1
EXHIBIT 99.2
--------------------------------------------------------------------------------
U.S. $750,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
SERVICE MERCHANDISE COMPANY, INC.
AS BORROWER
THE LENDERS PARTY HERETO
CITICORP USA, INC.
AS ADMINISTRATIVE AGENT
AND
BANKBOSTON, N.A.
AS DOCUMENTATION AGENT AND COLLATERAL MONITORING AGENT
AND
XXXXXXX XXXXX XXXXXX INC
AS ARRANGER AND BOOK MANAGER
DATED: JANUARY 20, 1999
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS
1.1 Defined Terms........................................................................ 2
1.2 Other Definitional Provisions........................................................ 37
SECTION 2. AMOUNTS AND TERMS OF TERM LOANS
2.1 Term Loans........................................................................... 37
2.2 Repayment of Term Loans; Amortization................................................ 37
SECTION 3. AMOUNTS AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 Revolving Credit Commitments......................................................... 38
3.2 Procedure for Revolving Credit Borrowing............................................. 38
3.3 Commitment Fee....................................................................... 39
3.4 Termination or Reduction of Commitments.............................................. 39
3.5 Repayment of Revolving Loans......................................................... 39
3.6 L/C Commitment....................................................................... 39
3.7 Procedure for Issuance of Letters of Credit.......................................... 40
3.8 Letter of Credit Fees, Commissions and Other Charges................................. 41
3.9 L/C Participations................................................................... 41
3.10 Letter of Credit Reimbursement Obligations........................................... 42
3.11 Obligations Absolute................................................................. 43
3.12 Letter of Credit Payments............................................................ 43
3.13 Letter of Credit Applications........................................................ 43
3.14 Swing Line Commitment................................................................ 43
3.15 Procedure for Swing Line Borrowing................................................... 44
3.16 Refunding of Swing Line Loans; Participations in Swing Line Loans.................... 44
3.17 Annual Revolving Credit Clean-Down................................................... 46
3.18 Other Fees........................................................................... 46
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
4.1 Optional and Mandatory Prepayments................................................... 46
4.2 Conversion and Continuation Options.................................................. 48
4.3 Minimum Amounts and Maximum Number of Tranches....................................... 48
4.4 Interest Rates and Payment Dates..................................................... 48
4.5 Computation of Interest and Fees..................................................... 49
4.6 Inability to Determine Interest Rate................................................. 49
4.7 Pro Rata Treatment and Payments...................................................... 50
4.8 Illegality........................................................................... 51
4.9 Requirements of Law.................................................................. 51
4.10 Indemnification for Taxes............................................................ 52
4.11 Indemnity............................................................................ 54
4.12 Change of Lending Office............................................................. 54
4.13 Evidence of Debt..................................................................... 54
- i -
3
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1 Financial Condition.................................................................. 55
5.2 No Change............................................................................ 56
5.3 Existence; Compliance with Law....................................................... 56
5.4 Power; Authorization; Enforceable Obligations........................................ 56
5.5 No Legal Bar......................................................................... 57
5.6 No Material Litigation............................................................... 57
5.7 No Default........................................................................... 57
5.8 No Burdensome Restrictions........................................................... 57
5.9 Taxes................................................................................ 57
5.10 Federal Regulations.................................................................. 58
5.11 ERISA................................................................................ 58
5.12 Investment Company Act; Other Regulations............................................ 58
