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LOAN AND SECURITY AGREEMENT
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FLEET RETAIL FINANCE INC.
AGENT FOR
THE LENDERS REFERENCED HEREIN
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XXXXXX FINANCIAL, INC.
CO-AGENT AND DOCUMENTATION AGENT
PHAR-MOR, INC.
THE LEAD BORROWER
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PHAR-MOR, INC.
PHAR-MOR, INC. LLC
PHAR-MOR OF DELAWARE, INC.
PHAR-MOR OF FLORIDA, INC.
PHAR-MOR OF OHIO, INC.
PHAR-MOR OF VIRGINIA, INC.
PHAR-MOR OF WISCONSIN, INC.
PHARMHOUSE CORP.
RX REALTY CORP.
THE BORROWERS
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Fleet Securities Inc.
THE SYNDICATION AGENT
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September 24, 2001
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TABLE OF CONTENTS
Article 1:- DEFINITIONS:.......................................................1
Article 2:- THE REVOLVING CREDIT:.............................................26
21- ESTABLISHMENT OF REVOLVING CREDIT.................................26
22- INITIAL RESERVES. CHANGES TO RESERVES.............................27
23- ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS)..................27
24- RISKS OF VALUE OF COLLATERAL......................................28
25- COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT
LETTERS OF CREDIT.............................................28
26- REVOLVING CREDIT LOAN REQUESTS....................................28
27- MAKING OF REVOLVING CREDIT LOANS..................................29
28- SWINGLINE LOANS...................................................30
29- THE LOAN ACCOUNT..................................................30
210- THE REVOLVING CREDIT NOTES.......................................31
211- PAYMENT OF THE LOAN ACCOUNT......................................32
212- INTEREST ON REVOLVING CREDIT LOANS...............................33
213- REVOLVING CREDIT COMMITMENT FEE..................................33
214- AGENT'S FEE......................................................33
215- UNUSED LINE FEE..................................................34
216- EARLY TERMINATION FEE............................................34
217- CONCERNING FEES..................................................34
218- AGENT'S AND REVOLVING CREDIT LENDERS' DISCRETION.................34
219- PROCEDURES FOR ISSUANCE OF L/C'S.................................35
220- FEES FOR L/C'S...................................................36
221- CONCERNING L/C'S.................................................37
222- CHANGED CIRCUMSTANCES............................................38
223- DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT.................39
224- LENDERS' COMMITMENTS.............................................40
225- REDUCTION OF REVOLVING CREDIT CEILING............................41
Article 3:- CONDITIONS PRECEDENT:.............................................41
31- CORPORATE DUE DILIGENCE...........................................41
32- OPINION...........................................................41
33- ADDITIONAL DOCUMENTS..............................................41
34- BORROWING ORDER...................................................41
35- REPRESENTATIONS AND WARRANTIES....................................42
36- CONSENTS AND APPROVALS............................................42
37- NO DEFAULTS UNDER APPLICABLE LAW OR MATERIAL AGREEMENTS...........42
38- NO LITIGATION.....................................................42
39- ALL FEES AND EXPENSES PAID........................................42
310- NO MATERIAL ADVERSE CHANGE.......................................42
311- MINIMUM DAY ONE EXCESS AVAILABILITY..............................42
312- BORROWER NOT IN DEFAULT..........................................42
313- PROJECTIONS......................................................42
314- OTHER INFORMATION................................................43
315- GOVERNMENT REGULATIONS...........................................43
316- 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.....................43
43- TRADE NAMES.......................................................44
44- INFRASTRUCTURE....................................................45
45- LOCATIONS.........................................................45
46- TITLE TO ASSETS...................................................46
47- INDEBTEDNESS......................................................46
48- INSURANCE.........................................................47
49- LICENSES..........................................................47
410- LEASES...........................................................48
411- REQUIREMENTS OF LAW..............................................48
412- LABOR RELATIONS..................................................48
413- MAINTAIN PROPERTIES..............................................49
414- TAXES............................................................49
415- NO MARGIN STOCK..................................................50
416- ERISA............................................................50
417- HAZARDOUS MATERIALS..............................................51
418- LITIGATION.......................................................51
419- DIVIDENDS. INVESTMENTS. CORPORATE ACTION.........................51
420- NEW BORROWERS....................................................52
421- LOANS............................................................53
422- PROTECTION OF ASSETS.............................................53
000- XXXX XX XXXXXXXX.................................................00
424- AFFILIATE TRANSACTIONS...........................................54
425- FURTHER ASSURANCES...............................................54
426- ADEQUACY OF DISCLOSURE...........................................55
427- NO RESTRICTIONS ON LIABILITIES...................................55
428- OTHER COVENANTS..................................................55
Article 5:- FINANCIAL REPORTING AND PERFORMANCE COVENANTS:....................55
51- MAINTAIN RECORDS..................................................55
52- ACCESS TO RECORDS.................................................56
53- IMMEDIATE NOTICE TO AGENT.........................................57
54- Borrowing Base Certificate........................................58
55- MONTHLY REPORTS...................................................58
56- QUARTERLY REPORTS.................................................58
57- ANNUAL REPORTS....................................................58
58- OFFICERS' CERTIFICATES............................................59
59- INVENTORIES, APPRAISALS, AND AUDITS...............................60
510- ADDITIONAL FINANCIAL INFORMATION.................................60
511- MINIMUM EXCESS AVAILABILITY......................................61
Article 6:- USE OF COLLATERAL:................................................62
61- USE OF INVENTORY COLLATERAL.......................................62
62- INVENTORY QUALITY.................................................62
63- ADJUSTMENTS AND ALLOWANCES........................................62
64- VALIDITY OF ACCOUNTS..............................................62
65- NOTIFICATION TO ACCOUNT DEBTORS...................................63
Article 7:- CASH MANAGEMENT. PAYMENT OF LIABILITIES:..........................63
71- DEPOSITORY ACCOUNTS...............................................63
72- CREDIT CARD RECEIPTS..............................................63
73- THE CONCENTRATION, BLOCKED, AND OPERATING ACCOUNTS................64
74- PROCEEDS AND COLLECTIONS..........................................64
75- PAYMENT OF LIABILITIES............................................65
76- THE OPERATING ACCOUNT.............................................66
Article 8:- GRANT OF SECURITY INTEREST:.......................................66
81- GRANT OF SECURITY INTEREST........................................66
82- EXTENT AND DURATION OF SECURITY INTEREST..........................67
Article 9:- AGENT AS BORROWER'S ATTORNEY-IN-FACT:.............................67
91- APPOINTMENT AS ATTORNEY-IN-FACT...................................67
92- NO OBLIGATION TO ACT..............................................68
Article 10:- EVENTS OF DEFAULT:...............................................68
101- FAILURE TO PAY THE REVOLVING CREDIT..............................68
102- FAILURE TO MAKE OTHER PAYMENTS...................................68
103- FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD).......68
104- Financial Reporting Requirements.................................68
105- FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD)..........69
106- MISREPRESENTATION................................................69
107- ACCELERATION OF OTHER DEBT. BREACH OF LEASE......................69
108- DEFAULT UNDER OTHER AGREEMENTS...................................69
109- UNINSURED CASUALTY LOSS..........................................69
1010- ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.....................69
1011- MODIFICATION OF BORROWING ORDER.................................70
1012- APPOINTMENT OF TRUSTEE OR EXAMINER..............................70
1013- CONVERSION OF PROCEEDINGS.......................................70
1014- RELIEF FROM STAY................................................70
1015- DEFAULT BY GUARANTOR............................................70
1016- INDICTMENT - FORFEITURE.........................................70
1017- TERMINATION OF GUARANTY.........................................70
1018- CHALLENGE TO LOAN DOCUMENTS.....................................71
1019- CHANGE IN CONTROL...............................................71
Article 11:- RIGHTS AND REMEDIES UPON DEFAULT:................................71
111- Acceleration.....................................................71
112- RIGHTS OF ENFORCEMENT............................................71
113- SALE OF COLLATERAL...............................................72
114- OCCUPATION OF BUSINESS LOCATION..................................72
115- GRANT OF NONEXCLUSIVE LICENSE....................................73
116- ASSEMBLY OF COLLATERAL...........................................73
117- RIGHTS AND REMEDIES..............................................73
Article 12:- REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:.....................73
121- REVOLVING CREDIT FUNDING PROCEDURES..............................73
122- SWINGLINE LOANS..................................................74
123- AGENT'S COVERING OF FUNDINGS:....................................74
124- ORDINARY COURSE DISTRIBUTIONS....................................76
Article 13:- ACCELERATION AND LIQUIDATION:....................................77
131- ACCELERATION NOTICES.............................................77
132- ACCELERATION.....................................................77
133- INITIATION OF LIQUIDATION........................................77
134- ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION...............78
135- AGENT'S CONDUCT OF LIQUIDATION...................................78
136- DISTRIBUTION OF LIQUIDATION PROCEEDS:............................78
137- RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION...................79
Article 14:- THE AGENT:.......................................................79
141- APPOINTMENT OF THE AGENT.........................................79
142- RESPONSIBILITIES OF AGENT........................................80
143- CONCERNING DISTRIBUTIONS BY THE AGENT............................81
144- DISPUTE RESOLUTION:..............................................81
145- DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS........................82
146- CONFIDENTIAL INFORMATION.........................................82
147- RELIANCE BY AGENT................................................82
148- NON-RELIANCE ON AGENT AND OTHER REVOLVING CREDIT LENDERS.........83
149- INDEMNIFICATION..................................................83
1410- RESIGNATION OF AGENT............................................84
Article 15:- ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:..............84
151- ADMINISTRATION OF CREDIT FACILITIES..............................84
152- ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS............85
153- ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS.......85
154- ACTION REQUIRING CERTAIN CONSENT.................................86
155- ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT...............86
156- ACTIONS REQUIRING SWINGLINE LENDER CONSENT.......................87
157- ACTIONS REQUIRING AGENT'S CONSENT................................87
158- MISCELLANEOUS ACTIONS............................................87
159- ACTIONS REQUIRING BORROWER'S CONSENT.............................88
1510- NONCONSENTING REVOLVING CREDIT LENDER...........................88
Article 16:- ASSIGNMENTS BY REVOLVING CREDIT LENDERS:.........................89
161- ASSIGNMENTS AND ASSUMPTIONS......................................89
162- ASSIGNMENT PROCEDURES............................................90
163- EFFECT OF ASSIGNMENT.............................................90
Article 17:- NOTICES:.........................................................91
171- NOTICE ADDRESSES.................................................91
172- NOTICE GIVEN.....................................................92
Article 18:- TERM:............................................................92
181- TERMINATION OF REVOLVING CREDIT..................................92
182- ACTIONS ON TERMINATION...........................................92
Article 19:- GENERAL:.........................................................93
191- PROTECTION OF COLLATERAL.........................................93
192- PUBLICITY........................................................93
193- SUCCESSORS AND ASSIGNS...........................................93
194- SEVERABILITY.....................................................93
195- AMENDMENTS. COURSE OF DEALING....................................93
196- POWER OF ATTORNEY................................................94
197- APPLICATION OF PROCEEDS..........................................94
198- INCREASED COSTS..................................................94
199- COSTS AND EXPENSES OF THE AGENT..................................95
1910- COPIES AND FACSIMILES...........................................95
1911- MASSACHUSETTS LAW...............................................96
1912- INDEMNIFICATION.................................................96
1913- RULES OF CONSTRUCTION...........................................96
1914- INTENT..........................................................98
1915- PARTICIPATIONS:.................................................98
1916- RIGHT OF SET-OFF................................................98
1917- PLEDGES TO FEDERAL RESERVE BANKS:...............................98
1918- MAXIMUM INTEREST RATE...........................................99
1919- EXECUTION IN COUNTERPARTS.......................................99
1920- WAIVERS.........................................................99
EXHIBITS
2:2-8(c) : SwingLine Note
2:2-10 : Revolving Credit Note
2:2-24 : Revolving Credit Lenders' Commitments
3:3-2 : Form of Opinion
3:3-14 : Additional Documents
4:4-2 : Corporate Information
4:4-3 : Trade Names
4:4-5 : Locations, Leases, and Landlords
4:4-6 : Encumbrances
4:4-6(c)(ii) : Equipment Usage Agreement
4:4-7 : Indebtedness
4:4-8 : Insurance Policies
4:4-10 : Capital Leases
4:4-12 : Labor Relations
4:4-14 : Taxes
4:4-16(a) : ERISA
4:4-17(a) : Hazardous Materials
4:4-18 : Litigation
5:5-4 : Borrowing Base Certificate
5:5-5 : Monthly Reports
7:7-1(a) : DDA's.
