Exhibit (4) (a)
REVOLVING CREDIT AGREEMENT
among
CLAIRE'S STORES, INC.,
CLAIRE'S BOUTIQUES, INC.,
CSL, INC.,
CBI DISTRIBUTING CORP.
CLAIRE'S CANADA CORP.
CLAIRE'S PUERTO RICO CORP.
and
BANK LEUMI TRUST COMPANY OF NEW YORK
Dated as of August 19, 1996
TABLE OF CONTENTS
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Accounting Terms . . . . . . . . . . . . . . .. . . . . . .1
1.2 General Terms . . . .. . . . . . . . . . . . . . . . . . . 1
1.3 Uniform Commercial Cod; Term; . . . . . . .. . . . . . . 10
II. ADVANCES; PAYMENTS . . . . . . . . . . . . . . . . . . . . . .10
2.1 Revolving Advances . . . . . . . . . . . . . . . . . . . .10
2.2 Notice of Borrowing . . . . . . . . . . . . . . .. . . . 10
2.3 Disbursement of Advance Proceeds . . . . . . . . . . . . .10
2.3A Conversions . . . . . . . . . . . . . . . . . . .. . . . 11
2.4 Maximum Advances; Clean-up Period . . . . . . . .. .. . . 11
2.5 Repayment of Advances . . . . . . . . . . . . . .. . . . 11
2.6 Repayment of Excess Advances . . . . . . . . . . . . . . .12
2.7 Statement of Account . . . . . . . . . . . . . . . . . . .12
2.8 Letters of Credit . . . . . . . . . . . . . . . .. . .. . 12
2.9 Issuance of Letters of Credit . . . . . . . . . .. . .. . 13
2.10 Requirements For Issuance of Letters of Credit . . . . . .13
2.11 Additional Payments . . . . . . . . . . . . . . .. . .. . 14
III. INTEREST AND FEES . . . . . . . . . . . . . . . . . . . . . . .14
3.1 Interest . . . . . . . . . . . . . . . . . . . . . .14
3.1A Interest Periods . . . . . . . . . . . . . . . . . . . . .15
3.2 Letter of Credit Fees . . . .. . . . . . . . . . . . . . .16
3.3 Facility Non-Use Fee . . . . . . . . . . . . . . . . . . .16
3.4 Operating Account . . . . . . . . .. . . . . . . . . . . .17
3.5 Computation of Interest and Fees . . . . . . . . . . . . .17
3.6 Maximum Charges . . . .. . . . . . . . . . . . . . . . . .17
3.7 Increased Costs .. . . . . . . . . . . . . . . . . . . . .17
3.7A Increased Costs, Illegality, etc. (Eurodollar
Advances) . . . .. . . . . . . . . . . . . . . . . . . . .18
3.7B Compensation . . . . . . . . . . . . . . . . . . . . . . .20
3.8 Capital Adequacy . . . . . . . . . . . . . . . . . . . . .20
3.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . .21
IV. GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Financial Disclosure . . . . . . . . . . . . . . . . . . .21
4.2 Compliance with Laws . . . . . . . . . . . . . . . . . . .22
4.3 Inspection of Premises . . . . . . . . . . . . . . . . . .22
4.4 Insurance . . . . . .. . . . . . . . . . . . . . . . . . .22
4.5 Failure to Pay Insurance . . . . . . . . . . . . . . . . .22
4.6 Payment of Taxes . . . . . . . . . . . . . . . . . . . . .23
4.7 Payment of Leasehold obligations . . . . . . . . . . . . .23
4.8 Maintenance of Equipment . . . . . . . . . . . . . . . . .23
4.9 Environmental Matters . . .. . . . . . . . . . . . . . . .23
V. REPRESENTATIONS AND WARRANTIES . . . . . .. . . . . . . . . . .25
5.1 Authority . . . . . . . . . . . . . . . . .. . . . . . . .25
5.2 Formation and Qualification . . . . . . .. . . . . . . . .26
5.3 Survival of Representations and Warranties . . . . . . . .26
5.4 Tax Returns . . . .. . . . . . . . . . . . . . . . . . . .26
5.5 Financial Statements . . . . . . . . . . . . . . . . . . .26
5.6 O.S.H.A. and Environmental Compliance. . . . . . . . . . .27
5.7 Solvency; No Litigation, Violation, Indebtedness or
Default . . . . . . . . . . . . . . . . . . . . . . . . .27
5.8 Licenses and Permits . . . . . . . . . . . . . . . . . . .27
5.9 Default of Indebtedness. . . . . . . . . . . . . . . . . .29
5.10 No Default . . . . . . . . . . . . . . . . . . . . . . . .29
5.11 No Burdensome Restri tions No Labor Disputes . . . . . . .29
5.12 No Labor Disputes. . . . . . . . . . . . . . . . . . . . .30
5.13 Margin Regulations . . . . . . . . . . . . . . . . . . . .30
5.14 Investment Company Act . . . . . . . . . . . . . . . . . .30
5.15 Disclosure . . . . . . . . . . . . . . . . . . . . . . . .30
5.16 (Intentionally omitted). . . . . . . . . . . . . . . . . .30
5.17 Swaps. . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.18 Conflicting Agreements . . . . . . . . . . . . . . . . . .30
5.19 Application of Certain laws and Regulations. . . . . . . .30
5.20 Suppliers and Customers. . . . . . . . . . . . . . . . . .31
VII AFFIRMATIVE COVENANTS . . . . . . . . .
6.1 Payment of Fees. . . . . . . . . .. . . . . . . . . . . . 31
6.2 Conduct of Business and Maintenance of Existence and
Assets . . . . . . . . . . . . . . . . . . . . . . . . . .31
6.3 Violations . . . . . . . . . . . . . . . . . . . . . . . .32
6.4 Tangible Net worth . . . . . . . . . . . . . . . . . . . .32
6.5 Interest Expense coverage Ratio. . . . . . . . . . . . . .32
6.6 Indebtedness to Tangible Net Worth . . . . . . . . . . . .32
6.7 Execution of Supplemental Instruments. . . . . . . . . . .32
6.8 Payment of Indebtedness . . . . .. . . . . . . . . . . . .32
6.9 Standards of Financial Statements. . . . . . . . . . . . .32
6.10 Current Ratio . . . . . . . . . .. . . . . . . . . . . . 32
6.11 Net Loss . . . . . . . . . . . . . . . . . . . . . . . . .32
6.12 Profit to Expense Ratio . . . . . . . . . . . . . . . . . 33
VII. NEGATIVE COVENANTS . . . . . . . . . . .
7.1 Merger, Consolidation, Acquisition and Sale of
Assets . . . . . . . . . . . . . . . . . . . . . . . . . .33
7.2 Creation of Liens. . . . . . . . . . . . . . . . . . . . .33
7.3 Guarantees . . . . . . . . . . . . . . . . . . . . . . . .33
7.4 Investments. . . . . . . . . . . . . . . . . . . . . . . .33
7.5 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . .33
7.6 [Intentionally omitted]. . . . . . . . . . . . . . . . . .34
7.7 [Intentionally omitted]. . . . . . . . . . . . . . . . . .34
7.8 [Intentionally omitted]. . . . . . . . . . . . . . . . . .34
7.9 Nature of Business . . . . . . . . . . . . . . . . . . . .34
7.10 Transactions with Affiliates . . . . . . . . . . . . . . .34
7.11 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . .34
7.12 Fiscal Year and Accounting Changes . . . . . . . . . . . .34
7.13 Pledge of Credit . . . . . . . . . . . . . . . . . . . . .34
7.14 Amendment of Articles of Incorporation, By-Laws. . . . . .35
7.15 Compliance with ERISA. . . . . . . . . . . . . . . . . . .35
7.16 [Intentionally omitted]. . . . . . . . . . . . . . . . . .35
7.17 [Intentionally omitted]. . . . . . . . . . . . . . . . . .35
7.18 Sale and Leaseback Transactions. . . . . . . . . . . . . .35
VIII.CONDITIONS PRECEDENT
8.1 Conditions to Initial Advances . . . . . . . . . . . . . .36
(a) Note . . . . . . . . . . . . . . . . . . . . . . . . 36
(b) Corporate Proceedings of Borrowers . . . . . . . . .36
(c) Incumbency Certificates of Borrowers . . . . . . . . 36
(d) Certificates . . . . . . . . . . . . . . . . . . . .36
(e) Good Standing Certificates . . . . . . . . . . . . . 36
(f) Legal Opinion. .. . . . . . . . . . . . . . . . . . .36
(g) No Litigation . . . . . . . . . . . . . . . . . . . .37
(h) Fees............................................... .37
(i) (Intentionally omitted). . . . . . . . . . . . . . . 37
(j) Payment Instructions . . . . . . . . . . . . . . . . 37
(k) Consents . . . . . . . . . . . . . . . . . . . . . . 37
(l) No Adverse Material Change . . . . . . . . . . . . . 37
(m) Other . . . . . . . . . . . . . . . . . . . . . . . .37
8.2 Conditions to Each Advance
(a) Representations and Warranties . . . . . . . . . . . .37
(b) No Default . . . . . . . . . . . . . . . . . . . . . .38
(c) Maximum Advances . . . . . . . . . . . . . . . . . . 38
INFORMATION AS TO BORROWERS . . . . . . . . . . . . . . . .38
9.1 Environmental Records. . . . . . . . . . . . . . . . .38
9.2 Litigation . . . . . . . . . . . . . . . . . . . . . .38
9.3 Material Occurrences . . . . . . . . . . . . . . . . .38
9.4 Annual Financial Statements. . . . . . . . . . . . . .39
9.5 Monthly Financial Statements . . . . . . . . . . . . .39
9.6 [Intentionally omitted]. . . . . . . . . . . . . . . .40
9.7 Other Reports. . . . . . . . . . . . . . . . . . . . .40
9.8 Additional Information . . . . . . . . . . . . . . . .40
9.9 Projected Operating Budget . . . . . . . . . . . . . .40
9.10 [Intentionally omitted]. . . . . . . . . . . . . . . .40
9.11 Notice of Suits, Adverse Events. . . . . . . . . . . .40
9.12 ERISA Notices and Requests . . . . . . . . . . . . . .41
9.13 Additional Documents . . . . . . . . . . . . . . . . .42
X. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . .42
XI. LENDER'S RIGHTS AND REMEDIES AFTER DEFAULT. . . . . . . . .44
11.1 Rights and Remedies. . . . . . . . . . . . . . . . . .44
11.2 Setoff . . . . . . . . . . . . . . . . . . . . . . . .44
11.3 Rights and Remedies not Exclusive. . . . . . . . . . .44
XII. WAIVERS AND JUDICIAL PROCEEDINGS. . . . . . . . . . . . . . 45
12.1 Waiver of Notice . . . . . . . . . . . . . . . . . . . 45
12.2 Delay. . . . . . . . . . . . . . . . . . . . . . . . . 45
12.3 Jury Waiver. . . . . . . . . . . . . . . . . . . . . ..45
XIII. EFFECTIVE DATE AND TERMINATION. . . . . . . . . . . . . . . 45
13.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.2 Termination. . . . . . . . . . . . . . . . . . . . . . 45
XIV. BORROWING AGENCY PROVISIONS. . . . . . . . . . . . . . . . .46
14.1 Appointment. . . . . . . . . . . . . . . . . . . . . . 46
14.2 Joint and Several Obligations. . . . . . . . . . . .. .46
XV. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 47
15.1 Governing Law. . . . . . . . . . . . . . . . . . . . . 47
15.2 Entire Understanding . . . . . . . . . . . . . . . . . 47
15.3 Successors and Assigns; Participations; New Lenders . .48
15.4 Application of Payments. . . . . . . . . . . . . . . . 48
15.5 Indemnity. . . . . . . . . . . . . . . . . . . . . . . 48
15.6 Notice . . . . . . . . . . . . . . . . . . . . . . . . 49
15.7 Severability . . . . . . . . . . . . . . . . . . . . . 49
15.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . 49
15.9 Injunctive Relief. . . . . . . . . . . . . . . . . . . 50
15.10 Consequential Damages . . . . . . . . . . . . . . . . 50
15.11 Captions. . . . . . . . . . . . . . . . . . . . . . . 50
15.12 Counterparts. . . . . . . . . . . . . . . . . . . . . 50
15.13 Construction. . . . . . . . . . . . . . . . . . . . . 50
REVOLVING CREDIT AGREEMENT
Revolving Credit Agreement dated as of August 19, 1996 among
CLAIRE'S STORES, INC., CLAIRE'S BOUTIQUES, INC., CSL, INC., CBI
DISTRIBUTING CORP., CLAIRE'S CANADA CORP., CLAIRE'S PUERTO RICO
CORP. (each, a Borrower" and, jointly and severally, the
"Borrowers), and BANK LEUMI TRUST COMPANY OF NEW YORK ("Leumi"),
a banking corporation organized under the laws of the State of
New York.
IN CONSIDERATION of the mutual covenants and undertakings
herein contained, Borrowers and Lender hereby agree as follows:
I. DEFINITIONS.
1.1 Accounting Terms. As used in this Agreement, the Note
or any certificate, report or other document made or delivered
pursuant to this Agreement, accounting terms not defined in
Section 1.2 or elsewhere in this Agreement and accounting terms
partly defined in Section 1.2 to the extent not defined, shall
have the respective meanings given to them under GAAP.
1.2 General Terms. For purposes of this Agreement the
following terms shall have the following meanings:
"Advances" shall mean and include Revolving Advances
and Letters of Credit.
"Affiliate" of any Person shall mean (a) any Person
(other than a Subsidiary) which, directly or indirectly, is in
control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director or officer (i)
of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or
indirect, (x) to vote 5% or more of the securities having
ordinary voting power for the election of directors of such
Person, or (y) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.
"Applicable Eurodollar Margin" shall mean with respect
to each Advance, a percentage per annum equal to, for the period
from the Closing Date to (but not including) the last day of the
Term with respect to such Advance, 1%.
"Authority" shall have the meaning set forth in Section
4.9(d
"Bank" shall mean Bank Leumi Trust Company of New York
and any successor thereto.
"Borrowers" shall mean, jointly and severally, Claire's
Stores , Inc. a Delaware corporation, Claire's Boutiques, Inc., a
Delaware corporation, CSL Inc., a Delaware corporation, CBI
Distributing Corp., a Delaware corporation, Claire's Canada
Corp., a Delaware corporation, Claire's Puerto Rico Corp., a
Delaware corporation, and all permitted successors and assigns of
each of them.
"Borrowing Agent" shall mean CSI.
"Business Day" shall mean any day other than a day on
which commercial banks in New York are authorized or required by
law to close.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C.9601 et seq.
"Charges" shall mean all taxes, charges, fees, imposts,
levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and
property taxes, custom duties, fees, assessments, Liens, Claims and
charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts, imposed by
any taxing or other authority, domestic or foreign (including,
without limitation, the Pension Benefit Guaranty Corporation or
any environmental agency or superfund), upon the assets of any
Borrower.
"Claims" shall mean all security interests, Liens,
claims or encumbrances held or asserted by any Person against any
or all of the assets of any Borrower, other than (A) Charges and
(B) Permitted Encumbrances.
"Closing Date" shall mean as of August 19, 1996 or such
other date as may be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated
thereunder.
"Consents" shall mean all filings and all licenses,
permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and other third parties,
domestic or foreign, necessary to carry on Borrowers' business,
including, without limitation, any Consents required under all
applicable federal, state or other applicable law.
"Controlled Group" shall mean all members of a
controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which,
together with any Borrower, are treated as a single employer
under Section 414 of the Code.
"CSI" shall mean Claire's Stores, Inc., a Delaware
corporation, and its successors and permitted assigns.
"Current Ratio" shall mean the ratio of consolidated
current assets to consolidated current liabilities as same are
treated in accordance with GAAP and consistent with those used in
the preparation of financial statements referred to in Section
IX.
"Default" shall mean an event which, with the giving of
notice or passage of time or both, would constitute an Event of
Default.
"Default Rate" shall have the meaning set forth in
Section 3.1 hereof.
"Documents" shall have the meaning set forth in Section
8.1(b) hereof.
"Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"Earnings Before Interest Expense Net of Interest
Income, Taxes, Depreciation and Amortization" shall mean, for any
fiscal period of Borrowers, Borrowers, earnings as shown on the
Borrowers' fiscal income statement before deducting interest
expense net of interest income, taxes, depreciation, and
amortization as determined in accordance with GAAP.
"Environmental Complaint" shall have the meaning set
forth.Section 4.9(d) hereof.
"Environmental Laws" shall mean all federal, state and
local environmental, land use, zoning, health, chemical use,
safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing
the use, storage, treatment, generation, transportation,
processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines,
interpretations, decisions, orders and directives of federal,
state and local governmental agencies and authorities with
respect thereto.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time and the rules
and regulations promulgated thereunder.
"Eurodollar Advances" shall mean each Advance bearing
interest at the rates provided in Section 3.1(b).
"Eurodollar Rate" shall mean with respect to each
Interest Period for a Eurodollar Advance, (i) the rate determined
by the Bank to be the arithmetic mean (rounded to the nearest
1/100 of 1%) of the offered quotation to first-class banks in the
interbank Eurodollar market for dollar deposits of amounts in
same day funds comparable to the outstanding principal amount of
the Eurodollar Advance for which an interest rate is then being
determined with maturities comparable to the Interest Period to
be applicable to such Eurodollar Advance, determined as of 10:00
A.M. (New York time) on the date which is two Business Days prior
to the commencement of such Interest Period divided (and rounded
upward to the next whole multiple of 1/16 of 1%) by (ii) a
percentage equal to 100% minus the then stated maximum rate of
all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or any successor category
of liabilities under Regulation D).
"Event of Default" shall mean the occurrence of any of
the events set forth in Article X hereof.
"GAAP" shall mean generally accepted accounting
principles in the United States of America in effect from time to
time.
"Governmental Body" shall mean any nation or
government, any state or other political subdivision thereof or
any entity exercising the legislative, judicial, regulatory or
administrative functions of or pertaining to a government.
"Hazardous Discharge" shall have the meaning set forth
in Section 4.9(d) hereof.
"Hazardous Substance" shall mean, without limitation,
any flammable explosives, radon, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products, methane, hazardous materials,
hazardous wastes, hazardous or toxic substances or related
materials as defined in CERCLA, the Hazardous Materials
TransportatiOn Act, as amended (49 U.S.C. Sections 1801, et
seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant
thereto.
"Hazardous Wastes" includes all waste materials subject
to regulation under CERCLA, RCRA or applicable state law, and any
other applicable Federal and state laws now in force or hereafter
enacted relating to hazardous waste disposal.