5.13 Subsidiaries......................................................................... 58
5.14 Environmental Matters................................................................ 58
5.15 The Security Documents............................................................... 59
5.16 Ownership of Property; Liens......................................................... 60
5.17 Intellectual Property................................................................ 61
5.18 Pledged Stock........................................................................ 61
5.19 Real Estate Matters.................................................................. 61
5.20 [Reserved]........................................................................... 61
5.21 Purpose of Loans; Use of Proceeds.................................................... 61
5.22 Accuracy of Information.............................................................. 61
5.23 Depositary Accounts.................................................................. 62
5.24 Senior Indebtedness.................................................................. 62
5.25 Y2K Compliance....................................................................... 62
5.26 Subordinated Debentures and Senior Note Indenture.................................... 63
SECTION 6. CONDITIONS
6.1 Conditions to Effectiveness.......................................................... 63
6.2 Conditions to Each Extension of Credit............................................... 66
SECTION 7. AFFIRMATIVE COVENANTS
7.1 Financial Statements................................................................. 67
7.2 Certificates; Other Information...................................................... 68
7.3 Payment of Obligations............................................................... 69
7.4 Maintenance of Existence; Compliance with Contractual Obligations and
Requirements of Law.................................................................. 69
7.5 Maintenance of Property; Insurance................................................... 69
7.6 Inspection of Property; Books and Records; Discussions............................... 69
7.7 Notices.............................................................................. 69
7.8 Environmental Laws................................................................... 70
7.9 Further Assurances................................................................... 70
7.10 Mortgages; Etc....................................................................... 71
7.11 Additional Collateral................................................................ 71
7.12 Management Restructuring Consultant.................................................. 72
7.13 Business Plans and Projections....................................................... 72
7.14 Depositary Account and Payments System............................................... 73
- ii -
4
7.15 Ongoing Y2K Reports.................................................................. 73
7.16 Securing of Waivers.................................................................. 73
SECTION 8. NEGATIVE COVENANTS
8.1 Financial Condition Covenants........................................................ 73
8.2 Limitation on Guarantee Obligations.................................................. 74
8.3 Limitation on Liens.................................................................. 75
8.4 Limitation on Fundamental Changes.................................................... 78
8.5 Limitation on Sale of Assets......................................................... 78
8.6 Limitation on Dividends.............................................................. 79
8.7 Limitation on Indebtedness........................................................... 80
8.8 Limitation on Investments, Loans and Advances........................................ 80
8.9 Limitation on Optional Payments and Modifications of Debt Instruments................ 81
8.10 Limitation on Transactions with Affiliates........................................... 82
8.11 Limitation on Sales and Leasebacks................................................... 82
8.12 Fiscal Years and Quarters............................................................ 82
8.13 Limitation on Conduct of Business.................................................... 82
8.14 No Other Designated Senior Debt...................................................... 82
8.15 Limitation on Issuances of Capital Stock............................................. 82
8.16 Foreign Holding Companies, Inactive Subsidiaries and Special Purpose
Subsidiaries......................................................................... 82
SECTION 9. EVENTS OF DEFAULT.......................................................................... 83
SECTION 10. ADMINISTRATIVE AGENT AND THE COLLATERAL MONITORING AGENT
10.1 Appointment.......................................................................... 86
10.2 Delegation of Duties................................................................. 86
10.3 Exculpatory Provisions............................................................... 86
