Law which regulates or relates to, or
imposes any standard of conduct or liability on account of or
in respect to environmental protection matters, including,
without limitation, Hazardous Materials, as are now or
hereafter in effect.
(b) The common law relating to damage to Persons or
property from Hazardous Materials.
"Equipment": Includes, without limitation, "equipment" as defined in
the UCC, and also all furniture, store fixtures, motor
vehicles, rolling stock, machinery, office equipment, plant
equipment, tools, dies, molds, and other goods, property, and
assets which are used and/or were purchased for use in the
operation or furtherance of a Borrower's business, and any and
all accessions or additions thereto, and substitutions
therefor.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate": Any Person which is under common control with a
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes any Borrower and which would be
treated as a single employer under Section 414 of the Internal
Revenue Code of 1986, as amended.
"Eurodollar Business Day": Any day which is both a Business Day and a
day on which the principal market in Eurodollars in which
Fleet National Bank participates is open for dealings in
United States Dollar deposits.
"Eurodollar Loan": Any Revolving Credit Loan which bears
interest at a Eurodollar Rate.
"Eurodollar Margin": The then applicable Eurodollar Margin as
determined from the Pricing Grid.
"Eurodollar Offer Rate": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the Agent to
be the highest prevailing rate per annum at which deposits on
U.S. Dollars are offered to Fleet National Bank, by
first-class banks in the Eurodollar market in which Fleet
National Bank participates at or about 10:00AM (Boston Time)
Two (2) Eurodollar Business Days before the first day of the
Interest Period for the subject Eurodollar Loan, for a deposit
approximately in the amount of the subject loan for a period
of time approximately equal to such Interest Period.
"Eurodollar Rate": That per annum rate (calculated based on a 360 day
year and actual days elapsed) which is the aggregate of the
Eurodollar Offer Rate plus the Eurodollar Margin except that,
in the event that it is determined by the Agent that any
Revolving Credit Lender may be subject to the Reserve
Percentage, the "Eurodollar Rate" shall mean, as to such
Revolving Credit Lender, with respect to any Eurodollar Loans
then outstanding (from the date on which that Reserve
Percentage first became applicable to such loans), and with
respect to all Eurodollar Loans thereafter made, an interest
rate per annum equal the sum of (a) plus (b), where:
(a) is the decimal equivalent of the following
fraction:
Eurodollar Offer Rate
----------------------------
1 minus Reserve Percentage
(b) is the applicable Eurodollar Margin.
"Events of Default": Is defined in Article 10:.
"Excess Availability": The result of Availability minus: all then
held checks (if any); accounts payable which are beyond credit
terms then accorded the Borrowers; overdrafts; any then unpaid
charges to the Loan Account.
"Exempt DDA": A depository account maintained by any Borrower, the
only contents of which may be transfers from the Operating
Account and actually used solely (i) for xxxxx cash purposes;
or (ii) for payroll.
"Farm Products": Has the meaning given that term in the UCC.
"Fee Letter": That letter dated on or about December 1, 2000 and
styled "Fee Letter" between the Lead Borrower and the Agent,
as such letter may from time to time be amended.
"Fiscal":When followed by "month" or "quarter", the relevant fiscal
period based on the Borrowers' fiscal year and accounting
conventions. When followed by reference to a specific year,
the fiscal year which ends in a month of the year to which
reference is being made (e.g. if the Borrowers' fiscal year
ends in January 2001 reference to that year would be to the
Borrowers' "Fiscal 2001").
"Fixtures": Has the meaning given that term in the UCC.
"GAAP": Principles which are consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that
accounting period in respect of which reference to GAAP is
being made, provided, however, in the event of a Material
Accounting Change, then unless otherwise specifically agreed
to by the Agent, (a) the Borrowers' compliance with the
financial performance covenants imposed pursuant to Section
5:5-11 shall be determined as if such Material Accounting
Change had not taken place and (b) the Lead Borrower shall
include, with its monthly, quarterly, and annual financial
statements a schedule, certified by the Lead Borrower's chief
financial officer, on which the effect of such Material
Accounting Change on that statement shall be described.
"General Intangibles": Includes, without limitation, "general
intangibles" as defined in the UCC; and also all: rights to
payment for credit extended; deposits; amounts due to any
Borrower; credit memoranda in favor of any Borrower; warranty
claims; tax refunds and abatements; insurance refunds and
premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and
futures contracts; records; customer lists; telephone numbers;
goodwill; causes of action; judgments; payments under any
settlement or other agreement; literary rights; rights to
performance; royalties; license and/or franchise fees; rights
of admission; licenses; franchises; license agreements,
including all rights of any Borrower to enforce same; permits,
certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent
applications, patents pending, and other intellectual
property; internet addresses and domain names; developmental
ideas and concepts; proprietary processes; blueprints,
drawings, designs, diagrams, plans, reports, and charts;
catalogs; manuals; technical data; computer software programs
(including the source and object codes therefor), computer
records, computer software, rights of access to computer
record service bureaus, service bureau computer contracts, and
computer data; tapes, disks, semi-conductors chips and
printouts; trade secrets rights, copyrights, mask work rights
and interests, and derivative works and interests; user,
technical reference, and other manuals and materials; trade
names, trademarks, service marks, and all goodwill relating
thereto; applications for registration of the foregoing; and
all other general intangible property of any Borrower in the
nature of intellectual property; proposals; cost estimates,
and reproductions on paper, or otherwise, of any and all
concepts or ideas, and any matter related to, or connected
with, the design, development, manufacture, sale, marketing,
leasing, or use of any or all property produced, sold, or
leased, by any Borrower or credit extended or services
performed, by any Borrower, whether intended for an individual
customer or the general business of any Borrower, or used or
useful in connection with research by any Borrower.
"Goods": Has the meaning given that term in the UCC, and also includes
all things movable when a security interest therein attaches
and also all computer programs embedded in goods and any
supporting information provided in connection with a
transaction relating to the program if (i) the program is
associated with the goods in such manner that it customarily
is considered part of the goods or (ii) by becoming the owner
of the goods, a Person acquires a right to use the program in
connection with the goods.
"Hazardous Materials": Any (a) substance which is defined or
regulated as a hazardous material in or under any
Environmental Law and (b) oil in any physical state.
"House2Home Conversion": The conversion of the Borrowers' principal
line of business from that it which it had been engaged at the
execution of the 1999 Loan Agreement to the "House2Home - The
Incredible Decorating Store" concept as outlined in the
Business Plan.
"Indebtedness": All indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following:
(a) In respect of money borrowed (including any
indebtedness which is non-recourse to the credit of such
Person but which is secured by an Encumbrance on any asset of
such Person) whether or not evidenced by a promissory note,
bond, debenture or other written obligation to pay money.
(b) In connection with any letter of credit or
acceptance transaction (including, without limitation, the
face amount of all letters of credit and acceptances issued
for the account of such Person or reimbursement on account of
which such Person would be obligated).
(c) In connection with the sale or discount of
accounts receivable or chattel paper of such Person.
(d) On account of deposits or advances which create
an obligation, on the part of a Borrower, to repay or credit
such deposit or advance.
(e) As lessee under Capital Leases.
(f) In connection with any sale and leaseback
transaction which results in a Capital Lease on which any
Borrower is obligated.
"Indebtedness" also includes:
(x) Indebtedness of others secured
by an Encumbrance on any asset of such
Person, whether or not such Indebtedness is
assumed by such Person.
(y) Any guaranty, endorsement,
suretyship or other undertaking pursuant to
which that Person may be liable on account
of any obligation of any third party.
(z) The Indebtedness of a
partnership or joint venture for which such
Person is liable as a general partner or
joint venturer.
"InDefault": Any occurrence, circumstance, or state of facts with
respect to a Borrower which (a) is an Event of Default; or (b)
would become an Event of Default if any requisite notice were
given and/or any requisite period of time were to run and such
occurrence, circumstance, or state of facts were not
absolutely cured within any applicable grace period.
"Indemnified Person": Is defined in Section 19:19-13.
"Instruments": Has the meaning given that term in the UCC.
"Interest Payment Date": With reference to:
Each Eurodollar Loan: The last day of the Interest
Period relating thereto (and the last day of month three for
any such loan which has a six month Interest Period); the
Termination Date; and the End Date.
Each Base Margin Loan: The first day of each month;
the Termination Date; and the End Date.
"Interest Period": The following:
(a) With respect to each Eurodollar Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of, or conversion to, the subject
Eurodollar Loan and ending one, two, three, or six months
thereafter, as the Lead Borrower may elect by notice (pursuant
to Section 2:2-7) to the Agent
(b) With respect to each Base Margin Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of or conversion to such Base
Margin Loan and ending on that date (i) as of which the
subject Base Margin Loan is converted to a Eurodollar Loan, as
the Lead Borrower may elect by notice (pursuant to Section
2:2-7) to the Agent, or (ii) on which the subject Base Margin
Loan is paid by the Borrowers.
(c) The setting of Interest Periods is in all
instances subject to the following:
(i) Any Interest Period for a Base
Margin Loan which would otherwise end on a day which
is not a Business Day shall be extended to the next
succeeding Business Day.
(ii) Any Interest Period for a Eurodollar
Loan which would otherwise end on a day that is not a
Eurodollar Business Day shall be extended to the next
succeeding Eurodollar Business Day, unless that
succeeding Eurodollar Business Day is in the next
calendar month, in which event such Interest Period
shall end on the last Eurodollar Business Day of the
month during which the Interest Period ends.
(iii) Subject to Subsection (iv), below, any
Interest Period applicable to a Eurodollar Loan,
which Interest Period begins on a day for which there
is no numerically corresponding day in the calendar
month during which such Interest Period ends, shall
end on the last Eurodollar Business Day of the month
during which that Interest Period ends.
(iv) Any Interest Period which would
otherwise end after the Termination Date shall end on
the Termination Date.
(v) The number of Interest Periods in effect
at any one time is subject to Section 2:2-13(d)
hereof.
"Inventory": Includes, without limitation, "inventory" as defined in
the UCC and also all: (a) Goods which are leased by a Person
as lessor; are held by a Person for sale or lease or to be
furnished under a contract of service; are furnished by a
Person under a contract of service; or consist of raw
materials, work in process, or materials used or consumed in a
business; (b) Goods of said description in transit; (c) Goods
of said description which are returned, repossessed and
rejected; (d) packaging, advertising, and shipping materials
related to any of the foregoing; (e) all names, marks, and
General Intangibles affixed or to be affixed or associated
thereto; and (f) Documents and Documents of Title which
represent any of the foregoing.
"Inventory Advance Rate": 70%.
"Inventory Appraisal": An appraisal of the Borrowers' Inventory
undertaken at the request of the Agent, by a Nationally
Recognized Inventory Appraiser acceptable to the Agent, using
a methodology comparable to that employed by Xxxxxx Xxxxxxxx
in the preparation of its appraisal of the Borrowers'
Inventory dated on or about October 25, 2000.
"Inventory Reserves": Such Reserves as may be established from
time to time by the Agent in the Agent's discretion with
respect to the determination of the saleability, at retail, of
the Eligible Inventory or which reflect such other factors as
affect the market value of the Eligible Inventory.
"Investment Property": Has the meaning given that term in the UCC.
"Issuer": The issuer of any L/C.
"L/C": Any letter of credit, the issuance of which is procured by the
Agent for the account of any Borrower and any acceptance made
on account of such letter of credit.
"L/C Landing Costs": To the extent not included in the Stated
Amount of an L/C, customs, duty, freight, and other
out-of-pocket costs and expenses which will be expended to
"land" the Inventory, the purchase of which is supported by
such L/C.
"Lead Borrower": Is referred to in the Preamble.
"Lease": Any lease or other agreement, no matter how styled or
structured, pursuant to which a Borrower is entitled to the
use or occupancy of any space.
"Lenders'Special Counsel": A single counsel, selected by the Majority
Lenders following the occurrence of an Event of Default, to
represent the interests of the Revolving Credit Lenders in
connection with the enforcement, attempted enforcement, or
preservation of any rights and remedies under this, or any
other Loan Document, as well as in connection with any
"workout", forbearance, or restructuring of the credit
facility contemplated hereby.
"Letter-of-Credit Right": Has the meaning given that term in UCC 9'99
and also refers to any right to payment or performance under
an L/C, whether or not the beneficiary has demanded or is at
the time entitled to demand payment or performance.
"Liabilities": Includes, without limitation, the following:
(a) All and each of the following, whether now existing or
hereafter arising under this Agreement or under any of the other Loan
Documents:
(i) Any and all direct and indirect liabilities,
debts, and obligations of each Borrower to the Agent or any
Revolving Credit Lender, each of every kind, nature, and
description.
(ii) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by any Borrower to the Agent or any Revolving
Credit Lender (including all future advances whether or not
made pursuant to a commitment by the Agent or any Revolving
Credit Lender), whether or not any of such are liquidated,
unliquidated, primary, secondary, secured, unsecured, direct,
indirect, absolute, contingent, or of any other type, nature,
or description, or by reason of any cause of action which the
Agent or any Revolving Credit Lender may hold against any
Borrower.
(iii) All notes and other obligations of each
Borrower now or hereafter assigned to or held by the Agent or
any Revolving Credit Lender, each of every kind, nature, and
description.
(iv) All interest, fees, and charges and other
amounts which may be charged by the Agent or any Revolving
Credit Lender to any Borrower and/or which may be due from any
Borrower to the Agent or any Revolving Credit Lender from time
to time, including, without limitation, any interest accruing
after the filing of a petition by or against any Borrower
under the Bankruptcy Code, regardless of whether such interest
is an allowed claim under the Bankruptcy Code).
(v) All costs and expenses incurred or paid by the
Agent or any Revolving Credit Lender in respect of any
agreement between any Borrower and the Agent or any Revolving
Credit Lender or instrument furnished by any Borrower to the
Agent or any Revolving Credit Lender (including, without
limitation, Costs of Collection, attorneys' reasonable fees,
and all court and litigation costs and expenses).
(vi) Any and all covenants of each Borrower to or
with the Agent or any Revolving Credit Lender and any and all
obligations of each Borrower to act or to refrain from acting
in accordance with any agreement between that Borrower and the
Agent or any Revolving Credit Lender or instrument furnished
by that Borrower to the Agent or any Revolving Credit Lender.
(vii) Each of the foregoing as if each reference to
the " the Agent or any Revolving Credit Lender" were to each
Affiliate of the Agent.
(b) Any and all direct or indirect liabilities, debts, and
obligations of each Borrower to the Agent or any Affiliate of the
Agent, each of every kind, nature, and description owing on account
of any service or accommodation provided to, or for the account of any
Borrower pursuant to this or any other Loan Document, including cash
management services and the issuances of L/C's.
"Liquidation": The exercise, by the Agent, of those rights accorded to
the Agent under the Loan Documents as a creditor of the
Borrowers following and on account of the occurrence of an
Event of Default looking towards the realization on the
Collateral. Derivations of the word "Liquidation" (such as
"Liquidate") are used with like meaning in this Agreement.
"Loan Account": Is defined in Section 2:2-10.
"Loan Commitment": With respect to each Revolving Credit Lender,
that respective Revolving Credit Lender's Revolving Credit
Dollar Commitment.
"Loan Documents": This Agreement, each instrument and document
executed and/or delivered pursuant to the 1999 Loan Agreement
or as contemplated by Article 3:, below, and each other
instrument or document from time to time executed and/or
delivered in connection with the arrangements contemplated
hereby.
"Lock Box Bank": That bank to which the Borrowers concentrate
proceeds of the Borrowers' sales, which, at the execution of
this Agreement, is Xxxxx Fargo Bank, N.A.
"Majority Lenders": Revolving Credit Lenders (other than Delinquent
Revolving Credit Lenders) holding 51% or more of the Loan
Commitments (other than any Loan Commitments held by
Delinquent Revolving Credit Lenders).
"Material Accounting Change": Any change in GAAP applicable to
accounting periods subsequent to the Borrowers' fiscal year
most recently completed prior to the execution of this
Agreement, which change has a material effect on the
Borrowers' Consolidated financial condition or operating
results, as reflected on financial statements and reports
prepared by or for the Borrowers, when compared with such
condition or results as if such change had not taken place or
where preparation of the Borrowers' statements and reports in
compliance with such change results in the breach of a
financial performance covenant imposed pursuant to Section
5:5-11 where such a breach would not have occurred if such
change had not taken place or visa versa.
"Material Adverse Change": Subject to the proviso at the foot of this
Definition, any event, fact, circumstance, change in, or
effect on, the business of, any Borrower which, individually
or in the aggregate or on a cumulative basis with any other
circumstances, changes in, or effects on, the Borrowers or the
Collateral taken as a whole:
(a) Is, or would reasonably be expected to be,
materially adverse to the business, operations, assets or
liabilities (including, without limitation, contingent
liabilities), results of operations or the financial condition
of the Borrowers, when taken as a whole; or
(b) Would reasonably be expected to materially
adversely affect the ability of the Borrowers taken as a whole
to operate or conduct business in all material respects in the
manner in which they are currently operated or conducted by
the Borrowers taken as a whole (after giving effect to the
House2Home Conversion as reflected in the Business Plan) or to
perform their obligations under the Loan Documents; or
(c) Would reasonably be expected to have a material
adverse effect or result in a material adverse change in the
value, enforceability, collectibility or the nature of the
Collateral. Provided, however, no adverse effect of the
House2Home Conversion which is reflected in the Business Plan
(but not otherwise) shall be considered in the determination
of whether a "Material Adverse Change" has taken place.
"Material Adverse Effect": A result, consequence, or outcome with
respect to the Borrowers which constitutes a Material Adverse
Change.
"Maturity Date": November 30, 2004.
"Minimum Projected Excess Availability": Twenty Five Million
Dollars($25 Million) less than Excess Availability for the
relevant period, as reflected on the Agent's December 1, 2000
Availability Schedule.
"Nationally Recognized Inventory Appraiser:" An inventory appraiser
which engages in a national practice of the appraisal of
retail inventory.
"New Store": A Store which, on February 1, 2001, was not operated
by any Borrower under either the HomeBase or the House2Home
concept and was not then dark on account of its undergoing
conversion from the HomeBase to the House2Home concept.
"Nominee": A business entity (such as a corporation or limited
partnership) formed by the Agent to own or manage any Post
Foreclosure Asset.
"Operating Account": Is defined in Section 7:7-2.
"OverLoan": A loan, advance, or providing of credit support (such as
the issuance of any L/C) to the extent that, immediately after
its having been made, Availability is less than zero.
"Parent": HomeBase, Inc.
"Participant": Is defined in Section 19:19-16, hereof.
"Payment Intangible": Has the meaning given that term in UCC 9'99
and also refers to any general intangible under which the
Account Debtor's primary obligation is a monetary obligation.
"Permitted Affiliate Transactions":Each of the following:
(a) The sale of goods and services for a price
and on terms which are
(i) competitive and fully deductible as
an "ordinary and necessary
business expense" and/or fully depreciable under the Internal
Revenue Code of 1986 and the Treasury Regulations, each as
amended; and
(ii) no less favorable to that selling
Borrower than those which would have been charged and imposed
in an arms length transaction.
(b) A transaction in which there is no Consolidated
gain or loss to any party to such transaction.
"Permitted Encumbrances": The following:
(a) Encumbrances in favor of the Agent.
(b) Those Encumbrances (if any) listed on Exhibit 4:4-6
annexed to the 1999 Loan Agreement and which, for ease of reference, is
annexed hereto as EXHIBIT 4:4-7.
(c) Liens securing the payment of taxes, either not yet
overdue or the validity of which are being contested as permitted by
Section 4:4-15(b) of this Agreement.
(d) Non-consensual statutory liens (other than liens securing
the payment of taxes) arising in the ordinary course of a Borrowers'
business to the extent: such liens secure obligations which are not
overdue or such liens secure obligations relating to claims or
liabilities which are fully insured and being defended at the sole cost
and expense and at the sole risk of the insurer or are being contested
in good faith by appropriate proceedings diligently pursued and
available to a Borrower, in each instance prior to the commencement of
foreclosure or other similar proceedings and with respect to which
adequate reserves have been set aside on the Borrowers' books.
(e) Encumbrances on properties consisting of easements, rights
of way, zoning restrictions, restrictions on the use of real property
and defects and irregularities in the title thereto, landlord's or
lessor's liens under leases to which a Borrower is a party, and other
minor liens or encumbrances none of which interferes materially with
the use of the property affected in the ordinary conduct of the
business of that Borrower.
(f) Deposits under workmen's compensation, unemployment
insurance and social security laws, or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed
money) or leases, or to secure statutory obligations or surety or
appeal bonds, or to secure indemnity, performance or other similar
bonds arising in the ordinary course of business.
(g) Landlord's liens by operation of law where waivers have
not been obtained.
(h) Purchase money security interests (as defined in the UCC)
in Equipment permitted by Section 4:4-7(c).
(i) Interests of lessors under Capital Leases.
(j) Liens arising on account of the transfer of an interest in
Accounts or notes receivable, which transfer qualifies as a sale under
GAAP.
(k) Liens consisting of security deposits made by a Borrower.
(l) Liens granted by one Borrower to another Borrower.
(m) Encumbrances on Inventory which, when aggregated with the
Cost of Inventory consigned to any Borrower, do not exceed four percent
(4%) of the Cost of all of the Borrowers' Inventory at any time.
(n) Liens not otherwise described in this Definition, which
secure up to $5 Million in the aggregate at any one time outstanding.
(o) Liens arising out of Permitted Real Estate Transactions.
The inclusion of any of the foregoing as a "Permitted Encumbrance"
shall not affect its relative priority vis a vis any Collateral
Interest created by a Borrower in favor of the Agent.
"Permitted Indebtedness": The following:
(a) Indebtedness under this Agreement.
(b) Indebtedness described on EXHIBIT 4:4-8,
annexed hereto.
(c) Indebtedness on account of a Permitted Real
Estate Transaction.
(d) Indebtedness secured solely by a Permitted
Encumbrance.
(e) Indebtedness on account of the termination
of the Borrower's private label
credit card program to take effect on or about July 15, 2001,
provided that the discount in connection with such termination
does not exceed five percent (5%) of the aggregate balance
then owed by cardholders in that program.
(f) Contingent obligations on account of endorsements
of instruments for deposit or collection in the ordinary
course.
(g) Contingent obligations consisting of unsecured
guaranties, and other arrangements which have the functional
effect of a guaranty, of another Borrower or of any Subsidiary
of any Borrower.
(h) Permitted SubDebt.
(i) Indebtedness to any Affiliate.
(j) Capitalized Lease obligations, not to exceed
$30 Million outstanding at any one time.
"Permitted Investments": Each of the following, provided that it is
held by the Parent; is subject to the prior perfected security
interest of the Agent; and is denominated in United States
Dollars:
(a) Short-term obligations of, or fully
guaranteed by, the United States of America; or its agencies.
(b) Commercial paper rated A-2 or better by Standard
and Poor's Corporation or P-2 or better by Xxxxx'x Investors
Service, Inc. and securities commonly known as "short-term
bank notes" issued by any Revolving Credit Lender denominated
in United States dollars which at the time of purchase have
been rated and the ratings for which are not less than P-2 if
rated by Xxxxx'x Investors Services, Inc., and not less than
A-2 if rated by Standard and Poor's Corporation.
(c) Demand deposit accounts maintained in the
ordinary course of business.
(d) Certificates of deposit issued by and time
deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000.
(e) Municipal securities rated "A" or better as
rated by Standard and Poor's Corporation or Xxxxx'x Investors
Service, Inc. and municipal securities mutual funds which have
a weighted average life of less than two (2) years.
(f) Corporate debt securities rated "A" or better as
rated by Standard and Poor's Corporation or Xxxxx'x Investors
Service, Inc. which mature within two (2) years from the date
the Investment is made by the Borrower or any of its
Subsidiaries.
(g) Asset or mortgage backed securities rated "A" or
better as rated by Standard and Poor's Corporation or Xxxxx'x
Investors Service, Inc. with an average life less than two (2)
years; provided that after giving effect to any such
Investment, the aggregate cost of all such Investments does
not exceed $25,000,000.
(h) Auction rate securities rated "A" or better as
rated by Standard and Poor's Corporation or Xxxxx'x Investors
Service, Inc.; provided that after giving effect to any such
Investment, the aggregate cost of all such Investments does
not exceed $25,000,000.
(i) Repurchase agreements relating to a security
which is rated "A" or better as rated by Standard and Poor's
Corporation or Xxxxx'x Investors Service, Inc. that mature
within two (2) years from the date the Investment is made by
the Borrower or any of its Subsidiaries; provided that after
giving effect to any such Investment, the aggregate cost of
all such Investments does not exceed $25,000,000.
(j) Municipal securities rated "SP2" or better by
Standard and Poor's Corporation or "MIG2" or better by Xxxxx'x
Investors Service, Inc. with an average life of less than two
(2) years; provided, that after giving effect to any such
Investment, the aggregate cost of all such Investments does
not exceed $25,000,000.
(k) Money market mutual funds regulated by SEC rule
2a-7 (17 CFR 270.2a-7) under the Investment Company Act of
1940.
(l) Insurance company guaranteed investment contracts
or funding agreements with insurers rated A-2 or better by
Standard and Poor's Corporation.
(m) Bond mutual funds investing in securities rated
"A" or better by Standard and Poor's Corporation which have a
weighted average life of two (2) years or less.
"Permitted Merger": A merger or consolidation of one Borrower into
another, not less than thirty (30) days prior written notice
of which (with reasonable particularity as to the facts and
circumstances thereof) has been provided to the Agent.
"Permitted Real Estate Transaction": The sale, mortgaging (or its
functional equivalent), or sale and leaseback of any real
estate owned by a Borrower, where both of the following
conditions are satisfied: (a) on the date on which the
relevant Borrower becomes contractually obligated to
consummate the subject transaction, no Borrower is in Default
and no Borrower will become InDefault as a result of such
transaction and (b) on the date on which the subject
transaction is consummated, (i) such real estate is not then
designated by the Lead Borrower as Eligible Real Estate and
(ii) no OverLoan will result on account of the consummation of
such transaction.
"Permitted Repurchase" Either of the following ((a) or (b)) which
occurs after May 31, 2002:
(a) A purchase or repurchase, by the Parent of
its capital stock as follows:
(i) With proceeds received from the issuance
of new shares of the Parent's capital stock.
(ii) Pursuant to a program adopted by the
Parent's Directors to repurchase stock options issued
by the Parent.