7:7-1(b)(ii) : Blocked Account Agreement
7:7-2 : Credit Card Arrangements
16:16-2 : Assignment and Acceptance
1
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LOAN AND SECURITY AGREEMENT
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September 24, 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 2:2-24, below;
and
The Revolving Credit Lenders;
and
Phar-Mor, Inc., debtor-in-possession, in such capacity, ( the "Lead
Borrower"), a Pennsylvania corporation with its principal executive offices
at 00 Xxxxxxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000, as agent for the
following (individually, a "Borrower" and collectively, the "Borrowers"):
Phar-Mor, Inc., a Pennsylvania corporation, debtor-in-possession,
Phar-Mor of Florida, Inc., a Pennsylvania corporation,
debtor-in-possession, Phar-Mor of Ohio, Inc., an Ohio corporation,
debtor-in-possession, Phar-Mor of Virginia, Inc., a Virginia
corporation, debtor-in-possession, Phar-Mor of Wisconsin, Inc., a
Wisconsin corporation, debtor-in-possession, Phar-Mor of Delaware,
Inc., a Delaware corporation, debtor-in-possession, Phar-Mor, Inc.
LLC, a Pennsylvania limited liability company, debtor-in-possession,
Pharmhouse Corp., a New York corporation, debtor-in-possession, and RX
Realty Corp., a New York corporation, debtor-in-possession,
in consideration of the mutual covenants contained herein and benefits to
be derived herefrom,
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:
"Acceleration": The making of demand or declaration that any
indebtedness, not otherwise due and payable, is due and
payable. Derivations of the word "Acceleration" (such as
"Accelerate") are used with like meaning in this Agreement.
2
"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; arising out of the
use of a credit or charge card or information contained on
or used with that card; 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": The following:
(a) 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.
(b) Any Person which: is a parent, brother-sister,
subsidiary, 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; or
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).
3
"Agent's Fee": Is defined in Section 2:2-14.
"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 jurisdiction over
such Person, or any property of such Person, or of any other
Person for whose conduct such Person would be responsible.
"Applicable Margin": The Base Margin Loans, Eurodollar Loans and
L/C Fees determined as of the date of this Agreement based
upon the following criteria:
|----|------------|-----------|----------|-----------|-----------|
|Tier|Availability|Base Margin|Eurodollar|Documentary|Standby L/C|
| | |Applicable |Applicable|L/C Fees |Fees |
| | |Margin |Margin | | |
|----|------------|-----------|----------|-----------|-----------|
|1 |In excess of| 0% | 2.25% | 1.75% | 2.25% |
| |$50,000,000 | | | | |
|----|------------|-----------|----------|-----------|-----------|
|2 |In excess of| .25% | 2.50% | 2.00% | 2.50% |
| |$20,000,000 | | | | |
| |but less | | | | |
| |than or | | | | |
| |equal to | | | | |
| |$50,000,000 | | | | |
|----|------------|-----------|----------|-----------|-----------|
|3 |Less than or| .50% | 2.75% | 2.25% | 2.75% |
| |equal to | | | | |
| |$20,000,000 | | | | |
|----|------------|-----------|----------|-----------|-----------|
The initial Applicable Margin and L/C Fees shall be at Tier 2,
above. The Applicable Margin and L/C Fees shall be adjusted
quarterly as of the first day of each calendar quarter based
upon the average Availability for the immediately preceding
quarter, as shown on the Borrowing Base Certificates for such
quarter. Upon the occurrence of an Event of Default, interest
shall accrue at the rate set forth in Section 2:2-11(f), and
L/C Fees shall accrue at 200 basis points in excess of the L/C
Fees set forth at Xxxxx 0, above.
"Assigning Revolving Credit Lender": Defined in Section
16:16-1(a).
4
"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
(vi) The Carve Out.
Minus
(vii) The amounts then outstanding,
if any, under the Pre-Petition
Agreement.
(b) is the result of
(i) The Borrowing Base
Minus
(ii) The aggregate unpaid balance
of the Loan Account
Minus
(iv) The aggregate undrawn Stated
Amount of all then outstanding
L/C's.
Minus
(v) The aggregate of the
Availability Reserves
Minus
(vi) The Carve Out.
Minus
(vii) The amounts then outstanding,
if any, under the Pre-Petition
Agreement.
5
"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.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to
time.
"Bankruptcy Recoveries": Any claim or recovery realized by any
Borrower or which any Borrower may be entitled to assert by
reason of any avoidance or other power vested in or on
behalf of any Borrower or the estate of any Borrower under
the Bankruptcy Code, including, without limitation, claims
and recoveries based upon powers provided for in Chapter 5
thereof.
"Base": The higher of (i) the annual rate of interest announced
from time to time by Fleet National Bank at its head office
in Boston, Massachusetts, as its "Prime Rate" or (ii)
one-half of one percent (.50%) above the Federal Funds
Effective Rate. Federal Funds Effective Rate shall mean for
any day, the rate per annum equal to the weighted average of
the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is
not published for any day that is a Business Day, the
average of the quotations for such day on such transactions
received by Fleet National Bank from three funds brokers of
recognized standing selected by Fleet National Bank. 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 Rate": The aggregate of Base plus the Applicable
Margin per annum.
"Blocked Account": Any DDA into which the contents of any other
DDA is transferred.
"Blocked Account Agreement": An Agreement substantially in the
form of EXHIBIT 7:7-1(b)(ii).
"Borrower" and "Borrowers": Is defined in the Preamble.
6
"Borrowing Base": The aggregate of the following:
The face amount of Eligible Receivables (net of
Receivables Reserves) multiplied by the Receivables Advance
Rate.
Plus
The lesser of (a) the Cost of Eligible Inventory (net
of Inventory Reserves) multiplied by the Inventory Advance
Rate or (b) eighty-five percent (85%) of the appraised
liquidation value of Eligible Inventory (expressed as a
percentage of the Cost of appraised Eligible Inventory)
(provided that the appraised liquidation value of the
Borrowers' prescription list shall in no event exceed nine
percent (9%) of the appraised liquidation value of Eligible
Inventory, as determined in accordance with Section 5:5-9).
"Borrowing Base Certificate": Is defined in Section 5:5-4.
"Borrowing Order": An order entered by the Bankruptcy Court in
the Proceedings in substantially the form annexed hereto as
EXHIBIT 1-2 (or such other form as is acceptable to the
Agent in its reasonable discretion), which shall not have
been stayed, modified in an adverse manner, as determined by
the Agent in its reasonable discretion, or appealed (if the
Agent determines in its reasonable discretion, after
designation of the issues on appeal, that such appeal could
reasonably affect the value of the Collateral or the Agent's
or Lenders' ability to realize upon the Collateral).
"Business Day": Any day other than (a) a Saturday or Sunday; (b)
any day on which banks in Boston, Massachusetts or in
Youngstown, Ohio, 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 or Fleet National Bank is not open to the general
public to conduct business.
"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.
"Carve Out": $1,000,000.00, subject to the terms of the Borrowing
Order.
7
"Change in Control": The occurrence of any of the following:
(a) 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 20% or more of the issued and outstanding
capital stock of the Lead Borrower having the right, under
ordinary circumstances, to vote for the election of
directors of the Lead Borrower (excluding any acquisition of
stock by Avatex Corporation).
(b) More than half of the persons who were directors of
the Lead Borrower 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, disability, or
replacement by other Persons nominated by Avatex
Corporation, a Delaware corporation to be directors of the
Lead Borrower.
(c) Any failure of the Lead Borrower to own,
beneficially and of record, 100% of the capital stock of all
other Borrowers, either directly or through ownership of
100% of the capital stock of any entity which owns the stock
of any other Borrower.
"Chattel Paper": Has the meaning given that term in the UCC.
"Collateral": Is defined in Section 8:8-1.
"Collateral Interest": Any interest in property to secure an
obligation, including, without limitation, a security
interest, mortgage, and deed of trust.
"Concentration Account": Is defined in Section 7:7-3.
"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.
8
"Consigned Inventory": Inventory held by a Borrower on
consignment (including, without limitation, GE lightbulbs).
"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
cost method of accounting.
"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": All reasonable attorneys' 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" shall also include the reasonable fees and
expenses of Lenders' Special Counsel. The Costs of
Collection are Liabilities, and at the Agent's option may
bear interest, after demand, at the then effective Base
Margin Rate.
"Customer Credit Liability": Gift certificates, merchandise
credits, layaway obligations, customer deposits, 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.
"Default": Any occurrence, circumstance, or state of facts with
respect to any 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.
9
"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 three hundred
million dollars ($300,000,000.00) 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 Inventory": Eligible L/C Inventory and such of the
Borrowers' Inventory consisting of merchandise inventory
(inclusive of pharmaceutical Inventory and prescription
list), at such locations, and of such types, character,
qualities and quantities, as the Agent in its discretion
from time to time determines to be acceptable for borrowing,
as to which Inventory, the Agent has a perfected security
interest which is prior and superior to all security
interests, claims, and Encumbrances (other than Permitted
Encumbrances). Eligible Inventory will exclude, without
limitation, Inventory that is not saleable, including
non-merchandise categories (labels, bags, packaging, etc.),
Inventory in foreign locations (except for Eligible L/C
Inventory), fresh produce inventory, samples, damaged goods,
return to vendor merchandise, and Consigned Inventory.
"Eligible L/C Inventory": Inventory to be acquired by a Borrower,
the purchase of which is supported by a documentary L/C then
having an initial expiry of forty five (45) or less days,
provided that
(a) Such Inventory is of such types,
character, qualities and quantities (net of Inventory
Reserves) as the Agent in its reasonable discretion
from time to time reasonably determines to be
eligible for borrowing; and
(b) The documentary L/C supporting such
purchase names the Agent or any Issuer as consignee
of the subject Inventory and the Agent has control
over the documents which evidence ownership of the
subject Inventory (such as by the providing to the
Agent of a Customs Brokers Agreement in form
reasonably satisfactory to the Agent).
10
"Eligible Receivables": Such of the Borrowers' Accounts as arise
in the ordinary course of the Borrowers' business for goods
sold and/or services rendered by the Borrowers, which
Accounts have been determined by the Agent in its discretion
to be satisfactory and have been earned by performance and
are owed to the Borrowers by such of the Borrowers' trade
customers as the Agent determines to be satisfactory, in the
Agent's discretion in each instance, as to which Accounts,
the Agent has a perfected security interest which is prior
and superior to all security interests, claims, and
Encumbrances (other than Permitted Encumbrances).
"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.
"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.
11
"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 Offer Rate": That rate of interest (rounded upwards,
if necessary, to the next 1/100 of 1%) determined by the
Agent to be a 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 which is the aggregate of
the Eurodollar Offer Rate plus the Applicable Margin for
Eurodollar Loans except that, in the event that the Agent
determines that any Revolving Credit Lender may be subject
to the Reserve Percentage, the "Eurodollar Rate" shall mean,
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:
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(a) is the decimal equivalent of the following
fraction:
Eurodollar Offer Rate
--------------------------
1 minus Reserve Percentage
(b) is the Applicable Margin for Eurodollar Loans.
"Events of Default": Is defined in Article 10:. An "Event of
Default" shall be deemed to have occurred and to be
continuing unless and until that Event of Default has been
duly waived by the requisite Revolving Credit Lenders or by
the Agent as applicable.
"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.
"Fee Letter": That letter dated September 24, 2001 and styled
"Fee Letter" between the Lead Borrower and the Agent, as
such letter may from time to time be amended.
"Final Borrowing Order": A Borrowing Order entered in the
Proceedings after notice and a final hearing pursuant to
Rule 4001(c) of the Federal Rules of Bankruptcy Procedure.
"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.
"FRFI": Fleet Retail Finance Inc.
"GAAP": Generally accepted accounting principles 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
13
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 the 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.
14
"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.
"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) As lessee under Capital Leases.
(e) In connection with any sale and leaseback
transaction.