10.4 Reliance by Agents................................................................... 86
10.5 Notice of Default.................................................................... 87
10.6 Non-Reliance on Agents and Other Lenders............................................. 87
10.7 Indemnification...................................................................... 87
10.8 Agent in Its Individual Capacity..................................................... 88
10.9 Successor Administrative Agent....................................................... 88
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers............................................................... 88
11.2 Notices.............................................................................. 90
11.3 No Waiver; Cumulative Remedies....................................................... 91
11.4 Survival of Representations and Warranties........................................... 91
11.5 Payment of Expenses and Taxes; Indemnity............................................. 91
11.6 Successors and Assigns; Participations and Assignments............................... 92
11.7 Replacement of Lenders under Certain Circumstances................................... 94
11.8 Adjustments; Set-off................................................................. 95
11.9 Counterparts......................................................................... 95
11.10 Severability......................................................................... 96
11.11 Integration.......................................................................... 96
- iii -
5
11.12 Termination................................................................. 96
11.13 GOVERNING LAW............................................................... 96
11.14 Submission To Jurisdiction; Waivers......................................... 96
11.15 Acknowledgements............................................................ 97
11.16 WAIVERS OF JURY TRIAL....................................................... 97
11.17 Confidentiality............................................................. 97
11.18 Section Headings............................................................ 98
11.19 Judgment Currency........................................................... 98
11.20 Special Provisions.......................................................... 98
11.21 Amendments to Original Mortgages............................................ 98
11.22 Review of Business Plan..................................................... 98
11.23 Negotiation of Revised Covenants............................................ 99
11.24 Releases.................................................................... 99
11.25 Documents Evidence the Same Indebtedness.................................... 99
- iv -
6
SCHEDULES
Schedule 1.1(a) Commitments
Schedule 1.1(b) Real Estate Eligibility Conditions
Schedule 4.1(e) Florida Eligible Mortgaged Real Property
Schedule 5.1 Charges and Changes
Schedule 5.2 Changes
Schedule 5.4 Consents
Schedule 5.6 Litigation
Schedule 5.7 Defaults
Schedule 5.8 Restrictions
Schedule 5.13 Subsidiaries
Schedule 5.14 Environmental Matters
Schedule 5.15 Uniform Commercial Code Filings
Schedule 5.17 Intellectual Property Matters
Schedule 5.19 Material Real Property
Schedule 5.23 Depositary Accounts
Schedule 5.25 Y2K Compliance
Schedule 6.1(i) Local Counsel Jurisdictions
Schedule 6.1(l) Lien Search Jurisdictions
Schedule 7.3 Payments on Obligations
Schedule 7.4 Compliance with Obligations
Schedule 7.10(b) Excluded Properties
Schedule 7.10(c) Post Closing Real Estate Requirements
Schedule 8.2(b) Existing Guarantee Obligations
Schedule 8.3(f) Existing Liens
Schedule 8.7(f) Existing Indebtedness
Schedule 8.8 Investments
Schedule 8.10 Transactions with Affiliates
Schedule 11.2 Addresses
EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Subsidiaries Guarantee
Exhibit C Form of Master Collateral Agreement
Exhibit D Form of Revolving Credit Note
Exhibit E Form of Term Loan Note
Exhibit F Form of Swing Line Note
Exhibit G Form of Borrower Closing Certificate
Exhibit H-1 Form of Opinion of Counsel
Exhibit H-2 Form of Opinion of Local Counsel
Exhibit I Form of Borrowing Base Certificate
Exhibit J Available GOB Inventory Worksheet
- v -
7
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
January 20, 1999, by and among SERVICE MERCHANDISE COMPANY, INC., a Tennessee
corporation (the "Borrower"), the financial institutions and other entities from
time to time party to this Agreement (collectively, the "Lenders" and each
individually, a "Lender"), CITICORP USA, INC., a Delaware corporation
("Citicorp"), as collateral and administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), and BANKBOSTON, N.A., a national banking
association ("BankBoston"), as documentation agent and collateral monitoring
agent for the Lenders (in such capacities, the "Collateral Monitoring Agent")
(as amended, modified, supplemented, extended, renewed, or refinanced from time
to time, this "Agreement").