(b) A purchase or repurchase, by the Parent, of any
of its capital stock and a purchase, repurchase, retirement,
or repayment of principal, of any of the 1997 Subordinated
Notes, provided that the Excess Availability, immediately
after such purchase or repurchase, is not less than Threshold
Excess Availability.
"Permitted Subsidiary": A wholly owned subsidiary of the Parent (other
than a "Borrower" at the execution of this Agreement) where
either (a) or (b) of this Definition is satisfied:
(a) The assets of such subsidiary, when aggregated
with all other subsidiaries other than those governed by (b)
of this Definition, are less than $1,000,000.00.
(b) Such subsidiary has become a "Borrower" or a
guarantor of the Liabilities and has granted to the Agent, for
the ratable benefit of the Revolving Credit Lenders perfected
first-priority Collateral Interests in all of its assets
(subject only to any applicable Collateral Interest
Restrictions and Permitted Encumbrances) to secure its
obligations so undertaken, all by its execution and delivery
to the Agent of such documentation as is reasonably
satisfactory to the Agent.
"Permitted Sub Debt": The following Indebtedness:
(a) Indebtedness evidenced by the 1997
Subordinated Notes.
(b) Indebtedness subordinated to the Liabilities
pursuant to written agreement satisfactory to the Agent.
"Person": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other
enterprise or entity.
"Post Foreclosure Asset": All or any part of the Collateral, ownership
of which is acquired by the Agent or a Nominee on account of
the "bidding in" at a disposition as part of a Liquidation or
by reason of a "deed in lieu" type of transaction.
"Pricing Grid": Set out in EXHIBIT 2:2-13.
"Proceeds": Includes, without limitation, "Proceeds" as defined
in the UCC and each type of property described in Section
8:8-1 hereof.
"Protective OverAdvances": Revolving Credit Loans which are OverLoans,
but as to which each of the following conditions is satisfied:
(a) the Revolving Credit Ceiling is not exceeded; and (b) when
aggregated with all other Protective OverAdvances, such
Revolving Credit Loans do not aggregate more than 10% of the
aggregate of the Borrowing Base; and (c) such Revolving Credit
Loans are made or undertaken in the Agent's discretion to
protect and preserve the interests of the Revolving Credit
Lenders.
"Real Estate Advance Rate": 50%.
"Real Estate Appraised Value": The forced liquidation appraised
value of Eligible Real Estate, as determined by a real estate
appraiser reasonably satisfactory to the Agent and using a
methodology which is reasonably satisfactory to the Agent, the
then aggregate of which value shall be reduced on the first
day of each month, beginning with the twenty fourth month
after the Restatement Date, by one-sixtieth of the aggregate
as of the first day of such twenty fourth month, except that
the value of any Eligible Real Estate which is acquired after
the first day of the twenty fourth month after the Restatement
Date, shall be reduced by one-sixtieth of such forced
liquidation appraised value commencing on the first day of the
second month after the month during which such Eligible Real
Estate had been acquired.
"Real Estate Collateral": All real estate and interests in real
estate (other than solely as lessee, sublessor, sublessee, or
holder of any option to purchase under any lease) in which any
Borrower has an interest.
"Real Estate Parameters": (a) The subject real estate is owned by
(but not leased to) the Lead Borrower (or a Subsidiary of the
Lead Borrower) in fee simple title.
(b) Such parcel of Real Estate has been appraised by
a third party appraiser acceptable to the Agent and title
insurance, environmental studies, and other real estate
requirements, as reasonably determined by the Agent, have been
satisfied, including, but not limited to, those items which
would be required if the Agent were subject to compliance with
the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (commonly referred to as "FIRREA").
(c) A mortgage (or its functional equivalent) in form
reasonably satisfactory to the Agent has been filed with
respect to such real estate and the Agent's mortgage and
security interests in such parcel of real estate have been
perfected such that Agent has a perfected first-priority lien
in such real estate, subject only to Permitted Encumbrances,
but exclusive of those Permitted Encumbrances listed in
subparagraphs (l), (n), and (o) of the definition of Permitted
Encumbrances.
(d) The Lead Borrower (or the Subsidiary which owns
the subject real estate) is in compliance with the
representations, warranties and covenants set forth in the
mortgage or its functional equivalent relating to such parcel
of real estate.
"Receipts": All cash, cash equivalents, money, checks, credit
card slips, receipts and other Proceeds from any sale of the
Collateral.
"Receivables Collateral": That portion of the Collateral which
consists of Accounts, Accounts Receivable, General
Intangibles, Chattel Paper, Instruments, Documents of Title,
Documents, Investment Property, Payment Intangibles, Letter-
of -Credit Rights, bankers' acceptances, and all other rights
to payment.
"Register": Is defined in Section 16:16-2(c).
"Requirements of Law": As to any Person:
(a) Applicable Law.
(b) That Person's organizational documents.
(c) That Person's by-laws and/or other instruments
which deal with corporate or similar governance, as
applicable.
"Reserve Percentage": The decimal equivalent of that rate applicable to
a Revolving Credit Lender under regulations issued from time
to time by the Board of Governors of the Federal Reserve
System for determining the maximum reserve requirement of that
Revolving Credit Lender with respect to "Eurocurrency
liabilities" as defined in such regulations. The Reserve
Percentage applicable to a particular Eurodollar Loan shall be
based upon that in effect during the subject Interest Period,
with changes in the Reserve Percentage which take effect
during such Interest Period to take effect (and to
consequently change any interest rate determined with
reference to the Reserve Percentage) if and when such change
is applicable to such loans.
"Reserves": The following: Availability Reserves and Inventory Reserves
"Restatement Date": The date of this Agreement.
"Revolving Credit": Is defined in Section 2:2-1.
"Revolving Credit Ceiling": $250,000,000.00 .
"Revolving Credit Commitment Fee": Is defined in Section 2:2-14.
"Revolving Credit Dollar Commitment": As set forth on EXHIBIT
2:2-25, annexed hereto (as such amounts may change in
accordance with the provisions of this Agreement).
"Revolving Credit Early Termination Fee": Is defined in Section 2:2-17.
"Revolving Credit Lenders": Each Revolving Credit Lender to which
reference is made in the Preamble of this Agreement and any
other Person who becomes a "Revolving Credit Lender" in
accordance with the provisions of this Agreement.
"Revolving Credit Loans": Loans made under the Revolving Credit, except
that where the term "Revolving Credit Loan" is used with
reference to available interest rates applicable to the loans
under the Revolving Credit, it refers to so much of the unpaid
principal balance of the Loan Account as bears the same rate
of interest for the same Interest Period. (See Section
2:2-13(c)).
"Revolving Credit Note": Is defined in Section 2:2-11.
"Revolving Credit Obligations": The aggregate of the Borrowers'
liabilities, obligations, and indebtedness of any character on
account of or in respect to the Revolving Credit.
"Revolving Credit Percentage Commitment": As set forth on EXHIBIT
2:2-25, annexed hereto (as such amounts may change in
accordance with the provisions of this Agreement).
"SEC": The Securities and Exchange Commission.
"Senior Officer": President, Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Treasurer, and any other
Person or officer reasonably so designated by the Agent,
written notice of which designation is provided by the Agent
to the Lead Borrower.
"Stated Amount": The maximum amount for which an L/C may be honored.
"Store": A place at which a Borrower offers its Inventory for sale to
the public.
"Subsidiary": Any Person (a) 50% of whose stock or other divisible
ownership interests having ordinary voting power, are owned or
controlled, directly or indirectly by another Person or (b) of
which another Person is the general partner or managing
partner or the like.
"SuperMajority Lenders": Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 66-2/3% or more
of the Loan Commitments (other than Loan Commitments held by a
Delinquent Revolving Credit Lender).
"Supporting Obligation": Has the meaning given that term in UCC 9'99
and also refers to a Letter-of-Credit Right or secondary
obligation which supports the payment or performance of an
Account, Chattel Paper, a Document, a General Intangible, an
Instrument, or Investment Property.
"SwingLine": The facility pursuant to which the SwingLine Lender may
advance Revolving Credit Loans aggregating up to the SwingLine
Loan Ceiling.
"SwingLine Lender": Fleet Retail Finance Inc.
"SwingLine Loan Ceiling": $25,000,000.00 (subject to increase as
provided in Section 15:15-4).
"SwingLine Loans": Defined in Section 2:2-9.
"Termination Date": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 10:10-12, below;
or (c) the Agent's notice to the Lead Borrower setting the
Termination Date on account of the occurrence of any Event of
Default other than as described in Section 10:10-12, below; or
(d) that date, sixty (60) days irrevocable written notice of
which is provided by the Lead Borrower to the Agent.
"Threshold Excess Availability": Forty Million Dollars ($40,000,000.00)
"Transfer": Wire transfer pursuant to the wire transfer system
maintained by the Board of Governors of the Federal Reserve
Board, or as otherwise may be agreed to from time to time by
the Agent making such Transfer and the subject Revolving
Credit Lender. Wire instructions may be changed in the same
manner that Notice Addresses may be changed (Section 17:17-1),
except that no change of the wire instructions for Transfers
to any Revolving Credit Lender shall be effective without the
consent of the Agent.
"UCC": The Uniform Commercial Code as in effect from time to time in
Massachusetts.
"UCC9'99": The Uniform Commercial Code, Article 9, 1999 Official Text,
except that following the effectiveness, in Massachusetts, of
the revision of Article 9 of the Uniform Commercial Code
contemplated by UCC9'99 (with such nonuniform variations as
may be adopted as part of the enactment of that revision),
each reference to "UCC9'99" shall be to the UCC.
"Unanimous Consent": Consent of Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 100% of the Loan
Commitments (other than Loan Commitments held by a Delinquent
Revolving Credit Lender).
"Unused Line Fee": Is defined in Section 2:2-16.
"Usage": The aggregate, on the day on which Usage is being determined,
of (a) the then principal balance of the Loan Account plus
(ii) the then Stated Amount of all L/C's.
"Usage Percentage ": The decimal equivalent of a fraction, determined
with respect to a fiscal month, in which (a) the numerator is
the aggregate of (i) the average unpaid principal balance of
the Loan Account plus (ii) the average Stated Amount of all
L/C's and Acceptances, and (b) the denominator is
$250,000,000.00.
Article 2: - THE REVOLVING CREDIT:
21 -ESTABLISHMENT OF REVOLVING CREDIT
(a) The Revolving Credit Lenders hereby establish a
revolving line of credit (the "Revolving Credit") in the Borrowers' favor
pursuant to which each Revolving Credit Lender, subject to, and in accordance
with, this Agreement, acting through the Agent, shall make loans and advances
and otherwise provide financial accommodations to and for the account of the
Borrowers as provided herein.
(b) Loans, advances, and financial accommodations under the
Revolving Credit shall be made with reference to the Borrowing Base and shall
be subject to Availability. The Borrowing Base and Availability shall be
determined by the Agent by reference to Borrowing Base Certificates furnished
as provided in Section 5:5-4, below, and shall be subject to the following:
(ii) Such determination shall take into account
those Reserves as the Agent may determine as being applicable
thereto.
(iii) The Cost of Eligible Inventory shall be based
on the Borrowers' stock ledger inventory.
(a) The commitment of each Revolving Credit Lender to provide
such loans, advances, and financial accommodations is subject to Section 2:2-25.
(b) The proceeds of borrowings under the Revolving Credit
shall be used solely for the following purposes:
(iv) To provide on-going working capital
requirements and general corporate requirements of the
Borrowers, it being recognized that such working capital
and general corporate requirements do not include the use
of such proceeds to fund any purchase or repurchase, by the
Parent, of any of its capital stock and a purchase,
repurchase, retirement, or repayment of principal, of any of
the 1997 Subordinated Notes,
(v) For Permitted Repurchases.
22 -DESIGNATION OF ELIGIBLE REAL ESTATE
(a) The Lead Borrower may designate one or more parcels of
the Real Estate Collateral as Eligible Real Estate upon written notice to the
Agent, provided that the Real Estate Parameters have been satisfied with respect
to such parcel on the date on which such designation is made.
(b) The Lead Borrower may remove one or more parcels of Real
Estate Collateral, from time to time as Eligible Real Estate by written notice
to the Agent, provided that:
(ii) An OverLoan does not result from such removal.
(iii) No Borrower is InDefault immediately prior
to such removal nor after such removal.
23 -INITIAL RESERVES. CHANGES TO RESERVES.
(a) At the execution of the amendment and restatement of this
Agreement, the only Reserves are those in effect, immediately prior to such
amendment and restatement.
(b) The Agent shall provide not less than seven (7) days prior
notice to the Lead Borrower of the establishment of any Reserve (other than
those established at the execution of this Agreement) except that the following
may be undertaken without such prior notice:
(ii) a change to the amount of a then existing
Reserve (as distinguished from a change by which such Reserve
is measured or determined), which change reflects changed
circumstances (e.g. the amount of the Reserve for Customer
Credit Liability will change based on the aggregate of
Customer Credit Liability at any one time); and
(iii) the creation of, or a change to an existing
Reserve on account of circumstances which the Agent determines
as having a Material Adverse Change on the maintenance of loan
to collateral values.
24 -ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No Revolving Credit Lender has any obligation to make any
loan or advance, or otherwise to provide any credit to or for the benefit of the
Borrowers where the result of such loan, advance, or credit is an OverLoan.
(b) The Revolving Credit Lenders' obligations, among
themselves, are subject to Section 12:12-3(a) (which relates to each Revolving
Credit Lender's making amounts available to the Agent) and to Section 15:15-3(a)
(which relates to Protective OverAdvances).
(c) The Revolving Credit Lenders' providing of an OverLoan on
any one occasion does not affect the obligations of each Borrower hereunder
(including each Borrower's obligation to immediately repay any amount which
otherwise constitutes an OverLoan) nor obligate the Revolving Credit Lenders
to do so on any other occasion.
25 -RISKS OF VALUE OF COLLATERAL. The Agent's reference to a given
asset in connection with the making of loans, credits, and advances and the
providing of financial accommodations under the Revolving Credit and/or the
monitoring of compliance with the provisions hereof shall not be deemed a
determination by the Agent or any Revolving Credit Lender relative to the actual
value of the asset in question. All risks concerning the value of the
Collateral are and remain upon the Borrowers. All Collateral secures the prompt,
punctual, and faithful performance of the Liabilities whether or not relied
upon by the Agent in connection with the making of loans, credits, and advances
and the providing of financial accommodations under the Revolving Credit.
26 -COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT. Subject to the provisions of this Agreement, the Revolving
Credit Lenders shall make a loan or advance under the Revolving Credit and the
Agent shall endeavor to have an L/C issued for the account of the Lead Borrower,
in each instance if duly and timely requested by the Lead Borrower as provided
herein provided that:
(a) No OverLoan is then outstanding and none will result
therefrom.
(b) No Borrower is then InDefault and none will thereby become
InDefault.
27 -REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for loans and advances under the Revolving
Credit or for the continuance or conversion of an interest rate applicable to a
Revolving Credit Loan may be requested by the Lead Borrower in such manner as
may from time to time be acceptable to the Agent.
(b) Subject to the provisions of this Agreement, the Lead
Borrower may request a Revolving Credit Loan and elect an interest rate and
Interest Period to be applicable to that Revolving Credit Loan by giving notice
to the Agent by no later than the following:
(ii) If such Revolving Credit Loan is to be or is to
be converted to a Base Margin Loan: By 1:30PM on the Business Day on
which the subject Revolving Credit Loan is to be made or is to be so
converted. Base Margin Loans requested by the Lead Borrower, other
than those resulting from the conversion of a Eurodollar Loan,
shall not be less than $500,000.00.
(iii) If such Revolving Credit Loan is to be, or
is to be continued as, or converted to, a Eurodollar Loan: By 1:00PM
Three (3) Eurodollar Business Days before the commencement of any
new Interest Period or the end of the then applicable Interest Period.
Eurodollar Loans and conversions to Eurodollar Loans shall each be not
less than $1,000,000.00 and in increments of $500,000.00 in excess
of such minimum.
(iv) Any Eurodollar Loan which matures while any
Borrower is InDefault shall be converted, at the option of the Agent,
to a Base Margin Loan notwithstanding any notice from the Lead
Borrower that such Loan is to be continued as a Eurodollar Loan.
(a) Any request for a Revolving Credit Loan or for the
continuance or conversion of an interest rate applicable to a Revolving Credit
Loan which is made after the applicable deadline therefor, as set forth above,
shall be deemed to have been made at the opening of business on the then next
Business Day or Eurodollar Business Day, as applicable.
(b) The Lead Borrower may request that the Agent cause the
issuance by the Issuer of L/C's for the account of the Borrowers as provided in
Section 2:2-20.
(c) The Agent may rely on any request for a loan or advance,
or other financial accommodation under the Revolving Credit which the Agent,
in good faith, believes to have been made by a Person duly authorized to act
on behalf of the Lead Borrower and may decline to make any such requested loan
or advance, or issuance, or to provide any such financial accommodation pending
the Agent's being furnished with such documentation concerning that Person's
authority to act as may be satisfactory to the Agent.
(d) A request by the Lead Borrower for loan or advance, or
other financial accommodation under the Revolving Credit shall be irrevocable
and shall constitute certification by each Borrower that as of the date of such
request, each of the following is true and correct:
(v) There has been no material adverse change in the
Borrowers' financial condition from the most recent financial
information furnished Agent or any Revolving Credit Lender pursuant
to this Agreement.
(vi) Each representation which is made herein or in
any of the Loan Documents is then true and complete as of and as if
made on the date of such request (other than any representation which
is made only as of a specific date), it being understood that any
representation which is made by reference to an EXHIBIT hereto shall
be deemed a representation as of the date of this Agreement).
(vii) No Borrower is InDefault or if a Borrower
is InDefault, the facts and circumstances thereof and the steps
(if any) being taken to remedy such condition.
(a) If, at any time or from time to time, any Borrower is
InDefault:
(viii) The Agent may suspend the Revolving Credit
immediately.
(ix) Neither the Agent nor any Revolving Credit
Lender shall be obligated, during such suspension, to make any loans
or advance, or to provide any financial accommodation hereunder or
to seek the issuance of any L/C.
(x) The Agent may suspend the right of the Lead
Borrower to request any Eurodollar Loan or to convert any Base Margin
Loan to a Eurodollar Loan.
28 -MAKING OF REVOLVING CREDIT LOANS.
(a) A loan or advance under the Revolving Credit shall be made
by the transfer of the proceeds of such loan or advance to the Operating Account
or as otherwise instructed by the Lead Borrower.
(b) A loan or advance shall be deemed to have been made under
the Revolving Credit (and the Borrowers shall be indebted to the Agent and the
Revolving Credit Lenders for the amount thereof immediately) at the following:
(ii) The Agent's initiation of the transfer of the
proceeds of such loan or advance in accordance with the Lead
Borrower's instructions (if such loan or advance is of funds
requested by the Lead Borrower).
(iii) The charging of the amount of such loan to the
Loan Account (in all other circumstances).
(a) There shall not be any recourse to or liability of the
Agent or any Revolving Credit Lender, on account of any delay in the receipt,
and/or any loss, of funds which constitute a loan or advance under the Revolving
Credit, the wire transfer of which was properly initiated by the Agent in
accordance with wire instructions provided to the Agent by the Lead Borrower.
29 -SWINGLINE LOANS.
(a) For ease of administration, Base Margin Loans may be made
by the SwingLine Lender (in the aggregate, the "SwingLine Loans") in
accordance with the procedures set forth in this Agreement for the making
of loans and advances under the Revolving Credit. The unpaid principal balance
of the SwingLine Loans shall not at any one time be in excess of the SwingLine
Loan Ceiling.
(b) The aggregate unpaid principal balance of SwingLine Loans
shall bear interest at the rate applicable to Base Margin Loans and shall be
repayable as a loan under the Revolving Credit.
(c) The Borrowers' obligation to repay SwingLine Loans shall
be evidenced by a Note in the form of EXHIBIT 2:2-9(c), annexed hereto, executed
by the Borrowers, and payable to the SwingLine Lender. Neither the original nor
a copy of that Note shall be required, however, to establish or prove any
Liability. The Borrowers shall execute a replacement of any SwingLine Note which
has been lost, mutilated, or destroyed thereof and deliver such replacement to
the SwingLine Lender.
(d) For all purposes of this Loan Agreement, the SwingLine
Loans and the Borrowers' obligations to the SwingLine Lender constitute
Revolving Credit Loans and are secured as "Liabilities".
(e) SwingLine Loans may be subject to periodic settlement with
the Revolving Credit Lenders as provided in this Agreement, but in any event, no
less frequently than weekly.
210 -THE LOAN ACCOUNT.
(a) An account ("Loan Account") shall be opened on the books
of the Agent in which a record shall be kept of all loans and advances made
under the Revolving Credit.
(b) The Agent shall also keep a record (either in the Loan
Account or elsewhere, as the Agent may from time to time elect) of all
interest, fees, service charges, costs, expenses, and other debits owed to the
Agent and each Revolving Credit Lender on account of the Liabilities and of all
credits against such amounts so owed.
(c) All credits against the Liabilities shall be conditional
upon final payment to the Agent for the account of each Revolving Credit Lender
of the items giving rise to such credits. The amount of any item credited
against the Liabilities which is charged back against the Agent or any Revolving
Credit Lender for any reason or is not so paid shall be a Liability and shall
be added to the Loan Account, whether or not the item so charged back or not so
paid is returned.
(d) Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which any Borrower is obligated hereunder
are payable on demand. In the determination of Availability, the Agent may deem
fees, service charges, accrued interest, and other payments which will be due
and payable between the date of such determination and the first day of the
then next succeeding month as having been advanced under the Revolving
Credit whether or not such amounts are then due and payable.
(e) The Agent, without the request of the Lead Borrower, may
advance under the Revolving Credit any interest, fee, service charge, or other
payment to which the Agent or any Revolving Credit Lender is entitled from any
Borrower pursuant hereto and may charge the same to the Loan Account
notwithstanding that such amount so advanced may result in an OverLoan. Such
action on the part of the Agent shall not constitute a waiver of the Agent's
rights and each Borrower's obligations under Section 2:2-12(b). Any amount
which is added to the principal balance of the Loan Account as provided in this
Section 2:2-10(e) shall bear interest at the interest rate then and
thereafter applicable to Base Margin Loans.
(f) Any statement rendered by the Agent or any Revolving
Credit Lender to the Lead Borrower concerning the Liabilities shall be
considered correct and accepted by each Borrower and shall be conclusively
binding upon each Borrower unless the Lead Borrower provides the Agent with
written objection thereto within sixty (60) days from the mailing of such
statement, which written objection shall indicate, with particularity, the
reason for such objection. The Loan Account and the Agent's books and records
concerning the loan arrangement contemplated herein and the Liabilities shall
be prima facie evidence and proof of the items described therein.
211 -THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay
loans and advances under the Revolving Credit, with interest as provided herein,
shall be evidenced by Notes (each, a "Revolving Credit Note") in the form of
EXHIBIT 2:2-11, annexed hereto, executed by each Borrower, one payable to each
Revolving Credit Lender. Neither the original nor a copy of any Revolving Credit
Note shall be required, however, to establish or prove any Liability. In the
event that any Revolving Credit Note is ever lost, mutilated, or destroyed,
each Borrower shall execute a replacement thereof and deliver such replacement
to the Agent for delivery to such Revolving Credit Lender.
212 -PAYMENT OF THE LOAN ACCOUNT.
(a) The Borrowers may repay all or any portion of the
principal balance of the Loan Account from time to time until the Termination
Date.
(b) The Borrowers, without notice or demand from the Agent or
any Revolving Credit Lender, shall pay the Agent for the benefit of the
Revolving Credit Lenders, that amount, from time to time, which is necessary so
that there is no OverLoan outstanding.
(c) The Borrowers shall repay the then entire unpaid balance
of the Loan Account and all other Liabilities on the Termination Date.
(d) The Agent shall endeavor to cause the application of
payments (if any), pursuant to Sections 2:2-12(a) and 2:2-12(b) against
Eurodollar Loans then outstanding in such manner as results in the least cost to
the Borrowers, but shall not have any affirmative obligation to do so nor
liability on account of the Agent's failure to have done so. In no event shall
action or inaction taken by the Agent excuse any Borrower from any
indemnification obligation under Section 2:2-12(e).
(e) The Borrowers shall indemnify the Agent and each Revolving
Credit Lender and hold the Agent and each Revolving Credit Lender harmless
from and against any loss, cost or expense (including amounts payable by the
Agent or such Revolving Credit Lender on account of "breakage fees" (so-called)
which the Agent or such Revolving Credit Lender may sustain or incur
(including, without limitation, by virtue of acceleration after the
occurrence of any Event of Default) as a consequence of the following:
(ii) Default by any Borrower in payment of the
principal amount of or any interest on any Eurodollar Loan as and when
due and payable, including any such loss or expense arising from
interest or fees payable by such Revolving Credit Lender in order to
maintain its Eurodollar Loans.
(iii) Default by any Borrower in making a borrowing
or conversion after the Lead Borrower has given (or is deemed to have
given) a request for a Revolving Credit Loan or a request to convert
a Revolving Credit Loan from one applicable interest rate to another.
(iv) The making of any payment on a Eurodollar Loan
or the making of any conversion of any such Loan to a Base Margin
Loan on a day that is not the last day of the applicable Interest
Period with respect thereto.
213 -INTEREST ON REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall bear interest at the
Base Margin Rate unless timely notice is given (as provided in Section 2:2-7)
that the subject Revolving Credit Loan (or a portion thereof) is, or is to be
converted to, a Eurodollar Loan.
(b) Each Revolving Credit Loan which consists of a Eurodollar
Loan shall bear interest at the applicable Eurodollar Rate.
(c) Subject to, and in accordance with, the provisions of
this Agreement, the Lead Borrower may cause all or a part of the unpaid
principal balance of the Loan Account to bear interest at the Base Margin Rate
or the Eurodollar Rate as specified from time to time by notice to the Agent.
For ease of reference and administration, each part of the Loan Account which
bears interest at the same interest and for the same Interest Period is referred
to herein as if it were a separate "Revolving Credit Loan".
(d) The Lead Borrower shall not select, renew, or convert
any interest rate for a Revolving Credit Loan such that, in addition to interest
at the Base Margin Rate, there are more than six (6) Eurodollar Rates applicable
to the Revolving Credit Loans at any one time.
(e) The Borrowers shall pay accrued and unpaid interest on
each Revolving Credit Loan in arrears as follows:
(ii) On the applicable Interest Payment Date for that
Revolving Credit Loan.