"Indebtedness" of a Person at a particular date shall
mean all obligations of such Person which in accordance with GAAP
would be classified upon a balance sheet as liabilities (except
capital stock and surplus earned or otherwise) including, without
limitation by reason of enumeration, all indebtedness, debt and
other similar monetary obligations of such Person whether direct
or guaranteed, and all premiums, if any, due at the required
prepayment dates of such indebtedness, and all indebtedness
secured by a Lien on assets owned by such Person, whether or not
such indebtedness actually shall have been created, assumed or
incurred by such Person; provided, however, that Indebtedness
shall not include obligations under operating leases. Any
indebtedness of such Person resulting from the acquisition by
such Person of any assets subject to any Lien shall be deemed,
for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
"Interest Expense Coverage Ratio" shall mean, with
respect to any fiscal period of Borrowers, the ratio of (a)
Earnings Before Interest Expense Net of Interest Income, Taxes,
Depreciation and Amortization to (b) Interest Expense Net of
Interest Income.
"Interest Expense Net of Interest Income" shall mean,
for any fiscal period, the expense relating to existing
Indebtedness of the Borrowers less the interest income that the
Borrowers earned on a fiscal basis as determined in accordance
with GAAP.
"Interest Period" with respect to any Eurodollar
Advance shall mean the interest period applicable thereto, as
determined pursuant to Section 3.1A.
"Lender" shall mean Leumi and any successor or assign.
"Letters of Credit"- shall have the meaning set forth
in Section 2.8.
"Letter of Credit Fees" shall have the meaning set
forth in Section 3.2.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien, Charge, Claim
or encumbrance, or preference, priority or other security
agreement or preferential arrangement in respect of any asset of
any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease
having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of
any jurisdiction; provided, however, that "Liens" shall not
include any lien on personal property located in any store of any
Borrower to the extent such lien secures such Borrower's
obligations to the landlord under the real property lease with
respect to such store.
"Maximum Loan Amount" shall mean $10,000,000.
"Multiemplover Plan" shall mean a I'multiemployer plan"
as defined in Sections 3(37) and 4001(a)(3) of ERISA.
"Net Worth" at a particular date, shall mean all
amounts which would be included under shareholders, equity on a
consolidated balance sheet of Borrowers determined in accordance
with GAAP as at such date.
"Note" shall mean the Revolving Credit Note.
"Notice of Borrowing" shall have the meaning provided
in Section 2.2.
"Notice of Conversion" shall have the meaning provided
in Section 2.3A.
"Obligations" shall mean and include any and all of
Borrowers' Indebtedness and/or liabilities to Lender or any
corporation that directly or indirectly controls or is controlled
by or is under common control with Lender of every kind, nature
and description, direct or indirect, secured or unsecured, joint,
several, joint and several, absolute or contingent, due or to
become due, now existing or hereafter arising, contractual or
tortious, liquidated or unliquidated, regardless of how such
indebtedness or liabilities arise or by what agreement or
instrument they may be evidenced or whether evidenced by any
agreement or instrument, including, but not limited to, any and
all of Borrowers, Indebtedness and/or liabilities under this
Agreement or under any other agreement between Lender and any
Borrower and all obligations of Borrowers to Lender to perform
acts or refrain from taking any action.
"Other Documents" shall mean any and all other
agreements, instruments and documents, including, without
limitation, guaranties, pledges, powers of attorney, consents,
and all other writings heretofore, now or hereafter executed by
Borrowers and/or delivered to Lender in respect of the
transactions contemplated by this Agreement.
"Parent" of any Person shall mean a corporation or
other entity owning, directly or indirectly, at least 50% of the
shares of stock or other ownership interests having ordinary
voting power to elect a majority of the directors of the Person,
or other Persons performing similar functions for any such
Person.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation.
"Payment Office" shall mean initially 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000; thereafter, such other office of
Lender, if any, which it may designate by notice to Borrowing
Agent to be the Payment Office.
"Permitted Encumbrances" shall mean (a) Liens for
taxes, assessments or other governmental charges not delinquent,
or, being contested in good faith and by appropriate proceedings
and with respect to which proper reserves have been taken; (b)
Liens disclosed in the financial statements referred to in
Section 5.5; (c) deposits or pledges to secure obligations under
worker's compensation, social security or similar laws, or under
unemployment insurance; (d) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of
money), leases, statutory obligations, surety and appeal bonds
and other obligations of like nature arising in the ordinary
course of Borrowers, business; (e) judgment Liens that have been
stayed or bonded and mechanics', worker's, materialmen's or other
like Liens arising in the ordinary course of Borrowers, business
with respect to obligations which are not due or which are being
contested in good faith; (f) Liens placed upon fixed assets
hereafter acquired to secure a portion of the purchase price
thereof, provided that (x) any such lien shall not encumber any
other property of Borrowers, and (y) Borrowers comply with the
notice requirement set forth in the proviso to Section 7.8; (g)
other Liens incidental to the conduct of Borrowers, business or
the ownership or leasing of their property and assets which were
not incurred in connection with the borrowing of money or the
obtaining of advances or credit, and which do not in the
aggregate materially detract from the value of such Borrower's
property or assets or which do not materially impair the use
thereof in the operation of such Borrower's business or otherwise
materially and adversely affect such Borrower's business, assets,
operations, condition (financial or otherwise) or prospects; and.
(i) Liens disclosed on Exhibit 1.2.
"Person" shall mean an individual, a partnership, a
corporation, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a governmental
authority or any other entity of whatever nature.
"Plan" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA, maintained for employees
ofany.-- Borrower or any member of the Controlled Group or any
such Plan to which any Borrower or any member of the Controlled
Group is required to contribute on behalf of any of its
employees.
"Profit to Expense Ratio" shall mean the ratio of the
Borrowers' consolidated net profit for the fiscal year most
recently ended, depreciation for that year and 50% of cash on
hand for that fiscal year end (as same are treated in accordance
with GAAP and consistent with the preparation of financial
statements referred to in Section IX) to the expenditures for
fixed or capital assets (including capitalized leases) plus any
dividends or distributions on any shares of the common stock or
preferred stock of the Borrowers plus debt to the Lender which
matures in less than one year.
"RCRA" shall mean the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq., as same may be amended
from time to time.
"Reference Rate" shall mean the commercial lending rate
designated as such by the Bank and in effect from time to time,
such rate to be adjusted automatically, without notice, on the
effective date of any change in such rate. This rate of interest
is determined from time to time by the Bank as a means of pricing
some loans to its customers and is neither tied to any external
rate of interest or index nor does it necessarily reflect the
lowest rate of interest actually charged by the Bank to any
particular class or category of customers of the Bank.
"Related Person" shall mean as to any Person, any
trade, business or other entity, whether or not incorporated,
which, together with such Person, is treated as a single employer
under Section 414(c) of the Code.
"Release" shall have the meaning set forth in Section
5.6(c)(i) hereof.
"Reportable Event" shall mean a reportable event
described in Section 4043(b) of ERISA or the regulations
promulgated thereunder.
"Revolving Advances" shall mean Advances made other
than Letters of Credit.
"Revolving Credit Note" shall mean the promissory note
referred to in Section 2.1 hereof.
"Revolving Interest Rate" shall mean an interest rate
per annum. equal to the Reference Rate or, at the Borrowers'
option, the Eurodollar Rate plus one percent (1.0%) per annum for
a one, two or three month period.
"Senior Debt Payments" shall mean and include all cash
actually expended by Borrowers to make (a) interest payments on
any Advances hereunder Plus (b) payments for all fees,
commissions and charges set forth herein and with respect to any
Advances.
"Subsidiary" of any Person shall mean a corporation or other
entity of whose shares of stock or other ownership interests
having ordinary voting power (other than stock or other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for
such entity, are owned, directly or indirectly, by such Person.
"Tangible Net Worth" at a particular date shall mean an
amount equal to (a) Net Worth minus (b) the aggregate amount of
all assets of Borrowers on a consolidated basis as may properly
be classified as intangible assets in accordance with GAAP minus
(c) outstanding loans or advances by Borrowers to any Affiliate
but only to the extent that the aggregate amount of such loans
and advances is permitted hereunder and exceeds $1,500,000.
"Term" shall mean the Closing Date through July 31,
1999.
"Termination Event" shall mean (i) a Reportable Event
with respect to any Plan or Multiemployer Plan; (ii) the
withdrawal of any Borrower or any member of the Controlled Group
from a Plan or Multiemployer Plan during a plan year in which
such entity was a "substantial employer" as defined in Section
4001(a)(2) of ERISA (except that a withdrawal of a Subsidiary of
CSI from the Claire's Stores, Inc. 401(k) Savings and Retirement
Plan shall not constitute a Termination Event): (iii ) the
providing of notice of intent to terminate a Plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which might
constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer,
any Plan or Multiemployer Plan, or (b) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of any Borrower or
any member of the Controlled Group from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material
present on any real property owned or leased by any Borrower
which has been shown to have significant adverse effect on human
health or which is subject to regulation under the Toxic
Substances Control Act (TSCA), 15 U.S.C. SS 2601 et seq.,
applicable state law, or any other applicable Federal or state
laws now in force or hereafter enacted relating to toxic
substances. "Toxic Substance" includes but is not limited to
asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
"Type" shall mean either a Reference Rate Advance or a
Eurodollar Advance.
1.3 Uniform Commercial Code Terms. All terms used herein
and defined in the uniform Commercial Code as adopted in the
State of New York shall have the meaning given therein unless
otherwise defined herein.
II. ADVANCES; PAYMENTS.
2.1 Revolving Advances. Subject to the terms and conditions
set forth in this Agreement, Lender will make Revolving Advances
to Borrowers in aggregate amounts outstanding at any time up to
the Maximum Loan Amount less the aggregate amount of outstanding
Letters of Credit.
The Revolving Advances shall be evidenced by a promissory
note ("Revolving Credit Note") substantially in the form attached
hereto as Exhibit 2.1.
2.2 Notice of Borrowing. Whenever the Borrowers desire to
obtain Advances, the Borrowing Agent shall give the Bank written
notice prior to 12:00 Noon (New York time) on the third Business
Day prior to each incurrence of Eurodollar Advances and on the
Business Day prior to each incurrence of Reference Rate Advances
to be made hereunder. Each such notice (each a "Notice of
Borrowing) shall be form of Exhibit 2.2 and shall be in the
irrevocable and shall specify (i) the aggregate principal amount
of the Advance to be made, (ii) the date of such Advance (which
shall be a Business Day), and (iii) whether the respective
Advance shall consist of a Reference Rate Advance or Eurodollar
Advance and, if a Eurodollar Advance, the Interest Period to be
initially applicable thereto.
Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or
any other agreement with Lender, or with respect to any other
Obligation, become due, same shall be deemed a request for a
Reference Rate Advance as of the date same is due unless paid,
with interest, within five (5) Business Days of notice thereof to
Borrowing Agent from Lender, in the amount required to pay in
full such interest, fee, charge or Obligation under this
Agreement or any other agreement with Lender, together with all
interest relating thereto, and such request shall be irrevocable.
2.3 Disbursement of Advance Proceeds. All Advances shall be
disbursed from whichever office or other place Lender may
designate from time to time and, together with any and all other
Obligations of Borrowers to Lender, shall be charged to
Borrowers' account on Lender's books. During the Term, Borrowers
may use the Revolving Advances (subject to the provisions of
Sections _2.3A, 3.1, 3.1A and 3.7B) by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions
hereof. The proceeds of each Revolving Advance requested by
Borrowing Agent or deemed to have been requested by Borrowing
Agent under Section 2.2 hereof shall, with respect to requested
Reference Rate Advances to the extent Lender makes such Reference
Rate Advances, be made available to Borrowing Agent on the
Business day following the date of such request and with respect
to Eurodollar Advances, be made available to the Borrowing Agent
three Business Days after such request by way of credit to
Borrowers' operating account at Bank established pursuant to
Section 3.4 hereof, or such other bank as Borrowing Agent may
designate following notification to Lender, in federal funds or
other immediately available funds or, with respect to Revolving
Advances deemed to have been requested, be disbursed to Lender to
be applied to the outstanding Obligations giving rise to such
deemed request.
2.3A Conversions. The Borrowers shall have the option to
convert on any Business Day (but subject to Section 3.7B) all or
a portion of the outstanding principal amount of the Advances
into another Type of Advance, Provided that (i) Reference Rate
Advances may only be converted into Eurodollar Advances if no
Default or Event of Default is in existence on the date of the
conversion and (ii) Eurodollar Advances resulting from this
Section 2.3A shall be in the minimum principal amount of
$1,000,000. Each such conversion shall be effected by the
Borrowing Agent giving the Bank notice prior to 12:00 Noon (New
York time), at least three Business Days' (or one Business Day's
in the case of a conversion into Reference Rate Advances) prior
written notice (each, a "Notice of Conversion") specifying the
Advances to be so converted, the Type of Advances to be converted
into and, if to be converted into Eurodollar Advances, the
Interest Period to be initially applicable thereto.
2.4 Maximum Advances; Clean-up Period. At no time shall the aggregate
balance of outstanding Advances exceed the Maximum Loan Amount. For a period
of thirty (30) consecutive days during each year of the Term,
Borrowers shall reduce the aggregate balance of outstanding
Revolving Advances to zero and shall maintain such zero balance
at all times during such period of thirty (30) consecutive days.
2.5 Repayment of Advances.
(a) The Advances shall be due and payable in full on the
last day of the Term and in the case of Eurodollar Advances at
maturity, subject to earlier prepayment as herein provided.
(b) All payments of principal, interest and other amounts
payable hereunder, or under any of the related agreements shall
be made to Lender at the Payment Office not later than 1:00 P.M.
(New York Time) on the due date therefor in lawful money of the
United States of America in federal funds or other funds
immediately available to Lender. Lender shall have the right to
effectuate payment on any and all Obligations due and owing
hereunder by charging Borrowers' account or by making Advances as
provided in Section 2.2 hereof.
(c) Borrowers shall pay principal, interest, and all other
amounts payable hereunder, or under any related agreement,
without any deduction whatsoever, including, but not limited to,
any deduction for any setoff or counterclaim.
2.6 Repayment of Excess Advances. The aggregate balance of
Advances outstanding at any time in excess of the maximum amount
of Advances permitted hereunder shall be immediately due and
payable without the necessity of any demand, at the Payment
Office, whether or not a Default or Event of Default has
occurred.
2.7 Statement of Account. Lender shall maintain, in
accordance with its customary procedures, a loan account in the
name of Borrowers in which shall be recorded the date, Type,
Interest Period (if applicable) and amount of each Advance made
by Lender and the date and amount of each payment in respect
thereof; provided, however, the failure by Lender to record the
date, Type, Interest Period (if applicable) and amount of any
Advance shall not adversely affect Lender. For each month, Lender
shall send to Borrowing Agent a statement showing the accounting
for the Advances made, payments made or credited in respect
thereof, and other transactions between Lender and Borrowers,
during such month. The monthly statements shall be deemed correct
and binding upon Borrowers in the absence of manifest error and
shall constitute an account stated between Lender and Borrowers
unless Lender receives a written statement of Borrowers' specific
exceptions thereto within thirty (30) days after such statement
is received by Borrowing Agent. The records of Lender with
respect to the loan account shall be prima facie evidence of the
amounts of Advances and other charges-thereto and of payments
applicable thereto.
2.8 Letters of Credit. Subject to the terms and conditions
hereof, Lender shall issue sight Letters of Credit ("Letters of
Credit") provided, however, that Lender will not be. required to
issue any Letters of Credit to the extent that the face amount of
such Letters of Credit would then cause the sum of (i) the
outstanding Revolving Advances plus (ii) outstanding Letters of
Credit (with the requested Letter of Credit being deemed to be
outstanding for purposes of this calculation) to exceed the
Maximum Loan Amount. All disbursements or payments related to
Letters of Credit shall be deemed to be Revolving Advances and
shall bear interest at the Revolving Interest Rate; Letters of
Credit that have not been drawn upon shall not bear interest,
Letters of Credit shall be subject to the terms and conditions
set forth in the Documentary Commercial/Standby Letter of Credit
Application and Security Agreement attached hereto as Exhibit
2.8.
2.9 Issuance of Letters of Credit.
(a) Borrowing Agent may request Lender to issue a
Letter of Credit by delivering to Lender at the Payment Office,
Lender's standard form of Documentary Commercial/Standby Letter
of Credit Application and Security Agreement (the "Letter of
Credit Application"), completed to the satisfaction of Lender,
and such other certificates, documents and other papers and
information as Lender or Bank may reasonably request.
(b) Each Letter of Credit shall, among other things, (i) provide
for the payment of sight drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied by the
documents described therein and (ii) have an expiry date not
later than six months after such Letter of Credit's date of
issuance and in no event later than the last day of the Term.
Each Letter of Credit Application and each Letter of Credit shall
be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any amendments or revision thereof and,
to the extent not inconsistent therewith, the laws of the State
of New York.
2.10 Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of
Credit, Borrowers shall indemnify, save and hold Lender harmless
from any 1099, cost, expense or liability, including, without
limitation, payments made by Lender, and expenses and reasonable
attorneys' fees incurred by Lender arising out of, or in
connection with, any Letter of Credit to be issued or created for
any Borrower. Borrowers shall be bound by Lender's or any issuing
or accepting bank's regulations and good faith interpretations of
any Letter of Credit issued or created for Borrowers' account,
although this interpretation may be different from Borrowers,
own; and, neither Lender, the bank which opened the Letter of
Credit, nor any of its correspondents shall be liable for any
error or mistakes, whether of omission or commission, in
following Borrowing Agent's instructions or those contained in
any Letter of Credit or of any modifications, amendments or
supplements thereto or in issuing or paying any Letter of Credit
except for Lender's or such correspondents, willful misconduct or
gross (not mere) negligence.
(b) Borrowing Agent shall authorize and direct any bank
which issues a Letter of Credit to name Borrowers as the "Account
Party" therein and to deliver to Lender all instruments
documents, and other writings and property received by the bank
pursuant to the Letter of Credit and to accept and rely upon
Lender's instructions and agreements with respect to all matters
arising in connection with the Letter of Credit or the
application therefor.
(c) In connection with all Letters of Credit issued or
caused to be issued by Lender under this Agreement, Borrowers
hereby appoint Lender, or its designee, as their attorney, with
full power and authority (i) to sign and/or endorse any
Borrower's name upon any warehouse or other receipts, letter of
credit applications and acceptances; (ii) to sign any Borrower's
name on bills of lading; (iii) to clear Inventory through the
United States of America Customs Department ("Customs") in the
name of any Borrower or Lender or Lender's designee, and to sign
and delivery to Customs officials powers of attorney in the name
of any Borrower for such purpose; and (iv) to complete in any
Borrower's name or Lender's, or in the name of Lender's designee,
any order, sale or transaction, obtain the necessary documents in
connection therewith, and collect the proceeds thereof. Neither
Lender nor its attorneys will be liable for any acts or omissions
nor for any error of judgment or mistakes of fact or law, except
for Lender's or its attorney's willful misconduct or gross (not
mere) negligence. This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.