W I T N E S S E T H:
WHEREAS, the Borrower, the financial institutions party
thereto (the "Existing Lenders"), The Chase Manhattan Bank, a New York banking
corporation, as administrative agent and collateral agent for the Existing
Lenders (the "Existing Administrative Agent"), and Citicorp, as documentation
agent thereunder, are parties to that certain Amended and Restated Credit
Agreement, dated as of September 10, 1997 (as heretofore amended, the "Existing
Credit Agreement"); and
WHEREAS, effective immediately prior to the Effective Date
referred to below, (i) the Existing Lenders assigned all of their Loans and
Commitments under the Existing Credit Agreement to Citicorp and BankBoston,
which on the Effective Date are assigning a portion thereof to the Lenders and
(ii) the Existing Administrative Agent resigned as collateral and administrative
agent for the Existing Lenders and assigned to the Administrative Agent all of
its rights and obligations in its capacity as administrative and collateral
agent under the Existing Credit Agreement and the Loan Documents; and
WHEREAS, the Borrower and the Lenders desire to amend certain
terms of the Existing Credit Agreement, among other things, to provide for a
reduction in the principal amount of outstanding Term Loans, to reduce the
aggregate Revolving Credit Commitments from $700,000,000 to $600,000,000, to
change the final maturity of the Term Loans and the Revolving Loans and to make
certain changes to the covenants and certain other provisions contained therein;
and
WHEREAS, the Borrower, the Lenders and the Administrative
Agent have agreed to amend and restate the Existing Credit Agreement to provide
for such amendments on the terms set forth in this Agreement, which Agreement
shall become effective upon the satisfaction of certain conditions precedent set
forth herein; and
WHEREAS, it is the intent of the parties hereto that this
Agreement not constitute a novation of the obligations and liabilities existing
under the Existing Credit Agreement or evidence payment of all or any of such
obligations and liabilities, that this Agreement amend and restate in its
entirety the Existing Credit Agreement, and that from and after the Effective
Date the Existing Credit Agreement be of no further force or effect except as to
evidence the incurrence of the "Credit Agreement Obligations" thereunder and the
representations and warranties made thereunder;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and subject to the satisfaction of the conditions set forth
herein, the Borrower, the Lenders and the Administrative Agent hereby agree as
follows:
8
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR": means a fluctuating interest rate per annum as shall be
in effect from time to time, which rate per annum shall be equal at any
time to the then highest of:
(a) the rate of interest announced publicly by
Citibank in New York, New York, from time to time, as Citibank's base
rate;
(b) the sum (adjusted to the nearest 1/4 of one
percent or, if there is no nearest 1/4 of one percent, to the next
higher 1/4 of one percent) of (i) 1/2 of one percent per annum, plus
(ii) the rate per annum obtained by dividing (A) the latest three-week
moving average of secondary market morning offering rates in the United
States for three-month certificates of deposit of major United States
money market banks, such three-week moving average being determined
weekly on each Monday (or, if any such day is not a Business Day, on
the next succeeding Business Day) for the three-week period ending on
the previous Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank from three New York certificate of deposit dealers of
recognized standing selected by Citibank, by (B) a percentage equal to
100% minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for Citibank in respect of
liabilities consisting of or including (among other liabilities)
three-month U.S. dollar nonpersonal time deposits in the United States,
plus (iii) the average during such three-week period of the maximum
annual assessment rates payable to the Federal Deposit Insurance
Corporation (or any successor) by banks which are members of the Bank
Insurance Fund for insuring U.S. dollar deposits in the United States;
and
(c) the sum (adjusted to the nearest 1/4 of one
percent or, if there is no nearest 1/4 of one percent, to the next
higher 1/4 of one percent) of (i) 1/2 of one percent per annum plus
(ii) the Federal Funds Rate.
"ABR Loans": Term Loans or Revolving Loans the rate of
interest applicable to which is based upon the ABR.
"Account Debtor": any Person that is liable to make payments
with respect to an Account.
"Accounts": all "accounts" (as such term is defined in the
UCC) now owned or hereafter acquired by the Borrower or any Subsidiary
Guarantor and all Instruments and Chattel Paper now owned or hereafter
acquired by the Borrower or such Subsidiary Guarantor which evidence a
right to payment for goods sold or leased or for services rendered,
whether or not such right has been earned by performance.
"Accounts Receivable Calculation Date": at any time, the last
day of the most recent fiscal month.
2
9
"Acquisition": as to any Person, the acquisition by such
Person of (a) Capital Stock of any other Person that is not a
Subsidiary of such Person if, after giving effect to the acquisition of
such Capital Stock, such other Person would be a Subsidiary of such
Person, (b) all or substantially all of the assets of any other Person
or (c) assets constituting one or more business units of any other
Person.
"Administrative Agent": as defined in the preamble to this
Agreement, and any successor Administrative Agent appointed pursuant to
subsection 10.9.