(iii) On the Termination Date and on the End Date.
(iv) If an Event of Default has occurred and is
continuing: with such frequency as may be determined by the Agent.
(a) The Base Margin and the Eurodollar Margin shall be
determined according to the Pricing Grid annexed hereto as EXHIBIT 2:2-13.
(b) If an Event of Default has occurred and is continuing and
following the earlier of (i) the giving of a notice by the Agent exercising its
rights under this section, or (ii) Acceleration, all Revolving Credit Loans
shall bear interest at a rate which is the aggregate of the rate applicable to
Base Margin Loans plus Two Percent (2%) per annum.
214 -REVOLVING CREDIT COMMITMENT FEE. In consideration of the
commitment to make loans and advances to the Borrowers under the Revolving
Credit, and to maintain sufficient funds available for such purpose, there
has been earned and the Borrowers shall pay the "Revolving Credit Commitment
Fee" (so referred to herein) in the amount and payable as provided in the Fee
Letter.
215 -AGENT'S FEE. In addition to any other fee or expense to be
paid by the Borrowers on account of the Revolving Credit, the Borrowers shall
pay the Agent the " Agent's Fee" at the times and in the amounts as set forth
the Fee Letter.
216 -UNUSED LINE FEE.
(a) In addition to any other fee to be paid by the Borrowers
on account of the Revolving Credit, the Borrowers shall pay the Agent the
"Unused Line Fee" (so referred to herein) of the following per annum
percentage of the average difference, during the quarter just ended (or relevant
period with respect to the payment being made on the Termination Date) between
the Revolving Credit Ceiling and the aggregate of the unpaid principal balance
of the Loan Account and the undrawn Stated Amount of L/C's outstanding during
the relevant period:
(ii) Until the unpaid principal balance of the Loan
Account remains at or in excess of $50 Million for seven consecutive
days: 0.75%
(iii) All times after the unpaid principal balance of
the Loan Account has been at or in excess of $50 Million for seven
consecutive days: 0.50%
(a) The Unused Line Fee shall be paid in arrears, on the first
day of each quarter after the Restatement Date and on the Termination Date.
217 -EARLY TERMINATION FEE.
(a) Except as provided in Section 2:2-17(b), in the event
that the Termination Date occurs, for any reason, prior to the Maturity Date,
the Borrowers shall pay to the Agent , for the benefit of the Revolving Credit
Lenders, the "Revolving Credit Early Termination Fee" (so referred to herein)
equal to the following percentage of Revolving Credit Ceiling.
(ii) Prior to the first anniversary of the
Restatement Date: 1.0%
(iii) On or after the first such anniversary and
before the second such anniversary: 0.5%.
(iv) On or after the second such anniversary: Nil.
(a) No Early Termination Fee shall be due and payable in the
event of the early termination of the Revolving Credit in concert with a
refinancing of the Revolving Credit agented or provided by Fleet Retail Finance
Inc. or any of its affiliates, it being understood that neither any Revolving
Credit Lender nor any affiliate of any Revolving Credit Lender has agreed to
provide or to entertain a request to provide any such refinancing.
218 -CONCERNING FEES. The Borrowers shall not be entitled to any
credit, rebate or repayment of any fee earned by the Agent or any Revolving
Credit Lender pursuant to this Agreement or any Loan Document notwithstanding
any termination of this Agreement or suspension or termination of the Agent's
and any Revolving Credit Lender's respective obligation to make loans and
advances hereunder.
219 -AGENT'S AND REVOLVING CREDIT LENDERS' DISCRETION.
(a) Each reference in the Loan Documents to the exercise of
discretion or the like by the Agent or any Revolving Credit Lender shall be
to such Person's exercise of its judgment, in good faith, based upon such
Person's consideration of any such factors as the Agent or that Revolving Credit
Lender, taking into account information of which that Person then has actual
knowledge, believes:
(ii) Will or reasonably could be expected to affect
the value of the Collateral, the enforceability of the Agent's
Collateral Interests therein, or the amount which the Agent would
likely realize therefrom (taking into account delays which may
possibly be encountered in the Agent's realizing upon the Collateral
and likely Costs of Collection).
(iii) That any report or financial information
delivered to the Agent or any Revolving Credit Lender by or on
behalf of any Borrower is incomplete, inaccurate, or misleading
in any material manner or was not prepared in accordance with the
requirements of this Agreement.
(iv) That any Borrower is InDefault.
(a) In the exercise of such judgement, the Agent and each
Revolving Credit Lender also may take into account any of the following factors:
(v) Those included in, or tested by, the definitions
of "Eligible Inventory" and "Cost".
(vi) Material changes in or to the mix of the
Borrowers' Inventory.
(vii) Seasonality with respect to the Borrowers'
Inventory and patterns of retail sales.
(viii) Such other factors as the Agent and each
Revolving Credit Lender determines as having a material bearing on
credit risks associated with the providing of loans and financial
accommodations to the Borrowers.
220 -PROCEDURES FOR ISSUANCE OF L/C'S.
(a) The Lead Borrower may request that the Agent cause the
issuance by the Issuer of L/C's for the account of any Borrower. Each such
request shall be in such manner as may from time to time be acceptable to the
Agent.
(b) The Agent will cause the issuance of any L/C so requested
by the Lead Borrower, provided that , at the time that the request is made,
the Revolving Credit has not been suspended as provided in Section 2:2-7(g) and
if so issued:
(ii) The aggregate Stated Amount of all L/C's then
outstanding, does not exceed Seventy-five Million Dollars and No
Cents ($75,000,000.00).
(iii) The expiry of the L/C is not later than the
earlier of Thirty (30) days prior to the Maturity Date (unless the
Borrowers provide cash collateral reasonably satisfactory to the
Agent in an amount equal to not less than 105% of the Stated Amount
of any L/C which has an expiry after that date) or the following:
(B) Standby's: One (1) year from initial
issuance.
(C) Documentary's: One Hundred Eighty
(180) days from issuance.
(i) An OverLoan will not result from the issuance of
the subject L/C.
(a) Each Borrower shall execute such documentation to apply
for and support the issuance of an L/C as may be required by the Issuer.
(b) There shall not be any recourse to, nor liability of,
the Agent or any Revolving Credit Lender on account of the following to the
extent that any of the following occurs for reasons not within the reasonable
control of the Issuer:
(ii) Any delay by an Issuer to issue an L/C;
(iii) Any action or inaction of an Issuer on account
of or in respect to, any L/C.
(a) The Borrowers shall reimburse the Issuer for the amount of
any honoring of a drawing under an L/C on the same day on which such honoring
takes place. The Agent, without the request of any Borrower, may advance
under the Revolving Credit (and charge to the Loan Account) the amount of any
honoring of any L/C and other amount for which any Borrower, the Issuer, or the
Revolving Credit Lenders become obligated on account of, or in respect to, any
L/C. Such advance shall be made whether or not any Borrower is InDefault or such
advance would result in an OverLoan. Such action shall not constitute a waiver
of the Agent's rights under Section 2:2-12(b) hereof.
221 -FEES FOR L/C'S.
(a) The Borrowers shall pay to the Agent the following fees,
on account of L/C's, the issuance of which had been procured by the Agent,
quarterly in arrears, and on the Termination Date and on the End Date, equal to
the following percentage per annum of the weighted average Stated Amount of the
subject L/C's outstanding during the period in respect of which such fee is
being paid except that, if an Event of Default has occurred and is continuing,
such fee shall be increased by two percent (2%) per annum:
(ii) Standby L/C's: The Eurodollar Margin(s) in
effect during the subject quarter.
(iii) Documentary L/C's: The Eurodollar Margin(s)
in effect during the subject quarter minus Fifty (50) basis points.
(a) In addition to the fee to be paid as provided in
Subsection 2:2-21(a), above, the Borrowers shall pay to the Agent (or to the
Issuer, if so requested by Agent), on demand, the Issuers's then standard fees
associated with the issuance, processing, negotiation, amendment, and
administration of the L/C's.
(b) If any change in Applicable Law shall either: (iv) impose,
modify or deem applicable any reserve, special deposit or similar requirements
against letters of credit heretofore or hereafter issued by any Issuer or with
respect to which any Revolving Credit Lender or any Issuer has an obligation to
lend to fund drawings under any L/C; or
(v) impose on any Issuer any other condition or
requirements relating to any such letters of credit; and the result
of any event referred to in Section 2:2-21(c)(i) or 2:2-21(c)(ii),
above, shall be to increase the cost to any Revolving Credit Lender or
to any Issuer of issuing or maintaining any L/C (which increase in
cost shall be the result of such Issuer's reasonable allocation
among that Revolving Credit Lender's or Issuer's letter of credit
customers of the aggregate of such cost increases resulting from such
events), then, upon demand by the Agent and delivery by the Agent to
the Lead Borrower of a certificate of an officer of the subject
Revolving Credit Lender or the subject Issuer describing such change
in law, executive order, regulation, directive, or interpretation
thereof, its effect on such Revolving Credit Lender or such Issuer,
and the basis for determining such increased costs and their
allocation, the Agent, on not less than fifteen (15) days notice to
the Lead Borrower, may debit the Loan Account by such amounts as
shall be sufficient to compensate the subject Revolving Credit
Lender or the subject Issuer for such increased cost. Any Revolving
Credit Lender's or any Issuer's determination of costs incurred under
Section 2:2-21(c)(i) or 2:2-21(c)(ii), above, and the allocation,
if any, of such costs among the Borrowers and other letter of credit
customers of such Revolving Credit Lender or such Issuer, if done in
good faith and made on an equitable basis and in accordance
with such officer's certificate, shall be conclusive and binding on
the Borrowers.
222 -CONCERNING L/C'S.
(a) None of the Issuer, the Issuer's correspondents, any
Revolving Credit Lender, the Agent, or any advising, negotiating, or paying bank
with respect to any L/C shall be responsible in any way for:
(ii) The performance by any beneficiary under any
L/C of that beneficiary's obligations to any Borrower.
(iii) The form, sufficiency, correctness,
genuineness, authority of any person signing; falsification; or the
legal effect of; any documents called for under any L/C if (with
respect to the foregoing) such documents on their face appear to be
in order.
(a) The Issuer may honor, as complying with the terms of any
L/C and of any drawing thereunder, any drafts or other documents otherwise in
order, but signed or issued by an administrator, executor, conservator,
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, liquidator, receiver, or other legal representative of the party
authorized under such L/C to draw or issue such drafts or other documents.
(b) Unless otherwise agreed to, in the particular instance,
each Borrower hereby authorizes any Issuer to:
(iv) Select an advising bank, if any. (v) Select a
paying bank, if any.
(vi) Select a negotiating bank. (a) All directions,
correspondence, and funds transfers relating to any L/C are at the
risk of the Borrowers. The Issuer shall have discharged the Issuer's
obligations under any L/C which, or the drawing under which, includes
payment instructions, by the initiation of the method of payment
called for in, and in accordance with, such instructions (or by any
other commercially reasonable and comparable method). None of the
Agent, any Revolving Credit Lender, or the Issuer shall have any
responsibility for any inaccuracy, interruption, error, or delay in
transmission or delivery by post, telegraph or cable, or for any
inaccuracy of translation.
(b) The Agent's, each Revolving Credit Lender's, and the
Issuer's rights, powers, privileges and immunities specified in or arising
under this Agreement are in addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or rule of law or contract.
(c) Except to the extent otherwise expressly provided
hereunder or agreed to in writing by the Issuer and the Lead Borrower,
documentary L/C's will be governed by the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce, Publication No. 500, and
standby L/C's will be governed by International Standby Practices ISP98 (adopted
by the International Chamber of Commerce on April 6, 1998) and any respective
subsequent revisions thereof.
(d) The obligations of the Borrowers under this Agreement with
respect to L/C's are absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof under all
circumstances, whatsoever including, without limitation, the following:
(vii) Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of this Agreement,
any L/C, or any other agreement or instrument relating thereto.
(viii) Any Borrower's consent to any amendment or
waiver of, or consent to the departure from, any L/C.
(ix) The existence of any claim, set-off, defense,
or other right which any Borrower may have at any time against the
beneficiary of any L/C.
(x) Any good faith honoring of a drawing under any
L/C, which drawing possibly could have been dishonored based upon
a strict construction of the terms of the L/C.
223 -CHANGED CIRCUMSTANCES.
(a) The Agent may advise the Lead Borrower that the Agent
has made the good faith determination (which determination shall be final and
conclusive) of any of the following:
(ii) Adequate and fair means do not exist for
ascertaining the rate for Eurodollar Loans.
(iii) The continuation of or conversion of any
Revolving Credit Loan to a Eurodollar Loan has been made
impracticable or unlawful by the occurrence of a contingency that
materially and adversely affects the applicable market or the
compliance by the Agent or any Revolving Credit Lender in good faith
with any Applicable Law.
(iv) The indices on which the interest rates for
Eurodollar Loans are based shall no longer represent the effective
cost to the Agent or any Revolving Credit Lender for U.S. dollar
deposits in the interbank market for deposits in which it
regularly participates.
(a) In the event that the Agent advises the Lead Borrower of
an occurrence described in Section 2:2-23(a), then, until the Agent notifies
the Lead Borrower that the circumstances giving rise to such notice no longer
apply:
(v) The obligation of the Agent or each Revolving
Credit Lender to make loans of the type affected by such changed
circumstances or to permit the Lead Borrower to select the affected
interest rate as otherwise applicable to any Revolving Credit Loans
shall be suspended.
(vi) Any notice which the Lead Borrower had given
the Agent with respect to any Eurodollar Loan, the time for action
with respect to which has not occurred prior to the Agent's having
given notice pursuant to Section 2:2-23(a), shall be deemed at the
option of the Agent to not having been given.
224 -DESIGNATION OF LEAD BORROWER AS BORROWERS'AGENT.
(a) Each Borrower hereby irrevocably designates and appoints
the Lead Borrower as that Borrower's agent to obtain loans and advances
under the Revolving Credit, the proceeds of which shall be available to each
Borrower for those uses as set forth in Section 2:2-1(d), 2:2-1(d)(i),
2:2-1(d)(ii). As the disclosed principal for its agent, each Borrower shall be
obligated to the Agent and each Revolving Credit Lender on account of loans
and advances so made under the Revolving Credit as if made directly by the
Revolving Credit Lenders to that Borrower, notwithstanding the manner by
which such loans and advances are recorded on the books and records of the
Lead Borrower and of any Borrower.
(b) Each Borrower recognizes that credit available to it under
the Revolving Credit is in excess of and on better terms than it otherwise
could obtain on and for its own account and that one of the reasons therefor
is its joining in the credit facility contemplated herein with all other
Borrowers. Consequently, each Borrower hereby assumes and agrees to discharge
all Liabilities of all other Borrowers as if the Borrower so assuming were each
other Borrower.
(c) The Lead Borrower shall act as a conduit for each
Borrower (including itself, as a "Borrower")on whose behalf the Lead Borrower
has requested a Revolving Credit Loan.
(d) The proceeds of each loan and advance provided under the
Revolving Credit which is requested by the Lead Borrower shall be deposited
into the Operating Account or as otherwise indicated by the Lead Borrower.
The Lead Borrower shall cause the transfer of the proceeds thereof to the
(those) Borrower(s) on whose behalf such loan and advance was obtained.
Neither the Agent nor any Revolving Credit Lender shall have any obligation to
see to the application of such proceeds.
225 -LENDERS' COMMITMENTS
(a) Subject to Section 16:16-1 (which provides for assignments
and assumptions of commitments), each Revolving Credit Lender's "Revolving
Credit Percentage Commitment", and "Revolving Credit Dollar Commitment"
(respectively so referred to herein) is set forth on EXHIBIT 2:2-25, annexed
hereto.
(b) The obligations of each Revolving Credit Lender are
several and not joint. No Revolving Credit Lender shall have any obligation to
make any loan or advance under the Revolving Credit in excess of either of the
following:
(ii) That Revolving Credit Lender's Revolving Credit
Percentage Commitment of the subject loan or advance or of
Availability.
(iii) That Revolving Credit Lender's Revolving Credit
Dollar Commitment.
(a) No Revolving Credit Lender shall have any liability to
the Borrowers on account of the failure of any other Revolving Credit Lender to
provide any loan or advance under the Revolving Credit nor any obligation
to make up any shortfall which may be created by such failure.
(b) The Revolving Credit Dollar Commitments, Revolving Credit
Commitment Percentages, and identities of the Revolving Credit Lenders may be
changed, from time to time by the reallocation or assignment of Revolving
Credit Dollar Commitments and Revolving Credit Commitment Percentages amongst
the Revolving Credit Lenders or with other Persons who determine to become
"Revolving Credit Lenders", provided, however unless an Event of Default has
occurred and is continuing (in which event, no consent of any Borrower is
required) any assignment to a Person not then a Revolving Credit Lender shall
be subject to the prior consent of the Lead Borrower (not to be unreasonably
withheld), which consent will be deemed given unless the Lead Borrower provides
the Agent with written objection, not more than Five (5) Business Days after
the Agent shall have given the Lead Borrower written notice of a proposed
assignment).
(c) Upon written notice given the Lead Borrower from time to
time by the Agent, of any assignment or allocation referenced in Section
2:2-25(d):
(iv) Each Borrower shall execute one or more
replacement Revolving Credit Notes to reflect such changed Revolving
Credit Dollar Commitments, Revolving Credit Commitment Percentages,
and identities and shall deliver such replacement Revolving
Credit Notes to the Agent (which promptly thereafter shall deliver to
the Lead Borrower the Revolving Credit Notes so replaced) provided
however, in the event that a Revolving Credit Note is to be exchanged
following its acceleration or the entry of an order for relief
under the Bankruptcy Code with respect to any Borrower, the Agent,
in lieu of causing the Borrowers to execute one or more new Revolving
Credit Notes, may issue the Agent's Certificate confirming the
resulting Revolving Credit Dollar Commitments and Revolving Credit
Percentage Commitments.
(v) Such change shall be effective from the effective
date specified in such written notice and any Person added as a
Revolving Credit Lender shall have all rights and privileges of a
Revolving Credit Lender hereunder thereafter as if such Person had
been a signatory to this Agreement and any other Loan Document to
which a Revolving Credit Lender is a signatory and any Person removed
as a Revolving Credit Lender shall be relieved of any obligations or
responsibilities of a Revolving Credit Lender hereunder thereafter.
Article 3: - CONDITIONS PRECEDENT:
As a condition to the effectiveness of the amendment and restatement of
this Agreement (which effectiveness shall be marked by written confirmation
thereof from the Agent to the Lead Borrower) each of the documents respectively
described in Sections 3:3-1 through and including 3:3-4, (each in form and
substance satisfactory to the Agent) shall have been delivered to the Agent, and
the conditions respectively described in Sections 3:3-5 through and including
3:3-8, shall have been satisfied:
31 -CORPORATE DUE DILIGENCE.
(a) Certificates of corporate good standing for each
Borrower, respectively issued by the Secretary of State for the state in
which that Borrower is incorporated.
(b) Certificates of due qualification, in good standing,
issued by the Secretaries of State of each State in which the nature a
Borrower's business conducted or assets owned could require such qualification.
(c) Certificates of each Borrower's Secretary of the due
adoption, continued effectiveness, and setting forth the texts of, each
corporate resolution adopted in connection with the establishment of the loan
arrangement contemplated by the Loan Documents and attesting to the true
signatures of each Person authorized as a signatory to any of the Loan
Documents.
32 -OPINION. An opinion of counsel to the Borrowers in form and
substance satisfactory to the Agent to be addressed to the Agent and the Lenders
33 -ADDITIONAL DOCUMENTS. Such additional instruments and documents as
the Agent or its counsel reasonably may require or request including, without
limitation, the following:
(a) Confirmation that the form of mortgage or deed of trust,
a copy of which is annexed hereto as EXHIBIT 3:3-3(a) (with such variance
to reflect differences in local state law as may be mutually acceptable to
the Agent and the Lead Borrower), is acceptable to the Agent and the Lead
Borrower. Until such time that all Real Estate Parameters are satisfied, the
subject real estate shall not be included as Eligible Real Estate. The Borrowers
or Permitted Subsidiaries granting a guaranty of the Liabilities in form
reasonably satisfactory to the Agent shall cause clause (c) of the Real Estate
Parameters to be satisfied for all Real Estate Collateral within thirty (30)
days from the date of this Agreement. In addition, the opinion described in
Section 3-2, above shall be updated to the reasonable satisfaction of the Agent
in connection with the delivery of such mortgages and deeds of trust.
(b) A Security Agreement pursuant to which security interests
are created in all trademarks owned by any Borrower or any Subsidiary, which
trademarks were not included in any such Security Agreement executed
contemporaneous with the execution of the 1999 Loan Agreement.
(c) Confirmation (in form reasonably acceptable to the Agent)
by each Person which is obligated on any of the Liabilities that such person
remains so liable following the execution of this restatement of the 1999 Loan
Agreement.
(d) The Notifications (if any) to Credit Card Processors
described in Section 7:7-1(b)(i).
(e) The Notifications (if any) to the Borrowers' depositories
described in Section 7:7-1(b)(ii).
(f) Agreements with any Borrowers' warehousemen and inventory
consolidators (if any) from whom such agreements were not received in connection
with the execution of the 1999 Loan Agreement (each of which agreements is in
form reasonably satisfactory to the Agent). Such requirements shall be
satisfied within thirty (30) days from the date of this Agreement.
34 -OFFICERS' CERTIFICATES. Certificates executed by the Chief
Financial Officer and Executive Vice President of the Lead Borrower and
stating that the representations and warranties made by the Borrowers to
the Agent and the Revolving Credit Lenders in the Loan Documents are true and
complete as of the date of such Certificate, and that no event has occurred
which is or which, solely with the giving of notice or passage of time (or both)
would be an Event of Default.
35 -REPRESENTATIONS AND WARRANTIES. Each of the representations made
by or on behalf of each Borrower in this Agreement or in any of the other Loan
Documents or in any other report, statement, document, or paper provided by or
on behalf of each Borrower shall be true and complete as of the date as of
which such representation or warranty was made.
36 -ALL FEES AND EXPENSES PAID. All fees due at or immediately after
the first funding under the Revolving Credit and all costs and expenses incurred
by the Agent in connection with the establishment of the credit facility
contemplated hereby (including the fees and expenses of counsel to the Agent)
shall have been paid in full.
37 -NO BORROWER INDEFAULT. No Borrower is InDefault.
38 -NO ADVERSE CHANGE. No event shall have occurred or failed to
occur, which occurrence or failure is or could have a materially adverse
effect upon the Borrowers' financial condition, taken as a whole, as reflected
on the Business Plan.
39 -BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in this
Article 3: are for the sole benefit of the Agent and each Revolving Credit
Lender and may be waived by the Agent in whole or in part without prejudice to
the Agent or any Revolving Credit Lender.
No document shall be deemed delivered to the Agent or any Revolving Credit
Lender until received and accepted by the Agent at its offices in Boston,
Massachusetts. Under no circumstances shall this Agreement take effect until
executed and accepted by the Agent at said offices.
Article 4: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
To induce each Revolving Credit Lender to establish the credit facility
contemplated herein and to induce the Revolving Credit Lenders to provide loans
and advances under the Revolving Credit (each of which loans shall be deemed to
have been made in reliance thereupon) the Borrowers, in addition to all other
representations, warranties, and covenants made by any Borrower in any other
Loan Document, make those representations, warranties, and covenants included in
this Agreement.
41 -PAYMENT AND PERFORMANCE OF LIABILITIES. The Borrowers shall pay
each payment Liability when due (or when demanded, if payable on demand) and
shall promptly, punctually, and faithfully perform each other Liability.
42 -DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Borrower presently is and hereafter shall remain
in good standing as a corporation under the laws of the State in which it is
organized, as set forth in the Preamble to this Agreement and is and shall
hereafter remain duly qualified and in good standing in every other State in
which, by reason of the nature or location of each Borrower's assets or
operation of each Borrower's business, such qualification may be necessary,
except where the failure to so qualify would not have a Material Adverse Effect.
(b) Each Borrower's respective organizational identification
number assigned to it by the State of its incorporation and its respective
federal employer identification number is stated on EXHIBIT 4:4-2, annexed
hereto.
(c) Except in consequence of a Permitted Merger, no
Borrower shall: change its State of organization; any organizational
identification number assigned to that Borrower by that State; or that
Borrower's federal taxpayer identification number.
(d) Each Affiliate, as of the Restatement Date, is listed
on EXHIBIT 4:4-2. Each Affiliate listed on EXHIBIT 4:4-2 (except for the Parent)
is a Subsidiary of the Parent. No Borrower (except for the Parent) will create
any Subsidiary nor will the Parent permit any Subsidiary to create any
Subsidiary other than a Permitted Subsidiary. The Lead Borrower shall provide
the Agent with prior written notice of any entity's becoming or ceasing to be an
Affiliate.
(e) Each Borrower has all requisite corporate power and
authority to execute and deliver all Loan Documents to which that Borrower is
a party and has and will hereafter retain all requisite corporate power to
perform all Liabilities.
(f) The execution and delivery by each Borrower of each
Loan Document to which it is a party; each Borrower's consummation of the
transactions contemplated by such Loan Documents (including, without limitation,
the creation of Collateral Interests by that Borrower to secure the
Liabilities); each Borrower's performance under those of the Loan Documents to
which it is a party; the borrowings hereunder; and the use of the proceeds
thereof:
(ii) Have been duly authorized by all necessary
corporate action.
(iii) Do not, and will not, contravene in any
material respect any provision of any Requirement of Law or obligation
of that Borrower.
(iv) Will not result in the creation or imposition
of, or the obligation to create or impose, any Encumbrance upon any
assets of that Borrower pursuant to any Requirement of Law or
obligation, except pursuant to the Loan Documents.
(a) The Loan Documents (exclusive of any documents described
in Section 3-3(a) or (f) to be delivered subsequent to the date of this
Agreement) have been duly executed and delivered by each Borrower and are the
legal, valid and binding obligations of each Borrower, enforceable against
each Borrower in accordance with their respective terms, except as such
enforceability is limited by bankruptcy, insolvency, or other laws relating
to or affecting generally the enforcement of creditors' rights and except to the
extent that the availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
therefor may be brought.
43 -TRADE NAMES.
(a) EXHIBIT 4:4-3, annexed hereto, is a listing of:
(ii) All names under which any Borrower conducted
its business since January 1, 1995.
(iii) All Persons with whom any Borrower ever
consolidated or merged, or from whom any Borrower acquired in a
single transaction or in a series of related transactions
substantially all of such Person's assets since January 1, 1995.