"Indebtedness" also includes
(x) Any guaranty, endorsement,
suretyship or other undertaking pursuant to
which that Person may be liable on account
of any obligation of any third party.
(y) The Indebtedness of a
partnership or joint venture for which such
Person is liable as a general partner or
joint venturer.
"Indemnified Person": Is defined in Section 19:19-12.
"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 on 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 2:2-6) to the Agent.
15
(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
2:2-6) 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
Business Day shall be extended to the next succeeding
Business Day, unless that succeeding Business Day is
in the next calendar month, in which event such
Interest Period shall end on the last 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 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
2:2-12(d)hereof.
"Interim Borrowing Order": A Borrowing Order entered in the
Proceedings prior to notice and a final hearing pursuant to
Rule 4001(c) of the Federal Rules of Bankruptcy Procedure.
"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, provided, however,
that Inventory shall not include Consigned Inventory.
"Inventory Advance Rate": Sixty-four percent (64%).
16
"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. Without limiting the generality of the foregoing,
Inventory Reserves may include (but are not limited to)
reserves based on the following:
(i) Obsolescence (based upon Inventory on hand
beyond a given number of days).
(ii) Seasonality.
(iii) Shrinkage.
(iv) Imbalance.
(v) Change in Inventory character.
(vi) Change in Inventory composition
(vii) Change in Inventory mix.
(viii) Markdowns (both permanent and point of sale)
(ix) Retail markons and markups inconsistent with
prior period practice and performance;
industry standards; current business plans;
or advertising calendar and planned
advertising events.
"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. After entry of the
Interim Borrowing Order, all L/Cs issued under the
Pre-Petition Agreement shall be deemed to have been issued
hereunder and shall constitute L/Cs for all purposes of this
Agreement and the other Loan Documents.
"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.
"Lease": Any lease or other agreement, no matter how styled or
structured, pursuant to which any Borrower is entitled to
the use or occupancy of any space.
"Leasehold Interest": Any interest of a Borrower as lessee under
any Lease.
17
"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 the
UCC 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.
(v) All Costs of Collection.
(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
18
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 2:2-9.
"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 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 or in connection with any
transaction with the Agent or any Affiliate of the Agent,
including, without limitation, any transaction which arises
out of any cash management, depository, investment, letter
of credit, interest rate protection, or equipment leasing
services provided by the Agent or any Affiliate of the
Agent, as each may be amended from time to time.
"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), or if the Loan
Commitments have been terminated, Revolving Credit Lenders
whose percentage of the outstanding Revolving Credit Loans
and face amount of all outstanding L/Cs (after settlement
and repayment of all SwingLine Loans by the Revolving Credit
Lenders) aggregate not less than 51% of all such
Liabilities.
"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
19
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": Other than the filing of the
Proceedings, 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 which:
(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 that Borrower.
(b) Would reasonably be expected to materially
adversely affect the ability of that Borrower to operate or
conduct its business in all material respects in the manner
necessary to perform its obligations under the Loan
Documents .
(c) Would reasonably be expected to have a material
adverse effect or result in a material adverse change in the
value, enforceability, collectability or the nature of the
Collateral.
"Material Adverse Effect": A result, consequence, or outcome with
respect to the Borrowers which constitutes a Material
Adverse Change.
"Maturity Date": October 23, 2001, unless the Final Borrowing
Order is entered by that date, and if the Final Borrowing
Order is so entered, "Maturity Date" shall mean September
24, 2003.
"New Borrower": Is defined in Section 4:4-20.
"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 7:7-3.
"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.
"Participant": Is defined in Section 19:19-15, hereof.
"Payment Intangible": Has the meaning given that term in the UCC
and also refers to any general intangible under which the
Account Debtor's primary obligation is a monetary
obligation.
"Permissible OverLoans": 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 Permissible
20
OverLoans, such Revolving Credit Loans do not aggregate more
than ten percent (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.
"Permitted Encumbrances": The following:
(a) Encumbrances in favor of the Agent.
(b) Encumbrances listed on EXHIBIT 4:4-6, annexed
hereto.
(c) Encumbrances on Equipment or real property, subject
to compliance with the terms of Section 4:4-6(c), below.
(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 (subject to commercially reasonable
deductibles) 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) Carriers', warehousemen's, mechanics, repairmen's
or similar liens incurred in the ordinary course of
business.
(f) Zoning restrictions, easements, licenses, covenants
and other restrictions affecting the use of real property.
(g) 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.
(h) Landlord's liens by operation of law.
(i) Interests of lessors under Capital Leases.
(j) Liens consisting of security deposits made by a
Borrower. The inclusion of any of the foregoing as a
"Permitted Encumbrance" does not affect its relative
priority vis a vis any Collateral Interest created by a
Borrower in favor of the Agent.
(k) Encumbrances subordinated to the Encumbrances of
the Agent, so long as the amount and terms of such
subordination are reasonably satisfactory to the Agent.
21
"Permitted Store Closing Sales": The scheduled permanent closing
of those 65 of the Borrowers' Stores previously identified
to the Agent and the proposed sale of all Collateral located
thereon through the retention by the Borrowers of one or
more professional retail liquidators, reasonably acceptable
to the Agent, as approved by the Bankruptcy Court pursuant
to Section 363 of the Bankruptcy Code.
"Petition Date": September 24, 2001.
"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.
"Plan": A plan or plans pursuant to Chapter 11 of the Bankruptcy
Code.
"Pre-Petition Agreement": The Loan and Security Agreement dated
November 16, 2000 by and among FRFI, as Agent, the Lenders
party thereto and the Borrowers and all instruments,
documents and agreements executed in connection therewith,
each as amended and in effect.
"Proceedings": The cases, pursuant to Chapter 11 of the
Bankruptcy Code, initiated by the Borrowers in the United
States Bankruptcy Court for the Northern District of Ohio.
"Proceeds": Includes, without limitation, "Proceeds" as defined
in the UCC and each type of property described in Section
8:8-1 hereof.
"Receipts": All cash, cash equivalents, money, checks, credit
card slips, receipts and other Proceeds from any sale of the
Collateral.
"Receivables Advance Rate": Eighty five percent (85%).
"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.
"Receivables 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 collectability in the
ordinary course and of the creditworthiness of the relevant
Account Debtor. Without limiting the generality of the
foregoing, Receivables Reserves may include (but are not
limited to) reserves based on the following:
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(a) The aggregate of all accounts receivables which are
more than sixty (60) days past original invoice date.
(b) The aggregate of all accounts receivable owed by
any Account Debtor twenty five percent (25%) or more of
whose accounts are described in Subsection (a), above.
(c) That portion of Eligible Receivables owed by any
Account Debtor which exceed thirty percent (30%) of all
Eligible Receivables.
(d) The aggregate of all accounts receivable which
arise out of the sale by any Borrower of goods consigned or
delivered to that Borrower or to the Account Debtor on sale
or return terms (whether or not compliance has been made
with the applicable provisions of Article 2 of the Uniform
Commercial Code).
(e) The aggregate of all accounts receivable which
arise out of any sale made on a basis other than upon terms
usual to the business of any Borrower.
(f) The aggregate of all accounts receivable which
arise out of any sale made on a "xxxx and hold," dating, or
delayed shipping basis.
(g) The aggregate of all accounts receivable which are
owed by any Account Debtor whose principal place of business
is not within the continental United States or the District
of Columbia.
(h) The aggregate of all accounts receivable which are
owed by any Affiliate.
(i) So much of any account as to which the subject
Account Debtor holds or is entitled to any claim,
counterclaim, set off, or chargeback as determined by the
Agent in its discretion.
(j) The aggregate of all accounts receivable which are
evidenced by a promissory note or other documentation
evidencing modified payment terms.
(k) The aggregate of all accounts receivable which
arise out of any agreement with, or purchase order from (a)
the United States, or any instrumentality thereof, or (b)
with any other state or local governmental entity as to
whose contracts, the assignment thereof is subject to any
limitation or prohibition, including, without limitation,
all so-called Medicare and Medicaid receivables.
(l) The aggregate of all accounts receivable which are
owed by any person employed by, or a salesperson of, any
Borrower.
"Register": Is defined in Section 16:16-2(c).
23
"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.
(d) Without limiting the generality of the foregoing,
"Requirement of Law" includes all requirements of the
Bankruptcy Code; all rules adopted pursuant to the
Bankruptcy Code or otherwise and applicable to the Borrowers
and/or the Proceedings; the Borrowing Order; and all other
orders or rulings formally or informally entered in the
Proceedings or in any action or proceeding which relates
thereto.
"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: Receivables Reserves; Availability
Reserves; and Inventory Reserves.
"Revolving Credit": Is defined in Section 2:2-1.
"Revolving Credit Ceiling": After entry of the Interim Borrowing
Order through December 23, 2001, subject to the provisions
of Section 2-25 hereof, the sum of $135,000,000.00, and
thereafter, the sum of $100,000,000.00.
"Revolving Credit Commitment Fee": Is defined in Section 2:2-13.
"Revolving Credit Dollar Commitment": As set forth on EXHIBIT
2:2-24, annexed hereto (as such amounts may change in
accordance with the provisions of this Agreement).
"Revolving Credit Early Termination Fee": Is defined in Section
2:2-16.
"Revolving Credit Lenders": Each Revolving Credit Lender party to
this Agreement as of the date hereof and any other Person
who becomes a "Revolving Credit Lender" in accordance with
the provisions of to this Agreement.
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"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 2:2-11(c)).
"Revolving Credit Note": Is defined in Section 2:2-10.
"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 Commitment Percentage": As set forth on EXHIBIT
2:2-24, annexed hereto (as such amounts may change in
accordance with the provisions of this Agreement).
"SEC": The Securities and Exchange Commission.
"Stated Amount": The maximum amount for which an L/C may be
honored.
"Store": A place at which a Borrower customarily offers its
Inventory for retail sale to the public.
"Subsidiary": Any corporation, association, joint stock company,
business trust or other similar organization of which 50% or
more of the ordinary voting power for the election of a
majority of the members of the board of directors or other
governing body of such entity is held or controlled by a
Borrower or a Subsidiary of a Borrower; or any other such
organization the management of which is directly or
indirectly controlled by a Borrower or a Subsidiary of a
Borrower through the exercise of voting power or otherwise;
or any joint venture, whether incorporated or not, in which
a Borrower or any of its Subsidiaries has a 50% ownership
interest.
"SuperMajority Lenders": Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 66-2/3% or more
the Loan Commitments (other than Loan Commitments held by a
Delinquent Revolving Credit Lender), or if the Loan
Commitments have been terminated, Revolving Credit Lenders
whose percentage of the outstanding Revolving Credit Loans
and face amount of all outstanding L/Cs (after settlement
and repayment of all SwingLine Loans by the Revolving Credit
Lenders) aggregate not less than 66-2/3% of all such
Liabilities.
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"Supporting Obligation": Has the meaning given that term in the
UCC 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": FRFI.
"SwingLine Loan Ceiling": $13,500,000.00 (subject to increase as
provided in Section 15:15-4).
"SwingLine Loans": Defined in Section 2:2-8.
"SwingLine Note": Defined in Section 3-7(c).
"Syndication Agent": Fleet Securities Inc.
"Termination Date": The earliest of (a) the Maturity Date; or (b)
the effective date of a confirmed Plan in the Proceedings;
or (c) the Agent's notice to the Lead Borrower setting the
Termination Date on account of the occurrence of any Event
of Default; or (d) that date, thirty (30) days irrevocable
written notice of which is provided by the Lead Borrower to
the Agent.
"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.
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"UCC": The Uniform Commercial Code as in effect from time to time
in Massachusetts.
"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 2:2-15.
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. The Cost of Eligible Inventory will be determined in a
manner consistent with practices in effect as of the Petition Date, based on the
Borrowers' general ledger inventory.
(c) The commitment of each Revolving Credit Lender to provide such loans,
advances, and financial accommodations is subject to Section 2:2-24.
(d) The proceeds of borrowings under the Revolving Credit shall be used
solely for the Borrowers' working capital (including, repayment of existing
Indebtedness to institutional lenders), and Capital Expenditures, to the extent
permitted by this Agreement. No proceeds of a borrowing under the Revolving
Credit may be used, nor shall any be requested, with a view towards the
accumulation of any general fund or funded reserve of the Borrowers other than
in the ordinary course of the Borrowers' business and consistent with the
provisions of this Agreement.