"Affiliate": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either
to (a) vote 5% or more of the securities having ordinary voting power
for the election of directors of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by
contract or otherwise. For the purposes of this Agreement, the Borrower
and its Restricted Subsidiaries shall not be deemed to be Affiliates of
each other and Xxx Xxxx & Associates or its successor, solely in its
capacity as a management restructuring consultant, or any successor
management restructuring consultant solely by reason of such capacity,
shall not be deemed to be an Affiliate of the Borrower or its
Subsidiaries.
"Agents": collectively, the Administrative Agent and the
Collateral Monitoring Agent.
"Aggregate Outstanding Extensions of Credit": at any time, an
amount equal to the sum of (a) the Aggregate Revolving Credit
Outstandings at such time and (b) the aggregate outstanding principal
amount of Term Loans of all the Term Lenders at such time.
"Aggregate Revolving Credit Outstandings": at any time, an
amount equal to the Revolving Credit Extensions of Credit of all the
Lenders at such time.
"Agreement": as defined in the preamble to this Agreement.
"Agreement Currency": as defined in subsection 11.19.
"Applicable Commitment Fee Rate": 0.50% per annum, which will
accrue, commencing on the Effective Date, as a percentage of the daily
average unused portion of the Revolving Credit Commitments payable
monthly in arrears and on the Revolving Credit Termination Date.
"Applicant": with respect to any Letter of Credit, the
Borrower or any Subsidiary Guarantor.
"Application": an application or request, in such form as an
Issuing Bank may specify from time to time, requesting such Issuing
Bank to open a Letter of Credit.
"Arranger and Book Manager": Xxxxxxx Xxxxx Barney Inc.
"Asset Sale": means any sale or other disposition, or series
of sales or other dispositions (including, without limitation, by
merger or consolidation, and whether by operation of law or otherwise),
made on or after the Effective Date by the Borrower and/or any of the
Restricted Subsidiaries to any Person of any asset or assets which
individually yields or in the aggregate for a series of related
transactions yield proceeds or have a fair market value in excess of
$150,000; provided, that any sale or other disposition permitted
pursuant to
3
10
clauses (a) through (e) and clauses (h) through (k) of subsection 8.5
shall not constitute an Asset Sale for purposes of this Agreement.
"Asset Sale Proceeds" means with respect to any Asset Sale,
cash payments received by the Borrower or any Restricted Subsidiary
(including, without limitation, any cash payments received by way of
deferred payment of principal (but not interest) pursuant to a note or
receivable or otherwise and any cash realized from any disposition of
non-cash proceeds received by the seller, but only as and when
received) from any Asset Sale (after repayment of any Indebtedness
other than the Loans due by reason of such Asset Sale), in each case
net of the amount of (i) brokers' and advisors' fees and commissions
payable in connection with such Asset Sale, (ii) all foreign, federal,
state and local taxes estimated in good faith by the Borrower to be
payable as a direct consequence of such Asset Sale, including, without
limitation, in connection with the payment of a dividend or the making
of a distribution by a Restricted Subsidiary of such payments to the
Borrower or any other Restricted Subsidiary (including, without
limitation, taxes withheld in connection with the repatriation of such
proceeds), net of any tax benefits derived in respect of such dividend
or distribution, (iii) the fees and expenses attributable to such Asset
Sale, to the extent not included in clause (i) above, and (iv) any
amount required to be paid to any Person (other than the Borrower or
any Restricted Subsidiary) owning a beneficial interest in the property
or assets subject to such Asset Sale. For purposes of this definition,
(x) an Asset Sale shall be deemed to include, without limitation, any
award of compensation for any asset or property or group thereof taken
by condemnation or eminent domain and insurance proceeds for the loss
of or damage to any asset or property if such award or proceeds equals
or exceeds $2,000,000 (per occurrence), and (y) in the case of
insurance proceeds for damage to any Operating Asset, such proceeds
shall not be deemed Asset Sale Proceeds so long as no Event of Default
shall have occurred and be continuing and if such Operating Assets are
repaired within 120 days of the receipt of such proceeds or a binding
agreement to repair the same is entered into within such 120-day period
and such repairs are completed within one year of the date of the
receipt of such proceeds.