(a) The Lead Borrower will provide the Agent with not less
than twenty-one (21) days prior written notice (with reasonable particularity)
of any change to any Borrower's name from that under which that Borrower is
conducting its business at the execution of this Agreement and will not effect
such change unless each Borrower is then in compliance with all provisions of
this Agreement.
44 -INFRASTRUCTURE.
(a) Each Borrower has and will maintain a sufficient
infrastructure to conduct its business as presently conducted and as
contemplated to be conducted following its execution of this Agreement.
(b) Each Borrower owns and possesses, or has the right to
use (and will hereafter own, possess, or have such right to use) all patents,
industrial designs, trademarks, trade names, trade styles, brand names,
service marks, logos, copyrights, trade secrets, know-how, confidential
information, and other intellectual or proprietary property of any third Person
necessary for that Borrower's conduct of that Borrower's business.
(c) The conduct by each Borrower of that Borrower's business
does not presently infringe (nor will any Borrower conduct its business in
the future so as to infringe) the patents, industrial designs, trademarks,
trade names, trade styles, brand names, service marks, logos, copyrights, trade
secrets, know-how, confidential information, or other intellectual or
proprietary property of any third Person, except where such conflict would not
reasonably be expected to have a Material Adverse Effect.
45 -LOCATIONS.
(a) The Collateral, and the books, records, and papers of
Borrowers' pertaining thereto, are kept and maintained solely at the following
locations:
(ii) The Lead Borrower's chief executive offices
which, on the Restatement Date, are at 0000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx
00000 or as otherwise permitted by Section 4:4-5(b)(vii).
(iii) Those locations which are listed on
EXHIBIT 4:4-5, annexed hereto, which EXHIBIT includes, with respect to
each such location, the name and address of the landlord on the
Lease which covers such location (or an indication that a Borrower
owns the subject location) and of all service bureaus with which any
such records are maintained and the names and addresses of each of
then Borrowers' landlords, or as otherwise permitted by
Section 4:4-5(b)(vii).
(a) No Borrower shall remove any of the Collateral from
said chief executive office or those locations listed on EXHIBIT 4:4-5 except
for the following purposes:
(iv) To accomplish sales of Inventory in the
ordinary course of business
(v) The consummation of the House2Home Conversion
as reflected on the Business Plan.
(vi) To move Inventory to such location or from
one such location to another such location.
(vii) To utilize such of the Collateral as is
removed from such locations in the ordinary course of business (such
as motor vehicles).
(viii) To Stores opened after the execution of
this Agreement, but only where there is compliance with the Section
4:4-6 .
(ix) In connection with any disposition of
Collateral permitted by Section 4:4-14(d).
(x) To other locations, not less than Thirty (30)
days prior written notice of which is provided to the Agent, and
provided that there is compliance with all relevant provisions of the
Loan Documents (including, but not limited to, Section 4:4-25) in
connection therewith.
(a) Except as otherwise disclosed pursuant to, or
permitted by, this Section 4:4-5, no tangible personal property of any Borrower
is in the care or custody of any third party or stored or entrusted with a
bailee or other third party and none shall hereafter be placed under such care,
custody, storage, or entrustment.
46 -STORES.
(a) No Borrower will execute any Lease:
(ii) other than in the ordinary course of
business; or
(iii) which would result in a breach of this
Agreement.
(a) No Borrower will open any New Store:
(iv) On less than thirty (30) days prior written
notice to the Agent (with reasonable particularity of the relevant
facts and circumstances); and
(v) which would result in a breach of Section
4:4-6(c)(i); or
(vi) not in compliance with all other provisions
of this Agreement including, without limitation, Section 4:4-25.
(a) The Borrowers, as a whole, will not
(vii) Open more than the following number of new
Stores during the Fiscal year indicated:
(B) FYE January 2002 : 10
(C) FYE January 2003 : 10
(D) FYE January 2004 : 15
(E) FYE January 2005 : 15
(i) Close more than twelve Stores operated in the
House2Home format during any twelve (12) month period.
(ii) Permanently close (as distinguished from
converting to the House2Home concept) more than twenty seven (27)
Stores operated in the HomeBase format.
47 -TITLE TO ASSETS.
(a) The Borrowers are, and (except for Collateral sold,
conveyed, or disposed of as permitted by this Agreement) shall hereafter
remain, the owners of the Collateral free and clear of all Encumbrances with
the exceptions of Permitted Encumbrances.
(b) No Borrower has, and none shall have possession of,
any property on consignment to that Borrower, the Cost of which, when aggregated
with the Cost of Inventory on which there is an Encumbrance, exceeds four
percent (4%) of the Cost of all of the Borrowers' Inventory at that time.
(c) No Borrower shall acquire or obtain the right to use any
Equipment, the acquisition or right to use of which Equipment is otherwise
permitted by this Agreement, in which Equipment any third party has an
interest, except for:
(ii) Equipment which is merely incidental to the
conduct of that Borrower's business or Equipment that is not
necessary in connection with the conduct of any Liquidation.
(iii) Equipment, the acquisition or right to use
of which has been consented to by the Agent, which consent may be
conditioned solely upon the Agent's receipt of an agreement with the
third party which has an interest in such Equipment substantially in
the form of EXHIBIT 4:4-7(c), annexed hereto.
48 -INDEBTEDNESS. The Borrowers do not and shall not hereafter
have any Indebtedness other than Permitted Indebtedness.
49 -INSURANCE.
(a) EXHIBIT 4:4-9, annexed hereto, is a schedule of all
property, liability, and business interruption insurance policies owned by the
Borrowers or under which any Borrower is the named insured. Each of such
policies is in full force and effect. Neither the issuer of any such policy nor
any Borrower is in default or violation of any such policy.
(b) The Borrowers shall have and maintain at all times
insurance covering the Collateral for such risks, in such amounts,
containing such terms, in such form, for such periods, and written by such
companies as is consistent with sound and prudent industry practice.
(c) All insurance carried by the Borrowers shall provide
for a minimum of thirty (30) days' written notice of cancellation to the Agent
and all such insurance which covers the Collateral shall include an endorsement
in favor of the Agent, which endorsement shall provide that the insurance,
to the extent of the Agent's interest therein, shall not be impaired or
invalidated, in whole or in part, by reason of any act or neglect of any
Borrower or by the failure of any Borrower to comply with any warranty or
condition of the policy.
(d) The coverage reflected on EXHIBIT 4:4-9 presently
satisfies the foregoing requirements, it being recognized by each Borrower,
however, that such requirements may change hereafter to reflect changing
circumstances.
(e) The Lead Borrower shall furnish the Agent from time to
time with certificates or other evidence satisfactory to the Agent regarding
compliance by the Borrowers with the foregoing requirements.
(f) In the event of the failure by the Borrowers to
maintain insurance as required herein, the Agent, at its option and at
Borrowers' expense, may obtain such insurance, provided, however, the Agent's
obtaining of such insurance shall not constitute a cure or waiver of any Event
of Default occasioned by the Borrowers' failure to have maintained such
insurance.
410 -LICENSES. Except for matters which, individually and in the
aggregate could not reasonably be expected to have a Material Adverse Effect:
(a) Each license, distributorship, franchise, and similar
agreement issued to, or to which any Borrower is a party is in full force
and effect.
(b) No party to any such license or agreement is in default
or violation thereof.
(c) No Borrower has received any notice or threat of
cancellation of any such license or agreement.
411 -LEASES.
(a) EXHIBIT 4:4-11, annexed hereto, is a schedule of all
presently effective Capital Leases as of the Restatement Date. (Exhibit 4:4-5
includes a list of all other presently effective Leases).
(b) As of the Restatement Date: (ii) Each of such Leases and
Capital Leases is in full force and effect as of the Restatement Date
(iii) No party to any such Lease or Capital Lease
is in default or violation of any such Lease or Capital Lease.
(iv) No Borrower has received any notice or
threat of cancellation of any such Lease or Capital Lease except
for matters which individually and in the aggregate would not
reasonably be expected to have a Material Adverse Effect.
(a) Each Borrower hereby authorizes the Agent at any time
and from time to time while any Borrower is InDefault to contact any of the
Borrowers' respective landlords in order to confirm the Borrowers' continued
compliance with the terms and conditions of the Lease(s) between the subject
Borrower and that landlord and to discuss such issues, concerning the subject
Borrower's occupancy under such Lease(s), as the Agent may determine.
412 -REQUIREMENTS OF LAW. Each Borrower is in compliance with,
and shall hereafter comply with and use its assets in compliance with, all
Requirements of Law except where the failure of such compliance will not
reasonably be expected to have a Material Adverse Effect. No Borrower has
received any notice of any violation of any Requirement of Law (other than of a
violation which has no more than a de minimis adverse effect on the Borrowers'
business or assets), which violation reasonably could be expected to have a
Material Adverse Effect.
413 -LABOR RELATIONS.
(a) As of the Restatement Date, no Borrower is party
to any collective bargaining or other labor contract.
(b) There is not presently pending and, to any Borrower's
knowledge, there is not threatened any of the following which reasonably
could be expected to have a Material Adverse Effect:
(ii) Any strike, slowdown, picketing, work
stoppage, or employee grievance process.
(iii) Any proceeding against or affecting any
Borrower relating to the alleged violation of any Applicable Law
pertaining to labor relations or before National Labor Relations
Board, the Equal Employment Opportunity Commission, or any comparable
governmental body, organizational activity, or other labor or
employment dispute against or affecting any Borrower, which, if
determined adversely to that Borrower could have a Material Adverse
Effect.
(iv) Any lockout of any employees by any Borrower
(and no such action is contemplated by any Borrower).
(v) Any application for the certification of a
collective bargaining agent.
(a) No event has occurred or circumstance exists which
could provide the basis for any work stoppage or other labor dispute which
reasonably could be expected to have a Material Adverse Effect.
(b) Each Borrower: (vi) Has complied in all material
respects with all Applicable Law relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing.
(vii) Is not liable for the payment of a
material amount of compensation, damages, taxes, fines, penalties,
or other amounts, however designated, for that Borrower's failure to
comply with any Applicable Law referenced in Section 4:4-13(d)(i).
414 -PROPERTIES. The Borrowers shall:
(a) Keep the Collateral in good order and repair (ordinary
reasonable wear and tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any policy
of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following:
(ii) The sale of Inventory, which sale is
otherwise in conformity with this Agreement.
(iii) The sale of Collateral by one Borrower to
another, which sale or other disposition is otherwise in conformity
with this Agreement.
(iv) The disposal of Equipment which is obsolete,
worn out, or damaged beyond repair, which Equipment is replaced to
the extent necessary to preserve or improve the operating efficiency
of any Borrower.
(v) The disposal of equipment in concert with
Store closures permitted by Section 4:4-6. (vi) Permitted Real
Estate Transactions.
(vii) The sale, to independent third parties,
of trademarks associated with the HomeBase concept.
(viii) The turning over to the Agent of all
Receipts as provided herein. (ix) The disposition of any non-
merchandise inventory (such as labels, bags, and packaging materials);
damaged goods; return to vendor merchandise; packaways; consigned
inventory; and other similar categories of Goods otherwise in
compliance with this Agreement.
415 -TAXES.
(a) With respect to the Borrowers' federal, state, and local
tax liability and obligations:
(ii) The Lead Borrower, in compliance in all
material respects with Applicable Law, has properly filed all returns
due to be filed up to the date of this Agreement, other than any
return, the failure of which to so file would not reasonably be
expected to have more than a de minimis adverse effect on the
Borrowers.
(iii) Except as described on EXHIBIT 4:4-15, as of
the Restatement Date:
(B) No audit or examination of the books
and records of any Borrower is being conducted by any
taxing authority.
(C) No agreement is extant which waives
or extends any statute of limitations applicable to the
right of any taxing authority to assert a deficiency or make
any other claim for or in respect to federal income taxes.
(D) No issue has been raised in any tax
examination of any Borrower which, by application of similar
principles, reasonably could be expected to result in
the assertion of a material deficiency for any fiscal year
open for examination, assessment, or claim by any taxing
authority.
(E) No Borrower is aware of any facts
or circumstances such that any claim could be made against
such Borrower by any taxing authority where the result of
such claim could reasonably be expected to have a Material
Adverse Effect.
(a) The Borrowers have, and hereafter shall: pay, as they
become due and payable, all taxes and unemployment contributions and other
charges of any kind or nature levied, assessed or claimed against any Borrower
or the Collateral by any person or entity whose claim could result in an
Encumbrance upon any asset of any Borrower or by any governmental authority;
properly exercise any trust responsibilities imposed upon any Borrower by reason
of withholding from employees' pay or by reason of any Borrower's receipt of
sales tax or other funds for the account of any third party; timely make all
contributions and other payments as may be required pursuant to any Employee
Benefit Plan now or hereafter established by any Borrower; and timely file all
tax and other returns and other reports with each governmental authority to whom
any Borrower is obligated to so file, provided, however, the Lead Borrower,
after establishing proper reserves, may in good faith and by appropriate
proceedings contest any tax, assessment, or other governmental charge, subject
however, to Section 4:4-15(c).
(b) No Borrower shall suffer or permit any tax lien to be
filed against it, which tax lien includes any Collateral which consists of
Inventory, Account, or a right to payment of that Borrower, where such tax lien
could have priority over the Liabilities.
416 -NO MARGIN STOCK. No Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T, and X of the Board of Governors of
the Federal Reserve System of the United States). No part of the proceeds of any
borrowing hereunder will be used at any time to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
417 -ERISA. Except for matters which individually or in the aggregate
are not reasonably expected to have a Material Adverse Effect, no Borrower nor
any ERISA Affiliate ever has or hereafter shall:
(a) Fail to be in compliance with that Borrower's Employee
Benefit Plan.
(b) Fail timely to file all reports and filings required
by ERISA to be filed by any Borrower.
(c) Engage in any "prohibited transactions" or "reportable
events" (respectively as described in ERISA).
(d) Engage in, or commit, any act such that a tax or penalty
could be imposed upon any Borrower on account thereof pursuant to ERISA.
(e) Accumulate any material funding deficiency within the
meaning of ERISA.
(f) Terminate any Employee Benefit Plan such that a lien
could be asserted against any assets of any Borrower on account thereof
pursuant to ERISA.
(g) Be a member of, contribute to, or have any obligation
under any Employee Benefit Plan which is a multiemployer plan within the meaning
of Section 4001(a) of ERISA.
418 -HAZARDOUS MATERIALS.
(a) Except for matters which individually or in the
aggregate are not reasonably expected to have a Material Adverse Effect, no
Borrower has ever:
(i) been legally responsible for any release or
threat of release of any Hazardous Material or
(ii) received notification of the incurrence of
any expense in connection with the assessment, containment, or
removal of any Hazardous Material for which that Borrower would be
responsible.
(b) Each Borrower shall:
(i) dispose of any Hazardous Material only in
compliance in all material respects with all Environmental Laws and
(ii) have possession of any Hazardous Material
only in the ordinary course of that Borrower's business and in
compliance all material respects with all Environmental Laws.
(c) The Lead Borrower shall provide the Agent with
written notice upon any Borrower's obtaining knowledge of any incurrence of
any expense or loss by any governmental authority or other Person in connection
with the assessment, containment, or removal of any Hazardous Material, for
which expense or loss any Borrower may be liable, where such expense or loss
reasonably could be expected to have a Material Adverse Effect.
419 -LITIGATION. Except as described in EXHIBIT 4:4-19, annexed
hereto, there is not presently pending or threatened by or against any Borrower
any suit, action, proceeding, or investigation which, if determined adversely
to any Borrower, could reasonably be expected to have a Material Adverse Effect.
420 -DIVIDENDS. INVESTMENTS. CORPORATE ACTION.
(a) No Borrower shall:
(ii) Pay any cash dividend or make any other
distribution in respect of any class of that Borrower's capital stock,
except that the Parent may declare and issue dividends of its own
capital stock.
(iii) Except for a Permitted Repurchase, own,
redeem, retire, purchase, or acquire any of any Borrower's capital
stock.
(iv) Invest in or purchase any stock or
securities or rights to purchase any such stock or securities, of any
Person other than the following:
(B) A Permitted Repurchase.
(C) A Permitted Investment.
(i) Merge or consolidate or be merged or
consolidated with or into any other corporation or other entity
other than a Permitted Merger.
(ii) Consolidate any of that Borrower's
operations with those of any other Person other than of another
Borrower.
(iii) Organize or create any Affiliate other than
a Permitted Subsidiary.
(iv) Subordinate any debts or obligations owed
to that Borrower by any third party to any other debts owed by
such third party to any other Person.
(v) Acquire any assets other than in the ordinary
course and conduct of that Borrower's business as conducted at the
execution of this Agreement.
(a) The Parent shall not permit any Subsidiary to undertake
any of the foregoing actions unless, if that Affiliate were a Borrower,
that Affiliate could have done so.
421 -LOANS. No Borrower shall make any loans or advances to, nor
acquire the Indebtedness of, any Person, provided, however, the foregoing does
not prohibit any of the following:
(a) Advance payments made to that Borrower's suppliers in
the ordinary course.
(b) Advances to that Borrower's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of that Borrower, which
expenses are properly substantiated by the person seeking such advance and
properly reimbursable by that Borrower.
(c) Loans by one Borrower to another, not to exceed $1
Million at any one time outstanding, but only at a time when the unpaid
principal balance of the Loan Account is less than $25,000.00.
422 -PROTECTION OF ASSETS. The Agent, in the Agent's discretion, and
from time to time, if an Event of Default has occurred and is continuing, may
discharge any tax or Encumbrance on any of the Collateral, or take any other
action which the Agent reasonably may deem necessary or desirable to repair,
insure, maintain, preserve, collect, or realize upon any of the Collateral.
The Agent shall not have any obligation to undertake any of the foregoing and
shall have no liability on account of any action so undertaken except where
there is a specific finding in a judicial proceeding (in which the Agent
has had an opportunity to be heard), from which finding no further appeal is
available, that the Agent had acted in actual bad faith or in a grossly
negligent manner. The Borrowers shall pay to the Agent, on demand, or
the Agent, in its discretion, may add to the Loan Account, all amounts paid
or incurred by the Agent pursuant to this section 4:4-22.
423 -LINE OF BUSINESS. No Borrower shall engage in any business other
than the business in which it is currently engaged, the business which will
result from the execution of the House2Home Conversion (the conduct of each of
which is as reflected in the Business Plan), or a business reasonably related
thereto.
424 -AFFILIATE TRANSACTIONS. No Borrower shall make any payment, nor
give any value to any Affiliate except for Permitted Affiliate Transactions.
425 -FURTHER ASSURANCES.
(a) No Borrower is the owner of, nor has it any interest
in, any property or asset which, immediately upon the satisfaction of the
conditions precedent to the effectiveness of the amendment and restatement of
this Agreement (Article 3:) will not be subject to a perfected Collateral
Interest in favor of the Agent (subject only to Permitted Encumbrances and
Collateral Interest Restrictions) to secure the Liabilities.
(b) No Borrower will hereafter acquire any asset or any
interest in property which is not, immediately upon such acquisition, subject to
such a perfected Collateral Interest in favor of the Agent to secure the
Liabilities (subject only to Permitted Encumbrances and Collateral Interest
Restrictions), provided, however, the Lead Borrower's engaging in a Permitted
Real Estate Transaction (as to which, see Section 8:8-3) shall not constitute a
breach of this Section 4:4-25(b).
(c) Each Borrower shall execute and deliver to the Agent
such instruments, documents, and papers, and shall do all such things from time
to time hereafter as the Agent may request to carry into effect the provisions
and intent of this Agreement; to protect and perfect the Agent's Collateral
Interests in the Collateral; and to comply with all applicable statutes
and laws, and facilitate the collection of the Receivables Collateral.
Each Borrower shall execute all such instruments as may be required by the Agent
with respect to the recordation and/or perfection of the Collateral Interests
created or contemplated herein.
(d) Each Borrower hereby designates the Agent as and for
that Borrower's true and lawful attorney, with full power of
substitution, to sign and file any financing statements in order to perfect or
protect the Agent's Collateral Interests in the Collateral.
(e) This Agreement constitutes an authenticated record
which authorizes the Collateral Agent to file such financing statements as the
Collateral Agent determines as appropriate to perfect or protect the Agent's
Collateral Interests created hereby.
(f) A carbon, photographic, or other reproduction of
this Agreement or of any financing statement or other instrument executed
pursuant to this Section 4:4-25 shall be sufficient for filing to perfect the
security interests granted herein.
426 -ADEQUACY OF DISCLOSURE.
(a) All financial statements furnished to the Agent and to
each Revolving Credit Lender by each Borrower have been prepared in accordance
with GAAP consistently applied and present fairly the condition of the
Borrowers at the date(s) thereof and the results of operations and cash flows
for the period(s) covered (provided however, that unaudited financial
statements are subject to normal year end adjustments and to the absence of
footnotes). There has been no change in the Consolidated financial condition,
results of operations, or cash flows of the Borrowers since the date(s) of such
financial statements, other than changes in the ordinary course of business,
which changes have not been materially adverse, either singularly or in the
aggregate or are reflected in the Business Plan.
(b) As of the Restatement Date, no Borrower has any
contingent obligations or obligation under any Lease or Capital Lease
which is not reflected in the Borrowers' Consolidated financial statements
(or in the footnotes included with such statements) furnished to the Agent and
to each Revolving Credit Lender prior to the execution of this Agreement.
(c) To the best knowledge of the Borrowers, no document,
instrument, agreement, or paper now or hereafter given the Agent and to each
Revolving Credit Lender by or on behalf of each Borrower or any guarantor of
the Liabilities in connection with the execution of this Agreement by the
Agent and to each Revolving Credit Lender contains or will contain any
untrue statement of a material fact or omits or, when taken as a whole, will
omit to state a material fact necessary in order to make the statements
therein not misleading. There is no fact known to any Borrower (other than risks
disclosed by the Parent to the Agent or in its filings with the SEC) which has,
or which, in the foreseeable future could reasonably be expected to have, a
Material Adverse Effect.
000 -XX XXXXXXXXXXXX XX LIABILITIES. No Borrower shall enter into or
permit any Affiliate or Subsidiary to directly or indirectly become
subject to any agreement which prohibits or restricts, in any manner, any
Borrower's or any such Affiliate's or Subsidiary's:
(a) Creation of, and granting of Collateral Interests in
favor of the Agent other than the following:
(ii) In connection with a Permitted Real Estate
Transaction (as to which, see Section 8:8-3).
(iii) By documentation which evidences solely a
purchase money security interest in Equipment otherwise permitted by this
Agreement.
(a) The incurrence of Liabilities.
428 -OTHER COVENANTS. No Borrower shall indirectly do or cause to
be done any act which, if done directly by that Borrower, would breach
any covenant contained in this Agreement.
Article 5: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
51 -MAINTAIN RECORDS. The Borrowers shall:
(a) At all times, keep proper books of account, in which
full, true, and accurate entries shall be made of all of the Borrowers'financial
transactions, all in accordance with GAAP applied consistently with prior
periods to fairly reflect the Consolidated financial condition of the Borrowers
at the close of, and its results of operations for, the periods in question.
(b) Timely provide the Agent with those financial reports,
statements, and schedules required by this Article 5: or otherwise, each of
which reports, statements and schedules shall be prepared, to the extent
applicable, in accordance with GAAP applied consistently with prior periods to
fairly reflect the Consolidated financial condition of the Borrowers at the
close of, and the results of operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of the
Collateral including, without limitation, accurate current stock, cost, and
sales records of its Inventory, accurately and sufficiently itemizing and
describing the kinds, types, and quantities of Inventory and the cost and
selling prices thereof.
(d) At all times, retain independent certified public
accountants who are reasonably satisfactory to the Agent and instruct such
accountants to fully cooperate with, and be available to, the Agent to discuss
the Borrowers' financial performance, financial condition, operating results,
controls, and such other matters, within the scope of the retention of such
accountants, as may be raised by the Agent.
(e) Not change any Borrower's fiscal year.
52 -ACCESS TO RECORDS.
(a) Each Borrower shall accord the Agent with access
from time to time at reasonable times, on reasonable notice, as the Agent
may require to all properties owned by or over which any Borrower has control.
The Agent shall have the right, and each Borrower will permit the Agent from
time to time as Agent may request, to examine, inspect, copy, and make extracts
from any and all of the Borrowers' books, records, electronically stored data,
papers, and files. Each Borrower shall make all of that Borrower's copying
facilities available to the Agent.
(b) Each Borrower hereby authorizes the Agent to:
(ii) Inspect, copy, duplicate, review, cause to be
reduced to hard copy, run off, draw off, and otherwise use any and all
computer or electronically stored information or data which relates
to any Borrower, or any service bureau, contractor, accountant, or
other person, and directs any such service bureau, contractor,
accountant, or other person fully to cooperate with the Agent with
respect thereto.
(iii) Verify, in a manner consistent with
customary commercial financing practices, at any time the
Collateral or any portion thereof, including verification with
Account Debtors, and/or with each Borrower's computer billing
companies, collection agencies, and accountants and to sign the
name of each Borrower on any notice to each Borrower's Account Debtors
or verification of the Collateral.
(a) The Agent from time to time may designate one or
more representatives to exercise the Agent's rights under this Section 5:5-2 as
fully as if the Agent were doing so.
53 -NOTICE TO AGENT.
(a) The Lead Borrower shall provide the Agent with written
notice promptly upon the occurrence of any of the following events, which
written notice shall be with reasonable particularity as to the facts and
circumstances in respect of which such notice is being given:
(ii) Any change in any Borrower's Senior Officers.
(iii) Any ceasing of any Borrower's making of
payment, in the ordinary course, to any of its creditors where the
result thereof could reasonably be expected to have a Material Adverse
Effect.
(iv) Any failure by any Borrower to pay rent at
any of that Borrower's locations, which failure continues for more
than three (3) days following the last day on which such rent was
payable where the result of such failure could reasonably be expected
to be a Material Adverse Effect.
(v) Any Material Adverse Change.
(vi) Any Borrower's becoming InDefault.
(vii) Any intention on the part of any Borrower to
discharge that Borrower's present independent accountants or any
withdrawal or resignation by such independent accountants from
their acting in such capacity (as to which, see Subsection 5:5-1(d)).
(viii) Any litigation which, if determined
adversely to any Borrower, could reasonably be expected to have a
Material Adverse Effect on the financial condition of that Borrower.
(a) The Lead Borrower shall:
(ix) Provide the Agent, promptly after being
distributed, with copies of any materials distributed to the
shareholders of the Parent (qua such shareholders).