2.11 Additional Payments. Any sums expended by Lender due to
any Borrower's failure to perform or comply with its obligations
under this Agreement or any Other Document including, without
limitation, such Borrower's obligations under Sections 4.5, 4.6,
4.7 and 6.1 hereof, may be charged to Borrowers, account as a
Revolving Advance and added to the Obligations as provided in
Section 2.2 hereof.
III. INTEREST AND FEES.
3.1 Interest. (a) The unpaid principal amount of each
Reference Rate Advance shall bear interest from the date of the
borrowing thereof until the last day of the Term (whether by
acceleration or otherwise) at a rate per annum which shall at all
times be the Reference Rate in effect from time to time.
(b) The
unpaid principal amount of each Eurodollar Advance shall bear
interest from the date of the borrowing thereof until maturity
(whether by acceleration or otherwise) at
a rate per annum which shall at all times be the Eurodollar Rate
plus the relevant Applicable Eurodollar Margin.
(c) All
overdue principal and, to the extent permitted by law, overdue
interest in respect of each Advance and any other overdue amount
payable hereunder shall bear interest at a rate per annum equal
to 2% in excess of the rate otherwise applicable to Reference
Rate Advances, provided that each Eurodollar Advance shall bear
interest after maturity (whether by acceleration or otherwise)
until the end of the Interest Period applicable thereto at such
maturity at a rate per annum equal to 2% plus the rate of
interest applicable thereto at maturity, with such interest to be
payable on demand.
(d) Interest shall accrue from and including the date of the making
of any Advance to but excluding the date of any repayment thereof
and shall be payable (i) in respect of each Reference Rate
Advance on the last Business Day of each month, (ii) in respect
of each Eurodollar Advance, on the last day of each Interest
Period applicable thereto and (iii) in respect of each Advance,
on any prepayment or conversion (on the amount prepaid or
converted), at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(e) The
Bank, upon determining the interest rate for any Eurodollar
Advances for any Interest Period, shall promptly notify the
Borrowing Agent thereof.
(f) Whenever, subsequent to the date of this Agreement, the Reference
Rate is increased or decreased, the interest on Reference Rate
Advances shall be similarly changed without notice or demand of
any kind by an amount equal to the amount of such change in the
Reference Rate during the time such change or changes remain in
effect.
3.1A Interest Periods. (a) (i) At the time the Borrowing
Agent gives a Notice of Borrowing or Notice of Conversion in
respect of the making of, or conversion into, Eurodollar Advances
(in the case of the initial Interest Period applicable thereto)
and (ii) prior to 12:00 Noon (New York time) on the third
Business Day prior to the expiration of an Interest Period
applicable to the making of a Eurodollar Advance, the Borrowing
Agent shall have the right to elect an Interest Period to be
applicable to such borrowing by giving the Bank written notice
thereof, which Interest Period shall, at the option of the
Borrowing Agent, be a one, two or three month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Eurodollar
Advances shall commence on the date of such Advance (including
the date of any-conversion from a Reference Rate Advance) and
each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(ii) if any Interest Period begins on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire
on a day which is not a Business Day, such Interest-Period shall
expire on the next succeeding Business Day, provided that if any
Interest Period would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(iv) no Interest Period in respect of any Advances
shall extend beyond the last day of the Term with respect to such
Advances;
(v) no Interest Period may be elected with respect
to Eurodollar Advances at any time when a Default or Event of
Default is then in existence; and
(vi) all Eurodollar Advances made on the same date
shall at all times have the same Interest Period.
(b) If upon the expiration of any Interest Period, the
Borrowing Agent has failed to (or may not) elect a new Interest
Period to be applicable to the respective Eurodollar Advances as
provided above, the Borrowing Agent shall be deemed to have
elected to convert such borrowing into Reference Rate Advances
effective as of the expiration date of such current Interest
Period.
3.2 Letter of Credit Fees.
(a) Borrowers shall pay Lender for issuing a Letter of
Credit (i) an opening fee equal to the greater of (a) a rate per
annum. of three tenths of one percent (0.3%) of the face amount
thereof or (b) $75 for each Letter of Credit opened, (ii) a fee
equal to that which is then being charged by Bank to customers in
connection with comparable-letters of credit and (iii) Bank's
other customary charges payable in connection with Letters of
Credit as in effect from time to time (which charges shall be
furnished to Borrowing Agent by Lender upon request) (the fees
set forth in (i), (ii) and (iii) are referred to as the "Letter
of Credit Fees"). Such fees and charges shall be payable, in the
case of any Letter of Credit, (i) on its opening, (ii) at the
time of each increase in face amount thereof and (iii) at such
other times as Bank customarily imposes fees with respect to
letters of credit. Any such charge in effect at the time of a
particular transaction shall be the charge for that transaction,
notwithstanding any subsequent change in Bank's prevailing
charges for that type of transaction. All Letter of Credit Fees
payable hereunder shall be deemed earned in full on the date when
the same are due and payable hereunder and shall not be subject
to rebate or proration upon the termination of this Agreement for
any reason.
3.3 Facility Non-Use Fee. If, for any month during the
term of this Agreement, the average daily unpaid balance of the
Revolving Advances for each day of such month does not equal the
Maximum Loan Amount, then Borrowers shall pay to Lender a fee at
a rate equal to two tenths of one percent (.20%) per annum. on
the amount by which the Maximum Loan Amount exceeds such average
daily unpaid balance. Such fee shall be payable to Lender in
arrears on the last day of each month.
3.4 Operating Account. Borrowers shall maintain a
separate demand deposit operating account with Bank to facilitate
the operating activity for Revolving Advances and Letters of
Credit.
3.5 Computation of Interest and Fees. Interest and fees
hereunder shall be computed on the basis of a year of 360 days
and for the actual number of days elapsed. If any payment to be
made hereunder becomes due and payable on a day other than a
Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at
the Revolving Interest Rate during such extension.
3.6 Maximum Charges. In no event whatsoever shall interest
and other charges charged hereunder exceed the highest rate
permissible under law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the
event that a court determines that Lender has received interest
and other charges hereunder in excess of the highest rate
applicable hereto, such excess interest shall be first applied to
any unpaid principal balance owed by Borrowers, and if the then
remaining excess interest is greater than the previously unpaid
principal balance, Lender shall promptly refund such excess
amount to Borrowers and the provisions hereof shall be deemed
amended to provide for such permissible rate.
3.7 Increased Costs. In the event that any applicable law,
treaty or governmental regulation, or any change therein or in
the interpretation or application thereof, or compliance by
Lender (for purposes of this Section 3.7, the term "Lender" shall
include Lender and any corporation or bank controlling Lender)
with any request or directive (whether or not having the force of
law) from any central bank or other financial, monetary or other
authority, shall:
(a) subject Lender to any tax of any kind
whatsoever with respect to this Agreement or change the basis of
taxation of payments to Lender of principal, fees, interest or
any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income
of Lender by the Federal government or the jurisdiction in which
it maintains its principal office);
(b) impose, modify or hold applicable any reserve,
special deposit, assessment or similar requirement other than
those in effect on date of this Agreement against assets held by,
or deposits in or for the account of, advances or loans by, or
other credit extended by, any office of Lender, including
(without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or
(c) impose on Lender any other condition with
respect to this Agreement or any Other Documents; and the result
of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining its Advances hereunder by an
amount that Lender deems to be material or to reduce the amount
of any payment (whether of principal, interest or otherwise) in
respect of any of the Advances by an amount that Lender deems to
be material, then, in any case Borrowers shall promptly pay
Lender, upon its demand, such additional amount as will
compensate Lender for such additional cost or such reduction, as
the case may be. Lender shall certify the amount of such
additional cost or reduced amount to Borrowing Agent, and such
certification shall be conclusive absent manifest error.
3.7A Increased Costs, Illegality, etc. (Eurodollar
Advances). (a) In the event that the Bank shall have determined
(which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on
any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the date of
this Agreement affecting the interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the
definition of Eurodollar Rate; or
(ii) at
any time, that the Bank shall incur increased costs or reductions
in the amounts received or receivable hereunder with respect to
any Eurodollar Advances (other than any increased cost or
reduction in the amount received or receivable resulting from the
imposition of or a change in the rate of income taxes or similar
charges) because of (x) any change since the Closing Date in any
applicable law, governmental rule, regulation, guideline, order
or request (whether or not having the force of law), or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline, order or request (such as, for example, but not
limited to, a change in official reserve requirements, but, in
all events, excluding reserves required under Regulation D to the
extent included in the computation of the Eurodollar Rate) and/or
(y) other circumstances affecting the interbank Eurodollar
market; or
(iii) at
any time, that the making or continuance of any Eurodollar
Advance has become unlawful by compliance by the Bank in good
faith with any law, governmental rule, regulation, guideline or
order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law but
with which the Bank customarily complies even though the failure
to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the
Closing Date which materially and adversely affects the interbank
Eurodollar market; then, and in any such event, the Bank shall on
such date give notice (by telephone confirmed in writing) to the
Borrowing Agent. Thereafter (x) in the case of clause (i) above,
Eurodollar Advances shall no longer be available until such time
as the Bank notifies the Borrowing Agent that the circumstances
giving rise to such notice by the Bank no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the
Borrowing Agent with respect to Eurodollar Advances which have
not yet been incurred shall be deemed rescinded by the Borrowing
Agent, (y) in the case of clause (ii) above, the Borrowers shall
pay to such Bank, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different
method of calculating, interest or otherwise as the Bank in its
sole discretion shall determine) as shall be required to
compensate such Bank for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to
the additional amounts owed to the Bank, showing the basis for
the calculation thereof, submitted to the Borrowing Agent by the
Bank shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of clause
(iii) above, the Borrowers shall take one of the actions
specified in Section 3.7A(b) as promptly as possible and, in any
event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected. by
the circumstances described in Section 3.7A(a)(ii) or (iii), the
Borrowing Agent may (and in the case of a Eurodollar Advance
affected pursuant to Section 3.7A(a)(ii) or (iii), the Borrowing
Agent shall) either (i) if the affected Eurodollar Advance is
then being made, cancel said Advance by giving the Bank
telephonic notice (confirmed promptly in writing) thereof on the
same date that the Borrowing Agent was notified by the Bank
pursuant to Section 3.7A(a)(ii) or (iii), or (ii) if the affected
Eurodollar Advance is then outstanding, upon at least three
Business Days' notice to the Bank, require the Bank to convert
each such Eurodollar Advance into a Reference Rate Advance (which
conversion, in the case of the circumstances described in Section
3.7A(a)(iii) shall occur no later than the last day of the
Interest Period then applicable to such Eurodollar Advance (or
such earlier date as shall be required by applicable law)).
(c) If the Bank shall have determined that after the
Closing Date, the adoption or effectiveness of any applicable
law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof,
or compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Bank's
capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which the Bank could
have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration the Bank's policies with
respect to capital adequacy), then from time to time, upon
written demand by the Bank, the Borrowers shall pay to the Bank
such additional amount or amounts as will compensate the Bank for
such reduction. The Bank, upon determining in good faith that any
additional amounts will be payable pursuant to this Section
3.7A(c), will give prompt written notice thereof to the Borrowing
Agent, which notice shall set forth the basis of the calculation
of such additional amounts, although the failure to give any such
notice shall not release or diminish any of the Borrowers,
obligations to pay additional amounts pursuant to this Section
3.7A(c) upon the subsequent receipt of such notice.
3.7B Compensation. The Borrowers shall compensate the
Bank, upon its written request (which request shall set forth the
basis for requesting such compensation), for all reasonable
losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required
by the Bank to fund its Eurodollar Advances) which the Bank may
sustain: (i) if for any reason (other than a default by the Bank)
the making of Eurodollar Advances does not occur on a date
specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrowing Agent or
deemed withdrawn pursuant to Section 3.7A(a)); (ii) if any
repayment, prepayment or conversion of any of its Eurodollar
Advances occurs on a date which is not the last day of an
Interest Period applicable thereto; (iii) if any prepayment or
conversion of any of its Eurodollar Advances is not made on any
date specified in a notice of prepayment or conversion given by
the Borrowing Agent; or (iv) as a consequence of (x) any other
def xxxx by the Borrowers to repay its Advances when required by
the terms of this Agreement or (y) an election made pursuant to
Section 3.7A(b).
3.8 Capital Adequacy.
(a) In the event that Lender shall have determined that any
applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender
(for purposes of this Section 3.8, the term "Lender" shall
include Lender and any corporation or bank controlling Lender)
with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on Lender's capital as a consequence
of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance
(taking into consideration Lender's policies with respect to
capital adequacy) by an amount deemed by Lender to be material,
then, from time to time, Borrowers shall pay upon demand to
Lender such additional amount or amounts as will compensate
Lender for such reduction. In determining such amount or amounts,
Lender may use any reasonable averaging or attribution methods.
The protection of this Section 3.8 shall be available to Lender
regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or
condition.
(b) A certificate of Lender setting forth such
amount or amounts as shall be necessary to compensate Lender with
respect to Section 3.8(a) hereof when delivered to Borrowing
Agent shall be conclusive absent manifest error.
3.9 Survival. The obligations of Borrowers under Sections
3.7 and 3.8 shall survive termination of this Agreement and the
Other Documents and payment in full of the Obligations.
IV. GENERAL TERMS
4.1 Financial Disclosure. Borrowers hereby irrevocably
authorize and direct all accountants and auditors employed by
Borrowers at any time during the term of this Agreement to
exhibit and deliver to Lender copies of any of Borrowers,
financial statements or other accounting records of any sort in
the accountant's or auditor's possession, and to disclose to
Lender any information such accountants may have concerning
Borrowers' financial status and business operations; however
Lender will give two (2) Business Days' notice to Borrowers in
order to afford to Borrowers the opportunity to furnish such
information or materials during such two (2) Business Day period
prior to obtaining such information or materials from such
accountants. Borrowers hereby authorize all federal, state and
municipal authorities to furnish to Lender copies of reports or
examinations relating to Borrowers, whether made by Borrowers or
otherwise; however, Lender will give two (2) Business Days'
notice to Borrowers in order to afford to Borrowers the
opportunity to furnish such information or materials during such
two (2) Business Day period prior to obtaining such information
or materials from such governmental authorities. Lender hereby
agrees to maintain the confidentiality of the financial
information that it receives pursuant to this section; however,
nothing herein shall be understood to prohibit Lender from using
or disseminating such information to its employees, attorneys,
accountants and agents, as necessary, for the proper
administration of Lender's rights and obligations under this
Agreement.
4.2 Compliance with Laws. Borrowers shall comply with all
acts, rules, regulations and orders of any legislative,
administrative or judicial body or official applicable to the
operation of Borrowers, business the non-compliance with which
would have a material adverse effect on the operations, business
or condition (financial or otherwise) of the Borrowers taken as a
whole.
4.3 Inspection of Premises. At all reasonable times, but,
unless there shall have occurred an Event of Default, not more
than twice annually and only following reasonable notice to
Borrowers, Lender shall have full access to and the right to
audit, check, inspect and make abstracts and copies from
Borrowers' books, records, audits, correspondence and all other
papers relating to the operation of Borrowers I business. Lender
and its agents may enter upon any of Borrowers, premises at any
time during business hours and at any other reasonable time, and
from time to time, but, unless there shall have occurred an Event
of Default, not more than twice annually, for the purpose of
inspecting any and all records pertaining to the operation of
Borrowers' business.
4.4 Insurance. At Borrowers, own cost and expense, in
amounts and with carriers reasonably acceptable to Lender,
Borrowers shall (a), except to the extent that Borrowers have, as
of the date hereof, established a self-insurance program,
reasonably acceptable to the Lender, for such insurable
properties and properties in which Borrowers have an interest,
keep all its insurable properties and properties in which
Borrowers have an interest (except automobiles (with respect to
property damage only) and all store assets, including inventory,
equipment, leasehold improvements and store fixtures, located in
any of Borrowers' stores] insured against the hazards of fire, f
lood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts,
as is customary in the case of companies engaged in businesses
similar to Borrowers, including, without limitation, business
interruption insurance; (b) maintain public and product liability
insurance against claims for personal injury, death or property
damage suffered by others; (c) maintain all such workmen's
compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which any Borrower is
engaged in business; (d) furnish Lender with an opportunity, at
any time, to review and, at Lender's own expense, copy all
policies and evidence of the maintenance of such policies.
4.5 Failure to Pay Insurance. If any Borrower fails to
obtain insurance as hereinabove provided, or to keep the same in
force, Lender, if Lender so elects, may obtain such insurance and
pay the premium therefor for Borrowers, account, and charge
Borrowers' account therefor, and such expenses so paid shall be
part of the Obligations.
4.6 Payment of Taxes. Each Borrower will pay when due all
taxes, assessments and other Charges or Claims lawfully levied or
assessed upon such Borrower or any of its assets including,
without limitation, real and personal property taxes, assessments
and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes, except for such
amounts being contested in good faith by such Borrower provided
that adequate reserves therefor are made in accordance with GAAP.
If any tax by any governmental authority is or may be imposed on
or as a result of any transaction between Borrowers and Lender
which Lender may be required to withhold or pay, or if any taxes,
assessments, or other Charges remain unpaid after the date fixed
for their payment, Lender may, with notice to Borrowers, pay the
taxes, assessments, Liens, Charges or Claims and Borrowers hereby
indemnify and hold Lender harmless in respect thereof. The amount
of any payment by Lender under this Section 4.6 shall be charged
to Borrowers' account as a Revolving Advance and added to the
Obligations and, until Borrowers shall furnish Lender with an
indemnity therefor (or supply Lender with evidence satisfactory
to Lender that due provision for the payment thereof has been
made), Lender may hold without interest any balance standing to
any Borrower's credit.
4.7 Payment of Leasehold Obligations. Each Borrower shall
at all times pay, when and as due, its rental obligations under
all leases under which it is a tenant, except for such amounts
being contested in good faith by-such Borrower provided that
adequate reserves therefor are made in accordance with GAAP, and
shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and,
at Lender's request, will provide evidence of having done SO.
4.8 Maintenance of Equipment. All of Borrowers,
equipment shall be maintained in good operating condition and
repair (reasonable wear and tear excepted) and all necessary
replacements of and repairs thereto shall be made 90 that the
value and operating efficiency of the equipment shall be
maintained and preserved. Borrowers shall not use or operate
equipment in violation of any law, statutes, ordinances, codes,
rules or regulations.
4.9 Environmental Matters.
(a) Each Borrower will ensure that all of its owned and
leased real property remains in compliance with all Environmental
Laws and will not place or permit to be placed any Hazardous
Substances thereon except as not prohibited by applicable law or
appropriate governmental authorities, except in any case where
the failure to do so would not have a material adverse effect on
the business, assets, operations, condition (financial or
otherwise) or prospects of the Borrowers, taken as a whole.
(b) Borrowers will establish and maintain a system to
assure and monitor continued compliance with all applicable
Environmental Laws which system shall include periodic reviews of
such compliance, except where the failure to do so would not have
a material adverse effect on the business, assets, operations,
condition (financial or otherwise) or prospects of the Borrowers,
taken as a whole.