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22- INITIAL RESERVES. CHANGES TO RESERVES.
(a) At the execution of this Agreement, the only Reserves are as reflected
on the initial Borrowing Base Certificate.
(b) Reserves that may be revised, by the Agent in good faith in its
reasonable business judgment:
(ii) To reflect events, conditions, contingencies or risks that, as
determined by the Agent in good faith in its reasonable business judgment,
do or may affect any of:
(B) The Collateral or any other property which secures the
Liabilities.
(C) The assets, business or prospects of any Borrower.
(D) The Collateral Interests and other rights of the Agent in, or
to realize upon, the Collateral (including the enforceability,
perfection and priority thereof).
(i) To reflect the Agent's good faith belief in its reasonable
business judgment that any collateral report or financial information
furnished by or on behalf of a Borrower to the Agent is or may have been
incomplete, inaccurate or misleading in any material respect.
(ii) To reflect any state of facts which constitutes an Event of
Default.
(a) A change to a then existing Reserve may be made only with not less than
seven (7) Business Days prior notice to the Lead Borrower, during which period
the Agent shall afford the Borrower an opportunity to demonstrate that such
Reserve is not necessary (unless the Agent determines that the Collateral would
be materially and adversely affected by such delay or an Event of Default
exists, in which case such Reserve may be immediately imposed), except that a
change to a then existing Reserve, which change reflects changed circumstances
of which the Lead Borrower has knowledge (such as a change in the aggregate of
taxes then outstanding), may be made without such notice.
23- 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 Permissible OverLoans).
(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.
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24- 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.
25- COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT. Subject to the provisions of this Agreement, the Revolving Credit
Lenders shall make Revolving Credit Loans and the Agent shall cause L/C's to be
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) The amount of the loan or advance or L/C so requested does not
exceed Availability.
(b) No Borrower is in Default.
26- REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for Revolving Credit Loans 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 12:00 PM 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 $10,000.00.
(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 $500,000.00 and in increments of
$100,000.00 in excess of such minimum.
(iv) Any Eurodollar Loan which matures while any Borrower is
in Default 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
2:2-19.
29
(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 reasonably 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) Except for the commencement of the Proceedings, 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) If on any day that an advance is made hereunder, any sales
tax owed by the Borrowers is due and payable and remains unpaid, then
some or all of such advance shall be applied to cover the Borrowers'
payment of such sales tax.
(vii) Each representation which is made herein or in any of the
Loan Documents is then true and complete in all material respects as
of and as if made on the date of such request.
(viii) No Borrower is in Default.
(a) If, at any time or from time to time, any Borrower is in Default:
(ix) The Agent may suspend the Revolving Credit immediately.
(x) 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.
(xi) 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.
27- 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:
(iv) Any delay beyond the reasonable control of the Agent in the
making of any loan or advance requested under the Revolving Credit.
(v) Any delay by any bank or other depository institution in
treating the proceeds of any such loan or advance as collected funds.
(vi) 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.
30
28- 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 2:2-8(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 shall be subject to periodic settlement with the
Revolving Credit Lenders as provided in this Agreement.
29- 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 Borrowing Base's
being exceeded. 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
2:2-11(b). Any amount which is added to the principal balance of the Loan
Account as provided in this Section 2:2-9(e) shall bear interest at the
interest rate then and thereafter applicable to Base Margin Loans.
31
(f) Any written statement rendered by the Agent or any Revolving
Credit Lender to the Lead Borrower concerning the Liabilities shall be
reviewed promptly by the Lead Borrower. To the extent that the Lead
Borrower believes that there is any mistake in such statement the Lead
Borrower shall promptly provide the Agent with written objection thereto,
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 of the items described therein.
210- 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
2:2-10, 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, at the request of the Agent, shall execute a replacement thereof and
deliver such replacement to the Agent.
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211- 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 that amount, from time to time, which is
necessary so that there is no OverLoan outstanding.
(c) The Borrowers shall repay the Revolving Credit:
(ii) in an amount equal to the proceeds realized from the sale,
refinancing, or other disposition of, or realization upon, any Collateral;
and
(iii) in accordance with the provisions of Article 7 hereof. All
amounts prepaid under this Section 2:2-11(c) may be reborrowed under the
Revolving Credit, subject to and in accordance with, the terms of this
Agreement.
(a) The Borrowers shall repay the then entire unpaid balance of the Loan
Account and all other Liabilities on the Termination Date.
(b) The Agent shall follow the Lead Borrower's timely instructions with
respect to the application of payments against Eurodollar Loans. In the absence
of timely instructions from the Lead Borrower, the Agent shall endeavor to cause
the application of payments (if any), pursuant to Sections 2:2-11(a) and
2:2-11(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 2:2-11(f).
(c) 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:
(iv) 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.
(v) Default by any Borrower in making a borrowing or conversion after
the 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.
(vi) The making of any payment on a Eurodollar Loan or the making of
any conversion of any such Eurodollar Loan to a Base Margin Loan on a day
that is not the last day of the applicable Interest Period with respect
thereto.
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212- 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 2:2-6) 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 the Lead Borrower.
(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 five (5) 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) Following the occurrence of any Event of Default, with such
frequency as may be determined by the Agent.
(a) Following the occurrence of any Event of Default (and whether or not
the Agent exercises the Agent's rights on account thereof), all Revolving Credit
Loans shall bear interest, at the option of the Agent or at the instruction of
the SuperMajority Lenders at rate which is the aggregate of the rate applicable
to Base Margin Loans plus two Percent (2%) per annum.
213- 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.
214- 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.
34
215- UNUSED LINE FEE. 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 0.375% per annum 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.
The Unused Line Fee shall be paid in arrears, on the first day of each quarter
after the execution of this Agreement and on the Termination Date.
216- EARLY TERMINATION FEE. In the event that the Termination Date occurs,
for any reason, prior to the Maturity Date (other than by virtue of the
Borrower's refinancing of the Liabilities with FRFI or Fleet National Bank or
any of their respective Affiliates), 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) in an amount equal to 1.00% of the
Revolving Credit Ceiling in effect on the Termination Date.
217- CONCERNING FEES.
(a) In addition to any other right to which the Agent is then entitled on
account thereof, the Agent may assess an additional fee payable by the Borrowers
on account of the accommodation, from time to time, by the Agent of the Lead
Borrower's request that the Agent depart or dispense with one or more of the
administrative provisions of this Agreement and/or any Borrower's failure to
comply with any of such provisions.
(b) By way of non-exclusive example, the Agent may assess a fee on account
of any of the following:
(ii) The Borrowers' failure to pay that amount which is necessary
so that no OverLoan is outstanding (as required under Section
2:2-11(b) hereof).
(iii) The providing of a loan or advance under the Revolving
Credit or charging of the Loan Account such that an OverLoan is made.
(iv) The foreshortening of any of the time frames with respect to
the making of Revolving Credit Loans as set forth in Section 2:2-6.
(v) The Lead Borrower's failure to provide a financial statement
or report within the applicable time frame provided for such report
under Article 5: hereof.
(a) 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.
218- 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
reasonable exercise of its judgment, in good faith (which shall be presumed),
based upon such Person's reasonable 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).
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(iii) Indicates 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) Suggests that any Borrower is in Default.
(a) In the exercise of such judgment, 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
Accounts," "Eligible Inventory", "Eligible L/C Inventory", "Eligible
Receivables" and "Cost".
(vi) The current financial and business climate of the industry
in which each Borrower competes (having regard for that Borrower's
position in that industry).
(vii) General macroeconomic conditions which have a material
effect on the Borrowers' cost structure.
(viii) Material changes in or to the mix of the Borrowers'
Inventory.
(ix) Seasonality with respect to the Borrowers' Inventory and
patterns of retail sales.
(x) 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.
(a) The burden of establishing the failure of the Agent or any Revolving
Credit Lender to have acted in a reasonable manner in such Person's exercise of
such discretion shall be the Borrowers' and may be made only by clear and
convincing evidence.
219- 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 2:2-6(g) and if so issued:
(ii) The aggregate Stated Amount of all L/C's (together with any L/Cs
issued under the Pre-Petition Agreement, to the extent such are not then
deemed L/Cs hereunder) then outstanding, does not exceed Twenty Million
Dollars ($20,000,000.00).
(iii) The expiry of the L/C is not later than the earlier of thirty
(30) days prior to the Maturity Date or the following:
(B) Standby's: One (1) year from initial issuance.
(C) Documentary's: Sixty (60) 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 an L/C as
may be required by the Issuer.
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(b) There shall not be any recourse to, nor liability of, the Agent or any
Revolving Credit Lender on account of any of the following beyond the reasonable
control of the Agent:
(ii) Any delay or refusal 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 in Default or such advance would
result in an OverLoan. Such action shall not constitute a waiver of the Agent's
rights under Section 2:2-11(b) hereof.
220- FEES FOR L/C'S.
(a) The Borrowers shall pay to the Agent, for the benefit of the Revolving
Credit Lenders, a fee, on account of L/C's, the issuance of which had been
procured by the Agent, monthly in arrears, and on the Termination Date and on
the End Date, equal to the applicable L/C Fees of the weighted average Stated
Amount of all standby and documentary L/C's, as applicable, outstanding during
the period in respect of which such fee is being paid except that, following the
occurrence of any Event of Default, such fee shall be increased by two percent
(2%) per annum.
(b) In addition to the fee to be paid as provided in Subsection 2:2-20(a),
above, the Borrowers shall pay to the Agent (or to the Issuer, if so requested
by Agent), on demand, all issuance, processing, negotiation, amendment, and
administrative fees and other amounts charged by the Issuer on account of, or in
respect to, any L/C.
(c) If any change in Applicable Law shall either:
(ii) 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
(iii) 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 2:2-20(c)(i) or
2:2-20(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 Borrowers shall immediately pay to the Agent, from time to time as specified
by the Agent, 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 2:2-20(c)(i) or 2:2-20(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.
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221- 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.
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. 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:
(a) 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.
(i) Any Borrower's consent to any amendment or waiver of, or
consent to the departure from, any L/C.
(ii) 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.
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222- 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 2:2-22(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 2:2-22(a), shall be deemed at the option of the Agent to not having
been given.
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223- 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 those set forth in Section 2:2-1(d). 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.
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224- LENDERS' COMMITMENTS
(a) Subject to Section 16:16-1 (which provides for assignments and
assumptions of commitments), each Revolving Credit Lender's "Revolving Credit
Commitment Percentage", and "Revolving Credit Dollar Commitment" (respectively
so referred to herein) is set forth on EXHIBIT 2:2-24, 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 the lesser of the following:
(ii) That Revolving Credit Lender's Revolving Credit Commitment
Percentage 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", as described in Section 16:16-1, below, provided, however unless an
Event of Default has occurred (in which event, no consent of any Borrower is
required) subsequent to the completion of the initial syndication by the
Syndication Agent, 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 2:2-24(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).
(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, privileges, and obligations 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 arising.
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225- REDUCTION OF REVOLVING CREDIT CEILING. Upon at least two Business
Days' prior written notice to the Agent at any time commencing after entry of
the Final Order, the Borrowers may permanently reduce the Revolving Credit
Ceiling, prior to the permanent reduction set forth in the definition of
Revolving Credit Ceiling, provided that no such reduction shall cause the
Revolving Credit Ceiling to be less than $100,000,000.00. Each such reduction
shall be in the principal amount of $5,000,000.00 or an integral multiple
thereof. Each such reduction shall be applied ratably to the Commitments of each
Lender under the Revolving Credit and shall be irrevocable when given. At the
time of each such reduction, the Borrowers shall pay to the Agent all Unused
Line Fees accrued on the amount so reduced and any amount by which the principal
balance of the Revolving Credit Loans and Stated Amount of L/Cs exceeds the
Revolving Credit Ceiling as so reduced.
Article 3:- CONDITIONS PRECEDENT:
As a condition to the effectiveness of this Agreement, the establishment of
the Revolving Credit, and the making of the first loan under the Revolving
Credit, each of the documents and conditions respectively described below, shall
have been delivered to the Agent, or satisfied (in form and substance reasonably
satisfactory to the Agent):
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
Secretary(ies) 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 the form of EXHIBIT
3:3-2, annexed hereto..