(x) Provide the Agent, promptly after being filed
with the SEC, all registration statements, annual, quarterly, and
other reports filed by the Parent.
(xi) At the request of the Agent, from time to
time, provide the Agent with copies of all advertising (including
copies of all print advertising and duplicate tapes of all video and
radio advertising).
(xii) Provide the Agent, promptly following
receipt by the Parent, with a copy of any management letter or
similar communications from any accountant of the Parent.
54 -BORROWING BASE CERTIFICATE. The Lead Borrower shall provide the
Agent with a Borrowing Base Certificate (in the form of EXHIBIT 5:5-4 annexed
hereto, as such form may be revised from time to time by the Agent) as follows:
(a) By 1:00PM on each Wednesday, as of the close of
business on the then immediately prior Saturday.
(b) With each Revolving Credit loan request made pursuant to
Section 2:2-7.
55 -MONTHLY REPORTS. Monthly, the Lead Borrower shall provide the
Agent with
(a) Timely as provided in EXHIBIT 5:5-5, annexed hereto,
those financial statements and reports described in EXHIBIT 5:5-5.
(b) The officer's compliance certificate described in
Section 5:5-8.
56 -QUARTERLY REPORTS. Quarterly, within Forty Five (45) days
following the end of each of the Borrowers' first three Fiscal quarters, the
Lead Borrower shall provide the Agent with the following:
(a) A management prepared financial statement of the
Borrowers for the period from the beginning of the Borrowers' then current
fiscal year through the end of the subject quarter, with comparative
information for the same period of the previous fiscal year, which statement
shall include, at a minimum, a balance sheet, income statement (which income
statement shall be on a store specific and on a "consolidated" basis), statement
of changes in shareholders' equity, and cash flows and comparisons of same Store
sales for the corresponding quarter of the then immediately previous year, as
well as to the Business Plan.
(b) Copy of the Borrowers' 10-Q filed with the SEC, for the
first second, and third fiscal quarters only.
(c) The officer's compliance certificate described in
Section 5:5-8.
57 -ANNUAL REPORTS. Annually, within ninety (90) days following the
end of the Borrowers' Fiscal year, the Lead Borrower shall furnish the Agent
(a) The 10-K report for the Borrowers or that year, filed,
or to be filed with the SEC, which shall have been prepared by, and bear the
unqualified opinion of, the Borrowers' independent certified public accountants
(i.e. said statement shall be "certified" by such accountants) and shall
include, at a minimum (with comparative information for the then prior fiscal
year) a balance sheet, income statement, statement of changes in shareholders'
equity, and cash flows.
(b) The officer's compliance certificate described in
Section 5:5-8.
58 -OFFICERS' CERTIFICATES. The Lead Borrower shall cause a Senior
Officer to provide such Person's Certificate with those monthly, quarterly,
and annual statements to be furnished pursuant to this Agreement, which
Certificate shall:
(a) Indicate that the subject statement was prepared in
accordance with GAAP or the requirements of this Agreement, consistently
applied in the preparation thereof and with prior such statements of like kind
furnished pursuant to this Agreement, and presents fairly the Consolidated
financial condition of the Borrowers at the close of, and the results of the
Borrowers' operations and cash flows for, the period(s) covered, subject,
however to the following:
(ii) Usual year end adjustments (this exception
shall not be included in the Certificate which accompanies such annual
statement).
(iii) Material Accounting Changes (in which
event, such Certificate shall include a schedule(in reasonable detail)
of the effect of each such Material Accounting Change) not previously
specifically taken into account in the determination of the financial
performance covenant imposed pursuant to Section 5:5-11.
(iv) The absence of footnotes to monthly and
quarterly statements.
(a) Indicate either that
(i) no Borrower is InDefault, or
(ii) if such an event has occurred, its nature
(in reasonable detail) and the steps (if any) being taken or
contemplated by the Borrowers to be taken on account thereof.
(b) Include calculations concerning the Borrowers'
compliance (or failure to comply) at the date of the subject statement with
each of the financial performance covenants included in Section 5:5-11 hereof.
59 -INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Agent, at the expense of the Borrowers, may
participate in and/or observe each count and/or physical inventory of so much
of the Collateral as consists of Inventory which is undertaken on behalf of the
Borrowers.
(b) The Borrowers, shall cause physical inventories to be
undertaken as follows:
(ii) Subject to Section 5:5-9(b)(ii), the
Borrowers, at their own expense, shall cause at least one (1) physical
inventory to be undertaken in each fiscal year during which this
Agreement is in effect (the scheduling of which inventory shall be
subject to the Agent's discretion after the occurrence and
continuance of any Event of Default) conducted by such inventory
takers as are satisfactory to the Agent and the Parent and which
employs a methodology consistent with that which had been employed
in physical inventories taken prior to November 1, 1999.
(iii) The Agent may cause or require additional
inventories to be undertaken (in each instance, at the expense of the
Borrowers) if an Event of Default or an Availability Trigger Event
has occurred and is continuing.
(iv) On the Agent's reasonable request from time
to time, the Lead Borrower shall provide the Agent with a copy of the
preliminary results ("flash report") of a physical inventory conducted
pursuant to this Section 5:5-9(b) (as well as of any other physical
inventory undertaken by any Borrower) within ten (10) days
following the completion of such inventory.
(v) The Lead Borrower, within thirty (30) days
following the end of each of the Borrowers' Fiscal years, shall
provide the Agent with a reconciliation of the results of the
Borrowers' physical inventories taken during the Fiscal year then just
ended and, to the extent not previously so posted, shall post such
results to the Borrowers' stock ledger and, as applicable to the
Borrowers' other financial books and records .
(a) Upon the Agent's reasonable request from time to time,
the Borrowers shall permit the Agent to obtain an appraisal, from time to time,
of the Borrowers' Inventory.
(vi) Subject to Section 5:5-9(c)(ii) , the
Borrowers shall reimburse the Agent for the Agent's out-of-pocket cost
of up to four (4) such appraisals in any Twelve (12) month period
during which this Agreement is in effect.
(vii) If such expense obligation arose while
an Event of Default or an Availability Trigger Event has occurred
and is continuing, the Borrowers shall reimburse the Agent for all
such appraisals.
(a) The Borrowers shall reimburse the Agent for the Agent's
out-of-pocket cost of commercial finance audits of the Borrowers' books and
records as follows: (viii) Subject to Section 5:5-9(d)(ii), the Borrowers shall
reimburse the Agent for the Agent's out-of-pocket cost of up to four (4) such
audits in any Twelve (12) month period during which this Agreement is in effect.
(ix) If such expense obligation arose while
an Event of Default or an Availability Trigger Event has occurred
and is continuing, the Borrowers shall reimburse the Agent for all
such audits. Revolving Credit Lenders, at their respective own
expense, may accompany and observe any commercial finance audit of
the Borrower's books which the Agent causes to be undertaken.
510 -ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be
provided pursuant to this Article 5:, the Lead Borrower promptly shall provide
the Agent (and any guarantor of the Liabilities), with such other and
additional information concerning the Borrowers, the Collateral, the
operation of the Borrowers' business, and the Borrowers' financial
condition, including original counterparts of financial reports and statements,
as the Agent may from time to time request from the Lead Borrower.
(b) The Lead Borrower may provide the Agent, from time to
time hereafter, with updated forecasts of the Borrowers' anticipated
performance and operating results.
(c) In all events, the Lead Borrower, no earlier than Ninety
(90) days prior to the end of its fiscal year nor later than the last day of the
first fiscal quarter of the Borrower's fiscal year, shall furnish the Agent with
an updated and extended forecast which shall go out at least through the end of
the subject fiscal year and shall include an income statement, balance sheet,
and statement of cash flow, by month, each prepared in conformity with GAAP and
consistent with the Borrowers' then current practices.
(d) The Agent and each of the Revolving Credit Lenders
agrees that, except with the prior consent of the Lead Borrower, it will not
disclose any confidential information with respect to the Borrowers which is
now or in the future furnished pursuant to this Agreement or any other Loan
Document, provided, however, that the Agent and each Revolving Credit Lender may
disclose any such information as follows:
(ii) To the following (but only if the Person to
whom so disclosed is instructed to treat the such information as
confidential):
(B) To its employees, Affiliates,
advisors or counsel.
(C) To any prospective or actual
transferee or participant in connection with any
contemplated transfer or participation of this Agreement,
the Liabilities, or any interest therein by the Agent or any
Revolving Credit Lender, which transfer or participation
is permitted by the terms of this Agreement.
(D) To the Agent and other Revolving
Credit Lenders.
(i) As has become generally available to the
public.
(ii) As may be required or appropriate in any
report, statement or testimony submitted to any municipal, state, or
federal regulatory body having or claiming to have jurisdiction over
the Agent or any Revolving Credit Lender.
(iii) As may be required or appropriate in
respect to any summons or subpoena or in connection with any
litigation
(iv) In order to comply with any law, order,
regulation or ruling applicable to the Agent or any Revolving Credit
Lender.
511 -FINANCIAL PERFORMANCE COVENANTS. The Borrowers shall observe
and comply with those financial performance covenants set forth on EXHIBIT
5:5-11, annexed hereto. Compliance with such financial performance covenants
shall be made as if no Material Accounting Changes had been made (other than any
Material Accounting Changes specifically taken into account in the setting of
such covenants). The Agent may determine the Borrowers' compliance with such
covenants based upon financial reports and statements provided by the Lead
Borrower to the Agent (whether or not such financial reports and statements
are required to be furnished pursuant to this Agreement) as well as by
reference to interim financial information provided to, or commercially
reasonably developed by, the Agent.
Article 6: - USE OF COLLATERAL:
61 -USE OF INVENTORY COLLATERAL.
(a) No Borrower shall engage in any sale or other
disposition of Inventory which consists of:
(ii) Any sale or other disposition which is not
for fair consideration in the conduct of the Borrowers' business in
the ordinary course unless conducted as part of the House2Home
Conversion and/or unless conducted in connection with any Store
closure (including any Store sale) permitted by this Agreement.
(iii) Sales or other dispositions to creditors.
(iv) Sales or other dispositions in bulk except
in connection with any Store closure permitted by this Agreement.
(v) Sales of any Collateral in breach of any
provision of this Agreement. (a) No sale of Inventory by any Borrower
shall be on consignment, approval, or under any other circumstances
such that, with the exception of the Borrowers' customary return
policy applicable to the return of inventory purchased by the
Borrowers' retail customers in the ordinary course, such Inventory
may be returned to a Borrower without the consent of the Agent.
62 -INVENTORY QUALITY. All Inventory now owned or hereafter
acquired by any Borrowers is and will be of good and merchantable quality and
free from defects (other than (x) quality problems and defects within customary
trade tolerances and (y) subject to insured casualties).
63 -ADJUSTMENTS AND ALLOWANCES. Each Borrower may grant such
allowances or other adjustments to that Borrower's Account Debtors (exclusive of
extending the time for payment of any Account or Account Receivable in excess of
$100,000.00, which shall not be done without first obtaining the Agent's prior
written consent in each instance) as that Borrower may reasonably deem to
accord with sound business practice.
64 -VALIDITY OF ACCOUNTS.
(a) The amount of each Account shown on the books, records,
and invoices of the Borrowers represented as owing by each Account Debtor is and
will be the correct amount actually owing by such Account Debtor and shall have
been fully earned by performance by the Borrowers.
(b) No Borrower has any knowledge of any impairment of
the validity or collectibility of any of the Accounts which are included in the
calculation of the Borrowing Base (except as stated therein and except as
subject to adjustments to Credit Card Receivables in the ordinary course of
business). The Lead Borrower shall notify the Agent of any material such
impairment promptly after any Borrower becomes aware of any such
impairment.
65 -NOTIFICATION TO ACCOUNT DEBTORS. The Agent shall have the right
(after any Event of Default has occurred and is continuing) to notify any of the
Borrowers' Account Debtors to make payment directly to the Agent and to collect
all amounts due on account of the Collateral.
Article 7: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
71 -THE BLOCKED ACCOUNT.
(a) On the Restatement Date, the Blocked Account Agreement
is in full force and effect.
(b) As a condition to the effectiveness of the amendment and
restatement of this Agreement, the Lead Borrower shall deliver the following to
the Agent:
(ii) Notices to each processor of any of credit
card receipts of any of the Borrowers, each in form satisfactory to
the Agent, which notices were not so delivered in connection with
the execution of the 1999 Loan Agreement.
(iii) A notice, addressed generally to the
depositories at which any Borrower maintains a DDA into which proceeds
of the Borrower's sales are deposited, each in form satisfactory to
the Agent, which notices were not so delivered in connection with
the execution of the 1999 Loan Agreement.
(a) Upon the occurrence of any Event of Default or an
Availability Trigger Event, then, in addition to any other rights to which the
Agent is then entitled, the Agent may (and on instructions of the SuperMajority
Lenders shall ) undertake the following (subject in all events to Section
7:7-1(d)).
(iv) Give notice to the Lock Box Bank to forward
to the Boston Concentration Account, by ACH or wire transfer, the
proceeds of all Receivables Collateral from time to time received by
the Lock Box Bank.
(v) Give notice to each of the Borrowers' credit
card processors to forward to the Boston Concentration Account, by
ACH or wire transfer, the proceeds of all Receivables Collateral
which such credit card processors otherwise would forward to or for
the account of the Borrower.
(vi) Send a copy of the notice furnished pursuant
to Section 7:7-1(b)(ii) (or pursuant to the cognate provision
included in the 1999 Loan Agreement) to each depository at which any
Borrower maintains a DDA into which proceeds of the Borrower's
sales are deposited as described and to take such other steps as the
Agent reasonably determines as appropriate to cause the Agent's
dominion and control of Receipts, proceed, and collections.
(vii) Give notice to the Lead Borrower of the
Agent's having exercised its rights pursuant to this Section
7:7-1(c). Following the occurrence of any event described in this
Section 7:7-1(c), all Receipts, proceeds, and collections shall be
held in trust by the Borrowers for the Agent and shall not be
commingled with any of the Borrowers' other funds or deposited in
any account of any Borrower other than as instructed by the Agent.
(a) If, following the Agent's exercise of any of its
rights described in Section 7:7-1(c): (viii) If such exercise was on account
of the occurrence of an Event of Default which is no longer continuing; or
(ix) If such exercise was on account of the
occurrence of an Availability Trigger Event and an Availability
Trigger Cure occurs thereafter, then the Agent, subject to its
continuing rights thereafter under Section 7:7-1(c), shall take
steps to reverse those actions which it had so taken pursuant to
that Section.
(a) The Borrower will not change its cash concentration
procedures from those in place at the execution of this Agreement unless such
change is coordinated with the Agent with a view towards the preservation
and protection of the Agent's rights included in this Article 7:.
72 -THE CONCENTRATION AND OPERATING ACCOUNTS.
(a) The following checking accounts have been or will be
established (and are so referred to herein):
(ii) The "Boston Concentration Account" (so
referred to herein): Established by the Agent with Fleet National
Bank.
(iii) The "Operating Account" (so referred to
herein): One more accounts established by the Lead Borrower with Fleet
National Bank (the Operating Account is referred to as the
"Disbursement Account" in the 1999 Loan Agreement).
(a) The Borrowers shall pay all fees and charges of, and
maintain such impressed balances as may be required by the depository in which
any account is opened as required hereby (even if such account is opened by and/
or is the property of the Agent.
73 -PAYMENT OF LIABILITIES.
(a) On each Business Day, the Agent shall apply the then
collected balance of the Boston Concentration Account (net of fees charged,
and of such impressed balances as may be required by the bank at which the
Boston Concentration Account is maintained): First, towards the SwingLine Loans
and Second, towards the unpaid balance of the Loan Account and all other
Liabilities, provided, however, for purposes of the calculation of interest
on the unpaid principal balance of the Loan Account, such payment shall be
deemed to have been made One (1) Business Day after such transfer.
(b) The following rules shall apply to deposits and payments
under and pursuant to this Agreement:
(ii) Funds shall be deemed to have been
deposited to the Boston Concentration Account on the Business Day
on which deposited, provided that notice of such deposit is available
to the Agent by 2:00PM on that Business Day.
(iii) Funds paid to the Agent, other than by
deposit to the Boston Concentration Account, shall be deemed to have
been received on the Business Day when they are good and collected
funds, provided that notice of such payment is available to the Agent
by 2:00PM on that Business Day.
(iv) If notice of a deposit to the Boston
Concentration Account (Section 7:7-3(b)(i)) or payment (Section
7:7-3(b)(ii)) is not available to the Agent until after 2:00PM on a
Business Day, such deposit or payment shall be deemed to have been
made at 9:00AM on the then next Business Day.
(v) All deposits to the Boston Concentration
Account and other payments to the Agent are subject to clearance and
collection.
(a) The Agent shall transfer to the Operating Account
any surplus in the Boston Concentration Account remaining after the
application towards the Liabilities referred to in Section 7:7-3(a), above
(less those amount which are to be netted out, as provided therein) provided,
however, in the event that
(vi) any Borrower is InDefault; and (vii) one or
more L/C's are then outstanding, then the Agent may establish a funded
reserve of up to 105% of the aggregate Stated Amounts of such L/C's.
Such funded reserve shall either be (i) returned to the Borrowers in
the event that no Borrower is InDefault or (ii) applied towards the
Liabilities following the occurrence of any Event of Default described
in Section 10:10-12 or Acceleration.
74 -THE OPERATING ACCOUNT. Except as otherwise specifically
provided in, or permitted by, this Agreement, all checks shall be drawn by the
Borrower upon, and other disbursements shall be made by the Borrower solely
from, the Operating Account or from its payroll account.
Article 8: - GRANT OF SECURITY INTEREST:
81 -GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt,
punctual, and faithful performance of all and each of the Liabilities, each
Borrower hereby grants to the Agent, for the ratable benefit of the Revolving
Credit Lenders, a continuing security interest in and to, and assigns to the
Agent, for the ratable benefit of the Revolving Credit Lenders, the following,
and each item thereof, whether now owned or now due, or in which that Borrower
has an interest, or hereafter acquired, arising, or to become due, or in which
that Borrower obtains an interest, and all products, Proceeds, substitutions,
and accessions of or to any of the following:
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All General Intangibles.
(d) All Equipment.
(e) All Goods.
(f) All Farm Products.
(g) All Fixtures.
(h) All Chattel Paper.
(i) All Letter-of-Credit Rights.
(j) All Payment Intangibles.
(k) All Supporting Obligations.
(l) All Real Estate Collateral.
(m) All books, records, and information relating to the
Collateral and/or to the operation of each Borrower's business, and all rights
of access to such books, records, and information, and all property in which
such books, records, and information are stored, recorded, and maintained.
(n) All Investment Property, Instruments, Documents,
Deposit Accounts, money, policies and certificates of insurance, deposits,
impressed accounts, compensating balances, cash, or other property.
(o) All insurance proceeds, refunds, and premium
rebates, including, without limitation, proceeds of fire and credit insurance,
whether any of such proceeds, refunds, and premium rebates arise out of any of
the foregoing. (8:8-1(a) through 8:8-1(n)) or otherwise.
(p) All liens, guaranties, rights, remedies, and
privileges pertaining to any of the foregoing (8:8-1(a) through 8:8-1(o)),
including the right of stoppage in transit.
82 -EXTENT AND DURATION OF SECURITY INTEREST.
(a) The security interest created herein is subject to any
applicable Collateral Interest Restrictions.
(b) The security interest created and granted herein is in
addition to, and supplemental of, any security interest previously granted by
any Borrower to the Agent and shall continue in full force and effect applicable
to all Liabilities until both (a) all Liabilities have been paid and/or
satisfied in full and (b) the security interest created herein is specifically
terminated in writing by a duly authorized officer of the Agent.
83 -PERMITTED REAL ESTATE TRANSACTIONS. The Agent shall execute
all such documents as the Lead Borrower from time to time may request to
facilitate the consummation of a Permitted Real Estate Transaction, including
the release and discharge of any Collateral Interest which the Agent then
holds on the Real Estate Collateral which is subject of such Permitted Real
Estate Transaction.
Article 9: - AGENT AS BORROWER'S ATTORNEY-IN-FACT:
91 -APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby
irrevocably constitutes and appoints the Agent (acting through any of its
officers) as that Borrower's true and lawful attorney, with full power of
substitution, following the occurrence and during the continuance of an Event
of Default, to convert the Collateral into cash at the sole risk, cost, and
expense of that Borrower, but for the sole benefit of the Agent and the
Revolving Credit Lenders. The rights and powers granted the Agent by this
appointment include but are not limited to the right and power to:
(a) Prosecute, defend, compromise, or release any action
relating to the Collateral.
(b) Sign change of address forms to change the address to
which each Borrower's mail is to be sent to such address as the Agent shall
designate; receive and open each Borrower's mail; remove any Receivables
Collateral and Proceeds of Collateral therefrom and turn over the balance of
such mail either to the Lead Borrower or to any trustee in bankruptcy or
receiver of the Lead Borrower, or other legal representative of a Borrower whom
the Agent determines to be the appropriate person to whom to so turn over such
mail.
(c) Endorse the name of the relevant Borrower in favor of
the Agent upon any and all checks, drafts, notes, acceptances, or other items
or instruments; sign and endorse the name of the relevant Borrower on, and
receive as secured party, any of the Collateral, any invoices, schedules of
Collateral, freight or express receipts, or bills of lading, storage receipts,
warehouse receipts, or other documents of title respectively relating to the
Collateral.
(d) Sign the name of the relevant Borrower on any notice to
that Borrower's Account Debtors or verification of the Receivables Collateral;
sign the relevant Borrower's name on any Proof of Claim in Bankruptcy against
Account Debtors, and on notices of lien, claims of mechanic's liens, or
assignments or releases of mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the
payment of any letter of credit and/or banker's acceptance of which any
Borrower is a beneficiary.
(f) Repair, manufacture, assemble, complete, package,
deliver, alter or supply goods, if any, necessary to fulfill in whole or in part
the purchase order of any customer of each Borrower. (g) Use, license or
transfer any or all General Intangibles of each Borrower.
92 -NO OBLIGATION TO ACT. The Agent shall not be obligated to do any
of the acts or to exercise any of the powers authorized by Section 9:9-1 herein,
but if the Agent elects to do any such act or to exercise any of such powers,
it shall not be accountable for more than it actually receives as a result of
such exercise of power, and shall not be responsible to any Borrower for any
act or omission to act except for any act or omission to act as to which
there is a final determination made in a judicial proceeding (in which
proceeding the Agent has had an opportunity to be heard) which determination
includes a specific finding that the subject act or omission to act had been
grossly negligent or in actual bad faith.
Article 10: - EVENTS OF DEFAULT:
The occurrence of any event described in this Article 10: respectively
shall constitute an "Event of Default" herein.
101 -FAILURE TO PAY REVOLVING CREDIT. The failure by any Borrower to
pay any principal or interest when due under the Revolving Credit.
102 -FAILURE TO MAKE OTHER PAYMENTS. The failure by any Borrower to
pay within five (5) days of when due, any, fee, or other payment Liability
(other than as set forth in Section 10:10-1, above) under any of the Loan
Documents.
103 -FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD). The
failure by any Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with any covenant or Liability not otherwise described
in Section 10:10-1 or Section 10:10-2 hereof, and included in any of the
following provisions hereof:
Section Relates to:
------- -----------
4:4-5 Location of Collateral
4:4-7 Title to Assets
4:4-8 Indebtedness
4:4-9 Insurance Policies
4:4-15(c) Tax Liens
4:4-20 Dividends. Investments. Other
Corporate Actions
4:4-24 Affiliate Transactions
5:5-11 Financial Performance Covenants
6:6-1 Use of Inventory Collateral
Article 7: Cash Management
104 -FINANCIAL REPORTING REQUIREMENTS. The failure by the Lead
Borrower or any Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with the financial reporting requirements included in
Article 5:, subject, however, to the following limited number of grace
periods applicable to certain of those requirements:
===================================== ================== ========================== ================================
REPORT / STATEMENT REQUIRED BY GRACE PERIOD NUMBER OF GRACE PERIODS
SECTION
===================================== ================== ========================== ================================
Weekly Borrowing Base 5:5-4 One Business Day Six in any 12 months
------------------------------------- ------------------ -------------------------- --------------------------------
Monthly Reports 5:5-5 Six Business Days Three in any 12 months
------------------------------------- ------------------ -------------------------- --------------------------------
Notice of Change in Senior Officers 5:5-3(a)(i) Twenty Days One in any 12 months
------------------------------------- ------------------ -------------------------- --------------------------------
Notice of Material Adverse Change 5:5-3(a)(iv) Ten Business Days One in any 12 months
------------------------------------- ------------------ -------------------------- --------------------------------
Retain Accountants 5:5-3(a)(vi) Twenty Days Once
------------------------------------- ------------------ -------------------------- --------------------------------
105 -FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The
failure by any Borrower, twenty (20) days following the earlier, with
respect to that Borrower's failure to promptly, punctually and faithfully
perform, discharge, or comply with any covenant or Liability not described in
any of Sections 10:10-1, 10:10-2, 10:10-3, or 10:10-4 hereof, to have cured
such failure:
(a) That Borrower's knowledge of such failure to perform,
discharge, or comply.
(b) Written notice from the Agent to the Lead Borrower of
such failure to perform, discharge or comply.
106 -MISREPRESENTATION. Any representation or warranty at any time
made by any Borrower to the Agent or any Revolving Credit Lender was not true or
complete in all material respects when given.
107 -ACCELERATION OF OTHER DEBT. BREACH OF LEASE. The occurrence of
any event such that any Indebtedness of any Borrower in excess of $5 Million
to any creditor other than the Agent or any Revolving Credit Lender could be
accelerated or, without the consent of any Borrower, any Leases with monthly
base rent aggregating not less than $200,000.00 could be terminated prior to
their stated termination date (whether or not the subject creditor or lessor
takes any action on account of such occurrence).
108 -DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach
of any covenant or failure timely to discharge any Liability imposed by, or
of any default under, any agreement (including any Loan Document) between the
Agent or any Revolving Credit Lender and any Borrower or instrument given by any
Borrower to the Agent or any Revolving Credit Lender and the expiry, without
cure, of any applicable grace period (notwithstanding that the subject Agent
or Revolving Credit Lender may not have exercised all or any of its rights on
account of such breach or default).