(c) Each Borrower will (i) employ in connection with its
use of all of its owned and leased real property appropriate
technology necessary to maintain compliance with any applicable
Environmental Laws, (ii) dispose of any and all Hazardous Waste
generated thereat only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable
Environmental Laws and (iii) use its best efforts to obtain
certificates of disposal, such as hazardous waste manifest
receipts, from all treatment, transport, storage or disposal
facilities or operators employed by such Borrower in connection
with the transport or disposal of any such Hazardous Waste,
except in any case, where the failure to do so would not have a
material adverse effect on the business, assets, operations,
condition (financial or otherwise) or prospects of the Borrowers,
taken as a whole.
(d) In the event any Borrower obtains, gives or receives
notice of any Release or threat of Release of a reportable
quantity of any Hazardous Substances at any of its owned and
leased real property (any such event being hereinafter referred
to as a "Hazardous Discharge") or receives any notice of
violation, request for information or notification that it is
potentially responsible for investigation or cleanup of
environmental conditions at any of its owned and leased real
property, demand letter or complaint, order, citation, or other
written notice with regard to any Hazardous Discharge or
violation of Environmental Laws affecting such real property or
such Borrower's interest therein (any of the foregoing is
referred to herein as an "Environmental Complaint") from any
Person or entity, including any state agency responsible in whole
or in part for environmental matters in the state in which such
real property is located or the United States Environmental
Protection Agency (any such person or entity hereinafter the
"Authority"), then such Borrower shall, within five (5) Business
Days, give written notice of same to Lender detailing facts and
circumstances of which such Borrower is aware giving rise to the
Hazardous Discharge or Environmental Complaint Such information
is not intended to create nor shall it create any obligation upon
Lender with respect thereto.
(e) Each Borrower shall promptly forward to Lender copies
of any request for information, notification of potential
liability, demand letter relating to potential responsibility
with respect to the investigation or cleanup of Hazardous
Substances at any other site owned, operated or used by such
Borrower to dispose of Hazardous Substances and shall continue to
forward copies of correspondence between such Borrower and the
Authority regarding such claims to Lender until the claim is
settled. Each Borrower shall promptly forward to Lender
copies of all documents and reports concerning a Hazardous
Discharge that such Borrower is required to file under any
Environmental Laws.
(f) Each Borrower shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary
action in order to safeguard the health of any Person. If any
Borrower shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or any Borrower shall fail
to comply with any of the requirements of any Environmental Laws,
Lender may, but without the obligation to do so: (A) give such
notices or (B.) enter onto the real property (or authorize third
parties to enter onto the real property) and take such actions as
Lender (or such third parties as directed by Lender) deem
reasonably necessary or advisable, to clean up, remove, mitigate
or otherwise deal with any such Hazardous Discharge or
Environmental Complaint. All reasonable costs and expenses
incurred by Lender (or such third parties) in the exercise of any
such rights, including any sums paid in connection with any
judicial or administrative investigation or proceedings, fines
and penalties, together with interest thereon from the date
expended at the Default Rate for Revolving Advances shall be paid
by Borrowers upon demand, and until paid shall be added to and
become a part of the Obligations.
V. REPRESENTATIONS AND WARRANTIES.
Borrowers represent and warrant as follows:
5.1 Authority. Each Borrower has full power, authority and
legal right to enter into this Agreement and the other Documents
and perform all obligations hereunder and thereunder. The
execution, delivery and performance hereof and of the Other
Documents (a) are within each Borrower's corporate powers, have
been duly authorized, are not in contravention of law or the
terms of such Borrower's by-laws, certificate of incorporation or
other applicable documents relating to such Borrower's formation
or to the conduct of such Borrower's business or of any material
agreement or undertaking to which such Borrower is a party or by
which such Borrower is bound, and (b) will not conflict with nor
result in any breach in any of the provisions of or constitute a
default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the
provisions of any agreement, charter document, instrument, bylaw,
of other instrument to which such Borrower is a party or by which
it may be bound.
5.2 Formation and Oualification.
(a) Each Borrower is duly incorporated and in good
standing under the laws of the state of its incorporation and is
qualified to do business and is in good standing in all states
where the failure to maintain good standing would have a material
adverse affect on its ability to conduct its business and own its
property and where the failure to so qualify would have a
material adverse effect on all of the Borrowers, taken as a
whole, or their businesses, taken as a whole. Each Borrower has
delivered to Lender true and complete copies of its certificate
of incorporation and by-laws and will promptly notify Lender of
any amendment or changes thereto.
(b) The only Subsidiaries of CSI are listed on
Schedule 5.2.
5.3 Survival of Representations and Warranties. All
representations and warranties of Borrowers contained in this
Agreement and the Other Documents shall be true at the time of
Borrowers' execution of this Agreement and the Other Documents,
and shall survive the execution, delivery and acceptance thereof
by Lender and the parties thereto and the closing of the
transactions described therein or related thereto.
5.4 Tax Returns. Each Borrower has filed all federal, state
and local tax returns and other reports it is required by law to
file and has paid all taxes, assessments, fees and other
governmental charges that are due and payable. To the best of
Borrowers' knowledge, the provision for taxes on the books of
Borrowers are adequate for all years not closed by applicable
statutes, and for their current fiscal year, and Borrowers have
no knowledge of any deficiency or additional assessment in
connection therewith not provided for on their books.
5.5 Financial Statements.
The consolidated and consolidating balance sheets of CSI,
its Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective
periods during which a subsidiary relationship existed) as of
February 3, 1996 and the related statements of income, changes in
stockholder's equity, and changes in cash flow for the period
ended on such date, all accompanied by reports thereon containing
opinions without qualification by independent certified public
accountants, copies of which have been delivered to Lender, have
been prepared in accordance with GAAP, consistently applied
(except for changes in application in which such accountants
concur and present fairly the financial position of CSI and its
subsidiaries at such date and the results of their operations f
or such period. Since February 3, 1996 there has been no change
in the condition, financial or otherwise, of CSI or its
Subsidiaries as shown on the consolidated balance sheet as of
such date and no change in the aggregate value of machinery,
equipment and real property owned by CSI and its Subsidiaries,
except changes in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse to
all of the Borrowers, taken as a whole.
5.6 O.S.H.A. and Environmental Compliance.
(a) Each Borrower has duly complied in all material
respects with, and its facilities, business, assets, property,
leaseholds and equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety
and Health Act, the Environmental Protection Act, RCRA and all
other Environmental Laws, and there are no outstanding citations,
notices or orders of non-compliance issued to any Borrower or
relating to its business, assets, property, leaseholds or
equipment under any such laws, rules or regulations, which, in
any case, could materially and adversely affect the operations,
business, assets, condition (financial or otherwise) or prospects
of the Borrowers, taken as a whole.
(b) Each Borrower has been issued all required federal,
state and local licenses, certificates or permits relating to all
applicable Environmental Laws, the absence of which could
materially and adversely affect the operations, business, assets,
condition (financial or otherwise) or prospects of the Borrowers,
taken as a whole.
(c) (i) There are no visible signs of releases, spills,
discharges, leaks or disposal (collectively referred to as
"Releases") of Hazardous Substances at, upon, under or within any
real property owned or leased by any Borrower; (ii) there are no
underground storage tanks or polychlorinated biphenyls on any
real property owned or leased by any Borrower; (iii) no real
property owned or leased by any Borrower has ever been used as a
treatment, storage or disposal facility of Hazardous Waste; and
(iv) no Hazardous Substances are present on such real property,
excepting such quantities as are handled in accordance with all
applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary
for the operation of the commercial business of Borrowers or of
their tenants.
5.7 Solvency; No Litigation, violation, Indebtedness or
Default.
(a) The Borrowers, taken as a whole, are solvent, able to
pay their debts as they mature, have capital sufficient to carry
on their business and all businesses in which they are about to
engage, and (i) as of the Closing Date, the fair present saleable
value of their assets (calculated on a going concern basis) is in
excess of the amount of their liabilities and (ii) subsequent to
the Closing Date, the fair saleable value of their assets
(calculated on a going concern basis) will be in excess of the
amount of their liabilities.
(b) Except as disclosed in Schedule 5.7(b), no Borrower has
(i) any pending or threatened litigation, actions or proceedings
which involve the possibility of materially and
adversely affecting the business, assets, operations, condition
or prospects, financial or otherwise of the Borrowers, taken as a
whole, or the ability of any Borrower to perform this Agreement,
nor (ii) any Indebtedness for money borrowed other than the
obligations.
(c) No Borrower is in violation of any applicable statute,
regulation or ordinance in any respect materially and adversely
affecting its business, assets, operations or condition
(financial or otherwise), or prospects, nor is in violation of
any order of any court, governmental authority or arbitration
board or tribunal.
(d) No Borrower nor any member of the Controlled Group
maintains or contributes to any Plan other than those listed on
Schedule 5.7(d) hereto. Except as set forth in Schedule 5.7(d),
(i) no Plan has incurred any "accumulated funding deficiency," as
defined in Section 302(a)(2) of ERISA and Section 412(a) of the
Code, whether or not waived, and each Borrower and each member of
the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan,
(ii) each Plan which is intended to be a qualified plan under
Section 401(a) of the Code as currently in effect has been
determined by the Internal Revenue Service to be qualified under
Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code,
(iii) no Borrower nor any member of the Controlled Group has
incurred any liability to the PBGC other than for the payment of
premiums, and there are no premium payments which have become due
which are unpaid, (iv) no Plan has been terminated by the plan
administrator thereof or by the PBGC, and there is no occurrence
which would cause the PBGC to institute proceedings under Title
IV of ERISA to terminate any Plan, (v) at this time, the current
value of the assets of each Plan is equal to or exceeds the
present value of the accrued benefits and other liabilities of
such Plan and no Borrower nor any member of the Controlled Group
knows of any facts or circumstances which would materially change
the value of such assets and accrued benefits and other
liabilities, (vi) to the best of such Borrower's knowledge no
Borrower nor any member of the Controlled Group has breached any
of the responsibilities, obligations or duties imposed on it by
ERISA with respect to any Plan which would result in a material
loss or liability to such Borrower (vii) no Borrower nor any
member of a Controlled Group has-incurred any liability for any
excise tax arising under Section 4972 or 49808 of the Code, and
no fact exists which could give rise to any such liability,
(viii) to the best of such Borrower's knowledge no Borrower nor
any member of the Controlled Group nor any fiduciary of, nor any
trustee to, any Plan, has engaged in a "prohibited transaction"
described in Section 406 of the ERISA or Section 4975 of the Code
which would result in a material loss or liability to such
Borrower nor taken any action which would constitute or result in
a Termination Event with with respect to any such Plan which is
subject to ERISA, (ix) each Borrower and each member of the
Controlled Group has made all contributions due and payable with
respect to each Plan subject to the jurisdiction of the PBGC, (x)
there exists no event described in Section 4043(b) of ERISA, for
which the thirty (30) day notice period contained in 29 CFR
2615.3 has not been waived, (xi) no Borrower nor any member of
the Controlled Group has any fiduciary responsibility for
investments with respect to any Plan subject to the jurisdiction
of the PBGC existing for the benefit of persons other than
employees or former employees of such Borrower and any member of
the Controlled Group, and (xii) no Borrower nor any member of the
Controlled Group has withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980.
5.8 Licenses and Permits. Except as set forth in Schedule
5.8, each Borrower (a) is in compliance with and (b) has procured
and is now in possession of, all material licenses or permits
required by any applicable federal, state, or local law or
regulation for the operation of its business in each jurisdiction
wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits would have
a material adverse effect on the business, properties, condition
(financial or otherwise) or operations, present or prospective of
such Borrower.
5.9 Default of Indebtedness. No Borrower is in default in
the payment of the principal of or interest on any Indebtedness
or under any instrument or agreement under or subject to which
any Indebtedness has been issued, and no event has occurred under
the provisions of any such instrument or agreement which with or
without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.10 No Default. No Borrower is in default in the
payment or performance of any ofits contractual obligations which
would be likely to adversely effect the business, assets,
operations or condition ( financial or otherwise) or prospects
of the Borrowers, taken as a whole, and no Default has occurred.
5.11 No Burdensome Restrictions. No Borrower is party to any
contract or agreement the performance of which would adversely
affect the business, assets, operations, condition (financial or
otherwise) or prospects of the Borrowers, taken as a whole.
5.12 No Labor Disputes. No Borrower is involved in any labor
dispute; there are no strikes or walkouts or union organization
of any of Borrowers' employees threatened or in existence and no
labor contract is scheduled to expire during the Term other than
as Set forth on Schedule 5.12 hereto.
5.13 Margin Regulations. No Borrower is engaged, nor
will any engage, principally or as one of its important
activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation
U or Regulation G of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect.
No part of the proceeds of any Advance will be used for
"purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.
5.14 Investment Company Act. No Borrower is an "investment
company" registered or required to be registered under the
Investment Company Act of 1940, as amended, nor is it controlled
by such a company.
5.15 Disclosure. No representation or warranty made by any
Borrower in this Agreement or in any financial statement, report,
certificate or any other document furnished in connection
herewith contains any untrue statement of fact or omits to state
any fact necessary to make the statements herein or therein not
misleading. There is no fact known to any Borrower or which
reasonably should be known to any Borrower which such Borrower
has not disclosed to Lender in writing with respect to the
transactions contemplated by this Agreement which adversely
affects the condition (financial or otherwise), results of
operations, business, assets or prospects of such Borrower.
5.16 [Intentionally omitted].
5.17 Swaps. No Borrower is a party to, nor will any be a
party to, any swap agreement whereby such Borrower has agreed or
will agree to swap interest rates or currencies unless same
provides that damages upon termination following an event of
default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
5.18 Conflicting Agreements. No material provision of any
mortgage, indenture, contract, agreement, judgment, decree or
order binding on any Borrower conflicts with, or requires any
Consent which has not already been obtained to, or would in any
way prevent the execution, delivery or performance of, the terms
of this Agreement or the Other Documents.
5.19 Application of Certain Laws and Regulations. Neither
any-Borrower nor any Affiliate of any Borrower is subject to any
statute, rule or regulation which regulates the incurrence of any
Indebtedness, including without limitation, statutes or
regulations relative to common or interstate carriers or to the
sale of electricity, gas, steam, water, telephone, telegraph or
other public utility services.
5.20 Suppliers and Customers.
(a) Each of the Botrowers and each Subsidiary has
adequate sources of supply for its business as currently
conducted and as proposed to be conducted. Each has good
relationships with all of its material sources of supply of goods
and services and each does not anticipate any material problem
with any such material sources of supply.
(b) No Borrower has any knowledge that the customer
base of any Borrower might materially decrease.
VI. AFFIRMATIVE COVENANTS.
Each Borrower shall, until payment in full of the
Obligations and termination of this Agreement:
6.1 Payment of Fees. Pay to Lender on demand all usual and
customary fees and expenses which Lender incurs in connection
with the forwarding of Advance proceeds. Lender may, without
making demand, charge the account of Borrowers for all such fees
and expenses.
6.2 Conduct of Business and Maintenance of Existence and
Assets. (a) Conduct continuously and operate actively its
business according to good business practices and maintain all
of. its properties useful or necessary in its business in good
working order and condition (reasonable wear and tear excepted),
including, without limitation, all licenses, patents, copyrights,
tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual
property right; (b) keep in full force and effect its existence
and comply in all material respects with the laws and regulations
governing the conduct of its business where the failure to do so
would have a material adverse effect on such Borrower or its
busin ess; and (c) make all such reports and pay all such
franchise and other taxes and license fees and do all such other
acts and things as may be lawfully required to maintain its
rights, licenses, leases, powers and franchises under the laws of
the United States or any political subdivision thereof where the
failure to do so would have a material adverse effect on such
Borrower or its business.
6.3 Violations. Promptly notify Lender in writing of
any violation of any law, statute, regulation or ordinance of any
governmental entity, or of any agency thereof, applicable to any
Borrower which could materially and adversely affect the
business, assets, operations, condition (financial or otherwise)
or prospects of the Borrowers, taken as a whole.
6.4 Tangible Net Worth. Cause to be maintained as at the
end of each fiscal quarter, commencing as of August 1, 1996, a
Tangible Net Worth in an amount not less than $125,000,000.
6.5 Interest Expense Coverage Ratio. Cause to be maintained
at the end of each fiscal year an Interest Expense Coverage Ratio
of not less than 2:1.
6.6 Indebtedness to Tangible Net Worth. Cause to be
maintained as of the end of each fiscal quarter a ratio of total
Indebtedness of Borrowers on a consolidated basis to Tangible Net
Worth of not greater than 1:1.
6.7 Execution of Supplemental Instruments. Execute and
deliver to Lender from time to time, upon demand, such
supplemental agreements, statements, instruments or documents as
Lender may request in order that the full intent of this
Agreement may be carried into effect.
6.8 Payment of Indebtedness. Pay, discharge or otherwise
satisfy at or before maturity (subject, where applicable, to
specified grace periods and, in the case of the trade payables,
to normal payment practices) all its obligations and liabilities
of whatever nature, except when the amount or validity thereof is
currently being contested in good faith by appropriate
proceedings and Borrowers shall have provided for such reserves
as Lender may reasonably deem proper and necessary, subject at
all times to any applicable subordination arrangement in favor of
Lender.
6.9 Standards of Financial Statements. Cause all financial
statements and notices referred to in Sections 9.4, 9.5, 9.7,
9.8, 9.9, 9.11, 9.12 and 9.13 to be complete and correct in all
material respects (subject, in the case of interim financial
statements, to normal year-end audit adjustments) and to be
prepared in reasonable detail and, as applicable, in accordance
with GAAP applied consistently throughout the periods reflected
therein (except as concurred in by such reporting accountants or
officer, as the case may be, and disclosed therein).
6.10 Current Ratio. Cause to be maintained a Current Ratio,
as at the end of each fiscal quarter, of not less than 1.5:1.
6.11 Net Loss. Not permit a consolidated net loss, as same
is treated in accordance with GAAP and consistent with the
financial statements delivered to the Bank per Section IX, in
excess of $10,000,000 for any two consecutive fiscal quarters of
Borrowers.
6.12 Profit to Expense Ratio. As at the end of each fiscal
year, cause to be maintained, a Profit to Expense Ratio of not
less than 1:1.
VII. NEGATIVE COVENANTS.
No Borrower shall, until satisfaction in full of the
obligations and termination of this Agreement:
7.1 Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other
reorganization with or into any other Person or business division
or acquire all or a substantial portion of the assets or stock of
any Person or business division or permit any other Person to
consolidate with or merge with it unless, with respect to any
merger,. consolidation, reorganization or acquisition of assets
or stock, (i) Lender receives prior written notice thereof and
(ii) after giving effect to such merger, consolidation,
reorganization or acquisition of assets or stock no Default or
Event of Default shall exist.
(b) Sell, lease, transfer or otherwise dispose of
all, or substantially all, of its properties or assets.