33- ADDITIONAL DOCUMENTS. Such additional instruments and documents as the
Agent or its counsel reasonably may require or request.
34- BORROWING ORDER. There shall have been entered in the Proceedings an
Interim Borrowing Order.
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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 in all material respects
as of the date as of which such representation or warranty was made.
36- CONSENTS AND APPROVALS. All necessary consents and approvals to the
transactions contemplated hereby shall have been obtained and shall be
reasonably satisfactory to the Agent.
37- NO DEFAULTS UNDER APPLICABLE LAW OR MATERIAL AGREEMENTS. The
consummation of the transactions contemplated hereby shall not (a) violate any
Requirement of Law or (b) conflict with, or result in a default or event of
default under, any material agreement of the Borrowers.
38- NO LITIGATION. There shall not exist any litigation or other
proceedings, the result of which has or is likely to have a Material Adverse
Effect on any Borrower.
39- 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 facilities
contemplated hereby (including the reasonable fees and expenses of counsel to
the Agent) shall have been paid in full.
310- NO MATERIAL ADVERSE CHANGE. Except for the commencement of the
Proceedings, no event shall have occurred or failed to occur, which occurrence
or failure has or is reasonably likely to have a materially adverse effect upon
the Borrower's financial condition when compared with such financial condition
at August 4, 2001.
311- MINIMUM DAY ONE EXCESS AVAILABILITY. On the Petition Date,
Availability, after giving effect to the first funding under the Revolving
Credit; post-petition accounts payable which are beyond credit terms then
accorded the Borrower; overdrafts; any charges to the Loan Account made in
connection with the establishment of the credit facility contemplated hereby;
and L/C's to be issued at, or immediately subsequent to, such establishment, is
not less than $30,000,000.00.
312- BORROWER NOT IN DEFAULT. No Borrower is in Default.
313- PROJECTIONS. The Agent shall have received and be satisfied with
detailed one-year financial projections and business assumptions for the
Borrower.
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314- OTHER INFORMATION. Any other documents set forth on EXHIBIT 3:3-14,
annexed hereto shall have been received by the Agent and shall be in form and
substance reasonably satisfactory to the Agent.
315- GOVERNMENT REGULATIONS. The proposed financing is subject to the
condition that no material changes in governmental regulations or policies
affecting the Borrower, the Agent or Lenders involved in this transaction occur
prior to Closing.
316- 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.
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(c) 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 is listed on EXHIBIT 4:4-2. The Lead Borrower shall
provide the Agent with prior written notice of any entity's becoming or ceasing
to be an Affiliate.
(e) Upon entry of the Interim Order, each Borrower will have all requisite
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 power to
perform all Liabilities.
(f) Upon entry of the Interim Order, 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) Will be duly authorized by all necessary action.
(iii) 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) Based upon entry of the Interim Order, the Loan Documents 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.
43- TRADE NAMES.
(a) EXHIBIT 4:4-3, annexed hereto, is a listing of:
(ii) All names under which any Borrower ever conducted its
business after September 11, 1995.
(iii) All Persons with whom any Borrower ever consolidated or
merged, or from whom any Borrower ever acquired in a single
transaction or in a series of related transactions substantially all
of such Person's assets.
(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.
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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, to the extent that any infringement would 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 are at 00
Xxxxxxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000.
(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.
(a) Notwithstanding anything herein to the contrary, the Borrowers may
remove and destroy records and papers of the Borrowers pertaining to the
Collateral to the extent that it is consistent with practices of the Borrowers
in effect as of the Petition Date.
(b) 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) In connection with the conduct of any Permitted Store Closing
Sales.
(vi) To move Inventory from one such location to another such location
of the same Borrower.
(vii) To utilize such of the Collateral as is removed from such
locations in the ordinary course of business (such as motor vehicles).
(a) No Borrower will execute any Lease other than where each of the
following conditions is satisfied:
(viii) Such execution is in the ordinary course of business.
(ix) Neither such execution nor any Borrower's acting under such Lease
results in any Borrower's becoming in Default.
(x) Not less than fifteen (15) days prior written notice (with
reasonable particularity) is given to the Agent of the execution of the
subject Lease.
46
(xi) Such execution will not result in the Borrowers' opening of one
or more Stores, if the opening of such Store or Stores is otherwise
prohibited by this Agreement.
(a) Each Borrower may alter, modify, or amend any Lease in the ordinary
course of its business ; provided that such alteration, modification or
amendment does not cause any Borrower to become in Default.
(b) During any fiscal year during which this Agreement is in effect the
Borrowers may open and/or relocate those number of Stores reflected in the
forecast furnished to the Agent, provided that such opening and/or relocation
otherwise complies with this Agreement.
(c) On or before October 12, 2001, or as extended in the reasonable
discretion of the Agent, the Borrowers shall obtain an order from the Bankruptcy
Court, acceptable to the Agent, approving and authorizing the Permitted Store
Closing Sales. Other than the Permitted Store Closing Sales the Borrowers shall
not close any additional Stores without the prior written consent of the Agent.
(d) 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- TITLE TO ASSETS.
(a) The Borrowers are, and 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 other than such property disclosed in the Borrowing
Base Certificate.
(c) No Borrower shall acquire or obtain the right to use any Equipment in
which Equipment any third party has an interest, except for:
(ii) Equipment which is used to conduct that Borrower's business.
(iii) Equipment with respect to which the Agent has received an
agreement (substantially in the form of EXHIBIT 4:4-6(c)(ii), annexed
hereto) with the third party which has an interest in such Equipment.
47- INDEBTEDNESS. The Borrowers do not and shall not hereafter have any
Indebtedness with the exceptions of:
(a) Any Indebtedness on account of the Revolving Credit.
(b) The Indebtedness (if any) listed on EXHIBIT 4:4-7, annexed hereto.
(c) Indebtedness incurred in connection with the financing or refinancing
of any Equipment and real estate.
(d) Indebtedness incurred in connection with loans made among Borrowers.
(e) Indebtedness subordinated to the Liabilities, in such amounts and on
such terms and conditions as are acceptable to the Agent incurred in connection
with Permitted Encumbrances.
47
48- INSURANCE.
(a) EXHIBIT 4:4-8, annexed hereto, is a schedule of all 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 material default or material violation of any such
policy.
(b) The Borrowers shall have and maintain at all times insurance covering
such risks, in such amounts, containing such terms, in such form, for such
periods, and written by such companies as may be satisfactory to the Agent.
(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 4:4-8 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, 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.
49- LICENSES. Each license, distributorship, franchise, and similar
agreement issued to, or to which any Borrower is a party is in full force and
effect in all material respects. No party to any such license or agreement is in
default or violation thereof which would have a Material Adverse Effect. No
Borrower has received any notice or threat of cancellation of any such license
or agreement where such cancellation could have a Material Adverse Effect.
48
410- LEASES. EXHIBIT 4:4-10, annexed hereto, is a schedule of all presently
effective Capital Leases. (Exhibit 4:4-5 includes a list of all other presently
effective Leases). Each of such Leases and Capital Leases is in full force and
effect in all material respects. No party to any such Lease or Capital Lease is
in default or violation of any such Lease or Capital Lease (other than a default
resulting from the filing of the Proceedings) which would have a Material
Adverse Effect. No Borrower has received any notice or threat of cancellation of
any such Lease or Capital Lease where such cancellation could have a Material
Adverse Effect. Each Borrower hereby authorizes the Agent at any time and from
time to time to contact any of the Borrowers' respective landlords in accordance
with commercially reasonable lending practices 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.
411- REQUIREMENTS OF LAW. Each Borrower is in compliance in all material
respects with, and shall hereafter comply with and use its assets in compliance
in all material respects with, all Requirements of Law if the failure to comply
with any Requirements of Law would have a Material Adverse Effect. No Borrower
has received any notice of any violation of any Requirement of Law where the
effect of such violation could have a Material Adverse Effect.
412- LABOR RELATIONS. Except as described in EXHIBIT 4:4-12:
(a) No Borrower has been, and none is presently a 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:
(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 on that Borrower
(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.
(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, if the failure to comply with any such Applicable Laws would
have a Material Adverse Effect.
(vii) Is not liable for the payment of more than a de minimius 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 4:4-12(d)(i), the failure of which had
or has a Material Adverse Effect.
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413- MAINTAIN 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 material portion 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 in compliance with this Agreement.
(iii) The disposal of Equipment which is obsolete, worn out, damaged
beyond repair, or no longer useful in the business of a Borrower, which
Equipment is replaced to the extent necessary to preserve or improve the
operating efficiency of any Borrower.
(iv) The turning over to the Agent of all Receipts as provided herein.
414- TAXES.
(a) With respect to the Borrowers' federal, state, and local tax liability
and obligations:
(ii) The Lead Borrower, in compliance with all Applicable Law, has
properly filed all returns due to be filed up to the date of this
Agreement.
(iii) Except as described on EXHIBIT 4:4-14:
(B) At no time during the past three (3) years has any Borrower
received from any taxing authority any request to perform any
examination of or with respect to any Borrower nor any other written
notice in any way relating to any claimed failure by any Borrower to
materially comply with all Applicable Law concerning payment of any
taxes or other amounts in the nature of taxes, the failure of which
would have a Material Adverse Effect.
(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 deficiency for any fiscal
year open for examination, assessment, or claim by any taxing
authority.
(a) The Borrowers shall: pay as they become due and payable, and incurred
subsequent to the filing of the Proceedings, 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.
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415- 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.
416- ERISA.
(a) Except as described in EXHIBIT 4:4-16(a), neither any Borrower nor any
ERISA Affiliate, since September 11, 1995:
(ii) Violated or failed to be in full compliance with any Borrower's
Employee Benefit Plan it maintains, except where such failure or
noncompliance could not reasonably be expected to have a Material Adverse
Effect.
(iii) Failed timely to file all reports and filings required by ERISA
to be filed by any Borrower, except where such failure or noncompliance
could not reasonably be expected to have a Material Adverse Effect.
(iv) Engaged in any nonexempt "prohibited transactions" or "reportable
events" (respectively as described in ERISA).
(v) Engaged in, or committed, any act such that a tax or penalty
reasonably could be imposed upon any Borrower on account thereof pursuant
to ERISA.
(vi) Accumulated any material cumulative funding deficiency within the
meaning of ERISA.
(vii) Terminated any Employee Benefit Plan such that a lien could be
asserted against any assets of any Borrower on account thereof pursuant to
ERISA.
(viii) Been a member of, contributed to, or have any obligation under
any Employee Benefit Plan which is a multiemployer plan within the meaning
of Section 4001(a) of ERISA.
(a) Neither any Borrower nor any ERISA Affiliate shall ever engage in any
action of the type described in Section 4:4-16(a).
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417- HAZARDOUS MATERIALS.
(a) Except as described in EXHIBIT 4:4-17(a), no Borrower has since
September 11, 1995: (i) been held legally responsible for any release or threat
of release of any Hazardous Material in violation of any Environmental Laws, 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 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 with all Environmental Laws.
418- LITIGATION. Except as described in EXHIBIT 4:4-18, annexed hereto, and
the Proceedings, 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 have a Material Adverse Effect on a Borrower.
419- DIVIDENDS. INVESTMENTS. CORPORATE ACTION. No Borrower shall:
(a) Pay any cash dividend or make any other distribution in respect of any
class of that Borrower's capital stock.
(b) Own, redeem, retire, purchase, or acquire any of any Borrower's capital
stock other than in connection with the creation of a New Borrower (as to which,
see Section 4:4-20).
(c) Invest in or purchase any stock or securities or rights to purchase any
such stock or securities, of any Person, including, without limitation, Avatex
Corporation, other than in connection with the creation of a New Borrower (as to
which, see Section 4:4-20).
(d) Merge or consolidate or be merged or consolidated with or into any
other corporation or other entity.
(e) Consolidate any of that Borrower's operations with those of any other
Person other than of another Borrower.
(f) Organize or create any Affiliate other than in connection with the
creation of a New Borrower (as to which, see Section 4:4-20).
(g) 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.
(h) Acquire any assets other than in the ordinary course and conduct of
that Borrower's business as conducted at the execution of this Agreement, except
for assets acquired in connection with the opening of new stores (as permitted
hereunder), and otherwise with the consent of the Agent, such consent not to be
unreasonably withheld.