109 -UNINSURED LOSS. The occurrence, in consequence of any single
event or series of connected events, of the uninsured loss, theft, damage, or
destruction of or to the Collateral in excess of the following:
(a) If an Availability Trigger Event has occurred and is
then continuing (i.e. no Availability Cure has thereafter occurred): In excess
of $5 Million.
(b) Under all circumstances other than as described in
Section 10:10-9(a): $10 Million.
1010 -ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
(a) The service of process upon the Agent or any Revolving
Credit Lender or any Participant seeking to attach, by trustee, mesne, or other
process, any of funds of any Borrower on deposit with, or assets of any Borrower
in the possession of, the Agent or that Revolving Credit Lender or such
Participant.
(b) The entry of any judgment against any Borrower, which
judgment is not satisfied (if a money judgment) or appealed from (with execution
or similar process stayed) within thirty (30) days of its entry and which
judgment, when added to all other money judgments, aggregates in excess of
$100,000.00.
(c) The occurrence of any Material Adverse Effect.
1011 -BUSINESS FAILURE. Any act by, against, or relating to any
Borrower, or its property or assets, which act constitutes the determination, by
any Borrower, to initiate a program of partial or total self-liquidation (not
otherwise permitted by this Agreement); application for, consent to, or
sufferance of the appointment of a receiver, trustee, or other person, pursuant
to court action or otherwise, over all, or any part of any Borrower's property;
the granting of any trust mortgage or execution of an assignment for the benefit
of the creditors of any Borrower, or the occurrence of any other voluntary
or involuntary liquidation or extension of debt agreement for any Borrower; the
offering by or entering into by any Borrower of any composition, extension,
or any other arrangement seeking relief from or extension of the debts of any
Borrower; or the initiation of any judicial or non-judicial proceeding or
agreement by, against, or including any Borrower which seeks or intends to
accomplish a reorganization or arrangement with creditors; and/or the
initiation by or on behalf of any Borrower of the liquidation or winding up of
all or any part of any Borrower's business or operations, and if such action is
initiated against any Borrower, it is not timely contested, or if so timely
contested, is not dismissed within sixty (60) days of when initiated.
1012 -BANKRUPTCY. The failure by any Borrower to generally pay the
debts of that Borrower as they mature; adjudication of bankruptcy or insolvency
relative to any Borrower; the entry of an order for relief or similar order with
respect to any Borrower in any proceeding pursuant to the Bankruptcy Code or
any other federal bankruptcy law; the filing of any complaint, application, or
petition by any Borrower initiating any matter in which any Borrower is or
may be granted any relief from the debts of that Borrower pursuant to the
Bankruptcy Code or any other insolvency statute or procedure; the filing
of any complaint, application, or petition against any Borrower initiating
any matter in which that Borrower is or may be granted any relief from the debts
of that Borrower pursuant to the Bankruptcy Code or any other insolvency statute
or procedure, which complaint, application, or petition is not timely contested
in good faith by that Borrower by appropriate proceedings or, if so contested,
is not dismissed within sixty (60) days of when filed.
1013 -DEFAULT BY GUARANTOR OR AFFILIATE. The occurrence of any of the
foregoing Events of Default with respect to any guarantor of the Liabilities,
or the occurrence of any of the foregoing Events of Default with respect to any
such guarantor as if such guarantor were a "Borrower" described therein.
1014 -INDICTMENT - FORFEITURE. The indictment of, or institution of
any legal process or proceeding against, any Borrower, under any federal,
state, municipal, and other civil or criminal statute, rule, regulation, order,
or other requirement having the force of law where the relief, penalties,
or remedies sought or available include the forfeiture of any property of that
Borrower and/or the imposition of any stay or other order, the effect of which,
could reasonably be expected to have a Material Adverse Effect.
1015 -TERMINATION OF GUARANTY. The termination or attempted
termination of any guaranty by any guarantor of the Liabilities.
1016 -CHALLENGE TO LOAN DOCUMENTS.
(a) Any challenge by or on behalf of any Borrower or any
guarantor of the Liabilities to the validity of any Loan Document or the
applicability or enforceability of any Loan Document strictly in accordance with
the subject Loan Document's terms or which seeks to void, avoid, limit, or
otherwise adversely affect any security interest created by or in any Loan
Document or any payment made pursuant thereto.
(b) Any determination by any court or any other judicial
or government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto.
1017 -CHANGE IN CONTROL. Any Change in Control.
Article 11: - RIGHTS AND REMEDIES UPON DEFAULT:
111 -ACCELERATION. Upon the occurrence of any Event of Default as
described in Section 10:10-12, all Indebtedness of the Borrower to the Revolving
Credit Lenders shall be immediately due and payable. Upon the occurrence of any
Event of Default other than as described in Section 10:10-12, the Agent may
(and on the issuance of Acceleration Notice(s) requisite to the causing of
Acceleration, the Agent shall) declare all Indebtedness of the Borrower to
the Revolving Credit Lenders to be immediately due and payable and may exercise
all of the Agent's Rights and Remedies as the Agent from time to time thereafter
determines as appropriate, including those rights and remedies set forth in
this Article 11:.
112 -RIGHTS OF ENFORCEMENT. The Agent shall have all of the rights
and remedies of a secured party upon default under the UCC, in addition to
which the Agent shall have all and each of the following rights and remedies:
(a) To give notice to any bank at which any DDA or Blocked
Account is maintained and in which Proceeds of Collateral are deposited, to
turn over such Proceeds directly to the Agent.
(b) To give notice to any customs broker of any of the
Borrowers to follow the instructions of the Agent as provided in any written
agreement or undertaking of such broker in favor of the Agent.
(c) To collect the Receivables Collateral with or without
the taking of possession of any of the Collateral.
(d) To take possession of all or any portion of the
Collateral.
(e) To sell, lease, or otherwise dispose of any or all
of the Collateral, in its then condition or following such preparation or
processing as the Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(f) To conduct one or more going out of business sales which
include the sale or other disposition of the Collateral.
(g) To apply the Receivables Collateral or the Proceeds of
the Collateral towards (but not necessarily in complete satisfaction of)
the Liabilities.
(h) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
113 -SALE OF COLLATERAL.
(a) Any sale or other disposition of the Collateral may be
at public or private sale upon such terms and in such manner as the Agent deems
advisable, having due regard to compliance with any statute or regulation which
might affect, limit, or apply to the Agent's disposition of the Collateral.
(b) The Agent, in the exercise of the Agent's rights and
remedies upon default, may conduct one or more going out of business sales, in
the Agent's own right or by one or more agents and contractors. Such sale(s) may
be conducted upon any premises owned, leased, or occupied by any Borrower. The
Agent and any such agent or contractor, in conjunction with any such sale, may
augment the Inventory with other goods (all of which other goods shall remain
the sole property of the Agent or such agent or contractor). Any amounts
realized from the sale of such goods which constitute augmentations to the
Inventory (net of an allocable share of the costs and expenses incurred in their
disposition) shall be the sole property of the Agent or such agent or contractor
and neither any Borrower nor any Person claiming under or in right of any
Borrower shall have any interest therein.
(c) Unless the Collateral is perishable or threatens
to decline speedily in value, or is of a type customarily sold on a
recognized market (in which event the Agent shall provide the Lead Borrower such
notice as may be practicable under the circumstances), the Agent shall give
the Lead Borrower at least ten (10) days prior written notice of the date,
time, and place of any proposed public sale, and of the date after which any
private sale or other disposition of the Collateral may be made. Each Borrower
agrees that such written notice shall satisfy all requirements for notice to
that Borrower which are imposed under the UCC or other applicable law with
respect to the exercise of the Agent's rights and remedies upon default.
(d) The Agent and any Revolving Credit Lender may purchase
the Collateral, or any portion of it at any sale held under this Article.
(e) If any of the Collateral is sold, leased, or otherwise
disposed of by the Agent on credit, the Liabilities shall not be deemed to have
been reduced as a result thereof unless and until payment is finally received
thereon by the Agent.
(f) The Agent shall apply the proceeds of the Agent's
exercise of its rights and remedies upon default pursuant to this Article 11:
in accordance with Sections 13:13-6 and 13:13-7.
114 -OCCUPATION OF BUSINESS LOCATION. In connection with the Agent's
exercise of the Agent's rights under this Article 11:, the Agent may enter upon,
occupy, and use any premises owned or occupied by each Borrower, and may
exclude each Borrower from such premises or portion thereof as may have been so
entered upon, occupied, or used by the Agent. The Agent shall not be required to
remove any of the Collateral from any such premises upon the Agent's taking
possession thereof, and may render any Collateral unusable to the Borrowers.
In no event shall the Agent be liable to any Borrower for use or occupancy by
the Agent of any premises pursuant to this Article 11:, nor for any charge (such
as wages for any Borrower's employees and utilities) incurred in connection with
the Agent's exercise of the Agent's Rights and Remedies.
115 -GRANT OF NONEXCLUSIVE LICENSE. Each Borrower hereby grants to
the Agent a royalty free nonexclusive irrevocable license to use, apply,
and affix any trademark, trade name, logo, or the like in which any Borrower
now or hereafter has rights, such license being with respect to the Agent's
exercise of the rights hereunder including, without limitation, in connection
with any completion of the manufacture of Inventory or sale or other
disposition of Inventory.
116 -ASSEMBLY OF COLLATERAL. The Agent may require any Borrower to
assemble the Collateral and make it available to the Agent at the Borrowers'
sole risk and expense at a place or places which are reasonably convenient to
both the Agent and the Lead Borrower.
117 -RIGHTS AND REMEDIES. The rights, remedies, powers, privileges,
and discretions of the Agent hereunder (herein, the Agent's Rights and
Remedies") shall be cumulative and not exclusive of any rights or remedies which
it would otherwise have. No delay or omission by the Agent in exercising or
enforcing any of the Agent's Rights and Remedies shall operate as, or
constitute, a waiver thereof. o waiver by the Agent of any Event of Default or
of any default under any other agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial exercise
of any of the Agent's Rights or Remedies, and no express or implied agreement
or transaction of whatever nature entered into between the Agent and any
person, at any time, shall preclude the other or further exercise of the Agent's
Rights and Remedies. No waiver by the Agent of any of the Agent's Rights and
Remedies on any one occasion shall be deemed a waiver on any subsequent
occasion, nor shall it be deemed a continuing waiver. The Agent's Rights and
Remedies may be exercised at such time or times and in such order of preference
as the Agent may determine. The Agent's Rights and Remedies may be exercised
without resort or regard to any other source of satisfaction of the Liabilities.
Article 12: - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
121 -REVOLVING CREDIT FUNDING PROCEDURES. Subject to Section 12:12-2:
(a) The Agent shall advise each Revolving Credit Lender, no
later than 2:00PM on a date on which any Revolving Credit Loan (other than a
SwingLine Loan) is to be made on that date. Such advice, in each instance,
may be by telephone or facsimile transmission, provided that if such advice
is by telephone, it shall be confirmed in writing. Advice of a Revolving Credit
Loan shall include the amount of and interest rate applicable to the subject
Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving
Credit Dollar Commitment, each Revolving Credit Lender, by no later than the end
of business on the day on which the subject Revolving Credit Loan is to be made,
shall Transfer that Revolving Credit Lender's Revolving Credit Percentage
Commitment of the subject Revolving Credit Loan to the Agent.
122 -SWINGLINE LOANS.
(a) In the event that, when a Revolving Credit Loan is
requested, the aggregate unpaid balance of the SwingLine Loan is less than the
SwingLine Loan Ceiling, then the SwingLine Lender may advise the Agent that the
SwingLine Lender has determined to include up to the amount of the requested
Revolving Credit Loan as part of the SwingLine Loan. In such event, the
SwingLine Lender shall Transfer the amount of the requested Revolving Credit
Loan to the Agent.
(b) The SwingLine Loan shall be converted to a Revolving
Credit Loan in which all Revolving Credit Lenders participate as follows:
(ii) At any time and from time to time, the
SwingLine Lender may advise the Agent that all, or any part of the
SwingLine Loan is to be converted to a Revolving Credit Loan in
which all Revolving Credit Lenders participate.
(iii) At the initiation of a Liquidation, the
then entire unpaid principal balance of the SwingLine Loan shall be
converted to a Revolving Credit Loan in which all Revolving Credit
Lenders participate. In either such event, the Agent shall advise each
Revolving Credit Lender of such conversion as if, and with the same
effect as if such conversion were the making of a Revolving Credit
Loan as provided in Section 12:12-1.
(a) The SwingLine Lender, in separate capacities, may also
be the Agent and a Revolving Credit Lender.
(b) The SwingLine Lender, in its capacity as SwingLine
Lender, is not a "Revolving Credit Lender" for any of the following purposes:
(iv) Except as otherwise specifically provided in
the relevant Section, any distribution pursuant to Section 13:13-6.
(v) Determination of whether the requisite Loan
Commitments have Consented to action requiring such Consent.
123 -AGENT'S COVERING OF FUNDINGS:
(a) Each Revolving Credit Lender shall make available to the
Agent, as provided herein, that Revolving Credit Lender's Revolving Credit
Percentage Commitment of the following:
(ii) Each Revolving Credit Loan, up to the maximum
amount of that Revolving Credit Lender's Revolving Credit Dollar
Commitment of the Revolving Credit Loans.
(iii) Up to the maximum amount of that Revolving
Credit Lender's Revolving Credit Dollar Commitment of each L/C
Drawing (to the extent that such L/C Drawing is not "covered" by a
Revolving Credit Loan as provided herein).
(a) In all circumstances, the Agent may:
(iv) Assume that each Revolving Credit Lender,
subject to Section 12:12-3(a), timely shall make available to the
Agent that Revolving Credit Lender's Revolving Credit Percentage
Commitment of each Revolving Credit Loan, notice of which is provided
pursuant to Section 12:12-1.
(v) In reliance upon such assumption, make
available the corresponding amount to the Borrowers.
(vi) Assume that each Revolving Credit Lender
timely shall pay, and shall make available, to the Agent all other
amounts which that Revolving Credit Lender is obligated to so pay
and/or make available hereunder or under any of the Loan Documents.
(a) In the event that, in reliance upon any of such
assumptions, the Agent makes available, a Revolving Credit Lender's Revolving
Credit Percentage Commitment of one or more Revolving Credit Loans, or any other
amount to be made available hereunder or under any of the Loan Documents, which
amount a Revolving Credit Lender (a "Delinquent Revolving Credit Lender") fails
to provide to the Agent within One (1) Business Day of written notice of such
failure, then: (vii) The amount which had been made available by the Agent is an
" Agent's Cover" (and is so referred to herein).
(viii) All interest paid by the Borrowers on
account of the Revolving Credit Loan or coverage of the subject L/C
Drawing which consist of the Agent's Cover shall be retained by the
Agent until the Agent's Cover, with interest, has been paid.
(ix) The Delinquent Revolving Credit Lender shall
pay to the Agent, on demand, interest at a rate equal to the
prevailing federal funds rate on any Agent's Cover in respect of
that Delinquent Revolving Credit Lender
(x) The Agent shall have succeeded to all rights
to payment to which the Delinquent Revolving Credit Lender otherwise
would have been entitled hereunder in respect of those amounts paid
by or in respect of the Borrowers on account of the Agent's Cover
together with interest until it is repaid. Such payments shall be
deemed made first towards the amounts in respect of which the Agent's
Cover was provided and only then towards amounts in which the
Delinquent Revolving Credit Lender is then participating. For
purposes of distributions to be made pursuant to Section 12:12-4(a)
(which relates to ordinary course distributions) or Section 13:13-6
(which relates to distributions of proceeds of a Liquidation) below,
amounts shall be deemed distributable to a Delinquent Revolving Credit
Lender (and consequently, to the Agent to the extent to which the
Agent is then entitled) at the highest level of distribution (if
applicable) at which the Delinquent Revolving Credit Lender would
otherwise have been entitled to a distribution.
(xi) Subject to Subsection 12:12-3(c)(iv), the
Delinquent Revolving Credit Lender shall be entitled to receive any
payments from the Borrowers to which the Delinquent Revolving Credit
Lender is then entitled, provided however there shall be deducted
from such amount and retained by the Agent any interest to which the
Agent is then entitled on account of Section 12:12-3(c)(ii), above.
(a) A Delinquent Revolving Credit Lender shall not be
relieved of any obligation of such Delinquent Revolving Credit Lender hereunder
(all and each of which shall constitute continuing obligations on the part of
any Delinquent Revolving Credit Lender).
(b) A Delinquent Revolving Credit Lender may cure its status
as a Delinquent Revolving Credit Lender by paying the Agent the aggregate of the
following:
(xii) The Agent's Cover (to the extent not
previously repaid by the Borrowers and retained by the Agent in accordance with
Subsection 12:12-3(c)(iv), above) with respect to that Delinquent Revolving
Credit Lender.
Plus
(xiii) The aggregate of the amount payable under
Subsection 12:12-3(c)(iii), above (which relates to interest to
be paid by that Delinquent Revolving Credit Lender).
Plus
(xiv) All such costs and expenses as may be
incurred by the Agent in the enforcement of the Agent's rights against
such Delinquent Revolving Credit Lender.
124 -ORDINARY COURSE DISTRIBUTIONS. (This Section 12:12-4 applies
unless the provisions of Section 13:13-6 (which relates to distributions in the
event of a Liquidation) becomes operative).
(a) Weekly, on such day as may be set from time to time by
the Agent (or more frequently at the Agent's option) the Agent and each
Revolving Credit Lender shall settle up on amounts advanced under the
Revolving Credit and collected funds received in the Concentration Account.
(b) The Agent shall distribute to the SwingLine Lender and
to each Revolving Credit Lender, such Person's respective Pro-Rata share of
interest payments on the Revolving Credit Loans when actually received and
collected by the Agent(excluding the one Business Day for settlement provided
for in Section 7:7-3(a), which shall be for the account of the Agent only).
For purposes of calculating interest due to a Revolving Credit Lender, that
Revolving Credit Lender shall be entitled to receive interest on the actual
amount contributed by that Revolving Credit Lender towards the principal
balance of the Revolving Credit Loans outstanding during the applicable period
covered by the interest payment made by the Borrowers. Any net principal
reductions to the Revolving Credit Loans received by the Agent in accordance
with the Loan Documents during such period shall not reduce such actual amount
so contributed, for purposes of calculation of interest due to that Revolving
Credit Lender, until the Agent has distributed to that Revolving Credit Lender
its pro-rata share thereof.
(c) The Agent shall distribute fees paid on account of the
Revolving Credit, as follows:
(ii) Revolving Credit Commitment Fee: As provided
by separate agreement between the Agent and each respective Revolving
Credit Lender.
(iii) Agent's Fee: Retained by and for the account
of the Agent.
(iv) Fees described in Section 2:2-21(b) (which
relates to fees associated with, among other things, the issuance of
L/C's): Retained by the Issuer.
(v) All other fees: To the Revolving Credit
Lenders, based on their respective Revolving Credit Percentage
Commitments, except that no Revolving Credit Lender shall have any
interest in, or right to receive any part of any interest which
reflects "float" as described in the proviso included in Section
7:7-3(a). Any such float shall be for the account of the Agent only.
(a) No Revolving Credit Lender shall have any interest in,
or right to receive any part of, the Agent's Fee to be paid by the Borrowers to
the Agent pursuant to this Agreement.
(b) Any amount received by the Agent as reimbursement for
any cost or expense (including without limitation, attorneys' reasonable fees)
shall be distributed by the Agent to that Person which is entitled to such
reimbursement as provided in this Agreement (and if such Person(s) is (are) the
Revolving Credit Lenders, pro-rata based upon their respective Revolving Credit
Commitment Percentages at the date on which the expense, in respect of which
such reimbursement is being made, was incurred).
(c) Each distribution pursuant to this Section 12:12-4 is
subject to Section 12:12-3(c), above.
Article 13: - ACCELERATION AND LIQUIDATION:
131 -ACCELERATION NOTICES
(a) The Agent may give the Revolving Credit Lenders an
Acceleration Notice at any time following the occurrence of an Event of Default.
(b) The SuperMajority Lenders may give the Agent an
Acceleration Notice at any time following the occurrence of an Event of
Default. Such notice may be by multiple counterparts, provided that counterparts
executed by the requisite Revolving Credit Lenders are received by the Agent
within a period of five (5) consecutive Business Days.
132 -ACCELERATION Unless stayed by judicial or statutory process,
the Agent shall Accelerate the Revolving Credit Obligations within a
commercially reasonable time following:
(a) The Agent's giving of an Acceleration Notice to the
Revolving Credit Lenders as provided in Section 13:13-1(a).
(b) The Agent's receipt of an Acceleration Notice from the
SuperMajority Lenders, in compliance with Section 13:13-1(b) .
133 -INITIATION OF LIQUIDATION Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Agent within a commercially
reasonable time following Acceleration of the Revolving Credit Obligations.
134 -ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION (a) At the
initiation of a Liquidation:
(ii) The unpaid principal balance of the SwingLine
Loan (if any) shall be converted, pursuant to Section 12:12-2(b)(ii),
to a Revolving Credit Loan in which all Revolving Credit Lenders
participate.
(iii) The Agent and the Revolving Credit Lenders
shall "net out" each Revolving Credit Lender's respective
contributions towards the Revolving Credit Loans, so that each
Revolving Credit Lender holds that Revolving Credit Lender's Revolving
Credit Percentage Commitment of the Revolving Credit Loans and
advances.
(a) Following the initiation of a Liquidation, each
Revolving Credit Lender shall contribute, towards any L/C thereafter honored and
not immediately reimbursed by the Borrowers, that Revolving Credit Lender's
Revolving Credit Percentage Commitment of such honoring.
135 -AGENT'S CONDUCT OF LIQUIDATION
(a) Any Liquidation shall be conducted by the Agent,
with the advice and assistance of the Revolving Credit Lenders.
(b) The Agent may establish one or more Nominees to "bid in"
or otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Agent shall manage the Nominee and manage and
dispose of any Post Foreclosure Assets with a view towards the realization of
the economic benefits of the ownership of the Post Foreclosure Assets and in
such regard, the Agent and/or the Nominee may operate, repair, manage, maintain,
develop, and dispose of any Post Foreclosure Asset in such manner as the
Agent determines as appropriate under the circumstances.
(d) The Agent may decline to undertake or to continue taking
a course of action or to execute an action plan (whether proposed by the Agent
or any Revolving Credit Lender) unless indemnified to the Agent's satisfaction
by the Revolving Credit Lenders against any and all liability and expense
which may be incurred by the Agent by reason of taking or continuing to take
that course of action or action plan, except for any action taken or omitted to
be taken as to which a final judicial determination has been or is made (in a
proceeding in which the Agent has had an opportunity to be heard) that the
Agent had acted in a grossly negligent manner, in actual bad faith, or in
willful misconduct.
(e) Each Revolving Credit Lender shall execute all such
instruments and documents not inconsistent with the provisions of this Agreement
as the Agent and/or the Nominee reasonably may request with respect to the
creation and governance of any Nominee, the conduct of the Liquidation, and the
management and disposition of any Post Foreclosure Asset.
136 -DISTRIBUTION OF LIQUIDATION PROCEEDS:
(a) The Agent may establish one or more reasonably funded
reserve accounts into which proceeds of the conduct of any Liquidation may be
deposited in anticipation of future expenses which may be incurred by the
Agent in the exercise of rights as a secured creditor of the Borrowers and prior
claims which the Agent anticipates may need to be paid.
(b) The Agent shall distribute the net proceeds of
Liquidation in accordance with the relative priorities set forth in Section
13:13-7.
(c) Each Revolving Credit Lender, on the written request of
the Agent and/or any Nominee, not more frequently than once each month, shall
reimburse the Agent and/or any Nominee, Pro-Rata, for any cost or expense
reasonably incurred by the Agent and/or the Nominee in the conduct of a
Liquidation, which amount is not covered out of current proceeds of the
Liquidation, which reimbursement shall be paid over to and distributed by the
Agent.
137 -RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION The relative
priorities to the proceeds of a Liquidation are as follows:
(a) To the Agent as reimbursement for all reasonable third
party costs and expenses incurred by the Agent and to Lenders' Special Counsel
and to any funded reserve established pursuant to Section 13:13-6(a); and then
(b) To the SwingLine Lender, on account of any SwingLine
loans not converted to Revolving Credit Loans pursuant to Section
13:13-4(a)(i); and then
(c) To the Revolving Credit Lenders (other than any
Delinquent Revolving Credit Lender), pro-rata, to the unpaid principal balance
of the Revolving Credit; and then
(d) To the Revolving Credit Lenders (other than any
Delinquent Revolving Credit Lender), pro-rata, to accrued interest on the
Revolving Credit; and then
(e) To the Revolving Credit Lenders (other than any
Delinquent Revolving Credit Lender), pro-rata, to those fees distributable
hereunder to the Revolving Credit Lenders; and then
(f) To any Delinquent Revolving Credit Lenders, pro-rata
to amounts to which such Revolving Credit Lenders otherwise would have been
entitled pursuant to Sections 13:13-7(c), 13:13-7(d), 13:13-7(e) ; and then
(g) To the Revolving Credit Lenders, pro-rata, to the extent
of the Revolving Credit Early Termination Fee; and then
(h) To any other Liabilities.
Article 14: - THE AGENT:
141 -APPOINTMENT OF THE AGENT
(a) Each Lender appoints and designates Fleet Retail Finance
Inc. as the "Agent" hereunder and under the Loan Documents.
(b) Each Revolving Credit Lender authorizes the Agent:
(ii) To execute those of the Loan Documents and
all other instruments relating thereto to which the Agent is a party.
(iii) To take such action on behalf of the
Revolving Credit Lenders and to exercise all such powers as are
expressly delegated to the Agent hereunder and in the Loan Documents
and all related documents, together with such other powers as are
reasonably incident thereto.
(a) The CIT Group/ Business Credit, Inc. has been granted
the title of "Documentation Agent", in which capacity, it shall not have any
rights nor any responsibilities. It may resign such position, at any time, on
written notice to the Agent; and shall cease to be Documentation Agent
contemporaneous with its ceasing to be a Revolving Credit Lender.
(b) Foothill Capital Corporation has been granted the title
of "Syndication Agent", in which capacity, it shall not have any rights nor any
responsibilities. It may resign such position, at any time, on written notice
to the Agent; and shall cease to be Syndication Agent contemporaneous with its
ceasing to be a Revolving Credit Lender.
142 -RESPONSIBILITIES OF AGENT
(a) The Agent shall not have any duties or responsibilities
to, or any fiduciary relationship with, any Revolving Credit Lender except for
those expressly set forth in this Agreement.