7.2 Creation of Liens. Create or suffer to exist any Lien,
Charge or Claim upon or against any of its property or assets now
owned or hereafter acquired other than Permitted Encumbrances.
7.3 Guarantees. Become liable upon the obligations of any
person, firm or corporation by assumption, endorsement or
guaranty thereof or otherwise (other than to Lender) except (a)
the endorsement of checks in the ordinary course of business and
(b) guarantees of any other Borrower's obligations.
7.4 Investments. Purchase or acquire obligations or stock
of, or any other interest in, any Person, except (a) obligations
issued or guaranteed by the United States of America or any
agency thereof, (b) commercial paper with maturities of not more
than 180 days and a published rating of not less than A-2 or P-2
(or the equivalent rating), (c) certificates of time deposit and
bankers' acceptances having maturities of not more than 180 days
and repurchase agreements backed by United States government
securities of a commercial bank if such bank has a combined
capital and surplus of at least $100,000,000, (d) U.S. money
market funds that invest solely in obligations issued or
guaranteed by the United States of America or an agency thereof
and (e) shares, assets or obligations of a company or division,
for purposes of acquisition, whose business purpose is similar to
that of the Borrowers.
7.5 Loans. Make advances, loans or extensions of credit to
any Person, including without limitation, any Parent, Subsidiary
or Affiliate, except as expressly permitted in Section 7.10
hereof.
7.6 [Intentionally omitted].
7.7 [Intentionally omitted].
7.8 [Intentionally omitted].
7.9 Nature of Business. Substantially change the nature of
the business in which it is presently engaged, nor except as
specifically permitted hereby purchase or invest, directly or
indirectly, in any assets or property other than in the ordinary
course of business for assets or property which are useful in,
necessary for and are to be used in its business as presently
conducted.
7.10 Transactions with Affiliates. Directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer
or lease any property to, or otherwise deal with, any Affiliate,
except transactions disclosed to Lender, in the ordinary course
of business, and on an arm's-length basis on terms no less
favorable than terms which would have been obtainable from a
Person other than an Affiliate; except that (i) any Borrower may
make loans or advances to any other Borrower provided that at the
end of each fiscal quarter of Borrowers the net balance of all
such inter-Borrower loans or advances on a consolidated basis
shall be zero and (ii) any Borrower may make loans or advances to
employees of any Borrower in an aggregate amount which, together
with all other loans or advances to employees of any Borrower
from all other Borrowers, is not at any time in excess of
$1,500,000, so long as prior to and after giving effect to any
such loans or advances there shall not exist any Event of Default
or Default.
7.11 Subsidiaries. Form or acquire any Subsidiary, with
assets in excess of $10,000,000, unless (i) such Subsidiary
expressly joins in this Agreement as a borrower and becomes
jointly and severally liable for the obligations of Borrowers
hereunder, under the Note, and under any other agreement between
Borrowers and Lender and (ii) Lender shall have received all
documents, including legal opinions, it may reasonably require to
establish compliance with each of the foregoing conditions.
7.12 Fiscal Year and Accounting Changes. Change its fiscal
year end from the Saturday closest to January 31 of each calendar
year or make any change (i) in accounting treatment and reporting
practices except as required by GAAP or (a) in tax reporting
treatment except as required by law.
7.13 Pledge of Credit. Now or hereafter pledge Lenders
credit on any purchases or for any purpose whatsoever or, except
as otherwise specifically permitted herein, use any portion of
any Advance in or for any business other than Borrowers, business
as conducted on the date of this Agreement.
7.14 Amendment of Articles of Incorporation, By-Laws.
Amend, modify or waive any material term or material provision of
its Articles of Incorporation or By-Laws, which impacts the
ability of the Borrowers to repay the obligations.
7.15 Compliance with ERISA. (i) (x) Maintain, or permit any
member of the Controlled Group to maintain, or (y) become
obligated to contribute, or permit any member of the Controlled
Group to become obligated to contribute, to any Plan, other than
those Plans disclosed on Schedule 5.7(d) if such contribution
would result in a material increase in costs to such Plan or in a
material loss or liability to Borrower, (ii) engage, or permit
any member of the Controlled Group to engage, in any nonexempt
"prohibited transaction", as that term is defined in section 406
of ERISA and Section 4975 of the Code which would result in a
material 1099 or liability to such Borrower, (iii) incur, or
permit any member of the Controlled Group to incur, any
"accumulated funding deficiency", as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (iv) terminate,
or permit any member of the Controlled Group to terminate, any
Plan where such event could result in any liability of Borrowers
or any member of the Controlled Group or the imposition of a lien
on the property of any Borrower or any member of the Controlled
Group pursuant to Section 4068 of ERISA, (v) assume, or permit
any member of the Controlled Group to assume, any obligation to
contribute to any Multiemployer Plan not disclosed on Schedule
5.7(d), (vi) incur, or permit any member of the Controlled Group
to incur, any withdrawal liability to any Multiemployer Plan;
(vii) fail promptly to notify the Lender of the occurrence of any
Termination Event, (viii) fail to comply in all material
respects, or permit a member of the Controlled Group to fail to
comply in all material respects, with the requirements of ERISA
or the Code or other applicable laws in respect of any Plan if
any such failure could result in a material adverse effect on the
business, assets, operations, condition (financial or otherwise)'
or prospects of the Borrowers, taken as a whole, (ix) fail to
meet, or permit any member of the Controlled Group to fail to
meet, all minimum funding requirements under ERISA or the Code or
postpone or delay or allow any member of the Controlled Group to
postpone or delay any funding requirement with respect of any
Plan.
7.16 [Intentionally omitted].
7.17 [Intentionally omitted].
7.18 Sale and Leaseback Transactions. At any time, directly
or indirectly, without the express prior written consent of
Lender, enter into any sale and leaseback transaction, in an
aggregate amount in excess of $15,000,000, with respect to any of
the assets of any Borrower.
VIII. CONDITIONS PRECEDENT.
8.1 Conditions to Initial Advances. The agreement of Lender
to make the initial Advances requested to be made on the Closing
Date is subject to the satisfaction, or waiver by Lender,
immediately prior to or concurrently with the making of such
Advances, of the following conditions precedent:
(a) Note. Lender shall have received the Note duly
executed and delivered by an authorized officer of each Borrower;
(b) Corporate Proceedings of Borrowers. Lender
shall have received a copy of the resolutions in form and
substance reasonably satisfactory to Lender, of the Board of
Directors of each Borrower authorizing the execution, delivery
and performance of this Agreement, the Notes and any Other
Documents (collectively the "Documents"), in each case certified
by the Secretary or an Assistant Secretary of such Borrower as of
the Closing Date; and, each such certificate shall state that the
resolutions thereby certified have not been amended, modified,
revoked or rescinded as of the date of such certificate;
(c) Incumbency Certificates of Borrowers. Lender
shall have received a certificate of the Secretary or an
Assistant Secretary of each Borrower, dated the Closing Date, as
to the incumbency and signature of the officers of such Borrower
executing this Agreement, any certificate or other documents to
be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
(d) Certificates. Lender shall have received a copy
of the Articles or Certificate of Incorporation of each Borrower,
and all amendments thereto, together with copies of the By-Laws
of each Borrower and all agreements of such Borrower's
shareholders, if any, certified as accurate and complete by the
Secretary of such Borrower;
(e) Good Standing Certificates. Lender shall have
received good standing certificates for each Borrower dated not
more than 10 days prior to the Closing Date, issued by the
Secretary of State or other appropriate official of such
Borrowers jurisdiction of incorporation and the jurisdiction(s)
where Borrowers maintain their principal place of business;
(f) Legal Opinion. Lender shall have received the
executed legal opinion of Rubin, Baum, Xxxxx, Constant, Xxxxxxxx
& Bilzin in form and substance satisfactory to Lender which shall
cover such matters incident to the transactions contemplated by
the Documents, as Lender may reasonably require;
(g) No Litigation. (i) No litigation, investigation
or proceeding before or by any arbitrator or governmental
authority shall be continuing or threatened against any Borrower
or against the officers or directors of any Borrower (A) in
connection with the Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of
Lender, is deemed material or (B.) which if adversely determined,
would, in the reasonable opinion of Lender, have a material
adverse effect on the business, assets, operations or condition
(financial or otherwise) of any Borrower; and (ii) no injunction,
writ, restraining order or other order of any nature materially
adverse to any Borrower or the conduct of its business or
inconsistent with the due consummation of this Agreement shall
have been issued by any governmental authority;
(h) Fees. Lender shall have received all fees
payable to Lender on or prior to the Closing Date pursuant to
Article III hereof;
(i) [Intentionally omitted].
(j) Payment Instructions. Lender shall have
received written instructions from Borrowing Agent directing the
application of proceeds of the initial Advances made pursuant to
this Agreement;
(k) Consents. Lender shall have received any and
all Consents necessary to permit the effectuation of the
transactions contemplated by this Agreement and the Other
Documents;
(l) No Adverse Material Change. Since February 3,
1996, there shall not have occurred (i) any material adverse
change in the business, financial condition, prospects or results
of operations of the Borrowers, taken as a whole; or (ii) any
event, condition or state of facts which would reasonably be
expected materially and adversely to affect the business,
financial condition or results of operations of the Borrowers,
taken as a whole; and
(m) Other. All corporate and other proceedings, and
all documents, instruments and other legal matters in connection
with the transactions herein contemplated shall be satisfactory
in form and substance to Lender and its counsel.
8.2 Conditions to Each Advance. The agreement of Lender to
make any Advance requested to be made on any date (including,
without limitation, the initial Advance), is subject to the
satisfaction of the following conditions precedent as of the ate
such Advance is made:
(a) Representations and Warranties. Each of the
representations and warranties made by Borrowers in or pursuant
to this Agreement and any related agreements to which it is a
party, and each of the representations and warranties contained
in any certificate, document or financial or other statement
furnished at any time under or in connection with this Agreement
or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of
such date;
(b) No Default. No Event of Default or Default
shall have occurred and be continuing on such date, or would
exist after giving effect to the Advances requested to be made,
on such date; provided, however that Lender, in its sole
discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances
so made shall not be deemed a waiver of any such Event of Default
or Default; and
(c) Maximum Advances. In the case of any Advances
requested to be made, after giving effect thereto, the aggregate
Advances shall not exceed the maximum Advances permitted under
Section 2.1 hereof. Each request for an Advance by Borrowing
Agent hereunder shall constitute a representation and warranty by
each Borrower as of the date of such Advance that the conditions
contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWERS.
Each Borrower shall, until satisfaction in full of the
Obligations and the termination of this Agreement:
9.1 Environmental Records. Furnish Lender, concurrently
with the delivery of the financial statements referred to in
Sections 9.4 and 9.5, with a certificate of Borrowers signed by
the President of Borrowing Agent stating, to the best of his
knowledge, that Borrowers are in compliance in all material
respects with all federal, state and local laws relating to
environmental protection and control and occupational safety and
health. To the extent any Borrower is not in compliance with the
foregoing laws in any material respect, the certificate shall set
forth with specificity all areas of non-compliance and the
proposed action such Borrower will implement in order to achieve
full compliance.
9.2 Litigation. Promptly notify Lender in writing of any
litigation, suit or administrative proceeding affecting
Borrowers, whether or not the claim is covered by insurance,
which could materially and adversely affect the business, assets,
operations, condition or prospects (financial or otherwise) of
the Borrowers, taken as a whole.
9.3 Material occurrences. Promptly notify Lender in writing
upon the occurrence of (a) any Event of Default or Default; (b)
any event, development or circumstance whereby any financial
statements or other reports furnished to Lender fail in any
material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating
results of Borrowers as of the date of such statements; (c) any
accumulated retirement plan funding deficiency which, if such
deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Internal Revenue Code, could
subject any Borrower to a tax imposed by Section 4971 of the
Internal Revenue Code; (d) each and every default by any Borrower
which might reasonably be expected to result in the acceleration
of the maturity of any Indebtedness in excess of $1,000,000,
including the names and addresses of the holders of such
Indebtedness with respect to which there is a default existing or
with respect to which the maturity has been or could be
accelerated, and the amount of such Indebtedness; and (e) any
other development in the business or affairs of any Borrower
which might reasonably be expected to be materially adverse to
the Borrowers, taken as a whole; in each case describing the
nature thereof and the action such Borrower proposes to take with
respect thereto.
9.4 Annual Financial Statements. Furnish Lender within
ninety (90) days after the end of each fiscal year of Borrowers,
audited financial statements of Borrowers on a consolidated basis
and unaudited financial statements of Borrowers on a
consolidating basis including, but not limited to, statements of
income and stockholders, equity and cash flow from the beginning
of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in
accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail and, with respect to the
consolidated financial statements, reported upon without
qualification by an independent certified public accounting firm
selected by Borrowers and satisfactory to Lender. The report of
such accounting firm shall be accompanied by a statement of such
accounting firm certifying that in making the examination upon
which such report was based either no information came to their
attention which to their knowledge constituted an Event of
Default or a Default under this Agreement or the related
Documentary Commercial/Standby Letter of Credit Application and
Security Agreement or, if such information came to their
attention, specifying any such default, and such report shall
contain or have appended thereto calculations which set forth
Borrowers' compliance with the requirements or restrictions
imposed by Sections 6.4, 6.5, 6.6, 6.10, 6.11 and 6.12.
9.5 Monthly Financial Statements. Furnish Lender within
thirty (3-0) days after the end of each month an unaudited
balance sheet of Borrowers and unaudited statements of income and
stockholders, equity and cash flow of Borrowers on a consolidated
and consolidating basis reflecting results of operations from the
beginning of the fiscal year to the end of such month and for
such month, prepared on a basis consistent with prior practices
and complete and correct in all material respects, subject to
normal year end adjustments.
9.6 [Intentionally omitted].
9.7 Other Reports. Furnish Lender as soon as available, but
in any event within ten (10) days after the issuance thereof,
with (i) copies of such financial statements, reports and returns
as CSI shall send to its stockholders, (ii) copies of all
financial statements, proxy materials or reports sent to any
Borrower's stockholders, (iii) copies of any annual, special or
interim audit reports or management or comment letters with
respect to any Borrower or its operations submitted to any
Borrower by independent financial accountants, (iv) copies of all
press releases, and (v) copies of all reports or registration
statements filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933 or the Securities Exchange
Act of 1934, each as amended, or the rules or regulations
promulgated thereunder.
9.8 Additional Information. Furnish Lender with such
additional information as Lender shall reasonably request in
order to enable Lender to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Note have
been complied with by Borrowers including, without limitation and
without the necessity of any request by Lender, (a) copies of all
environmental audits and reviews, (b) at least thirty (30) days
prior thereto, notice of any change in location of any Borrower I
s. principal executive offices, and (c) promptly upon any
Borrower's learning thereof, notice of any labor dispute to which
any Borrower may become a party, any strikes or walkouts relating
to any of its plants or other facilities, and the expiration of
any labor contract to which any Borrower is a party or by which
any Borrower is bound.
9.9 Projected Operating Budget. Furnish Lender, no less
than thirty (30) days prior to the beginning of each of
Borrowers' fiscal years commencing with fiscal year ending
February 1, 1997, a month by month projected operating budget and
cash flow of Borrowers for such fiscal year (including an income
statement for each month and a balance sheet as at the end of the
last month in each fiscal quarter), such projections to be
accompanied by a certificate signed by CSI's President or
Treasurer to the effect that such projections have been prepared
on the basis of sound financial planning practice consistent with
past budgets and financial statements and that such officer has
no reason to question the reasonableness of any material
assumptions on which such projections were prepared.
9.10 [Intentionally omitted].
9.11 Notice of Suits, Adverse Events. Furnish Lender
with prompt notice of (i) any lapse or other termination of any
Consent issued to any Borrower by any Governmental Body or any
other Person that is material to the operation of such Borrower's
business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of
any periodic or special reports filed by any Borrower with any
Governmental Body or Person, if such reports indicate any
material adverse change in the business, operations, affairs or
condition of such Borrower, or if copies thereof are requested by
Lender, and (iv) copies of any notices and other communications
from any Governmental Body or Person which specifically relate to
any Borrower and could have a material adverse effect on the
business, assets, operations, condition (financial or otherwise)
or prospects of the Borrowers, taken as a whole.
9.12 ERISA Notices and Requests. Furnish Lender with
immediate written notice in the event that (i) any Borrower or
any member of the Controlled Group knows or has reason to know
that a Termination Event has occurred, together with a written
Event and the action, if the Controlled Group has with respect
thereto and action taken or threatened by the Internal Controlled
Group knows or has that a Termination Event has occurred,
statement describing such Termination any, which such Borrower or
member of taken, is taking, or proposes to take when known, any
Revenue Service, Department of Labor or PBGC with respect
thereto, (ii) any Borrower or any member of the Controlled Group
knows that a prohibited transaction (as defined in Sections 406
of ERISA and 4975 of the Internal Revenue Code) has occurred
together with a written statement describing such transaction and
the action which such Borrower or any member of the Controlled
Group has taken, is taking or proposes to take with respect
thereto, (iii) a funding waiver request has been filed with
respect to any Plan together with all communications received by
any Borrower or any member of the Controlled Group with respect
to such request, (iv) any increase in the benefits of any
existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which any Borrower
or any member of the Controlled Group was not previously
contributing shall occur if such event results in a material
increase in costs or liability to such Borrower, (v) any Borrower
or any member of the Controlled Group shall receive from the PBGC
a notice of intention to terminate a Plan or to have a trustee
appointed to administer a Plan, together with copies of each such
notice, (vi) any Borrower or any member of the Controlled Group
shall receive any favorable or unfavorable determination letter
from the Internal Revenue Service regarding the qualification of
a Plan under Section 401(a) of the Internal Revenue Code,
together with copies of each such letter; (vii) any Borrower or
any member of the Controlled Group shall receive a notice
regarding the imposition of withdrawal liability, together with
copies of each such notice; (viii) any Borrower or any member of
the Controlled Group shall fail to make a required installment or
any other required payment under Section 412 of the Internal
Revenue Code on or before the due date for such installment or
payment; (ix) any Borrower or any member of the Controlled Group
knows that (a) a Multiemployer Plan has been terminated, (b) the
administrator or plan sponsor of a Multiemployer Plan intends to
terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.