52
420- NEW BORROWERS.
(a) Subject to and conditioned on the satisfaction of the requirements
included and referred to in this Section 4:4-20, any Borrower may organize or
create a wholly owned subsidiary (a "New Borrower").
(b) A Borrower may organize or create a New Borrower provided that each of
the following is satisfied:
(ii) The Borrowers are not then and will not thereby be rendered in
Default.
(iii) The Lead Borrower has furnished the Agent with the following by
no less than fifteen (15) days prior to any New Borrower's acquiring any
assets:
(B) A certificate of incorporation for the New Borrower, issued
no more than seven (7) days previous to the date when so furnished, by
the Secretary of State in which that New Borrower is organized.
(C) Certificates of qualification to do business issued by any
State in which such qualification of the New Borrower may be
necessary.
(D) A Certificate of the Secretary of the New Borrower which
includes copies of the resolutions of the New Borrower to become a
party to this Agreement as a "Borrower".
(E) The written assumption agreement (in form reasonably
satisfactory to the Agent) by the New Borrower pursuant to which the
New Borrower assumes all Liabilities as if the New Borrower were a
Borrower immediately prior to such assumption and agreement.
(F) Financing statements to satisfy the requirements of Section
4:4-25 (which relates to additional assurances).
(G) Notifications to the New Borrower's depositories (if
different from that to which notices have previously been provided
pursuant to Section 7:7-1(b)(i)) in form reasonably satisfactory to
the Agent.
(H) Notices to the New Borrower's credit card processor (if
different from that to which notices have previously been provided
pursuant to Section 7:7-2(b)) in form reasonably satisfactory to the
Agent.
(I) All stock certificates (each with a separate transfer power,
executed in blank by the holder thereof) for the New Borrower.
(J) Such other instruments and documents which the Agent
reasonably may request in connection with the subject New Borrower.
(a) Any New Borrower shall be a "Borrower" within the meaning of this
Agreement from the earliest moment that such Person is required to be the
subject of the notice required by Section 4:4-20(b)(ii).
53
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) Advances made to incentivize employees and prospective employees
employed or to be employed as pharmacists, not to exceed $20,000.00 per person
and $200,000.00 in any twelve (12) month period.
(d) Advances made to employees in the nature of bridge loans associated
with relocation expenses, not to exceed $200,000.00 per person and $1,000,000.00
in any twelve (12) month period.
(e) Loans made between two (2) or more Borrowers.
(f) Existing Loans which have been made to Cabot Noble, Inc.
(g) Existing Loans which have been made to Xxxxxxx Building Associates.
422- PROTECTION OF ASSETS. The Agent, in the Agent's discretion, and
following written notice to the Lead Borrower, and from time to time, may
discharge any tax or Encumbrance on any of the Collateral, or take any other
action which the Agent 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.
54
423- LINE OF BUSINESS. No Borrower shall engage in any business other than
the business in which it is currently engaged or a business reasonably related
thereto.
424- AFFILIATE TRANSACTIONS. No Borrower shall make any payment, nor give
any value to any Affiliate (other than another Borrower) except for goods and
services actually purchased by that Borrower from, or sold by that Borrower to,
such Affiliate for a price and on terms which shall:
(a) be 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
(b) be no less favorable to that Borrower than those which would have been
charged and imposed in an arms length transaction.
425- FURTHER ASSURANCES.
(a) Except for Permitted Encumbrances, no Borrower is the owner of, nor has
it any interest in, any Collateral which, immediately upon the satisfaction of
the conditions precedent to the effectiveness of the credit facility
contemplated hereby (Article 3:) will not be subject to a perfected Collateral
Interest in favor of the Agent (subject only to Permitted Encumbrances) to
secure the Liabilities.
(b) Except for Permitted Encumbrances, 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).
(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 reasonably 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) Each Borrower hereby authorizes the Agent to file such financing
statements as the Agent determines as appropriate to perfect or protect the
Agent's Collateral Interests in the Collateral.
(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.
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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). Except as
otherwise disclosed in writing by the Lead Borrower to the Agent or in its
filings with the SEC, there has been no material change in the 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.
(b) No Borrower has any contingent obligations or obligation under any
Lease or Capital Lease which is not noted in the Borrowers' financial statements
furnished to the Agent and to each Revolving Credit Lender prior to the
execution of this Agreement (except to the extent not required by GAAP).
(c) 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 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 which has, or which, is reasonably likely
to have, a material adverse effect on the financial condition of any Borrower
which has not been disclosed in writing to the Agent and to each Revolving
Credit Lender.
427- NO RESTRICTIONS ON LIABILITIES. No Borrower shall enter into or
directly or indirectly become subject to any agreement which prohibits or
restricts, in any manner, any Borrower's:
(a) Creation of, and granting of Collateral Interests in favor of the
Agent.
(b) 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 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 financial condition of the Borrowers at the close of, and the results of
operations for, the period(s) covered therein.
56
(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, at reasonable times,
on reasonable notice, from time to time 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 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 (such
verification to be undertaken in keeping with commercially reasonable
commercial lending practices) and to sign the name of each Borrower on any
notice to each Borrower's Account Debtors or verification of the
Collateral.
(a) Notwithstanding anything to the contrary herein, no Borrower shall be
required to deliver or disclose any customer pharmacy records to the extent
prohibited by Applicable Law.
(b) 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.
57
53- IMMEDIATE 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 President, chief executive officer,
chief operating officer, and chief financial officer (without regard to the
title(s) actually given to the Persons discharging the duties customarily
discharged by officers with those titles).
(iii) Any ceasing of any Borrower's making of payment, in the ordinary
course, to any of its creditors (other than its ceasing of making of such
payments on account of a dispute in the ordinary course), other than any
payment due on account of indebtedness incurred prior to the filing of the
Proceedings.
(iv) Any failure by any Borrower to pay rent incurred subsequent to
the filing of the Proceedings 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 without more than a de minimis adverse effect
to that Borrower.
(v) Any Material Adverse Change.
(vi) Any Borrower's becoming in Default.
(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,
might have a material adverse effect on the financial condition of that
Borrower.
(a) The Lead Borrower shall:
(ix) Provide the Agent, when so distributed, with copies of any
materials distributed to the shareholders of the Lead Borrower (qua such
shareholders).
(x) Provide the Agent:
(B) When filed, copies of all filings with the SEC.
(C) When received, copies of all correspondence from the SEC,
other than routine non-substantive general communications from the
SEC.
(i) Add the Agent as an addressee on all mailing lists maintained by
or for each Borrower.
(ii) 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).
(iii) Provide the Agent, when received by any Borrower, with a copy of
any management letter or similar communications from any accountant of any
Borrower.
(iv) Provide the Agent and the Agent's counsel with copies, when so
filed or submitted, or as soon as practicable thereafter, of any pleadings
filed in the Proceedings by or on behalf of any Borrower or the submission
by any Borrower of any financial statement to any of the Bankruptcy Court
in which the Proceedings are pending, the office of the United States
Trustee, or any committee appointed in the Proceedings.
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54- Borrowing Base Certificate. The Lead Borrower shall provide the Agent
with a collateral report and 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) by 2:00PM, weekly, on Friday of each week (as of the then immediately
preceding Saturday). Such Certificate may be sent to the Agent by facsimile
transmission, provided that the original thereof is mailed to the Agent on the
date of such transmission.
55- MONTHLY REPORTS.
Monthly, the Lead Borrower shall provide the Agent with original
counterparts of the following (each in such form as the Agent from time to time
may specify):
(i) Those reports described in EXHIBIT 5:5-5 hereto, at the times set
forth in such EXHIBIT; and
(ii) 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' fiscal quarters, the Lead Borrower shall provide
the Agent with the following:
(a) An original counterpart of 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 (on a store specific and on a
"consolidated" basis), statement of changes in shareholders' equity, and cash
flows and comparisons for the corresponding quarter of the then immediately
previous year.
(b) The officer's compliance certificate described in Section 5:5-8.
57- ANNUAL REPORTS.
(a) Annually, within one hundred and five (105) days following the end of
the Borrowers' fiscal year, the Lead Borrower shall furnish the Agent with the
following:
(ii) The Borrowers' annual financial statement, which statement shall
bear the opinion, without material qualification other than a going concern
reservation, of the Lead Borrower's 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.
(iii) The officer's compliance certificate described in Section 5:5-8.
(a) No later than the earlier of Fifteen (15) days prior to the end of each
of the Borrowers' fiscal years or the date on which such accountants commence
their work on the preparation of the Borrowers' annual financial statement, the
Lead Borrower shall give written notice to such accountants (with a copy of such
notice, when sent, to the Agent) that:
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(iv) Such annual financial statement will be delivered by the Lead
Borrower to the Agent (for subsequent distribution to each Revolving Credit
Lender).
(v) It is the primary intention of the Borrowers, in its engagement of
such accountants, to satisfy the financial reporting requirements set forth
in this Article 5:.
(vi) The Lead Borrower has been advised that the Agent and each
Revolving Credit Lender will rely thereon with respect to the
administration of, and transactions under, the credit facility contemplated
by this Agreement.
(a) Each annual statement shall be accompanied by such accountant's
Certificate indicating that, in conducting the audit for such annual statement,
nothing came to the attention of such accountants to believe that the Borrowers
are in Default (or that, if the Borrowers are in Default, the facts and
circumstances thereof).
58- OFFICERS' CERTIFICATES. The Lead Borrower shall cause either the Lead
Borrower's President, Chief Financial Officer, or its Controller, in each
instance, to provide such Person's Certificate with those monthly statements
required pursuant to Section 5:5-5(a)(ii), quarterly, and annual statements to
be furnished pursuant to this Agreement, which Certificate shall:
(a) Indicate that, to the best of such Person's knowledge, after inquiry,
the subject statement was prepared in accordance with GAAP consistently applied
and presents fairly the 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.
(a) Indicate either that (i) no Borrower is in Default, 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.
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59- INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Agent, at the expense of the Borrowers, may participate in and/or
observe each physical count and/or inventory of so much of the Collateral as
consists of Inventory which is undertaken on behalf of any Borrower.
(b) The Borrowers, at their own expense, shall cause not less than one (1)
physical inventory to be undertaken in each Fiscal year during which this
Agreement is in effect, conducted by such inventory takers as are reasonably
satisfactory to the Agent and following such methodology as is reasonably
satisfactory to the Agent.
(ii) Each such inventory shall be reconciled and recorded in the
Borrowers' financial statements within thirty (30) days of the date
following the completion of such inventory.
(iii) The Lead Borrower, within thirty (30) days following the end of
each month, shall provide the Agent with the results of each such inventory
that was recorded in that month.
(iv) The Agent, in its discretion, if any Borrower is in Default, may
cause such additional inventories to be taken as the Agent determines
(each, at the expense of the Borrowers).
(a) The Agent may obtain appraisals of the Collateral, from time to time
(in all events, at the Borrowers' expense), conducted by such appraisers as are
reasonably satisfactory to the Agent.
(b) The Agent contemplates conducting three (3) commercial finance field
examinations (in each event, at the Borrowers' expense) of the Borrowers' books
and records during any twelve (12) month period during which this Agreement is
in effect, but in its discretion, may undertake additional such audits during
such period.
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, as the Agent may from time to
time reasonably 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 sooner than Ninety (90) days prior
to the end of each of the Borrowers' fiscal years, shall provide the Agent with
an updated and extended forecast which shall go out at least through the end of
the then next 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.
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(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 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- MINIMUM EXCESS AVAILABILITY. The Borrowers shall not permit Excess
Availability at any time to be less than the greater of (x) $8,000,000.00, or
(y) seven percent (7%) of the Borrowing Base at the time of calculation. For the
purposes of the calculation of Availability under this Section 5-11, cash
deposited in the Concentration Account no later than 1:00 p.m. on the date of
calculation shall be added to the amount of Availability. The Lender may
determine the Borrowers' compliance with such covenants based upon financial
reports and statements provided by the Lead Borrower to the Lender (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 developed by, the Lender.
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Article 6:- USE OF COLLATERAL:
61- USE OF INVENTORY COLLATERAL.
(a) Except for Permitted Store Closing Sales, no Borrower shall engage
(ii) In any sale of the Inventory other than for (a) fair
consideration in the conduct of the Borrowers' business in the ordinary
course, or (b) dispositions of damaged or unsaleable Inventory consistent
with the Borrowers' historical practices.