(b) Neither the Agent nor any of its Affiliates shall be
responsible to any Revolving Credit Lender for any of the following:
(ii) Any recitals, statements, representations or
warranties made by any Borrower or any other Person.
(iii) Any appraisals or other assessments of the
assets of any Borrower or of any other Person responsible for or on
account of the Liabilities.
(iv) The value, validity, effectiveness,
genuineness, enforceability, or sufficiency of the Loan Agreement, the
Loan Documents or any other document referred to or provided for
therein.
(v) Any failure by any Borrower or any other
Person (other than the Agent) to perform its obligations under the
Loan Documents.
(a) The Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such attorneys, accountants,
and other professionals or agents or attorneys-in-fact selected by the Agent
with reasonable care. No such attorney, accountant, other professional, agent,
or attorney-in-fact shall be responsible for any action taken or omitted to be
taken by any other such Person.
(b) Neither the Agent, nor any of its directors, officers,
or employees shall be responsible for any action taken or omitted to be taken or
omitted to be taken by any other of them in connection herewith in reliance
upon advice of its counsel nor, in any other event except for any action
taken or omitted to be taken as to which a final judicial determination has
been or is made (in a proceeding in which such Person has had an opportunity to
be heard) that such Person had acted in a grossly negligent manner, in actual
bad faith, or in willful misconduct.
(c) The Agent shall not have any responsibility in any
event for more funds than the Agent actually receives and collects.
(d) The Agent, in its separate capacity as a Revolving
Credit Lender, shall have the same rights and powers hereunder as any other
Revolving Credit Lender.
143 -CONCERNING DISTRIBUTIONS BY THE AGENT
(a) The Agent in the Agent's reasonable discretion based
upon the Agent's determination of the likelihood that additional payments
will be received, expenses incurred, and/or claims made by third parties to
all or a portion of such proceeds, may delay the distribution of any payment
received on account of the Liabilities.
(b) The Agent may disburse funds prior to determining that
the sums which the Agent expects to receive have been finally and
unconditionally paid to the Agent. If and to the extent that the Agent does
disburse funds and it later becomes apparent that the Agent did not then
receive a payment in an amount equal to the sum paid out, then any Revolving
Credit Lender to whom the Agent made the funds available, on demand from the
Agent, shall refund to the Agent the sum paid to that person.
(c) If, in the reasonable opinion of the Agent, the
distribution of any amount received by the Agent might involve the Agent in
liability, or might be prohibited hereby, or might be questioned by any Person,
then the Agent may refrain from making distribution until the Agent's right to
make distribution has been adjudicated by a court of competent jurisdiction.
(d) The proceeds of any Revolving Credit Lender's exercise
of any right of, or in the nature of, set-off shall be deemed, First, to the
extent that a Revolving Credit Lender is entitled to any distribution
hereunder, to constitute such distribution and Second, shall be shared
with the other Revolving Credit Lenders as if distributed pursuant to (and
shall be deemed as distributions under) Section 13:13-7.
(e) Each Revolving Credit Lender recognizes that the
crediting of the Borrowers with the "proceeds" of any transaction in which
a Post Foreclosure Asset is acquired is a non-cash transaction and that, in
consequence, no distribution of such "proceeds" will be made by the Agent to any
Revolving Credit Lender.
(f) In the event that (x) a court of competent jurisdiction
shall adjudge that any amount received and distributed by the Agent is to be
repaid or disgorged or (y) the SuperMajority Lenders determine to effect such
repayment or disgorgement, then each Revolving Credit Lender to which any such
distribution shall have been made shall repay, to the Agent which had made such
distribution, that Revolving Credit Lender's Pro-Rata share of the amount
so adjudged or determined to be repaid or disgorged.
144 -DISPUTE RESOLUTION: Any dispute among the Revolving Credit
Lenders and/or the Agent concerning the interpretation, administration, or
enforcement of the financing arrangements contemplated by this or any other
Loan Document or the interpretation or administration of this or any other Loan
Document which cannot be resolved amicably shall be resolved in the United
States District Court for the District of Massachusetts, sitting in Boston or
in the Superior Court of Suffolk County, Massachusetts, to the jurisdiction
of which courts each Revolving Credit Lender hereto hereby submits.
145 -DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS The Agent will forward
to each Revolving Credit Lender, promptly after the Agent's receipt thereof, a
copy of each notice or other document furnished to the Agent pursuant to this
Agreement, including monthly, quarterly, and annual financial statements
received from the Lead Borrower pursuant to Article 5: of this Agreement,
other than any of the following:
(a) Routine communications associated with requests for
Revolving Credit Loans and/or the issuance of L/C's.
(b) Routine or nonmaterial communications.
(c) Any notice or document required by any of the Loan
Documents to be furnished to the Revolving Credit Lenders by the Lead Borrower.
(d) Any notice or document of which the Agent has knowledge
that such notice or document had been forwarded to the Revolving Credit Lenders
other than by the Agent.
146 -CONFIDENTIAL INFORMATION
(a) Each Revolving Credit Lender will maintain, as
confidential, all of the following:
(ii) Proprietary approaches, techniques, and
methods of analysis which are applied by the Agent in the
administration of the credit facility contemplated by this Agreement.
(iii) Proprietary forms and formats utilized by
the Agent in providing reports to the Revolving Credit Lenders
pursuant hereto, which forms or formats are not of general currency.
(a) Nothing included herein shall prohibit the disclosure
of any such information as may be required to be provided by judicial process or
by regulatory authorities having jurisdiction over any party to this Agreement.
147 -RELIANCE BY AGENT The Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex,
or facsimile) reasonably believed by the Agent to be genuine and correct and to
have been signed or sent by or on behalf of the proper person or persons, and
upon advice and statements of attorneys, accountants and other experts
selected by the Agent. As to any matters not expressly provided for in this
Agreement, any Loan Document, or in any other document referred to therein, the
Agent shall in all events be fully protected in acting, or in refraining from
acting, in accordance with the applicable Consent required by this Agreement.
Instructions given with the requisite Consent shall be binding on all Revolving
Credit Lenders.
148 -NON-RELIANCE ON AGENT AND OTHER REVOLVING CREDIT LENDERS
(a) Each Revolving Credit Lender represents to all other
Revolving Credit Lenders and to the Agent that such Revolving Credit Lender:
(ii) Independently and without reliance on any
representation or act by Agent or by any other Revolving Credit
Lender, and based on such documents and information as that Revolving
Credit Lender has deemed appropriate, has made such Revolving Credit
Lender's own appraisal of the financial condition and affairs of the
Borrowers and decision to enter into this Agreement.
(iii) Has relied upon that Revolving Credit
Lender's review of the Loan Documents by that Revolving Credit
Lender and by counsel to that Revolving Credit Lender as that
Revolving Credit Lender deemed appropriate under the circumstances.
(a) Each Revolving Credit Lender agrees that such
Revolving Credit Lender, independently and without reliance upon Agent or
any other Revolving Credit Lender, and based upon such documents and information
as such Revolving Credit Lender shall deem appropriate at the time, will
continue to make such Revolving Credit Lender's own appraisals of the financial
condition and affairs of the Borrowers when determining whether to take or not
to take any discretionary action under this Agreement.
(b) The Agent, in the discharge of that Agent's duties
hereunder, shall not be required to make inquiry of, or to inspect the
properties or books of, any Person.
(c) Except for notices, reports, and other documents and
information expressly required to be furnished to the Revolving Credit Lenders
by the Agent hereunder (as to which, see Section 14:14-5), the Agent shall
not have any affirmative duty or responsibility to provide any Lender with any
credit or other information concerning any Person, which information may come
into the possession of Agent or any Affiliate of the Agent.
(d) Each Revolving Credit Lender, at such Revolving Credit
Lender's request, shall have reasonable access to all nonprivileged documents
in the possession of the Agent, which documents relate to the Agent's
performance of its duties hereunder.
149 -INDEMNIFICATION Without limiting the liabilities of the Borrowers
under any this or any of the other Loan Documents, each Revolving Credit
Lender shall indemnify the Agent, Pro-Rata, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including
attorneys' reasonable fees and expenses and other out-of-pocket expenditures)
which may at any time be imposed on, incurred by, or asserted against the Agent
and in any way relating to or arising out of this Agreement or any other Loan
Document or any documents contemplated by or referred to therein or the
transactions contemplated thereby or the enforcement of any of terms hereof
or thereof or of any such other documents, provided, however, no Revolving
Credit Lender shall be liable for any of the foregoing to the extent that any of
the foregoing arises from any action taken or omitted to be taken by the
Agent as to which a final judicial determination has been or is made (in a
proceeding in which the Agent has had an opportunity to be heard) that the Agent
had acted in a grossly negligent manner, in actual bad faith, or in willful
misconduct.
1410 -RESIGNATION OF AGENT
(a) The Agent may resign at any time by giving 60 days prior
written notice thereof to the Revolving Credit Lenders. Upon receipt of any
such notice of resignation, the SuperMajority Lenders shall have the right
to appoint a successor to such Agent (and if no Event of Default has occurred
and is then continuing, with the consent of the Lead Borrower, not to be
unreasonably withheld and, in any event, deemed given by the Lead Borrower
if no written objection is provided by the Lead Borrower to the (resigning)
Agent within seven (7) Business Days notice of such proposed appointment).
If a successor Agent shall not have been so appointed and accepted such
appointment within 30 days after the giving of notice by the resigning Agent,
then the resigning Agent may appoint a successor Agent, which shall be a
financial institution having a combined capital and surplus in excess of $1
Billion. The consent of the Lead Borrower otherwise required by this Section
14:14-10(a) shall not be required if an Event of Default has occurred and is
then continuing.
(b) Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor shall thereupon succeed to,
and become vested with, all the rights, powers, privileges, and duties of
the (resigning) Agent so replaced, and the (resigning) Agent shall be discharged
from the (resigning) Agent's duties and obligations hereunder, other than on
account of any responsibility for any action taken or omitted to be taken by
the (resigning) Agent as to which a final judicial determination has been
or is made (in a proceeding in which the (resigning) Person has had an
opportunity to be heard) that such Person had acted in a grossly negligent
manner or in bad faith.
(c) After any retiring Agent's resignation, the provisions
of this Agreement and of all other Loan Documents shall continue in effect for
the retiring Person's benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Agent.
Article 15: - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:
151 -ADMINISTRATION OF CREDIT FACILITIES
(a) Except as otherwise specifically provided in this
Agreement, the Agent may take any action with respect to the credit facility
contemplated by the Loan Documents as the Agent determines to be appropriate,
provided, however, the Agent is not under any affirmative obligation to take any
action which it is not required by this Agreement or the Loan Documents
specifically to so take.
(b) Except as specifically provided in the following
Sections of this Agreement, whenever a Loan Document or this Agreement provides
that action may be taken or omitted to be taken in Agent's discretion, the
Agent shall have the sole right to take, or refrain from taking, such action
without, and notwithstanding, any vote of the Revolving Credit Lenders:
Actions Described in Section Type of Consent Required
---------------------------- ------------------------
15:15-2 Majority Lenders
15:15-3 SuperMajority Lenders
15:15-4 Certain Consent
15:15-5 Unanimous Consent
15:15-6 Consent of SwingLine Lender
15:15-7 Consent of the Agent
(c) The rights granted to the Revolving Credit Lenders
in those sections referenced in Section 15:15-1(b) shall not otherwise limit or
impair the Agent's exercise of its discretion under the Loan Documents.
152 - ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS Except as
otherwise provided in this Agreement, the Consent or direction of the Majority
Lenders is required for any amendment, waiver, or modification of any Loan
Document.
153 -ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS The
Consent or direction of the SuperMajority Lenders is required as follows:
(a) The Revolving Credit Lenders agree that any loan or
advance under the Revolving Credit which results in a Protective OverAdvance
may be made by the Agent in its discretion without the Consent of the Revolving
Credit Lenders and that each Revolving Credit Lender shall be bound thereby,
provided, however, the Consent or direction of the SuperMajority Lenders
is required to permit a Protective OverAdvance to be outstanding for more than
45 consecutive Business Days or more than twice in any twelve month period.
(b) If any Borrower is then InDefault, the SuperMajority
Lenders may direct the Agent to suspend the Revolving Credit (including the
making of any Protective OverAdvances), whereupon, as long as a Borrower is
InDefault, the only Revolving Credit Loans which may be made are either
(ii) Revolving Credit Loans made or undertaken in
the Agent's discretion to protect and preserve the interests of the
Revolving Credit Lenders; or
(iii) Revolving Credit Loans made with Consent of
the SuperMajority Lenders.
(a) If an Event of Default has occurred and not been
duly waived, the SuperMajority Lenders may:
(iv) Give the Agent an Acceleration Notice in
accordance with Section 13:13-1(b).
(v) Direct the Agent to increase the rate of
interest to the default rate of interest as provided in, and to
the extent permitted by, this Agreement.
154 - ACTION REQUIRING CERTAIN CONSENT The consent of the SwingLine
Lender and Revolving Credit Lenders (other than Delinquent Revolving Credit
Lenders) holding 66-2/3%% or more of the Loan Commitments of the Revolving
Credit Lenders (other than any Loan Commitments held by Delinquent Revolving
Credit Lenders) shall be required to increase the SwingLine Loan Ceiling.
155 -ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT None of the
following may take place except with Unanimous Consent:
(a) Any increase in any Revolving Credit Lender's Revolving
Credit Dollar Commitment or Revolving Credit Percentage Commitment (other
than by reason of the application of Section 15:15-10 (which deals with
NonConsenting Revolving Credit Lenders) or Section 16:16-1 (which deals with
assignments and participations)).
(b) Any decrease in any interest rate or fee payable to the
Revolving Credit Lenders on account of the Revolving Credit Loans.
(c) Any extension of the Maturity Date.
(d) Any forgiveness of all or any portion of any payment
Liability consisting of principal or interest under the Revolving Credit
or any fee which is distributable to the Revolving Credit Lenders.
(e) Any decrease in any interest rate or fee payable under
any of the Loan Documents (other than any Agent's Fee (for which the consent
of the Agent shall also be required)) and of any fee provided for by the Fee
Letter (which may be amended by written agreement between the Lead Borrower
on the one hand, and the Agent on the other).
(f) Any release of a material portion of the Collateral
not otherwise required or provided for in the Loan Documents or to facilitate
a Liquidation.
(g) Any amendment or waiver of the financial performance
covenants set forth on EXHIBIT 5:5-11(a).
(h) Any amendment of the definition of the terms "Borrowing
Base" or "Availability" or of any Definition of any component thereof, such
that more credit would be available to the Borrowers, based on the same assets,
as would have been available to the Borrowers immediately prior to such
amendment , it being understood, however, that:
(ii) The foregoing shall not limit the adjustment
by the Agent of any Reserve in the Agent's administration of the
Revolving Credit as otherwise permitted by this Agreement.
(iii) The foregoing shall not prevent the Agent,
in its administration of the Revolving Credit, from restoring any
component of Borrowing Base which had been lowered by the Agent back
to the value of such component, as stated in this Agreement or to an
intermediate value.
(a) Any release of any Person obligated on account of the
Liabilities.
(b) The making of any Revolving Credit Loan which, when
made, would be an OverLoan and is not a Protective OverAdvance, provided,
however,
(iv) no Consent shall be required in connection
with the making of any Revolving Credit Loan to "cover" any honoring
of a drawing under any L/C; and
(v) each Lender recognizes that subsequent to the
making of a Revolving Credit Loan which does not constitute a
Protective OverAdvance, the unpaid principal balance of the Loan
Account may exceed Borrowing Base on account of changed circumstances
beyond the control of the Agent (such as a drop in collateral value).
(a) The waiver of the obligation of the Borrowers to reduce
the unpaid principal balance of loans under the Revolving Credit to an amount
so that no OverLoan is outstanding (other than a Protective OverAdvance) or,
subject to the time limits included in Section 15:15-3(a) (which relates to
time and frequency limits on Protective OverAdvances), to eliminate an
Protective OverAdvance.
(b) Any amendment of this Article 15:.
(c) Amendment of any of the following Definitions:
"Appraised Inventory Liquidation Value"
"Appraised Inventory Percentage"
"Majority Lender"
"Protective OverAdvance"
"SuperMajority Lenders
"Unanimous Consent"
156 -ACTIONS REQUIRING SWINGLINE LENDER CONSENT No action, amendment,
or waiver of compliance with, any provision of the Loan Documents or of this
Agreement which affects the SwingLine Lender may be undertaken without the
Consent of the SwingLine Lender.
157 -ACTIONS REQUIRING AGENT'S CONSENT
(a) No action, amendment, or waiver of compliance with, any
provision of the Loan Documents or of this Agreement which affects the Agent in
its capacity as Agent may be undertaken without the written consent of the Agent
(b) No action referenced herein which affects the rights,
duties, obligations, or liabilities of the Agent shall be effective without the
written consent of the Agent.
158 -MISCELLANEOUS ACTIONS
(a) Notwithstanding any other provision of this Agreement,
no single Revolving Credit Lender independently may exercise any right of
action or enforcement against or with respect to any Borrower.
(b) The Agent shall be fully justified in failing or
refusing to take action under this Agreement or any Loan Document on behalf of
any Revolving Credit Lender unless the Agent shall first
(ii) receive such clear, unambiguous, written
instructions as the Agent deems appropriate; and
(iii) be indemnified to the Agent's satisfaction
by the Revolving Credit Lenders against any and all liability and
expense which may be incurred by the Agent by reason of taking or
continuing to take any such action, unless such action had been
grossly negligent, in willful misconduct, or in bad faith.
(a) The Agent may establish reasonable procedures for the
providing of direction and instructions from the Revolving Credit Lenders
to the Agent, including its reliance on multiple counterparts, facsimile
transmissions, and time limits within which such direction and instructions
must be received in order to be included in a determination of whether
the requisite Loan Commitments has provided its direction, Consent, or
instructions, provided that in no event shall the Agent shorten the time period
for Consent.
159 -ACTIONS REQUIRING LEAD BORROWER'S CONSENT
(a) Subject to Section 15:15-9(b) the provisions of this
Agreement which are included in the following Articles may be amended without
the consent of any Borrower, but only if the subject amendment relates to the
relationships of the Revolving Credit Lenders and the Agent inter se and
neither creates any additional nor augments any existing obligation on any
Borrower under any Loan Document nor relieves the Agent or any Revolving
Credit Lender from any commitment or undertaking to any Borrower.
Article Title of Article
------- ----------------
12: Revolving Credit Fundings and Distributions
13: Acceleration and Liquidation
14: The Agent
15: Action By Agents - Consents - Amendments - Waivers (other
than as provided in Section 15:15-9(b))
16: Assignments and Participations
(b) Subject to Section 15:15-9(c), the following provisions
of this Agreement may not be amended without the consent of the Lead Borrower:
Section Relates To
------- ----------
15:15-3 SuperMajority Lenders
15:15-5 Unanimous Consent
15:15-9 Actions Requiring Borrower's Consent
(c) The Lead Borrower's consent to the amendment of those
provisions referenced in Section 15:15-9(b) shall be deemed given unless
written objection is made, within Seven (7) Business Days following the
Agent's giving notice to the Borrower of the proposed amendment thereof,
provided that the Agent may rely on such passage of time as consent by the Lead
Borrower only if such written notice states that consent will be deemed
effective if no objection is received within such time period.
1510 -NONCONSENTING REVOLVING CREDIT LENDER
(a) In the event that a Revolving Credit Lender (in this
Section 15:15-10, a "NonConsenting Revolving Credit Lender") does not provide
its Consent to a proposal by the Agent to take action which requires consent
under this Article 15:, then one or more Revolving Credit Lenders who provided
Consent to such action may require the assignment, without recourse and in
accordance with the procedures outlined in Section 16:16-1, below, of the
NonConsenting Revolving Credit Lender's commitment hereunder on fifteen (15)
days written notice to the Agent and to the NonConsenting Revolving Credit
Lender.
(b) At the end of such fifteen (15) days, and provided that
the NonConsenting Revolving Credit Lender delivers the Revolving Credit Note
held by the NonConsenting Revolving Credit Lender to the Agent, the Revolving
Credit Lenders who have given such written notice shall Transfer the following
to the NonConsenting Revolving Credit Lender:
(ii) Such NonConsenting Revolving Credit Lender's
Pro-Rata share of the principal and interest of the Revolving Credit
Loans to the date of such assignment.
(iii) All fees distributable hereunder to the
NonConsenting Revolving Credit Lender to the date of such assignment.
(iv) Any out-of-pocket costs and expenses for
which the NonConsenting Revolving Credit Lender is entitled to
reimbursement from the Borrowers.
(a) In the event that the NonConsenting Revolving Credit
Lender fails to deliver to the Agent the Revolving Credit Note held by the
NonConsenting Revolving Credit Lender as provided in Section 15:15-10(b), then:
(v) The amount otherwise to be Transferred to the
NonConsenting Revolving Credit Lender shall be Transferred to the
Agent and held by the Agent, without interest, to be turned over to
the NonConsenting Revolving Credit Lender upon delivery of the
Revolving Credit Note held by that NonConsenting Revolving Credit
Lender.
(vi) The Revolving Credit Note held by the
NonConsenting Revolving Credit Lender shall have no force or effect
whatsoever.
(vii) The NonConsenting Revolving Credit Lender
shall cease to be a "Revolving Credit Lender".
(viii) The Revolving Credit Lender(s) which have
Transferred the amount to the Agent as described above shall have
succeeded to all rights and become subject to all of the obligations
of the NonConsenting Revolving Credit Lender as "Revolving Credit
Lender".
(a) In the event that more than One (1) Revolving Credit
Lender wishes to require such assignment, the NonConsenting Revolving Credit
Lender's commitment hereunder shall be divided among such Revolving Credit
Lenders, pro-rata based upon their respective Revolving Credit Percentage
Commitments, with the Agent coordinating such transaction.
(b) The Agent shall coordinate the retirement of the
Revolving Credit Note held by the NonConsenting Revolving Credit Lender and
the issuance of Revolving Credit Notes to those Revolving Credit Lenders
which "take-out" such NonConsenting Revolving Credit Lender, provided,
however, no processing fee otherwise to be paid as provided in Section
16:16-2(b) shall be due under such circumstances.
1511 -REPLACEMENT OF DELINQUENT REVOLVING CREDIT LENDER
(a) In the event that a Delinquent Revolving Credit Lender
fails to cure its status as a Delinquent Revolving Credit Lender (as to
which, see Section 12:12-3(e)) within Thirty (30) days following its having
become a Delinquent Revolving Credit Lender, then, subject to, and in accordance
with the procedures outlined and referred to in this Section 15:15-11, the
Delinquent Revolving Credit Lender's commitment hereunder may be assigned
without recourse or consent of the Delinquent Revolving Credit Lender.
(b) Any one or more Revolving Credit Lenders which are not
Delinquent Revolving Credit Lenders may require such assignment by written
notice given to the Agent and the Lead Borrower, at any time during the fifteen
(15) day period which commences after the expiry of the thirty (30) days
referenced in Section 15:15-11(a).
(c) In the event that no Revolving Credit Lenders provide
its written notice prior to the expiry of the fifteen (15) days referenced in
Section 15:15-11(b), then the Agent may require such assignment to one or more
Eligible Assignees (subject to any consent of the Lead Borrower required by
Section 2:2-25(d)) by giving notice of its nomination of one or more
replacements for the Delinquent Revolving Credit Lender at any time during the
then next following fifteen (15) days.
(d) In the event that neither any Revolving Credit Lender
provides its written notice as provided in Section 15:15-11(b) nor the Agent
nominates a replacement for the Delinquent Revolving Credit Lender to which
the Lead Borrower consents, as provided in Section 15:15-11(c), then the Lead
Borrower, at any time thereafter may nominate a replacement for the Delinquent
Revolving Credit Lender by written notice to the Agent, provided that:
(ii) Such nominee is an Eligible Assignee.
(iii) The Agent shall have given its written
consent to such nomination, which consent shall not be unreasonably
withheld or delayed.
(a) Within fifteen (15) days following the designation (and
the consent, if applicable, of the Agent or of the Lead Borrower) or one or
more replacements for the Delinquent Revolving Credit Lender, those
replacements shall Transfer to the Agent, the aggregate of the Delinquent
Revolving Credit Lender's Pro-Rata share of the principal and interest of the
Revolving Credit Loans to the date of such assignment.
(b) Following the Agent's receipt of the aggregate described
in Section 15:15-11(e), the Agent shall Transfer such aggregate to the
Delinquent Revolving Credit Lender, net of the amounts set forth below (which
shall be distributed to, and retained by, the Agent), but only if the Delinquent
Revolving Credit Lender delivers the Revolving Credit Note held by the
Delinquent Revolving Credit Lender:
(iv) The Agent's Cover (to the extent not
previously repaid by the Borrower and retained by the Agent in
accordance with Subsection 12:12-3(c)(iv), above) with respect to that
Delinquent Revolving Credit Lender.
Plus
(v) The aggregate of the amount payable under
Subsection 12:12-3(c)(iii), above (which relates to interest to be
paid by that Delinquent Revolving Credit Lender).
Plus
(vi) All such costs and expenses as may be
incurred by the Agent in the enforcement of the Agent's rights against
such Delinquent Revolving Credit Lender.
The Delinquent Revolving Credit Lender shall remain liable for any deficiency
remaining after the above application.
(a) In the event that the Delinquent Revolving Credit
Lender fails to deliver to the Agent the Revolving Credit Note held by the
Delinquent Revolving Credit Lender,
(vii) The amount otherwise to be Transferred to
the Delinquent Revolving Credit Lender shall be Transferred to the
Agent and held by the Agent, without interest, to be turned over to
the Delinquent Revolving Credit Lender upon delivery of the Revolving
Credit Note held by that Delinquent Revolving Credit Lender.
(viii) The Revolving Credit Note held by the
Delinquent Revolving Credit Lender shall have no force or effect
whatsoever.
(ix) The Delinquent Revolving Credit Lender shall
cease to be a "Revolving Credit Lender". (a) Immediately upon its
(or their) transfer of the aggregate referred to in Section
15:15-11(e), the Persons who have made such Transfer(s) shall have
succeeded to all rights and become subject to all of the obligations
of the Delinquent Revolving Credit Lender as "Revolving Credit
Lender".
(b) The Agent shall coordinate the retirement of the
Revolving Credit Note held by the Delinquent Revolving Credit Lender and the
issuance of Revolving Credit Notes to those Persons who have become Revolving
Credit Lenders pursuant to this Section 15:15-11, provided, however, no
processing fee otherwise to be paid as provided in Section 16:16-2(b)
shall be due under such circumstances.