9.13 Additional Documents. Execute and deliver to
Lender, upon request, such documents and agreements as Lender
may, from time to time, reasonably request to carry out the
purposes, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(a) failure by Borrowers to pay any principal or
interest on the Obligations when due, whether at maturity or by
reason of acceleration pursuant to the terms of this Agreement or
by notice of intention to prepay, or by required prepayment or
failure to pay any other liabilities or make any other payment,
fee or charge provided for herein within five (5) Business Days
of the date that same is due;
(b) any representation or warranty made or deemed
made by Borrowers in this Agreement or any related agreement or
in any certificate, document or financial or other statement
furnished at any time in connection herewith or therewith shall
prove to have been misleading in any material respect on the date
when made or deemed to have been made;
(c) failure by Borrowers to (i) furnish financial
information required by Sections 9.3, 9.4 or 9.6 within five (5)
Business Days of the date when due or, with respect to any other
financial information requested pursuant to Section 9.8 which can
reasonably be furnished within five (5) Business Days, furnish
such information within five (5) Business Days of the date same
is requested, or (ii) permit the inspection of its books or
records;
(d) issuance of a notice of Lien, Charge, Claim,
levy, assessment, injunction or attachment (other than Permitted
Encumbrances) against a material portion of the Borrowers,
property (taken as a whole) which is not stayed or lifted within
thirty (30) days;
(e) failure or neglect of any Borrower to perform,
keep or observe any term, provision, condition, covenant herein
contained, or contained in any other agreement or arrangement,
now or hereafter entered into between such Borrower and Lender
and, except with respect to any term, provision, condition or
covenant contained in Section 6.2, 6.3, 6.4, 6.5, 6.6, 6.8, 6.10,
6.11, 6.12, 7.1, 7.2, 7.3, 7.4, 7.5, 7.9, 7.10, 7.11, 7.13, 7.14,
7.15, 7.18, 9.2, 9.3, 9.6, 9.11 or 9.12 of this Agreement, same
continues for a period of five (5) Business Days following notice
thereof from Lender to Borrowers;
(f) any judgment is rendered or judgment liens
filed against any Borrower for an amount in excess of $1,000,000,
in the aggregate, which within thirty (30) days of such rendering
or filing is not either satisfied, stayed or discharged of
record;
(g) any Borrower shall (i) apply for or consent to
the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment
for the benefit of creditors, (iii) commence a voluntary case
under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file
a petition seeking to take advantage of any other law providing
for the relief of debtors, (vi) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it
in any involuntary case under such bankruptcy laws, or (vii) take
any action for the purpose of effecting any of the foregoing;
(h) any Borrower shall admit in writing its
inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business;
(i) any change in any Borrower's condition or
affairs (financial or otherwise) which in Lender's reasonable
judgment impairs the ability of such Borrower to perform its
Obligations under this Agreement;
(j) [Intentionally omitted].
(k) a default of the obligations of any Borrower
under any other agreement to which it is a party shall occur
which materially and adversely affects the condition, affairs or
prospects (financial or otherwise) of the Borrowers, taken as a
whole, which default is not cured within any applicable grace
period;
(1) [Intentionally omitted].
(m) any material provision of this Agreement shall,
for any reason, cease to be valid and binding on Borrowers, or
any Borrower shall so claim in writing to Lender;
(n) (i) any Governmental Body shall (A) revoke,
terminate, suspend or adversely modify any license, permit,
patent trademark or tradename of any Borrower, the continuation
of which is material to the continuation of the Borrowers'
business (taken as a whole), or (B) commence proceedings to
suspend, revoke, terminate or adversely modify any such license,
permit, trademark, tradename or patent, and such proceedings
shall not be dismissed or discharged within sixty (60) days, or
(C) schedule or conduct a hearing on the renewal of any license,
permit, trademark, trade name or patent necessary for the
continuation of any Borrower's business and the staff of such
Governmental Body issues a report recommending the termination
revocation, suspension or material, adverse modification of
license, permit, trademark, trade name or patent; (a) any
agreement which is necessary or material to the operation of any
Borrower's business shall be revoked or terminated and not
replaced by a substitute acceptable to Lender within thirty (30)
days after the date of such revocation or termination, and such
revocation or termination and non-replacement would have a
material adverse effect on the business or financial condition of
the Borrowers, taken as a whole;
(o) an event or condition specified in Sections
7.15 or 9.12 hereof shall occur or exist with respect to any Plan
and, as a result of such event or condition, together with all
other such events or conditions, any Borrower or any member of
the Controlled Group shall incur, or in the reasonable judgment
of Lender be reasonably likely to incur, a liability to a Plan or
the PBGC (or both) which, in the reasonable judgment of Lender,
would have a material adverse effect upon the ability of the
Borrowers, taken as a whole, to perform their Obligations under
this Agreement; or
(p) [Intentionally omitted].
XI. LENDER'S RIGHTS AND REMEDIES AFTER DEFAULT.
11.1 Rights and Remedies. Upon the occurrence of an Event of
Default pursuant to Article X(g) all obligations shall be
immediately due and payable and this Agreement and the obligation
of Lender to make Advances shall be deemed terminated; and, upon
the occurrence of any of the other Events of Default and at any
time thereafter (such default not having previously been cured),
at the option of Lender all Obligations shall be immediately due
and payable and Lender shall have the right to terminate this
Agreement and to terminate the obligation of Lender to make
Advances. Upon the occurrence of any Event of Default, Lender
shall have the right to exercise any and all other rights and
remedies provided for herein, at law or equity generally.
11.2 Setoff. In addition to any other rights which Lender
may have under applicable law, upon the occurrence of an Event of
Default hereunder, Lender shall have a right to apply any of
Borrowers' property held by Lender or by the Bank to reduce the
Obligations.
11.3 Rights and Remedies not Exclusive. The enumeration of
the foregoing rights and remedies is not intended to be
exhaustive -and the exercise of any right or remedy shall not
preclude the exercise of any other right or remedies, all of
which shall be cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1 Waiver of Notice. Each Borrower hereby waives notice of
non-payment
of any of the Advances, demand, presentment, protest and notice
thereof with
respect to any and all instruments, notice of acceptance hereof,
notice of loans
or advances made, credit extended, or any other action taken in
reliance hereon,
and all other demands and notices of any description, except such
as are
expressly provided for herein.
12.2 Delay. No delay or omission on Lender's part in
exercising any right, remedy or option shall operate as a waiver
of such or any other right, remedy or option or of any default.
12.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEM RIGHT TO
TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1 Term. This Agreement, which shall inure to the benefit
of and shall be binding upon the respective successors and
permitted assigns of each Borrower and Lender, shall become
effective on the date hereof and shall continue in full force and
effect until July 31, 1999 (the "Term") unless sooner terminated
as herein provided.
13.2 Termination. The termination of the Agreement shall not
affect any of Borrowers' or Lender's rights, or any of the
Obligations having their inception prior to the effective date of
such termination, and the provisions hereof shall continue to be
fully operative until all transactions entered into, rights or
interests created or Obligations have been fully disposed of,
concluded or liquidated. All representations, warranties,
covenants, waivers and agreements contained herein shall survive
termination hereof until all Obligations are repaid or performed
in full.
XIV. BORROWING AGENCY PROVISIONS.
14.1 Appointment. (a) Each Borrower hereby irrevocably
designates Borrowing Agent as its attorney and agent to borrow,
sign and endorse notes, and execute and deliver all instruments,
documents, writings and further assurances now or hereafter
required hereunder, on behalf of each Borrower, and does hereby
authorize Lender to pay over or credit all loan proceeds
hereunder in accordance with the advance request made by
Borrowing Agent.
(b) It is understood and agreed by each Borrower
that the handling of this credit facility in the manner set forth
in this Agreement is solely as an accommodation to Borrowers and
at their request, and that Lender shall incur no liability to
Borrowers as a result thereof. To induce Lender to do so and in
consideration thereof, each Borrower hereby agrees to indemnify
Lender and to hold Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or
injury asserted against Lender by any Person arising from or
incurred by
reason of Lender's handling of the financing arrangements of the
Borrowers as provided herein, reliance by Lender on any request
or instruction from Borrowing Agent or any other action taken by
Lender with respect to this Section 14.1 except due to the gross
(not mere) negligence or willful misconduct by Lender.
(c) Each Borrower represents and warrants to Lender
that (i) the Borrowers have one or more common shareholders
(other than CSI whose stock is publicly held), directors and
officers, (ii) the businesses and corporate activities of the
other Borrowers are closely related to, and substantially
benefit, the business and corporate activities of such Borrower,
(iii) the financial and other operations of the Borrowers are
performed on a combined basis as if the Borrowers constituted a
consolidated corporate group, (iv) such Borrower has received
substantial economic benefit from entering into this Agreement
and shall receive substantial economic benefit from the
application of each Advance hereunder, in each case whether or
not such amount is used directly by such Borrower, and (v) all
borrowings hereunder by the Borrowing Agent are for the exclusive
and indivisible benefit of all Borrowers as though, for
purposes of this Agreement and the Other Documents the Borrowers
constituted a single entity.
14.2 Joint and Several Obligations. Each Borrower further
agrees that all Obligations shall be joint and several, and that
each Borrower shall make payment upon any of the Obligations upon
their maturity by acceleration or otherwise, and that such
obligation and liability on the
part of each Borrower shall in no way be affected by any
extensions, renewals and forbearances granted by Lender to any
Borrower, failure of Lender to give any Borrower notice of
borrowing or any other notice, any failure of Lender to pursue or
preserve its rights against the other Borrowers, and that such
agreement by each Borrower to pay upon any notice issued pursuant
hereto is unconditional and unaffected by prior recourse by
Lender to the other Borrowers for such Borrowers, Obligations or
the lack thereof.
XV. MISCELLANEOUS.
15.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
applied to contracts to be performed wholly within the State of
New York. Any judicial proceeding brought by or against Borrowers
with respect to any of the Obligations, this Agreement or any
related agreement may be brought in
any court of competent jurisdiction in the State of New York,
United States of America, and, by execution and delivery of this
Agreement, Borrowers accept for themselves and in connection with
their properties, generally and unconditionally, the
non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agree to be bound by any
judgment rendered thereby in connection with this Agreement.
Nothing herein shall affect the right to serve process in any
manner permitted by law or shall limit the right of Lender to
bring proceedings against Borrowers in the courts of any other
jurisdiction. Borrowers waive any objection to jurisdiction and
venue of any action instituted hereunder and shall not assert
any. defense based on lack of jurisdiction or venue or based upon
forum non conveniens. Any judicial proceeding by Borrowers
against Lender
involving, directly or indirectly, any matter or claim in any way
arising out of, related to or connected with this Agreement or
any related agreement, shall be brought only in a federal or
state court located in the City of New York, State of New York.
15.2 Entire Understanding. This Agreement and the documents
executed concurrently herewith contain the entire understanding
between Borrowers and Lender and supersede all prior agreements
and understandings, if any, relating to the subject matter
hereof. Any promises, representations, warranties or guarantees
not herein contained and hereinafter made shall have no force and
effect unless in writing, signed by Borrowers' and Lender's
respective officers. Neither this Agreement nor any portion or
provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, canceled or terminated orally or by any
course of dealing, or in any manner other than by an agreement in
writing, signed by the party to be charged. Borrowers acknowledge
that they have advised by counsel in connection with the
execution of this
Agreement and Other Documents and are not relying upon oral
representations or statements inconsistent with the terms and
provisions of this Agreement.
15.3 Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure
to the benefit of Borrowers, Lender, all future holders of the
Note and their respective successors and assigns, except that
Borrowers may not assign or transfer any of their rights or
obligations under this Agreement without the prior written
consent of Lender.
(b) Lender may sell, assign or transfer all or any
part of its rights under this Agreement and the Note and all
related agreements, instruments and documents provided Borrowing
Agent gives its consent, which consent will not be unreasonably
withheld, to such sale and the transferee agrees to perform the
obligations of the transferor; in addition to the foregoing,
Borrowers acknowledge that in the regular course of commercial
banking business Lender may
at any time and from time to time sell participating interests in
the Advances to other financial institutions (each such
transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment
(including without limitation rights of set-off) with respect to
the portion of such Advances held by it or other Obligations
payable hereunder as
fully as if such Transferee were the direct holder thereof.
Borrowers hereby grant to any Transferee a continuing security
interest in any deposits, moneys or other property actually or
constructively held by such Transferee as security for the
Transferee's interest in the Advances.
15.4 Application of Payments. Lender shall have the
continuing and exclusive right to apply or reverse and re-apply
any payment to any portion of the Obligations. To the extent that
Borrowers make a payment or Lender receives any payment for
Borrowers' benefit which is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required to be repaid
to a trustee, debtor in possession, receiver, custodian or any
other party under any bankruptcy law, common law or equitable
cause, then, to such extent, the Obligations or part
thereof intended to be satisfied shall be revived and continue as
if such payment or proceeds had not been received by Lender.
15.5 Indemnity. Borrowers shall indemnify Lender from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel) which may
be imposed on, incurred by, or asserted against Lender in any
litigation, proceeding or investigation instituted or conducted
by any governmental agency or
instrumentality or any other Person with respect to any aspect
of, or any transaction contemplated by, or referred to in, or any
matter related to, this Agreementr whether or not Lender is a
party thereto, except to the extent that any of the foregoing
arises out of the gross negligence or willful misconduct of
Lender.
15.6 Notice. Any notice or request hereunder may be
given to Borrowers or to Lender at their respective addresses set
forth below or at such other address as may hereafter be
specified in a notice designated as a notice of change of address
under this Section. Any notice or request hereunder shall be
given by (a) hand delivery, (b) overnight courier, (c) registered
or certified mail, return receipt requested, (d) telex or
telegram, subsequently confirmed by registered or
certified mail, or (e) telecopy to the number set out below (or
such other number as may hereafter be specified in a notice
designated as a notice of change of address) with telephone
communication to a duly authorized officer of the recipient
confirming its receipt as subsequently confirmed by registered or
certified mail. Notices and requests shall, in the case of those
by overnight courier or telegram, be deemed to have been given
when delivered to the overnight
courier or delivered to the telegraph office addressed as
provided in this Section.
(A) If to Lender, at: Bank Leumi Trust Company of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxxxx,
Vice President
Telephone: (000) 000-0000
Telecopier:(000) 000-0000
(B) If to Borrowers or to Claire's Stores, Inc.
Borrowing Agent, at: 0 X.X. 000xx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to: Rubin, Baum, Xxxxx, Constant,
Xxxxxxxx & Bilzin
0000 Xxxxx Xxxxx Xxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
15.7 Severability. If any part of this Agreement is
contrary to, prohibited by, or deemed invalid under applicable
laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid,
but the remainder hereof shall not be invalidated thereby and
shall be given effect so far as possible.
15.8 Expenses. All costs and expenses including, without
limitation, reasonable attorneys' fees and disbursements incurred
by Lender (a) in all efforts made to enforce payment of any
Obligation, or (b) in connection with the entering into,
modification, amendment, administration and enforcement of this
Agreement or any consents or waivers hereunder and all related
agreements, documents and instruments, or (c) in defending or
prosecuting any actions or proceedings arising out of or relating
to Lender's transactions with Borrowers, or (d) in connection
with any advice given to Lender with respect to its rights and
obligations under this Agreement and all related agreements, may
be charged to Borrowers' account and shall be part of the
Obligations.
15.9 Injunctive Relief. Borrowers recognize that, in the
event Borrowers fail to perform, observe or discharge any of
their obligations or liabilities under this Agreement, any remedy
at law may prove to be inadequate relief to Lender; therefore,
Lender, if Lender 90 requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the
necessity of proving actual damages.
15.10 Consequential Damages. Neither Lender nor any
agent or attorney for Lender shall be liable to any Borrower for
consequential damages arising from any breach of contract, tort
or other wrong relating to the establishment, administration or
collection of the Obligations.
15.11 Captions. The captions at various places in this
Agreement are intended for convenience only and do not constitute
and shall not be interpreted as part of this Agreement.
15.12 Counterparts. This Agreement may be executed in one
or more counterparts, each of which taken together shall
constitute one and the same instrument.
15.13 Construction. The parties acknowledge that each
party and its counsel have reviewed this Agreement and that the
normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any
amendments, schedules or exhibits thereto.
Each of the parties has signed this Agreement as of the 19th day
of August, 1996.
CLAIRE'S STORES, INC.
By:
Name: XXX X. XXXXXX
Title: Treasurer
CLAIRE'S BOUTIQUES, INC.
By:
Name: XXX X. XXXXXX
Title: Treasurer
CLAIRE'S CANADA, CORP.
By:
Name:, XXX X. XXXXXX
Title: Treasurer
CLAIRE'S PUERTO RICO, CORP.
By:
Name: XXX X. XXXXXX
Title: Treasurer
CSL, INC.
By:
Name: XXX X. XXXXXX
Title: Treasurer
CBI DISTRIBUTING CORP.
By:
Name: XXX X. XXXXXX
Title: Treasurer
BANK LEUMI TRUST COMPANY OF NEW YORK
By:
Name: Xxxxxxx Xxxxxxxxxxx
Title: First Vice President
By:
Xxxx Xxxxxxxxxxx
Title: Vice President
STATE OF NEW YORK} ss.:
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxxxxxx Xxxxxxxxxxx, to me known, who, being by me duly sworn,
did depose and say that he is a First Vice President of Bank
Leumi Trust Company of New York, the corporation described in and
which executed the foregoing instrument and that he signed his
name thereto by order of the board of directors of said
corporation.
NOTARY PUBLIC
STATE OF NEW YORK} ss.:
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxxx Xxxxxxxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is a vice President of Bank Leumi Trust
Company of New York, the corporation described in and which
executed the foregoing instrument and that he signed his name
thereto by order of the board of directors of said corporation.
NOTARY PUBLIC
STATE OF NEW YORK} ss.
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of Claire's Stores, Inc.,
the corporation described in and which executed the foregoing
instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.:
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of Claire's Boutiques,
Inc., the corporation described in and which executed the
foregoing instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of CSL, Inc., the
corporation described in and which executed the foregoing
instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.:
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of CBI Distributing
Corp., the corporation described in and which executed the
foregoing instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.:
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of Claire's Canada Corp.,
the corporation described in and which executed the foregoing
instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of Claire's Puerto Rico
Corp., the corporation described in and which executed the
foregoing instrument and that he signed his name thereto.
NOTARY PUBLIC
SCHEDULE 5.2
CLAIRE'S BOUTIQUES, INC.
CBI DISTRIBUTING CORP.
CSL, INC.
CLAIRE'S PUERTO RICO CORP.
CLAIRE'S CANADA CORP.
READING GLASSES WORLD, INC.
RSI INTERNATIONAL, LTD.
RS PRODUCTS CORP.
CLAIRE'S ACCESSORIES U.K., LTD.
SCHEDULE5.7(b)
NONE
SCHEDULE 5.7(d)
CLAIRE'S STORES, INC. 401(K)
SAVINGS AND RETIREMENT PLAN
SCHEDULE 5.8
NONE
SCHEDULE 5.12
NONE
Exhibit 1. 2
NONE
EXHIBIT 2.1
REVOLVING-CREDIT NOTE
$10,000,000.00 New York, New York
August 19, 1996
FOR VALUE RECEIVED, the undersigned corporations, jointly
and severally, hereby promise to pay to the order of Bank Leumi
Trust Company of New York ("Lender"), at its offices at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place as the
holder may from time to time designate:
(i) the principal sum of TEN MILLION and 00/100
($10,000,000.00) DOLLARS, or such lesser amount of Advances as
may otherwise be due and payable under the Credit Agreement dated
this date among the undersigned and Lender ("Credit Agreement")
payable in full no later than July 31, 1999.