(iii) Sales or other dispositions to creditors.
(iv) Sales or other dispositions in bulk.
(v) Sales of any Collateral in breach of any provision of this
Agreement.
(a) No sale of Inventory 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.
(b) The Borrowers shall not consent to the return of any item of Collateral
pursuant to Section 546(g)* of the Bankruptcy Code.
62- INVENTORY QUALITY. All Inventory now owned or hereafter acquired by
each Borrower is and will be of good and merchantable quality and free from
material defects (other than defects within customary trade tolerances).
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, 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,
provided, however, the authority granted the Borrowers pursuant to this Section
6:6-3 may be limited or terminated by the Agent at any time in the Agent's
discretion.
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) The Agent from time to time may verify the Receivables Collateral
directly with the Borrowers' Account Debtors, such verification to be undertaken
in keeping with commercially reasonable commercial lending standards.
(c) No Borrower has any knowledge of any impairment of the validity or
collectibility of any of the Accounts. The Lead Borrower shall notify the Agent
of any such impairment immediately after any Borrower becomes aware of any such
impairment.
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65- NOTIFICATION TO ACCOUNT DEBTORS. The Agent shall have the right (after
an Event of Default has occurred), 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- DEPOSITORY ACCOUNTS.
(a) Annexed hereto as EXHIBIT 7:7-1(a) is a Schedule of all present DDA's,
which Schedule includes, with respect to each depository (i) the name and
address of that depository; (ii) the account number(s) of the account(s)
maintained with such depository; and (iii) a contact person at such depository.
(b) The Lead Borrower shall deliver the following to the Agent, as a
condition to the effectiveness of this Agreement:
(ii) Notification, executed on behalf of each Borrower, to each
depository institution with which any DDA is maintained (other than any
Exempt DDA and the Blocked Account), in form reasonably satisfactory to the
Agent of the Agent's interest in such DDA.
(iii) A Blocked Account Agreement substantially in the form of EXHIBIT
7:7-1(b)(ii), annexed hereto, with any depository institution at which
either of the following conditions applies:
(B) Both any DDA (other than the Operating Account) and the
Operating Account is maintained.
(C) A Blocked Account is maintained.
(a) No Borrower will establish any DDA hereafter (other than an Exempt DDA)
unless, contemporaneous with such establishment, the Lead Borrower delivers the
following to the Agent:
(ii) Notification to the depository at which such DDA is established
if the same would have been required pursuant to Section 7:7-1(b)(ii)(A) if
the subject DDA were open at the execution of this Agreement.
(iii) A Blocked Account Agreement executed on behalf of the depository
at which such DDA is established if the same would have been required
pursuant to Section 7:7-1(b)(ii)(B) if the subject DDA were open at the
execution of this Agreement.
72- CREDIT CARD RECEIPTS.
(a) Annexed hereto as EXHIBIT 7:7-2, is a Schedule which describes all
arrangements to which any Borrower is a party with respect to the payment to
that Borrower of the proceeds of credit card charges for sales by that Borrower.
(b) The Lead Borrower shall deliver to the Agent, as a condition to the
effectiveness of this Agreement, notification, executed on behalf of each
Borrower, to each of each Borrower's credit card clearinghouses and processors
of notice (in form reasonably satisfactory to the Agent), which notice provides
that upon notification by the Agent, payment of all credit card charges
submitted by that Borrower to that clearinghouse or other processor and any
other amount payable to that Borrower by such clearinghouse or other processor
shall be directed to the Blocked Account or as otherwise designated from time to
time by the Agent. No Borrower shall change such direction or designation except
upon and with the prior written consent of the Agent.
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73- THE CONCENTRATION, BLOCKED, AND OPERATING ACCOUNTS .
(a) The following checking accounts have been or will be established (and
are so referred to herein):
(ii) The "Concentration Account" (so referred to herein): Established
by the Agent with Fleet National Bank.
(iii) The "Blocked Account" (so referred to herein): Established by
the Lead Borrower with PNC Bank and Bank One.
(iv) The "Operating Account" (so referred to herein): Established by
the Borrowers with PNC Bank.
(a) The contents of each DDA (other than the Operating Account) and of the
Blocked Account constitutes Collateral and Proceeds of Collateral. The contents
of the Concentration Account constitutes proceeds of the Collateral.
(b) 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).
74- PROCEEDS AND COLLECTIONS .
(a) All Receipts constitute Collateral and proceeds of Collateral.
(b) All Receipts:
(ii) Shall be held in trust by the Borrowers for the Agent.
(iii) Shall not be commingled with any of any Borrower's other funds.
(iv) Shall be deposited and/or transferred only to the Blocked Account
or the Concentration Account.
(a) The Lead Borrower shall cause the ACH or wire transfer to the Blocked
Account or the Concentration Account (except in those instances in which such
transfer is not within the control of the Lead Borrower or any other Borrower),
no less frequently than daily (and whether or not there is then an outstanding
balance in the Loan Account) of the following:
(v) The then contents of each DDA (other than any Exempt DDA), each
such transfer to be net of any minimum balance, not to exceed $2,000.00, as
may be required to be maintained in the subject DDA by the bank at which
such DDA is maintained.
(vi) The proceeds of all credit card charges not otherwise provided
for pursuant hereto.
(a) In the event that, notwithstanding the provisions of this Section
7:7-4(b), 7:7-4(c) any Borrower receives or otherwise has dominion and control
of any Receipts, or any proceeds or collections of any Collateral, such
Receipts, proceeds, and collections shall be held in trust by that Borrower for
the Agent and shall not be commingled with any of that Borrower's other funds or
deposited in any account of any Borrower other than as instructed by the Agent.
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75- PAYMENT OF LIABILITIES.
(a) On each Business Day, the Agent shall apply the then collected balance
of the Concentration Account (net of fees charged, and of such impressed
balances as may be required by the bank at which the Concentration Account is
maintained) First, towards the SwingLine Loans and Second, towards the unpaid
balance of the Loan Account and all other Liabilities.
(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 Concentration
Account on the Business Day on which deposited.
(iii) Funds paid to the Agent, other than by deposit to the
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 Concentration Account (Section
7:7-5(b)(i)) or payment (Section 7:7-5(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 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
Concentration Account remaining after the application towards the Liabilities
referred to in Section 7:7-5(a), above (less those amount which are to be netted
out, as provided therein) provided, however, in the event that
(vi) any Borrower is in Default; and
(vii) one or more L/C's are then outstanding, then the Agent may
establish a funded reserve of up to 110% of the aggregate Stated Amounts of
such L/C's. Such funded reserve shall either be (i) returned to the Lead
Borrower provided that no Borrower is in Default or (ii) applied towards
the Liabilities following acceleration following the occurrence of any
other Event of Default.
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76- THE OPERATING ACCOUNT. Except as otherwise specifically provided in, or
permitted by, this Agreement, all check clearings and other disbursements shall
be funded by the Lead Borrower solely from, the Operating 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 (all of which, together with any other
property in which the Agent may in the future be granted a security interest, is
referred to herein as the "Collateral"):
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All General Intangibles.
(d) All Equipment.
(e) All Chattel Paper.
(f) All Letter-of-Credit Rights.
(g) All Payment Intangibles.
(h) All Supporting Obligations.
(i) 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.
(j) All Investment Property, Instruments, Documents, Deposit Accounts,
money, policies and certificates of insurance, deposits, impressed accounts,
compensating balances, and cash.
(k) All Leasehold Interests.
(l) 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(j)).
(m) All liens, guaranties, rights, remedies, and privileges pertaining to
any of the foregoing (8:8-1(a) through 8:8-1(l)), including the right of
stoppage in transit.
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82- EXTENT AND DURATION OF SECURITY INTEREST.
(a) 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.
(b) It is intended that the Collateral Interests created herein extend to
and cover all assets of each Borrower other than Bankruptcy Recoveries.
Article 9:- AGENT AS BORROWER'S ATTORNEY-IN-FACT:
91- APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby irrevocably
constitutes and appoints the Agent as that (acting through any of its officers)
Borrower's true and lawful attorney, with full power of substitution, following
the occurrence of an Event of Default, to convert the Collateral into cash at
the sole risk, cost, and expense of that Borrower. 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 Lease 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 any Borrower on any notice to the Borrower's Account
Debtors or verification of the Receivables Collateral; sign any 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.
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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. Upon the occurrence of any Event
of Default the Agent may, and on the instruction of the SuperMajority Lenders as
provided in Section 13:13-1(b) shall, declare any and all Liabilities shall
become immediately due and payable. The occurrence of any Event of Default shall
also constitute, without notice or demand, a default under all other agreements
between the Agent or any Revolving Credit Lender and any Borrower and
instruments and papers heretofore, now, or hereafter given the Agent or any
Revolving Credit Lender by any Borrower.
101- FAILURE TO PAY THE REVOLVING CREDIT. The failure by any Borrower to
pay when due any principal of, interest on, or fees in respect of, the Revolving
Credit.
102- FAILURE TO MAKE OTHER PAYMENTS. The failure by any Borrower to pay
within five (5) days of when due any payment Liability other than any payment
liability on account of the principal of, or interest on, or fees in respect of,
the Revolving Credit.
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 included in any of the
following provisions hereof:
Section______Relates to______:
------------------------------
4:4-7 Indebtedness
4:4-19 Dividends. Investments. Other Corporate Actions
4:4-24 Affiliate Transactions
5:5-11 Minimum Excess Availability
Article 7: Cash Management
104- Financial Reporting Requirements. The failure by the Lead 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:
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------------------------- ------------ -------------------- ---------------------
REPORT / STATEMENT REQUIRED BY GRACE PERIOD NUMBER OF GRACE
SECTION PERIODS
------------------------- ------------ -------------------- ---------------------
Borrowing Base 5:5:5-4 One Business Day 3 per fiscal Quarter
Certificates
------------------------- ------------ -------------------- ---------------------
Monthly Report (15 Days) 5:5-5 Three Business Day 4 in any 12 months
------------------------- ------------ -------------------- ---------------------
105- FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The failure
by any Borrower within twenty (20) days following the earlier of any Borrower's
actual knowledge of a breach of any covenant or Liability not described in any
of Sections 10:10-1, 10:10-2, 10:10-3, or 10:10-4 or of its receipt of written
notice from the Agent of the breach of any of any of such covenants or
Liabilities.
106- MISREPRESENTATION. The determination by the Agent that 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 $1,000,000.00 to
any creditor other than the Agent or any Revolving Credit Lender, arising after
the Petition Date, could be accelerated or, without the consent of any Borrower,
any Lease could be terminated (except for any termination in connection with any
Permitted Store Closing Sales) (whether or not the subject creditor or lessor
takes any action on account of such occurrence).
108- DEFAULT UNDER OTHER AGREEMENTS. Except for a default resulting from
the filing of the Proceedings, the occurrence of any breach of any covenant or
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 CASUALTY LOSS. The occurrence of any uninsured loss, theft,
damage, or destruction of or to any material portion of the Collateral.
1010- ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
(a) The entry of any judgment against any Borrower in excess of
$1,000,000.00, which judgment is not satisfied (if a money judgment) or appealed
from (with execution or similar process stayed, whether pursuant to Section 362
of the Bankruptcy Code or otherwise) within fifteen (15) days of its entry.
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(b) The entry of any order or the imposition of any other process having
the force of law, the effect of which is to restrain in any material way the
conduct by any Borrower of its business in the ordinary course, unless stayed
pursuant to Section 362 of the Bankruptcy Code or otherwise.
1011- MODIFICATION OF BORROWING ORDER. The entry of an order in the
Proceedings, which order constitutes the stay, modification in an adverse
manner, as determined by the Agent in its reasonable discretion, or appealed (if
the Agent determines in its reasonable discretion, after designation of the
issues on appeal, that such appeal could reasonably affect the value of the
Collateral or the Agent's or Lenders' ability to realize upon the Collateral),
or reversal of any Borrowing Order or which otherwise materially adversely
affects, as determined by the Agent in its reasonable discretion, the
effectiveness of any Borrowing Order.
1012- APPOINTMENT OF TRUSTEE OR EXAMINER. The appointment in the
Proceedings of a trustee or of any examiner having expanded powers to operate
all or any part of any Borrower's business.