Article 16: -ASSIGNMENTS BY REVOLVING CREDIT LENDERS:
161 -ASSIGNMENTS AND ASSUMPTIONS:
(a) Except as provided herein, each Revolving Credit Lender
(in this Section 16:16-1(a), an "Assigning Revolving Credit Lender") may assign
to one or more Eligible Assignees (in this Section 16:16-1(a), each an
"Assignee Revolving Credit Lender") all or a portion of that Revolving Credit
Lender's interests, rights and obligations under this Agreement and the Loan
Documents (including all or a portion of its Commitment) and the same portion of
the Revolving Credit Loans at the time owing to it, and of the Revolving
Credit Note held by the Assigning Revolving Credit Lender, provided that:
(ii) The Agent shall have given its prior written
consent to such assignment, which consent shall not be unreasonably
withheld, but need not be given if the proposed assignment would
result in any resulting Revolving Credit Lender's having a Dollar
Commitment of less than the "minimum hold" amount specified in Section
16:16-1(a)(iii) or if there would be more than Eight (8) Revolving
Credit Lenders. (For provisions which deal with any required consent
of the Borrowers to such assignment, see Section 2:2-25(d)).
(iii) Each such assignment shall be of a constant,
and not a varying, percentage of all the Assigning Revolving Credit
Lender's rights and obligations under this Agreement.
(iv) Following the effectiveness of such
assignment, the Assigning Revolving Credit Lender's Dollar Commitment
(if not an assignment of all of the Assigning Revolving Credit
Lender's Commitment) shall not be less than $10,000,000.00.
162 -ASSIGNMENT PROCEDURES. (This Section 16:16-2 describes the
procedures to be followed in connection with an assignment effected pursuant to
this Article 16: and permitted by Section 16:16-1).
(a) The parties to such an assignment shall execute and
deliver to the Agent, for recording in the Register, an Assignment and
Acceptance substantially in the form of EXHIBIT 16:16-1, annexed hereto.
(b) The Assigning Revolving Credit Lender shall deliver
to the Agent, with such Assignment and Acceptance, the Revolving Credit Note
held by the subject Assigning Revolving Credit Lender and the Agent's processing
fee of $3,500.00, provided, however, no such processing fee shall be due
where the Assigning Revolving Credit Lender is one of the Revolving Credit
Lenders at the initial execution of this Agreement.
(c) The Agent shall maintain a copy of each Assignment
and Acceptance delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Revolving Credit Lenders
and of the Revolving Credit Percentage Commitment and Revolving Credit
Percentage Commitment of each Revolving Credit Lender. The Register shall be
available for inspection by the Revolving Credit Lenders and by the Lead
Borrower at any reasonable time and from time to time upon reasonable prior
notice. In the absence of manifest error, the entries in the Register shall be
conclusive and binding on all Revolving Credit Lenders. The Agent and the
Revolving Credit Lenders may treat each Person whose name is recorded in the
Register as a "Revolving Credit Lender" hereunder for all purposes of this
Agreement.
(d) The Assigning Revolving Credit Lender and Assignee
Revolving Credit Lender, directly between themselves, shall make all
appropriate adjustments in payments for periods prior to the effective date of
an Assignment and Assumption.
163 -EFFECT OF ASSIGNMENT.
(a) From and after the effective date specified in an
Assignment and Acceptance which has been executed, delivered, and recorded
(which effective date the Agent may delay by up to Five (5) Business Days after
the delivery of such Assignment and Acceptance):
(ii) The Assignee Revolving Credit Lender:
(B) Shall be a party to this Agreement
and the Loan Documents (and to any amendments thereof) as
fully as if the Assignee Revolving Credit Lender had
executed each.
(C) Shall have the rights of a Revolving
Credit Lender hereunder to the extent of the Revolving
Credit Percentage Commitment and Revolving Credit Percentage
Commitment assigned by such Assignment and Acceptance.
(i) The Assigning Revolving Credit Lender shall be
released from the Assigning Revolving Credit Lender's obligations
under this Agreement and the Loan Documents to the extent of the
Commitment assigned by such Assignment and Acceptance.
(ii) The Agent shall undertake to obtain and
distribute replacement Revolving Credit Notes to the subject
Assigning Revolving Credit Lender and Assignee Revolving Credit
Lender.
(a) By executing and delivering an Assignment and
Acceptance, the parties thereto confirm to and agree with each other and with
all parties to this Agreement as to those matters which are set forth in the
subject Assignment and Acceptance.
Article 17: - NOTICES:
171 -NOTICE ADDRESSES. All notices, demands, and other communications
made in respect of any Loan Document (other than a request for a loan or
advance or other financial accommodation under the Revolving Credit) shall be
made to the following addresses, each of which may be changed upon seven (7)
days written notice to all others given by certified mail, return receipt
requested:
If to the Agent:
Fleet Retail Finance Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention :
Fax :
With a copy to:
Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxxxxx X. Xxxxxx,
Esquire
Fax : 000 000 0000
If to the Lead Borrower
And All Borrowers:
HomeBase, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention : Xxxxxx Xxxxx
Fax : 000 000 0000
With a copy to:
HomeBase, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention : Xxxx Xxxxx
Vice President and
General Counsel
Fax : 000 000 0000
172 -NOTICE GIVEN.
(a) Except as otherwise specifically provided herein,
notices shall be deemed made and correspondence received, as follows (all times
being local to the place of delivery or receipt):
(ii) By mail: the sooner of when actually
received or Three (3) days following deposit in the United States mail
as certified mail, return receipt requested, postage prepaid.
(iii) By recognized overnight express delivery:
the Business Day following the day when sent.
(iv) By Hand: If delivered on a Business Day after
9:00 AM and no later than Three (3) hours prior to the close of
customary business hours of the recipient, when delivered. Otherwise,
at the opening of the then next Business Day.
(v) By Facsimile transmission (which must include
a header on which the party sending such transmission is indicated):
If sent on a Business Day after 9:00 AM and no later than Three (3)
hours prior to the close of customary business hours of the
recipient, one (1) hour after being sent. Otherwise, at the opening
of the then next Business Day. (a) Rejection or refusal to accept
delivery and inability to deliver because of a changed address or
Facsimile Number for which no due notice was given shall each be
deemed receipt of the notice sent.
Article 18: - TERM:
181 -TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section 2:2-7(g) hereof)
until the Termination Date.
182 -ACTIONS ON TERMINATION.
(a) On the Termination Date, the Borrowers shall pay the
Agent (whether or not then due), in immediately available funds, all then
Liabilities including, without limitation: the following:
(ii) The entire balance of the Loan Account
(including the unpaid principal balance of the Revolving Credit Loans,
and the SwingLine Loan ).
(iii) Any then remaining installments of the
Revolving Credit Commitment Fee.
(iv) Any then remaining installments of the
Agent's Fee.
(v) Any payments due on account of the
indemnification obligations included in Section 2:2-12(e).
(vi) Any accrued and unpaid Unused Line Fee.
(vii) All unreimbursed costs and expenses of the
Agent and of Lenders' Special Counsel for which each Borrower is
responsible.
(a) On the Termination Date, the Borrowers shall also shall
make such arrangements concerning any L/C's then outstanding as are reasonably
satisfactory to the Agent.
(b) Until such payment (Section 18:18-2(a)) and arrangements
concerning L/C's (Section 18:18-2(b)), all provisions of this Agreement, other
than those included in Article 2: which place any obligation on the Agent or
any Revolving Credit Lender to make any loans or advances or to provide any
financial accommodations to any Borrower shall remain in full force and effect
until all Liabilities shall have been paid in full.
(c) The release by the Agent of the Collateral Interests
granted the Agent by the Borrowers hereunder may be upon such conditions and
indemnifications as the Agent may require.
Article 19: - GENERAL:
191 -PROTECTION OF COLLATERAL. The Agent has no duty as to the
collection or protection of the Collateral beyond the safe custody of such of
the Collateral as may come into the possession of the Agent.
192 -PUBLICITY. The Agent may issue a "tombstone" notice of the
establishment of the credit facility contemplated by this Agreement and may
make reference to each Borrower (and may utilize any logo or other distinctive
symbol associated with each Borrower) in connection with any advertising,
promotion, or marketing undertaken by the Agent.
193 -SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Borrowers and their respective representatives, successors, and assigns and
shall enure to the benefit of the Agent and each Revolving Credit Lender and
their respective successors and assigns, provided, however, no trustee or
other fiduciary appointed with respect to any Borrower shall have any rights
hereunder. In the event that the Agent or any Revolving Credit Lender assigns
or transfers its rights under this Agreement, the assignee shall thereupon
succeed to and become vested with all rights, powers, privileges, and duties
of such assignor hereunder and such assignor shall thereupon be discharged and
relieved from its duties and obligations hereunder.
194 -SEVERABILITY. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.
195 -AMENDMENTS. COURSE OF DEALING.
(a) This Agreement and the other Loan Documents incorporate
all discussions and negotiations between each Borrower and the Agent and each
Revolving Credit Lender, either express or implied, concerning the matters
included herein and in such other instruments, any custom, usage, or course of
dealings to the contrary notwithstanding. No such discussions, negotiations,
custom, usage, or course of dealings shall limit, modify, or otherwise affect
the provisions thereof. No failure by the Agent or any Revolving Credit Lender
to give notice to the Lead Borrower of any Borrower's having failed to observe
and comply with any warranty or covenant included in any Loan Document shall
constitute a waiver of such warranty or covenant or the amendment of the subject
Loan Document. No change made by the Agent to the manner by which Borrowing
Base is determined shall obligate the Agent to continue to determine Borrowing
Base in that manner.
(b) Each Borrower may undertake any action otherwise
prohibited hereby, and may omit to take any action otherwise required hereby,
upon and with the express prior written consent of the Agent. Subject to Article
15:, no consent, modification, amendment, or waiver of any provision of any
Loan Document shall be effective unless executed in writing by or on behalf of
the party to be charged with such modification, amendment, or waiver (and if
such party is the Agent then by a duly authorized officer thereof). Any
modification, amendment, or waiver provided by the Agent shall be in
reliance upon all representations and warranties theretofore made to the
Agent by or on behalf of the Borrowers (and any guarantor, endorser, or surety
of the Liabilities) and consequently may be rescinded in the event that any of
such representations or warranties was not true and complete in all material
respects when given.
196 -POWER OF ATTORNEY. In connection with all powers of attorney
included in this Agreement, each Borrower hereby grants unto the Agent (acting
through any of its officers) full power to do any and all things necessary or
appropriate in connection with the exercise of such powers as fully and
effectually as that Borrower might or could do, hereby ratifying all that said
attorney shall do or cause to be done by virtue of this Agreement. No power of
attorney set forth in this Agreement shall be affected by any disability or
incapacity suffered by any Borrower and each shall survive the same. All powers
conferred upon the Agent by this Agreement, being coupled with an interest,
shall be irrevocable until this Agreement is terminated by a written instrument
executed by a duly authorized officer of the Agent.
197 -APPLICATION OF PROCEEDS. The proceeds of any collection,
sale, or disposition of the Collateral by or on behalf of the Agent or of
any other payments received hereunder by or on behalf of the Agent, shall be
applied by the Agent towards the Liabilities in such order and manner as the
Agent determines in its sole discretion, consistent, however, with Sections
13:13-6 and 13:13-7 and any other applicable provisions of this Agreement. The
Borrowers shall remain liable for any deficiency remaining following such
application.
198 -INCREASED COSTS. If, as a result of the adoption of any change
to any Requirement of Law, or of the interpretation or application thereof by
any court or by any governmental or other authority or entity charged
with the administration thereof, whether or not having the force of law,
which:
(a) subjects any Revolving Credit Lender to any taxes or
changes the basis of taxation, or increases any existing taxes, on payments of
principal, interest or other amounts payable by any Borrower to the Agent or
any Revolving Credit Lender under this Agreement (except for taxes on the
Agent or any Revolving Credit Lender based on net income or capital imposed
by the jurisdiction in which the principal or lending offices of the Agent or
that Revolving Credit Lender are located);
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held by, or
deposits in or for the account of or loans by or any other acquisition of funds
by the relevant funding office of any Revolving Credit Lender (other than
reserves and assessments taken into account in the determination of the interest
rate applicable to Eurodollar Loans);
(c) imposes on any Revolving Credit Lender any other
condition with respect to any Loan Document; or
(d) imposes on any Revolving Credit Lender a requirement
to maintain or allocate capital in relation to the Liabilities; and the result
of any of the foregoing, in such Revolving Credit Lender's reasonable opinion,
is to increase the cost to that Revolving Credit Lender of making or maintaining
any loan, advance or financial accommodation or to reduce the income receivable
by that Revolving Credit Lender in respect of any loan, advance or financial
accommodation by an amount which that Revolving Credit Lender deems to be
material, then upon written notice from the Agent, from time to time, to the
Lead Borrower (such notice to set out in reasonable detail the facts giving
rise to and a summary calculation of such increased cost or reduced income),
the Borrowers shall pay to the Agent for the benefit of the subject Revolving
Credit Lender within fifteen (15) days of receipt of such notice, that amount
which shall compensate the subject Revolving Credit Lender for such additional
cost or reduction in income , provided, however, no Borrower shall be liable
for any such increased expense incurred or reduction in amount received by a
Revolving Credit Lender where such notice is not given to the Lead Borrower
within 120 days following that date on which the subject Revolving Credit Lender
knew or reasonably should have known of such effect.
199 -COSTS AND EXPENSES OF THE AGENT .
(a) The Borrowers shall pay from time to time on demand all
Costs of Collection and all reasonable costs, expenses, and disbursements
(including attorneys' reasonable fees and expenses) which are incurred by the
Agent in connection with the preparation, negotiation, execution, and delivery
of this Agreement and of any other Loan Documents, and all other reasonable
costs, expenses, and disbursements which may be incurred by the Agent in
connection with or in respect to the credit facility contemplated hereby or
which otherwise are incurred with respect to the Liabilities. The Borrowers
shall not have any responsibility to reimburse any Person on account of costs,
expenses, and disbursements (including attorneys' fees and expenses) incurred
or paid on account of a dispute solely amongst and between the Agent and the
Revolving Credit Lenders.
(b) The Borrowers shall pay from time to time on demand all
reasonable costs and expenses (including attorneys' reasonable fees and
expenses) incurred, following the occurrence of any Event of Default, by the
Revolving Credit Lenders to Lenders' Special Counsel.
(c) Each Borrower authorizes the Agent, on fifteen (15)
days prior notice with reasonable particularity to the Lead Borrower, to pay
all such fees and expenses and in the Agent's discretion, to add such fees and
expenses to the Loan Account.
(d) The undertaking on the part of each Borrower in this
Section 19:19-9 shall survive payment of the Liabilities and/or any
termination, release, or discharge executed by the Agent in favor of any
Borrower, other than a termination, release, or discharge which makes specific
reference to this Section 19:19-9.
1910 -COPIES AND FACSIMILES. Each Loan Document and all documents
and papers which relates thereto which have been or may be hereinafter furnished
the Agent or any Revolving Credit Lender may be reproduced by that Revolving
Credit Lender or by the Agent by any photographic, microfilm, xerographic,
digital imaging, or other process, and such Person making such reproduction may
destroy any document so reproduced. Any such reproduction shall be admissible
in evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business). Any facsimile which
bears proof of transmission shall be binding on the party which or on whose
behalf such transmission was initiated and likewise shall be so admissible in
evidence as if the original of such facsimile had been delivered to the party
which or on whose behalf such transmission was received.
1911 -MASSACHUSETTS LAW. This Agreement and all rights and
obligations hereunder, including matters of construction, validity, and
performance, shall be governed by the law of The Commonwealth of Massachusetts.
1912 -CONSENT TO JURISDICTION.
(a) Each Borrower agrees that any legal action, proceeding,
case, or controversy against any Borrower with respect to any Loan Document
may be brought in the Superior Court of Suffolk County Massachusetts or in the
United States District Court, District of Massachusetts, sitting in Boston,
Massachusetts, as the Agent may elect in the Agent's sole discretion. By
execution and delivery of this Agreement, each Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.
(b) Each Borrower WAIVES any objection based on forum non
conveniens and any objection to venue of any action or proceeding instituted
under any of the Loan Documents and consents to the granting of such legal or
equitable remedy as is deemed appropriate by the Court.
(c) Nothing herein shall affect the right of the Agent to
bring legal actions or proceedings in any other competent jurisdiction.
(d) Each Borrower agrees that any action commenced by any
Borrower asserting any claim arising under or in connection with this
Agreement or any other Loan Document shall be brought solely in the Superior
Court of Suffolk County Massachusetts or in the United States District Court,
District of Massachusetts, sitting in Boston, Massachusetts, and that such
Courts shall have exclusive jurisdiction with respect to any such action.
1913 -INDEMNIFICATION. Each Borrower shall indemnify, defend, and hold
the Agent and each Revolving Credit Lender and their respective employees,
officers, or agents (each, an "Indemnified Person") harmless of and from any
claim brought or threatened against any Indemnified Person by any Person (as
well as from attorneys' reasonable fees, expenses, and disbursements in
connection therewith) on account of the relationship of any Borrower or of any
other guarantor or endorser of the Liabilities (each of claims which may be
defended, compromised, settled, or pursued by the Indemnified Person with
counsel of the Lender's selection, but at the expense of the Borrowers) other
than any claim as to which a final determination is made in a judicial
proceeding (in which the Agent and any other Indemnified Person has had an
opportunity to be heard), which determination includes a specific finding that
the Indemnified Person seeking indemnification had acted in a grossly negligent
manner or in actual bad faith. This indemnification shall survive payment of the
Liabilities and/or any termination, release, or discharge executed by the Agent
in favor of the Borrowers, other than a termination, release, or discharge duly
executed on behalf of the Agent which makes specific reference to this Section
19:19-13.
1914 -RULES OF CONSTRUCTION. The following rules of construction
shall be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:
(a) Unless otherwise specifically provided for herein,
interest and any fee or charge which is stated as a per annum percentage shall
be calculated based on a 365/366 day year and actual days elapsed.
(b) Any term used herein to describe Collateral or a Person,
which term is defined in either (or both) the UCC as in effect on the date when
this Agreement was executed by the Borrowers or in UCC9'99, shall be given the
meaning which is the more encompassing of the two definitions.
(c) Words in the singular include the plural and words in
the plural include the singular.
(d) Each warranty and representation made by any Borrower
which includes reference to an EXHIBIT is made as of the Restatement Date.
(e) Cross references to Sections in this Agreement begin
with the Article in which that Section appears, followed by a colon, and then
the Section to which reference is made. (For example, a reference to
"Section 5:5-6" is to Section 5-6, which appears in Article 5 of this
Agreement).
(f) Titles, headings (indicated by being underlined or shown
in SMALL CAPITALS) and any Table of Contents are solely for convenience
of reference; do not constitute a part of the instrument in which included; and
do not affect such instrument's meaning, construction, or effect.
(g) The words "includes" and "including" are not limiting.
(h) Text which follows the words "including, without
limitation" (or similar words) is illustrative and not limitational.
(i) Text which is shown in italics (except for
parenthesized italicized text), shown in bold, shown IN ALL CAPITAL LETTERS,
or in any combination of the foregoing, shall be deemed to be conspicuous.
(j) The words "may not" are prohibitive and not permissive.
(k) Any reference to a Person's "knowledge" (or words of
similar import) is to the knowledge of the Borrowers' respective Senior Officers
(l) Terms which are defined in one section of any Loan
Document are used with such definition throughout the instrument in which so
defined.
(m) The symbol "$" refers to United States Dollars.
(n) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the entire
Loan Document in which such reference is made.
(o) References to "this Agreement" or to any other Loan
Document is to the subject instrument as amended to the date on which
application of such reference is being made.
(p) Except as otherwise specifically provided, all
references to time are to Boston time.
(q) In the determination of any notice, grace, or other
period of time prescribed or allowed hereunder:
(ii) Unless otherwise provided (I) the day of the
act, event, or default from which the designated period of time begins
to run shall not be included and the last day of the period so
computed shall be included unless such last day is not a Business
Day, in which event the last day of the relevant period shall be the
then next Business Day and (II) the period so computed shall end at
5:00 PM on the relevant Business Day.
(iii) The word "from" means "from and including".
(iv) The words "to" and "until" each mean "to, but
excluding".
(v) The word "through" means "to and including".
(a) The Loan Documents shall be construed and interpreted in
a harmonious manner and in keeping with the intentions set forth in Section
19:19-15 hereof, provided, however, in the event of any inconsistency between
the provisions of this Agreement and any other Loan Document, the provisions
of this Agreement shall govern and control.
1915 -INTENT. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of all Collateral Interests created by any
Borrower to secure the Liabilities be broadly construed in favor of the Agent
and that, subject to any applicable Collateral Interest Restrictions, they
cover all assets of each Borrower.
(c) All Collateral Interests created in favor of the Agent
at any time and from time to time secure all Liabilities, whether now
existing or contemplated or hereafter arising. (d) All reasonable costs,
expenses, and disbursements incurred by the Agent and, to the extent provide
in Section 19:19-9 each Revolving Credit Lender, in connection with such
Person's relationship(s) with any Borrower shall be borne by the Borrowers.
1916 -PARTICIPATIONS: Each Revolving Credit Lender may sell
participations to one or more financial institutions (each, a "Participant")
all or a portion of such Revolving Credit Lender's rights and obligations
under this Agreement, provided that no such participation shall include any
provision which accords the Person purchasing such participation with the
right, vis a vis the Agent, to consent to any action, amendment, or waiver which
is subject to any requirement herein for approval by all or a requisite number
or proportion of the Revolving Credit Lenders. No such sale of a participation
shall relieve a Revolving Credit Lender from that Revolving Credit Lender's
obligations hereunder nor obligate the Agent to any Person other than a
Revolving Credit Lender.
1917 -RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to any Borrower from the Agent or any Revolving Credit Lender
or any Participant or from any Affiliate of any of the foregoing, and any cash,
securities, instruments or other property of any Borrower in the possession of
any of the foregoing, whether for safekeeping or otherwise (regardless of the
reason such Person had received the same) shall at all times constitute security
for all Liabilities and for any and all obligations of each Borrower to the
Agent and such Revolving Credit Lender or any Participant or such Affiliate and
may be applied or set off against the Liabilities and against such obligations
at any time, whether or not such are then due and whether or not other
collateral is then available to the Agent or that Revolving Credit Lender.
1918 -PLEDGES TO FEDERAL RESERVE BANKS: Nothing included in this
Agreement shall prevent or limit any Revolving Credit Lender, to the extent that
such Revolving Credit Lender is subject to any of the twelve Federal Reserve
Banks organized under ss.4 of the Federal Reserve Act (12 U.S.C. ss.341) from
pledging all or any portion of that Lender's interest and rights under this
Agreement, provided, however, neither such pledge nor the enforcement thereof
shall release the pledging Revolving Credit Lender from any of its obligations
hereunder or under any of the Loan Documents.
1919 -MAXIMUM INTEREST RATE. Regardless of any provision of any Loan
Document, neither the Agent nor any Revolving Credit Lender shall be entitled to
contract for, charge, receive, collect, or apply as interest on any Liability,
any amount in excess of the maximum rate imposed by Applicable Law. Any payment
which is made which, if treated as interest on a Liability would result in such
interest's exceeding such maximum rate shall be held, to the extent of such
excess, as additional collateral for the Liabilities as if such excess were
"Collateral."
1920 -WAIVERS.
(a) Each Borrower (and all guarantors, endorsers, and
sureties of the Liabilities) makes each of the waivers included in Section
19:19-20(b), below, knowingly, voluntarily, and intentionally, and understands
that Agent and each Revolving Credit Lender, in establishing the facilities
contemplated hereby and in providing loans and other financial accommodations
to or for the account of the Borrowers as provided herein, whether now or in
the future, is relying on such waivers.
(b) EACH BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND
SURETY RESPECTIVELY WAIVES THE FOLLOWING:
(ii) Except as otherwise specifically required
hereby, notice of non-payment, demand, presentment, protest and all
forms of demand and notice, both with respect to the Liabilities
and the Collateral.
(iii) Except as otherwise specifically required
hereby, the right to notice and/or hearing prior to the Agent's exercising of
the Agent's rights upon default.
(iv) THE RIGHT TO A JURY IN ANY TRIAL OF ANY
CASE OR CONTROVERSY IN WHICH THE AGENT OR ANY REVOLVING CREDIT LENDER IS OR
BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE
AGENT OR ANY REVOLVING CREDIT LENDER OR IN WHICH THE AGENT OR ANY REVOLVING
CREDIT LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES
OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN ANY BORROWER OR
ANY OTHER PERSON AND THE AGENT AND EACH REVOLVING CREDIT LENDER LIKEWISE WAIVES
THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH CASE OR CONTROVERSY).
(v) The benefits or availability of any stay,
limitation, hindrance, delay, or restriction (including, without
limitation, any automatic stay which otherwise might be imposed
pursuant to Section 362 of the Bankruptcy Code) with respect to any
action which the Agent may or may become entitled to take hereunder.
(vi) Any defense, counterclaim, set-off,
recoupment, or other basis on which the amount of any Liability, as
stated on the books and records of the Agent, could be reduced or
claimed to be paid otherwise than in accordance with the tenor of
and written terms of such Liability.
(vii) Any claim to consequential, special, or
punitive damages.
The "Lead Borrower and the Borrowers"
HOMEBASE, INC.
(The "LEAD BORROWER" and a "BORROWER")
By_________________________________
Print Name:________________________________
Title:________________________________
HOMECLUB INC., OF TEXAS
By_________________________________
Print Name:________________________________
Title:________________________________
HOMECLUB, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
The "Agent":
FLEET RETAIL FINANCE INC.
By_________________________________
Print Name:________________________________
Title:________________________________
The "Revolving Credit Lenders"
FLEET RETAIL FINANCE INC.
By_________________________________
Print Name:________________________________
Title:________________________________
THE CIT GROUP / BUSINESS CREDIT, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
FOOTHILL CAPITAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
GMAC BUSINESS CREDIT LLC
By_________________________________
Print Name:________________________________
Title:________________________________
GMAC COMMERCIAL CREDIT LLC
By_________________________________
Print Name:________________________________
Title:________________________________
LASALLE BUSINESS CREDIT, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
NATIONAL CITY COMMERCIAL FINANCE, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
PROVIDENT BANK
By_________________________________
Print Name:________________________________
Title:________________________________
TEXTRON FINANCIAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
GENERAL ELECTRIC CAPITAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