(ii) interest on the principal amount of this
Revolving Credit Note from time to time outstanding, in like
money at said office from the date hereof until paid at the rates
and at the times provided in Section 3.1 of the Credit Agreement.
In no event, however, shall interest exceed the maximum interest
rate permitted by law. During such time as an Event of Default
has occurred, interest shall be payable at the Default Rate.
This Revolving Credit Note is entitled to the benefits of
the Credit Agreement and is subject to all of the agreements,
terms and conditions therein contained. All terms not otherwise
defined herein shall have the meaning ascribed thereto in the
Credit Agreement.
This Revolving Credit Note may be prepaid, in full, on the
terms and conditions set forth in the Credit Agreement.
If an Event of Default under Article X(g) of the Credit
Agreement shall occur, then this Revolving Credit Note shall
immediately become due and payable, without notice, together with
reasonable attorneys, fees if the collection hereof is placed in
the hands of an attorney to obtain or enforce payment hereof. If
any other Event of Default shall occur under the Credit Agreement
or any other agreement between Lender and the undersigned which
is not cured within any
applicable grace period, then this Revolving Credit Note shall,
at the option of the holder, immediately become due and payable,
without notice, together with reasonable attorneys, fees, if the
collection hereof is placed in the hands of an attorney to obtain
or enforce payment hereof.
This Revolving Credit Note is being delivered in the State
of New York, and shall be construed and enforced in accordance
with the laws of such State.
The undersigned expressly waives any presentment, demand,
protest, notice of protest, or notice of any kind except as
expressly provided in the Credit Agreement.
CLAIRE'S STORES, INC.
Witnessed By:
Name: Xxx X. Xxxxxx
Title: Treasurer
CLAIRE'S BOUTIQUES, INC.
Witnessed By:
Name: Xxx X. Xxxxxx
Title: Treasurer
CSL, INC.
Witnessed By:
Name: Xxx X. Xxxxxx
Title: Treasurer
CBI DISTRIBUTING CORP.
Witnessed By:
Name: Xxx X. Xxxxxx
Title: Treasurer
CLAIRE'S CANADA CORP.
Witnessed By:
Name: Xxx X. Xxxxxx
Title: Treasurer
CLAIRE'S PUERTO RICO CORP.
Witnessed By:
Name: Xxx X. Xxxxxx
Title: Treasurer
STATE OF NEW YORK} ss.
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of Claire's Stores, Inc.,
the corporation described in and which executed the foregoing
instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.:
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of Claire's Boutiques,
Inc., the corporation described in and which executed the
foregoing instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of CSL, Inc., the
corporation described in and which executed the foregoing
instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.:
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of CBI Distributing
Corp., the corporation described in and which executed the
foregoing instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.:
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of Claire's Canada Corp.,
the corporation described in and which executed the foregoing
instrument and that he signed his name thereto.
NOTARY PUBLIC
STATE OF NEW YORK} ss.:
COUNTY OF NEW YORK}
On this 19th day of August, 1996, before me personally came
Xxx X. Xxxxxx, to me known, who, being by me duly sworn, did
depose and say that he is the Treasurer of Claire's Puerto Rico
Corp., the corporation described in and which executed the
foregoing instrument and that he signed his name thereto.
NOTARY PUBLIC
EXHIBIT 2.2
FORM OF NOTICE OF BORROWING
Bank Leumi Trust Company of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Ladies and Gentlemen:
The undersigned refers to the Revolving Credit Agreement,
dated as of , 1996 (the "Credit Agreement") (the terms defined
therein being used herein as therein defined), among CLAIRE'S
STORES, INC., CLAIRE'S BOUTIQUES, INC., CSL, INC., CBI
DISTRIBUTING CORP., CLAIRE'S CANADA CORP., and CLAIRE'S PUERTO
RICO CORP. (collectively the "Borrower"), and hereby gives you
notice, irrevocably, pursuant to Section 2.2 of the Credit
Agreement, that the undersigned hereby requests an Advance under
the Credit Agreement, and in that connection sets forth below the
information relating to such Advance (the "Proposed Borrowing")
as required by Section 2.2 of the Credit Agreement:
(i) The aggregate principal amount of the Proposed
Borrowing is $ .
(ii) The Business Day of the Proposed Borrowing is
, .(1)
(iii) The Proposed Borrowing is to be initially
maintained as a (Reference Rate Advance] (Eurodollar Advance with
an initial Interest Period of ((one) (two] (three] month(s)].
The undersigned hereby certifies that the following
statements are true on the date hereof and will be true on the
date of the Proposed Borrowing:
(1) Written notice prior to 12:00 Noon (New York time) is
required at least three Business Days prior to each incurrence of
Eurodollar Advances and on the Business Day prior to each
incurrence of Reference Rate Advances.
EXHIBIT 2.2
Page 2
(A) the representations and warranties of the Borrower
contained in the Credit Agreement or in the Other Documents are
and will be true and correct in all material respects, both
before and after giving effect to the Proposed Borrowing and to
the application of the proceeds thereof, with the same effect as
though such representations and warranties had been made on and
as of the date of such Proposed Borrowing (it being understood
that any representation or warranty which by its terms is made as
of a specified date shall be required to be true and correct in
all material respects only as of such specified date); and
(B) no Default or Event of Default has occurred and is
continuing, or would result from such Proposed Borrowing or from
the application of the proceeds thereof.
Very truly yours,
CLAIRE'S STORES, INC., as
Borrowing Agent
By:
Name:
Title:
EXHIBIT 2.8
Page 2 of 6
Letter of Credit Application
1. As to drafts payable in United States currency drawn or
purporting to be drawn under the Credit. the undersigned agrees (a)
in case of each sight draft to pay to you at your office at 000
Xxxxx Xxxxxx. Xxx Xxxx, Xxx Xxxx 00000 (hereinafter called the
"Office'") in United States currency the amount payable thereon
immediately upon receipt of notice of payment thereof, with
interest from the time of such payment at the rate of four (4%)
percent above the rate of interest & designated by you , said in
effect from time to time as your "Reference Rate", adjusted when
said Reference Rate changes or at such other rate as is agreed upon
in writing between us (but if such interest rate shall not be
lawful with respect to the undersigned. then such rate shall be the
highest lawful rate permitted to be charged by you on a loan to the
undersigned) or, if so demanded by you, to so pay to you the amount
of such draft in advance at a time to be determined by you: and (b)
in case of each time draft, to pay to you the amount thereof at
your Office in United States currency not later than two (2)
business days prior to its maturity, or, if the draft is payable
elsewhere, then to make such payment at your Office in sufficient
time to reach the place or payment in the usual course of the
regular mails, not later than two (2) business days prior to
maturity. Interest payable hereunder shall be computed on the basis
of a 360 day year. The charging of interest on the basis of a
360-day year results in the payment of more interest than would be
required if interest were charged on the basis of the actual number
of days in the year. The undersigned acknowledges that the
Reference Rate may not necessarily represent the lowest rate
charged by you to customers.
2. As to drafts payable in currency other than United States
currency drawn or purporting to be drawn under the Credit, the
undersigned agrees (a) in case of each sight draft. to pay to you
immediately upon receipt of notice or payment thereof at your
office in United States currency the equivalent of the amount
payable on each draft at your then selling rate for cable transfers
to the place where. and in the currency in which, such draft is
payable, with interest at the legal rate or at such other rate as
is agreed upon in writing from the time of such payment, or if so
demanded by you to pay the same to you in advance at any other time
to be determined by you, and (b) in case of each time draft to
furnish you at said Office sufficiently in advance to reach the
place of payment in the usual course of the regular mails not later
than two (2) business days prior to maturity, with first class
banker's demand bills of exchange to be approved by you for the
amount and in the currency of such draft and bearing the
unqualified endorsement of the undersigned, or if you so request to
pay to you on demand at said office in United States currency the
equivalent or the amount of such draft at your then selling rate
for demand drafts on, or cable transfers to, the place where, and
in the currency in which, such draft is payable. If at the time
payment is to be made by the undersigned as aforesaid. there exists
no rate of exchange generally current in New York City for cable
transfers or demand drafts as hereinbefore provided. the
undersigned agrees to pay to you on demand in United States
currency the actual cost to you of settlement of your obligation to
the payee or the draft or to any holder thereof as the case may be
and however and whenever such settlement shall be made by you.
including interest on the dollar amount payable by the undersigned
from the date or payment of such draft to the date of the
undersigned's payment to you. The undersigned shall pay you on
demand in United States currency such amount as you may be required
to expend in order to comply with all governments exchange,
currency control or other laws. orders and regulations or any
country now or hereafter applicable to the purchase or sale of
and/or dealings in foreign currency.
3. The undersigned shall pay to you on demand a commission at such
rate as you determine to be proper and any and all expenses,
obligations, charges will liabilities paid or Incurred by you in
connection with the Credit and the within agreement, together with
interests wherever applicable. The undersigned shall pay to you on
demand from time to time any additional amounts necessary (in your
sole determination) to indemnify you against any increase in your
direct or indirect costs of issuing or maintaining, or any
reduction in the net amount to be received by you with respect to,
the Credit. whether due to this, imposition or modification of any
reserve special deposit or similar requirement (including any
assessment for insurance of deposits or of letters of credit), any
requirement to pay, or withhold or deduct from any amount payable,
any taxes, fees or similar charges, or for any other reason.
4. Except as written instructions expressly to the contrary have
been received by you from the undersigned in the foregoing
application or prior to the opening of the Credit and incorporated
in the Credit, the undersigned agrees (a) that you and any of your
correspondents may receive and accept as a "xxxx of lading" under
the Credit any document issued or purporting to be issued by or on
behalf of any carrier which acknowledges receipt of property for
transportation, whatever the specific provisions of such document
may be (b) that part shipments may be made under the Credit and
that you may honor the relative drafts without inquiry, regardless
of any apparent disproportion between the quantity shipped and the
amount o f the relative draft, and the total amount of the Credit
and the total quantity to be shipped under the Credit: (c) if
shipment in installments within stated periods is specified, and
there is a failure to ship in any designated period, shipments of
subsequent installments. made in their respective designated
periods, may be drawn against and drafts accepted and paid: (d)
that you may accept or pay, as complying with the terms of the
Credit, any drafts or other documents otherwise in order which may
be signed or issued by an administrator, executor, trustee in
bankruptcy, debtor in possession, assignee for benefit of
creditors, liquidator, receiver or other legal representative of
the party who is authorized under the Credit to draw or issue any
drafts or other documents without being required to inquire as to
his authority or appointment; (e) that without limiting any other
provisions of this agreement, you and any of your correspondents
may accept documents of any character which comply with the
provisions, definitions, Interpretations and practices contained in
"The Uniform Customs and Practice for Documentary Credits," The
International Chamber of Commerce Publications as amended from time
to time, or which comply with the laws or regulations in force in
customs and usages of the piece of negotiation; in that in the
event of any extension of the maturity, or time for negotiation or
presentation of drafts, acceptances or documents or any other
modifications of the terms or provisions of the Credit at the
request or with the consent of any of the undersigned with or
without notification to the others or in the event of any increase
in the amount of the Credit at the request of the undersigned, this
Agreement shall be binding upon the undersigned with regard to (i)
the Credit so increased or otherwise modified, (ii) drafts,
documents and property covered thereby, and (iii) any action taken
by you or any of your correspondents in accordance with such
extension. increase or other modification: (g) due you of your
correspondents may accept or pay any draft dated on or before the
estimation, of any time limit expressed in the Credit regardless of
when drawn and when or whether negotiated provided the other
required documents are dated prior to the expiration date of the
Credit.
5. Neither you nor any of your correspondents, agents,
representatives or designees shall be liable or responsible in any
manner including, without limitation, for any damages. losses or
other consequences resulting by reason of, and the undersigned's
obligations to you shall not be affected by (a) the existence,
character, quality, quantity, condition, packing, value, delivery
or any other aspect or the property purporting to be represented by
the documents: (b) any difference in character, quality, quantity,
condition or value of the property from that expressed in the
documents: (c) the validity, sufficiency or genuineness of
documents or of any endorsements thereon. even if such documents
should in fact prove to be in any and all respects invalid,
insufficient, fraudulent or forged: (d) the time, place, manner or
order in which shipment or delivery is made: (e) the character
adequacy, validity or genuineness of any insurance or any policies
or documents connected with insurance: (f) any deviation from
instructions delay, default or fraud by the shipper and/or anyone
else in connection with the property or the shipping or delivery
thereof: (g) the solvency, responsibility or relationship to the
property of any party issuing any documents in connection with the
property; (h) delay in arrival or failure to arrive of either the
property or any of the documents relating thereto: (i) delay in
giving, or failure to give notice or arrival or any other notice;
(j) any breach of contract between the shipper or vendor and the
consignee or buyer or the undersigned or any of them; (k) failure
of any draft to bear any reference or adequate reference to the
Credit or failure of documents to accompany any draft in
negotiation or failure of any person to note the amount or any
draft on the reverse side of the Credit or to surrender or take up
the Credit or to send forward documents apart from drafts as
required by the terms of the Credit, each of which provisions, if
contained in the Credit itself, it is agreed
Exhibit 2.8
Page 3 of 6
may he waived by you: (l) errors, omissions, interruptions or
delays in transmission or delivery of any message by mail, cable,
telegram, wireless telex or, other wise, whether or not they be in
cipher: (m) or errors in translation or errors in interpretation of
technical term. You shall not be responsible for any act, error,
neglect or default, omission, insolvency or failure in business or
any correspondence or for any consequence arising from causes
beyond your control. In furtherance and extension of the specific
provisions hereinbefore set forth the undersigned agrees that any
action taken or omitted by you or any of your correspondents under
or in connection with the Credit , the relative drafts. documents
or property if done in good faith, shall be, binding on the
undersigned and shall not put you or your correspondents under any
resulting liability to the undersigned and the undersigned shall
indemnity and hold you and your correspondents agents and
representatives harmless any claim, loss or liability arising from
or in connection with the Credit or, the related drafts, documents
or property.
6. In case the undersigned consents lit any overdrafts under any
Credit or authorizes payment or acceptance of drafts drawn
thereunder with irregular documents attached thereto, or
authorizes or consents to any departure from or modification of the
terms of this agreement or the credit hereunder. this agreement
shall be fully binding upon the undersigned in respect thereto and
notwithstanding such overdrafts, irregularities or variances this
agreement and your title to the property and documents shall be,
subsist and remain as though all matters had been done in strict
compliance with this agreement and with the Credit. In case of any
variation between the documents called for by the Credit or
instructions (if the undersigned and the documents accepted by you
or your correspondents, the undersigned shall be conclusively
deemed to have waived any right to object to such variation with
respect to any action of yours or your correspondents relating to
such documents and to have ratified and approved such action as
having been taken on the direction of the undersigned, unless the
undersigned immediately upon receipt of such documents or
acquisition of knowledge of such variation files objection with you
in writing. You and your correspondents shall not be liable for any
failure by you or anyone else to pay or accept any draft or
acceptance under this Credit or for any loss or damage resulting
from any censorship law, control or restriction rightfully or
wrongfully exercised by any de facto or de jure domestic or foreign
government or agency thereof, declared or undeclared war, or from
any other cause of whatsoever nature beyond your control or the
control of your correspondents agents or representatives, and the
undersigned agrees to indemnify and hold you harmless from any
claim, loss, liability or expense arising by reason thereof.
7. The undersigned hereby grants you a security interest in, and
recognizes and confirms and admits your unqualified right to the
title, possession and right of disposition of all property shipped
under or pursuant to or in connection with the Credit or in any way
relative thereto or to the drafts drawn thereunder, and in and to
all shipping documents, warehouse receipts, policies or
certificates of insurance and other documents or instruments
accompanying or relative to drafts drawn under the Credit and in
and to the proceeds of each and all of the foregoing, all to be
held by you subject to all the terms of this agreement as
collateral security for the prompt and unconditional payment of any
and every indebtedness. obligation and liability of the undersigned
to you and your claims of every nature and description against the
undersigned. whether or not represented by negotiable instruments
or other writings, whether arising under this instruments. the
Credit or by xxxxx of any other agreement or transaction, whether
now existing or hereafter incurred, originally constructed with you
and/or with another or others and now or hereafter owing to or
acquired in any manner by you, whether contracted by the
undersigned alone or jointly or severally with another or others,
direct or indirect, absolute or contingent, secured or not secured.
matured or not matured, all of the foregoing hereinafter called
"Obligation:'
8. In the event that any property and/or documents held by you or
for your account is released by you to or upon the order of the
undersigned in trust, the undersigned will sign and deliver to you
trust receipts, security agreements and/or statements of trust
receipt financing and financing statements and will pay all
required filing fees and upon the undersigned's failure to do so
you are authorized as the agent of the undersigned to sign any such
receipts and/or statements. Upon any transfer, delivery, surrender
or endorsement to the undersigned, or its designee, of any xxxx of
lading, warehouse receipt or other documents at any time held by
you or held for your accounts by any of your correspondents
relative to any drafts drawn hereunder, the undersigned will
indemnify and hold you harmless from and against claims, demands or
actions which may arise against you or any such correspondent by
reason thereof.
9. In order to further secure the payment of the Obligations, the
undersigned hereby grants you a security interest in any and all
property of the undersigned in your actual or constructive
possession or in transit to you or your correspondents, agents or
representatives from or for the undersigned and the proceeds
thereof, whether for safekeeping, custody, pledge, transmission,
collection or otherwise or coming into your possession in any other
manner for any other reason, and the undersigned agrees to pledge,
transfer and deposit with you and grant to you a security interest
in such other property as you shall reasonably request to secure
payment of the Obligations and to make such payments as you request
on account of the Obligations. You are also hereby given a
continuing lien and/or right of set-off for the amount of the
Obligations, upon or with respect to any and all deposits, general
or special and credits of the undersigned with and any and all
claims of the undersigned against you at any time existing: and you
are hereby authorized at any time or times, without prior notice,
to apply such deposits or credits or any part thereof to payment of
the Obligations in such amounts as you may select, although
contingent or matured and whether the Collateral is deemed
adequate or not. All of the foregoing, together with the property
enumerated in this agreement as security for the Obligations, as
well as any property in which you may now or hereafter be granted
a security interest or which may be deposited with you or your
agents by the undersigned to secure the obligations is herein
collectively call "Collateral" and you are hereby authorized to
deal therewith in the same manner as if you had sole title thereto.
If the undersigned, as registered holder to the Collateral, shall
become entitled to receive or does receive any stock certificate,
option or right, whether as an addition to, in substitution of, or
in exchange for such Collateral, or otherwise, the undersigned
agrees to accept same as you agent and to hold same in trust for
you, to forthwith deliver the same to you in the exact form
received, with the undersigned's endorsement when necessary, to be
held by you as Collateral.