1013- CONVERSION OF PROCEEDINGS. The conversion of the Proceedings to a
case under Chapter 7 of the Bankruptcy Code.
1014- RELIEF FROM STAY. The entry of any order which provides relief from
the automatic stay otherwise imposed pursuant to Section 362 of the Bankruptcy
Code, which order permits any creditor, other than the Agent, to realize upon,
or to exercise any right or remedy with respect to, any material asset of any
Borrower or to terminate any license, franchise, or similar agreement, where the
exercise of such right or remedy or such realization or termination could have a
material adverse effect on any Borrower's financial condition or ability to
conduct its business in the ordinary course.
1015- DEFAULT BY GUARANTOR. The occurrence of any of the foregoing Events
of Default with respect to any guarantor or endorser of the Liabilities as if
such guarantor were a "Borrower" described therein.
1016- INDICTMENT - FORFEITURE. The indictment of, or institution of any
legal process or proceeding against, any Borrower, under any Applicable Law
where the relief, penalties, or remedies sought or available include the
forfeiture of any property of any Borrower aggregating for all Borrowers an
amount in excess of $1,000,000.00,and/or the imposition of any stay or other
order, the effect of which would have a Material Adverse Effect.
1017- TERMINATION OF GUARANTY. The termination or attempted termination of
any guaranty by any guarantor of the Liabilities.
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1018- 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 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 or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto.
1019- CHANGE IN CONTROL. Any Change in Control.
Article 11:- RIGHTS AND REMEDIES UPON DEFAULT:
111- Acceleration. Upon the occurrence of any Event of Default, subject to
the terms of the Borrowing Order, 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 Borrowers 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.
112- RIGHTS OF ENFORCEMENT. Following the occurrence of any Event of
Default, 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.
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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.
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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. No 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 Commitment Percentage
of the subject Revolving Credit Loan to the Agent.
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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, provided that if the Agent is not so advised by the SwingLine
Lender, then all SwingLine Loans shall be converted to Revolving Credit
Loans in which all Revolving Credit Lenders participate no less frequently
than weekly.
(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 Commitment
Percentage 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 Commitment Percentage 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.
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(a) In the event that, in reliance upon any of such assumptions, the Agent
makes available, a Revolving Credit Lender's Revolving Credit Commitment
Percentage 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.
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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. 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:
(i) The Agent shall pay each Revolving Credit Lender a portion of the
Revolving Credit Commitment Fee in accordance with the terms of the letter
agreement between the Agent and such Revolving Credit Lender within two (2)
Business days after such Person becomes a Revolving Credit Lender
hereunder.
(ii) The Agent shall distribute the Unused Fee, the L/C Fees, and the
Early Termination Fees to the Revolving Credit Lenders pro rata based upon
their respective Revolving Credit Commitment Percentages, within two (2)
Business Days after the Agent's receipt thereof.
(d) 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.
(e) Any amount received by the Agent as reimbursement for any cost or
expense (including without limitation, reasonable attorneys' 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).
(f) Each distribution pursuant to this Section 12:12-4 is subject to
Section 12:12-3(c), above.
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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.
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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 Commitment Percentage 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
Commitment Percentage 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.
(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.
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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) Xxxxxx Financial, Inc. has been granted the title of " Co-Agent and
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 Co-Agent and Documentation Agent
contemporaneous with its ceasing to be a Revolving Credit Lender.
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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 to any Revolving Credit Lender 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 Lender, shall have the same
rights and powers hereunder as any other Lender.
(e) The Syndication Agent (except as provided in the commitment letter for
this transaction) shall have no powers, rights, duties or responsibilities with
respect to this Agreement and the other Loan Documents.
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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 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 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.
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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.
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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 reasonable attorneys'
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.
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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, 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 $1,000,000,000.00. 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.
(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 an 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 Lender:
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.
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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 Permissible OverLoan 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
Permissible OverLoan 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 in Default, the SuperMajority Lenders may
direct the Agent to suspend the Revolving Credit (including the making of any
Permissible OverLoans), whereupon, as long as a Borrower is in Default, 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.
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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 the Consent of each Revolving Credit Lender
adversely affected thereby or with Unanimous Consent:
(a) Any increase in any Revolving Credit Lender's Revolving Credit Dollar
Commitment or Revolving Credit Commitment Percentage (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.
(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 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, exceeds
Availability and is not either a Permissible OverLoan, 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 Permissible OverLoan, 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).
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(a) The waiver of the obligation of the Borrowers to reduce the unpaid
principal balance of loans under the Revolving Credit to an amount which does
not exceed a Permissible OverLoan or, subject to the time limits included in
Section 15:15-3(a) (which places time and frequency limits on Permissible
OverLoans), to eliminate an OverLoan.
(b) Any amendment of this Article 15:.
(c) Amendment of any of the following Definitions:
"Majority Lender"
"Permissible OverLoan"
"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.
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159- ACTIONS REQUIRING BORROWER'S CONSENT The Lead Borrower's consent is
required for any amendment of this Agreement, except that each of the following
Articles of this Agreement may be amended without the consent of the Lead
Borrower:
Article_____Title of Article
----------------------------
12: Revolving Credit Fundings and Distributions
13: Acceleration and Liquidation
14: The Agent
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".
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(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 Commitment Percentages, 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.
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).
(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.
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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 16:16-2, 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 Commitment Percentage and Revolving Credit Commitment
Percentage of each Revolving Credit Lender. The Register shall be available for
inspection by the Revolving Credit Lenders 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
Acceptance.
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 Commitment Percentage and
Revolving Credit Commitment Percentage assigned by such Assignment and
Acceptance.
(i) The Assigning Revolving Credit Lender shall be released from the
Assigning Revolving Credit Lender's obligations arising thereafter 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.
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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, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xx. Xxxxxxx X. Xxxxxx
Fax : 000 000-0000
With a copy to:
Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxxxx X. Xxxx, Esquire
Fax : 000 000-0000
If to the Borrower:
Phar-Mor, Inc.
00 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention : Xx. Xxxxxx Xxxxxxx
Fax :
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
1290 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention : Xxxx X. Xxxxxxx, Esquire
Fax: : 000 000-0000
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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, 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 2:2-6(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 2:2-11(f).
(vi) Any accrued and unpaid Unused Line Fee.
(vii) All unreimbursed costs and expenses of the Agent and of Lenders'
Special Counsel for which any 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 reasonably may require.
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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
(subject to the specific terms hereof).
(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.
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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, or of any other payments received hereunder,
shall be applied 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, after the date hereof, the adoption of or any
change in 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 jurisdictions 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
lending office of any Revolving Credit Lender;
(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 forthwith pay to the Agent, for the benefit of the subject
Revolving Credit Lender, upon receipt of such notice, that amount which shall
compensate the subject Revolving Credit Lender for such additional cost or
reduction in income.
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199- COSTS AND EXPENSES OF THE AGENT .
(a) The Borrowers shall pay from time to time on demand all reasonable
costs, expenses, and disbursements (including reasonable attorneys' 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.
(b) The Borrowers shall pay from time to time on demand all other
reasonable costs, expenses, and disbursements (including reasonable attorneys'
fees and expenses) which may be incurred, after the execution of this Agreement,
in connection with or in respect to the credit facility contemplated hereby or
which otherwise are incurred with respect to the Liabilities.
(c) The Borrowers shall pay from time to time on demand all reasonable
costs and expenses (including reasonable attorneys' fees and expenses) incurred,
following the occurrence of any Event of Default, by the Revolving Credit
Lenders to Lenders' Special Counsel.
(d) Each Borrower authorizes the Agent to pay all such fees and expenses
and in the Agent's discretion, to add such fees and expenses to the Loan
Account.
(e) 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.
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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 unless superceded by
the provisions of the Bankruptcy Code.
1912- INDEMNIFICATION. Each Borrower shall indemnify, defend, and hold the
Agent and each Revolving Credit Lender and any of 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 Borrower, any
guarantor or endorser of the Liabilities, or any other Person (as well as from
reasonable attorneys' fees, expenses, and disbursements in connection therewith)
on account of the relationship of the Borrowers or of any other guarantor or
endorser of the Liabilities, including all costs, expenses, liabilities, and
damages as may be suffered by any Indemnified Person in connection with (x) the
Collateral; (y) the occurrence of any Event of Default; or (z) the exercise of
any rights or remedies under any of the Loan Documents (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 or in violation of this Agreement or any other
Loan Document. 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 19:19-12.
1913- 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 360 day year and actual days elapsed.
(b) Words in the singular include the plural and words in the plural
include the singular.
(c) 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).
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(d) 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.
(e) The words "includes" and "including" are not limiting.
(f) Text which follows the words "including, without limitation" (or
similar words) is illustrative and not limitational.
(g) 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.
(h) The words "may not" are prohibitive and not permissive.
(i) Any reference to a Person's "knowledge" (or words of similar import)
are to such Person's knowledge assuming that such Person has undertaken
reasonable and diligent investigation with respect to the subject of such
"knowledge" (whether or not such investigation has actually been undertaken).
(j) Terms which are defined in one section of any Loan Document are used
with such definition throughout the instrument in which so defined.
(k) The symbol "$" refers to United States Dollars.
(l) 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.
(m) 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.
(n) Except as otherwise specifically provided, all references to time are
to Boston time.
(o) 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 19:19-14 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.
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1914- INTENT. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of all Collateral Interests created by the Borrowers to
secure the Liabilities be broadly construed in favor of the Agent and that they
cover all assets of the Borrower.
(c) All Collateral Interests created in favor of the Agent at any time and
from time to time by any the secure all Liabilities, whether now existing or
contemplated or hereafter arising.
(d) Unless otherwise explicitly provided herein, the Agent's consent to any
action of any Borrower which is prohibited unless such consent is given may be
given or refused by the Agent in its sole discretion, subject to the terms of
Section 2:2-18 hereof.
1915- PARTICIPATIONS: Each Revolving Credit Lender may sell participations
to one or more financial institutions (each, a "Participant") in that Revolving
Credit Lender's interests herein provided that no such participation shall
include any provision which accords that Participant with any rights, vis a vis
the Agent, with respect to any requirement herein for approval by 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.
1916- 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 following the
occurrence of an Event of Default constitute security for all Liabilities and
for any and all obligations of the Borrowers 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 whether or not other
collateral is then available to the Agent or that Revolving Credit Lender.
1917- 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.
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1918- 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."
1919- EXECUTION IN COUNTERPARTS. This Agreement and other Loan Documents
may be executed in any number of counterparts, each of which when so executed
and delivered shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same instrument.
1920- WAIVERS.
(a) The Borrowers (and all guarantors, endorsers, and sureties of the
Liabilities) make 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 not or in the future, is relying on
such waivers.
(b) THE BORROWERS, AND EACH SUCH GUARANTOR, ENDORSER, AND SURETY
RESPECTIVELY WAIVE THE FOLLOWING:
(ii) Except as otherwise specifically required hereby or by any other
Loan Document, 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 THE BORROWERS
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.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
(vi) Any claim to consequential, special, or punitive damages.
PHAR-MOR, INC.
("LEAD BORROWER")
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
("BORROWERS")
PHAR-MOR, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
RX REALTY CORP.
By__________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR OF FLORIDA, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR OF OHIO, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR OF VIRGINIA, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR OF WISCONSIN, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR OF DELAWARE, INC.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHAR-MOR, INC. LLC
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
PHARMHOUSE CORP.
By_________________________________
Print Name: Xxxxxx X. Xxxxxxx
Title: Vice President Chief Financial Officer
FLEET RETAIL FINANCE INC.
("AGENT")
By_________________________________
Print Name:________________________________
Title:________________________________
The "Revolving Credit Lenders"
FLEET RETAIL FINANCE INC.
By_________________________________
Print Name:________________________________
Title:________________________________
XXXXXX FINANCIAL, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
FOOTHILL CAPITAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
GMAC COMMERCIAL CREDIT LLC
By_________________________________
Print Name:________________________________
Title:________________________________
LASALLE BUSINESS CREDIT, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
IBJ WHITEHALL RETAIL FINANCE.
By_________________________________
Print Name:________________________________
Title:________________________________
GMAC BUSINESS CREDIT, LLC
By_________________________________
Print Name:________________________________
Title:________________________________
667811.4