10. (a) The undersigned agrees to procure promptly any necessary
import, export or other license for the importing, exporting,
shipping, or warehousing of any property shipped under, pursuant to
or in connection with the Credit or covered by any documents held
by you or any of your correspondents relative to any drafts
accepted by you or included in the Collateral, and to comply with
all foreign and domestic laws and governmental regulations in
regard to the shipment and/or warehousing and/or financing thereof,
and to furnish such documents in that respect as you may at any
time require.
(b) Unless the Credit provides for presentation of insurance
policies or certificates in negotiable form covering property
shipped under, pursuant to or in connection with the Credit, the
undersigned agrees to keep such property, and , in any event, to
keep all property covered by documents released by you to the
undersigned in trust, or included in Collateral, and your interest
therein, fully insured against loss by fire, theft, damage or any
other risk to which the said property may be subject, by policies
or certificates of insurance which shall provide that the loss, if
any, shall be payable to you or your order as your interest may
appear and to deposit the insurance certificates or policies with
you upon your demand. If any of said policies or certificates
procured by the undersigned fail to provide for payment of the loss
thereunder, as hereinbefore provided, the undersigned hereby makes
the loss payable to you under any of said policies or certificates,
and assigned to you all the avails and proceeds of any and all of
said policies or certificates, and agrees to accept the avails and
proceeds of all insurance policies and certificates as your agent
and to hold same in trust for you, and to forthwith deliver the
same to you in the exact form received with the undersigned's
endorsement where necessary, and you hereby irrevocably empowered,
with full power of substitution and revocation, to endorse any
check in the name of the undersigned received in payment of any
loss or adjustment. Notwithstanding the foregoing provisions, you
may,
Exhibit 2.8
Page 4 of 6
but shall not be obligated to, insure all or any part of the
property shipped under, or pursuant to, the Credit issued hereunder
and all or any Collateral held by you hereunder against all risks
of any kind and the premium thereon shall be paid to you by the
undersigned within five days after the demand for the same and you
shall have the rights to debit the amount of such premium to any
balances of the undersigned without notice. If the undersigned
fails to pay the premium upon any policy of insurance pledged
hereunder or upon any policy of insurance covering any property of
Collateral within five days of the due date (without benefit of the
grace period), you may, but shall not be obligated to pay the same
without notice to the undersigned and said premium shall be repaid
to, or may be debited by you, as above provided.
(c) The undersigned agrees to reimburse you upon demand in the
event you or any of your correspondents, agents or representatives
pay for or incur any expense or liability in connection with the
Credit or an6y draft accepted by you pursuant to this instrument or
in relation to any of the matters set forth or referred to herein,
including, but not limited to all correspondents' charges and
expenses and charges for or incidental to the care, the safekeeping
or otherwise of any of the property shipped under, pursuant to, or
in connection with the Credit.
11. The undersigned will at any and all times at your request,
sign financing statements, trust receipts, security agreements or
other documents with respect to the Collateral as you may
reasonably request. The right is expressly granted to you, at your
discretion, to file one or more financing statements without the
signature of the undersigned under the Uniform Commercial Code
naming the undersigned as debtor and you as secured party and
indicating therein the types or describing the items of Collateral
herein referred to. The undersigned hereby agrees to pay on
demand, and authorized you to charge its account with the cost of
any and all filing fees and costs which you deem necessary to incur
to protect your interest in the Collateral.
12. The undersigned consents that, without the necessity for any
reservation of rights against the undersigned and without notice to
or further assent by the undersigned, the liability of any party
for or upon Obligations or Collateral may from time to time, in
whole or in part, be renewed, extended, modified, prematured,
compromised, settled for cash, credit or otherwise and upon any
terms or conditions you may deem advisable and that you may
discharge or release any party from such liabilities and that
collateral security for any of the obligations may from time to
time, in whole or in part, be exchanged, sold or surrendered by you
all without in any way affecting or releasing the liability of the
undersigned upon the Obligations. You shall not be liable for any
failure to collect or demand payment of or protest or give any
notice of non-payment of any of the Collateral of for any delay in
so doing, nor shall you be under any obligation to take any action
whatsoever with respect to the Collateral or any part thereof. You
shall use reasonable care in the custody and preservation of
Collateral in your possession but need not take any steps to
preserve rights against prior parties or keep the Collateral
identifiable. You shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in your
possession if you take such action as the undersigned shall
reasonably request in writing but, in no event shall an omission to
do any act which the undersigned fails to request in writing be
deemed a failure to exercise such reasonable care and no omission
to comply with any request of the undersigned shall be deemed a
failure in exercise such reasonable care . Any right of set-off
exercised by you shall be deemed to have been exercised immediately
upon the occurrence of any event referred to in Paragraph 13
hereof, even though such set-off is made or entered on your books
subsequent thereto. You shall have no obligation to comply with
any recording, re-recording, filing, re-filing or other legal
requirement necessary to establish or maintain the validity,
priority or enforceability of, or your rights in and to
Collateral, or any part thereof. You may exercise any right of the
undersigned with respect to any Collateral. In any statutory or
non-statutory proceeding affecting the undersigned or Collateral,
you or you nominee may, whether or not a default exists and
regardless of the amount of Obligations, tile a proof of claim for
the full amount of any Collateral and vote such claim for the full
amount thereof: (a) for or against any proposal or resolution: (b)
for a Trustee or Trustees o for a Committee of Creditors: (c) for
the acceptance or rejection of any proposed arrangement, plan of
reorganization, wage earners' plan, composition or extension and
you or your nominee may receive any payment or distribution and
give acquital therefor and may exchange or release Collateral. Any
Collateral held by you hereunder, may without notice and whether or
not a default exists, be registered and held in your or your
nominee's name. You are hereby granted a power of attorney to
endorse the undersigned's name on any and all notes, checks,
drafts, bills of exchange, money orders or commercial paper
included in the Collateral or representing the proceeds thereof.
13. All monies due or owing to you from the undersigned under
this agreement or any other Obligations shall, at your option,
become immediately due and payable, without notice or demand and
notwithstanding any time or credit otherwise allowed or given to
you under this or any other agreement or instrument and the
undersigned and all guarantors shall be deemed in default hereunder
upon the occurrence of any one of the following events with respect
to any one of the undersigned or any guarantor or endorser of any
Obligations of any of the undersigned to you: (a) failure to pay
any sum upon the due date thereof: (b) if any statement,
representation or warranty made in any application, financial
statement or other agreement made with, or document delivered to
you, shall be false or untrue in any material respect: (c) default
in the performance of any condition or provision of this agreement
of any other agreement with, or any Obligations to you: (d) death,
and if a partnership, death of a partner: (e) insolvency, howsoever
evidenced: (f) the making of a general assignment for the benefit
of creditors: (g) the filing of any petition or the commencement of
any proceedings by or against any of the undersigned or any
guarantor of any Obligations, for any relief under any bankruptcy
or insolvency laws or any laws relating to the relief of debtors,
readjustment of indebtedness, reorganization, compositions or
extensions: (h) the appointment of a temporary or permanent
receiver or trustee or similar legal representative of, or the
issuance or making of a writ or order of attachment against any
property or assets: (i) entry of a judgment: (j) the commencement
of any proceeding for enforcement of a judgment under Article 52 of
the New York Civil Practice Law and Rules or under provisions of
any other law: (k) the adoption of any resolution for dissolution
or liquidation or the taking of any action for the purpose of such
dissolution or liquidation: (l) the suspension of usual business:
(m) the failure to deposit any additional collateral security with
you upon demand: (n) the failure to pay any premium on any
insurance policy pledged, or any insurance policy covering any
property pledged with you, or in which you are granted a security
interest within five days after such premium becomes due without
benefit of any period of grace: (o) failure forthwith upon demand
to furnish any financial information or to permit inspection of
books, documents or records of account: (p) failure to pay any tax
when due: (q) if at any time in your sole judgment the financial
responsibility of any of the undersigned, or of any guarantor of
any Obligations of the undersigned shall become impaired or
unsatisfactory to you.
14. Upon the happening of any of the events set forth in
Paragraph 13, and at any time thereafter, you shall have, in
addition to all other rights and remedies, the remedies of a
secured party under the New York Uniform Commercial Cods. The
undersigned shall, upon your request, assemble the Collateral and
make it available to you at a place to be designated by you which
is reasonably convenient to you and the undersigned. You will give
the undersigned notice of the time and place of any public sale of
the Collateral or of the time after which any private sale of any
other intended disposition thereof is to be made by sending notice,
as provided below, at least five days before the time of the sale
or disposition, which provisions for notice you and the undersigned
agree are reasonable. No such notice need be given by you with
respect to Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized
market. You may apply the net proceeds of any sale, lease or other
disposition of Collateral after deducting all costs and expenses of
every kind incurred therein or incidental to the retaking, holding,
preparing for sale, selling, leasing or the like of said
Collateral, or in any way relating to the rights of the undersigned
thereunder, including attorneys' fees hereinafter provided for and
legal expenses, to the payment, in whole or in part, in such order
as you may elect, of one or more of said obligations, whether due
or not due, absolute or contingent, and if contingent, you may
retain sufficient of such proceeds to cover the largest aggregate
sum which may be due or owing thereunder to you with prospective
interest costs, expenses and counsel fees and you shall not be
charged with any interest with respect thereto, and only after so
applying such net proceeds
Exhibit 2.8
Page 5 of 6
and after the payment by you of any other amounts required by law
need you account for the surplus, if any. The undersigned shall
remain liable to you for the payment of any deficiency with legal
interest, and coes hereby waive any and all rights of redemption
with relation to the Collateral, to the extent permitted by law.
15. Any notice to you shall be deemed effective only if sent to
and received at your office, division or department conducting the
transaction or transactions hereunder. Any notice to or demand on
and of the undersigned shall be binding on the undersigned and
shall be deemed effective if not first otherwise made or given when
forwarded by mail, telegraph, cable, radio, telephone or otherwise
to the last address or telephone number of any of the undersigned
appearing on your books with the same effect as if the same were
actually delivered to and received by the undersigned in person.
You shall not by any act , delay, omission or otherwise be deemed
to have waived any of your rights or remedies hereunder and no
waiver whatsoever shall be valid unless in writing, signed by one
of your duly authorized officers, and then only to the extent
therein set forth. A waiver whatsoever by you of any right or
remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which you would otherwise have on any
future occasion. No term or provision of this agreement can be
changed orally and no executory agreement shall be effective to
change or modify or to discharge in whole or in part this agreement
unless such executory agreement is in writing and signed by one of
your duly authorized officers. All you rights and remedies
hereunder shall be cumulative and may be exercised singly or
concurrently, and your rights specified herein are in addition to
those otherwise created. No delay on you part in exercising any
power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the
exercise of any other power or right, nor shall you be liable for
exercising or failing to exercise any such power or right. The
undersigned hereby waives demand, presentment, protest notice of
protest and notice of dishonor of any and all drafts, notes, bills
of exchange, checks and other instruments deposited or pledged as
Collateral hereunder whether upon inception, maturity, acceleration
of maturity or due date, or at any other time, and any and all
other notices and demands whatsoever, whether or not relating to
such instruments.
16. In the event that you or any of your correspondents, at the
request of the undersigned, extend, renew or refinance any of the
obligations of the undersigned to you arising by means of (a)
Bankers Acceptances created by the acceptance of drafts drawn by
the undersigned to you, arising under Paragraphs 1 and 2 hereof:
(b) Drafts drawn by the beneficiary of the Credit accepted by you
or any of your correspondents: (c) notes made by the undersigned:
or (d) otherwise or in the event that you further extend, renew or
refinance, from time to time, any such Bankers Acceptances, draft
or note, then, and in consideration thereof, the undersigned agrees
to pay to you the amount of each Bankers Acceptance or draft in the
manner provided in Paragraphs 1 and 2 hereof for the payment of
time drafts drawn under the Credit, or, if a note is involved, then
in the manner provided in the note. The undersigned further agrees
that with respect to any such extension, renewal or refinancing,
all of the terms, conditions, agreements and obligations contained
in this agreement shall apply thereto and that you shall have all
the rights and remedies set forth in this agreement as well as
those set forth in any other document signed by or on behalf of the
undersigned. Should the beneficiary under the Credit, upon receipt
of advice by cable or otherwise of the issuance of the Credit, but
prior to its actual receipt, negotiate drafts by virtue of such
advise, such negotiation shall be considered a proper one and shall
be included under the terms and subject to all conditions hereof
and in addition thereto the undersigned assumes all the risk of the
misuse of the Credit.
17. You may, but shall not be obligated to, contest, pay and/or
discharge all liens, encumbrances, taxes or assessments on, or
claims, actions or demands against, any of the Collateral deposited
hereunder without notice to, or the consent of, the undersigned and
you may, but shall not be obligated to, take all actions and
proceedings in your own name or in the name of the undersigned or
of any other appropriate person to remove or contest such liens,
encumbrances, claims, actions, demands, taxes or assessments and
all sums advance or paid by you and all costs, attorneys' fees and
expenses relating thereto shall be paid by, and chargeable to, the
undersigned.
18. The word "property" as used in this agreement, includes
goods, merchandise, instruments, documents, securities, funds,
choices in action and any and all other forms of property, whether
real, personal or mixed, and any right or interest therein and the
proceeds thereof. Property in your possession shall include
property in possession of any person holding same for you in any
manner whatsoever.
19. If any of the undersigned is a partnership, the members
thereof shall be individually bound and liable hereunder. If this
agreement is signed by two or more parties, it shall be the joint
and several agreement of such parties.
20. If the Credit issued by you will provide that it will be
available by presentation, to you or to any of your correspondents,
of the documents described in the application, unaccompanied by
drafts, the undersigned agrees that all reference herein to drafts,
documents relative to drafts, and the presentation, acceptance for
payment or payment of drafts shall refer to documents presented for
payment without drafts, the presentation and acceptance thereof,
and payment upon such presentation, and that the undersigned's
obligation and your rights, privileges and remedies hereunder shall
be the same as though payments had been made upon presentation of
drafts drawn under the Credit accompanies by the said documents.
21. The undersigned will bear and pay all expenses of every kind
for the enforcement of any of your rights herein mentioned or of
any claim or demand by you against the undersigned and/or
guarantors and/or any other person, firm or corporation and of any
Collateral held by you, and the undersigned will pay to you upon
demand any such expenses incurred by you. If an attorney is used
to collect or enforce the Obligations or to enforce, declare or
adjudicate
any rights or obligations under this agreement, or with respect to
the Obligations or Collateral, whether by suit, or my other means
whatsoever attorneys'
fees incurred by you shall be payable by the undersigned. The
undersigned in any litigation (whether or no( arising mg of or
relating to this agreement or
to any Obligations) in which you and any of the undersigned shall
be adverse parties, waives trial by jury and the right to interpose
any defense based
on any Statute of Limitations or any claim of Inches. set-off. or
counterclaim of any nature or description. Notwithstanding anything
to the contrary contained herein. the undersigned hereby
indemnifies and holds you harmless from and against any and all
claims actions (including, without limitation.
legal proceedings relating to any court order, injunction or other
process or decree restraining or seeking to restrain you from
paying any amount under
the Credit or relating to any attachment or execution in connection
with the Credit. any Obligations or Collateral). losses, judgments,
amounts and expenses including, without limitation. attorneys'
fees. and court costs, (such claims, actions, losses. etc..
hereinafter called collectively "Liabilities" suffered or incurred
by you in connection with or arising out of this agreement, any
Obligations or the Collateral and regardless of whether such
Liabilities relate to claims or actions brought by the undersigned
or any third party.
22. The term "you" as used throughout this agreement shall he
deemed to include the Bank Leumi Trust Company of New York and all
its branches
or departments; wherever located,. and any individuals,
partnerships or corporation acting as nominee for or in behalf of
the Bank Leumi Trust Company of New York and any subsidiary or
entity controlled by the Bank Leumi Trust Company of New York and
any other subsidiary or entity which is controlled directly or
indirectly by any such subsidiary or entity. The term
"undersigned" as used throughout this agreement shall include the
individual or individuals, association, partnership or corporation
named herein as "undersigned," and (a) any successor individual or
individuals, association or partnership or corporation to which all
or substantially all of the business or assets of said undersigned
shall have been transferred, (b) in case of a partnership, any new
partnership which shall have been created by reason of the
admission of any new partner or partners therein or the dissolution
of the existing partnership by death. resignation or other
withdrawal of any partner. and (c) in the case of a corporation ,
any other corporation into or with which said undersigned shall
have been merged, consolidated reorganized or absorbed.
Exhibit 2.8
Page 6 of 6
23. This agreement is made in the City (if New York and shall he
construed in accordance with the laws of the State of New York.
In the event that you bring any action or suit in any court to
record of New York State or the Federal Government to enforce any
or all of the Liabilities Ail the undersigned
or any of your rights hereunder. service of process may he made
upon the undersigned by mailing a copy of the summons to the
undersigned at the address set forth below, and the undersigned
hereby irrevocably submits to the jurisdiction of any New York
State or Federal court located in New York City over any action,
suit or proceeding arising out of any dispute between the
undersigned and you.
24. We hereby certify that the merchandise to be shipped under
this Letter of Credit or the shipping thereof is not prohibited
under the Foreign Assets
Control Regulations, of the United States Treasury Department and
that any importation of goods, merchandise or other property
covered by this application conforms in every respect with all
existing United States Government reputations.
25. If any term, condition or provisions of this agreement or
of any other agreement or document executed and/or delivered to you
is determined to be
invalid or unenforceable, such determination shall not affect the
validity or enforceability of any other term, condition or
provisions of this agreement and
all other agreements executed and/or delivered to you and they
shill he carried out as if any such invalid or unenforceable term,
condition or provision
were not embodied herein or therein.
26. You may assign or transfer this agreement and all Collateral
and in such event the assignee (or transferee thereof hall have the
same rights and remedies hereunder as if originally named herein in
your place. Upon any such assignment or transfer. you may deliver
the Collateral and property held
as security or any part thereof to the assignee or transferee who
shall hereupon become vested with all your powers and rights in
respect thereof and you shall thereafter be forever relieved and
fully discharged from any liability or responsibility with respect
to the property transferred but you shall retain all powers and
rights with respect to the property not so transfer red. You
shall, at all reasonable times and from time to time, be allowed,
by or through any of your officers, agents, attorneys or
accountants, to examine, inspect and make abstracts from the
undersigned's books.
27. The Credit shall be subject to the Uniform Customs and
Practice for Documentary Credits, International Chamber of Commerce
Publication is amended from time to time.
28. The undersigned agrees that: (a) any assistance provided by
you in the preparation of the terms of the credit was requested by
the undersigned and was based solely upon information provided to
you by the undersigned, (B) except for information furnished by the
undersigned, you have no knowledge of the transaction for which the
credit has been obtained.; (C) the undersigned has read and
understands all of the terms and provisions of the credit and this
Letter of Credit Application, and (D) the terms of the credit are
in accord with the undersigned's instructions and represent all the
conditions that the undersigned has requested as a prerequisite for
you to pay under the credit.
By
Address