"Assignee": as defined in subsection 11.6(c).
"Available Accounts Receivable Amount": as of any Accounts
Receivable Calculation Date, an amount equal to up to 75% of the
Eligible Trade Accounts Receivable Amount as of such Accounts
Receivable Calculation Date.
"Available Cash Equivalents": as of any Calculation Date, an
amount equal to 100% of Cash Equivalents which have then been pledged
to the Administrative Agent pursuant to the Pledge Agreement.
"Available GOB Inventory Amount": as of any Calculation Date,
an amount equal to the GOB Inventory Amount minus the GOB Discount
Amount for the period reported on at such Calculation Date, as
calculated on the Available GOB Inventory Worksheet attached hereto as
Exhibit J.
"Available Inventory Amount": as of any Calculation Date, an
amount equal to (a) 70% (subject to upward adjustment to 72.5% in the
Agents' discretion) of the Eligible Adjusted Inventory Amount
(excluding the Eligible Adjusted Inventory Amount in respect of
Inventory at the OSS Subsidiary) as of such Calculation Date, plus (b)
50% of the Eligible Adjusted Inventory Amount for Inventory at the OSS
Subsidiary as of such Calculation Date, minus (c) the Customer Credit
Liability Amount as of the most recent Reserve Calculation Date, minus
(d) the Landlord Lien Reserve Amount as of the most recent Reserve
Calculation
4
11
Date; provided that, during the peak seasonal inventory period of
September 1st through December 10th only, the Agents may, in their sole
discretion exercised commercially reasonably, increase the allowable
percentage rate as to clause (a) of this definition to 75%.
"Available L/C Amount": as of any Calculation Date, an amount
equal to up to 60% of the sum of (a) the aggregate undrawn face amount
of Trade Letters of Credit (including Trade Letters of Credit which
have been collateralized by Standby Letters of Credit issued by an
Issuing Bank) issued to finance the purchase of Inventory (excluding
any Inventory included in the calculation of Eligible Inventory Amount)
and (b) the aggregate Inventory Value of Inventory financed with Trade
Letters of Credit which have been fully drawn and the Reimbursement
Obligations in respect of which have been fully paid so long as, in the
case of clause (a) and (b), (i) such Inventory shall be in transit to
properties owned or leased by the Borrower or the Subsidiary Guarantors
in the United States, (ii) such Inventory is not included in the
calculation of Eligible Inventory Amount and, upon arrival in the
United States, will be included in the determination of the Eligible
Inventory Amount (but not included in the determination of the
Ineligible Inventory Amount) and (iii) the Administrative Agent or its
agent or bailee shall be named as the consignee of the applicable xxxx
of lading or other document of title.
"Available Revolving Credit Commitment": as to any Lender, at
any time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Credit Commitment at such time over (b) such Lender's
Revolving Credit Extensions of Credit at such time.
"Available Mortgaged Real Property Amount": an amount equal to
the lesser of (i) 54.5% of the excess of (A) the aggregate Mortgage
Value of all parcels of Eligible Mortgaged Real Property as of the most
recent Calculation Date over (B) the sum of (I) the aggregate Real
Property Amortization Amounts for all parcels of Eligible Mortgaged
Real Property at such time, (II) the Environmental Reserve Amount at
such time and (III) the aggregate Mechanics' Lien Reserve Amounts for
all parcels of Eligible Mortgaged Real Property at such time and (ii)
$82,000,000.
"BankBoston": as defined in the preamble to this Agreement.
"benefitted Lenders": as defined in subsection 11.8(a).
"Blocked Account Agreement": any "Blocked Account Agreement"
(i) entered into among the Borrower or any Subsidiary Guarantor, a
Depositary Bank and the Existing Administrative Agent, substantially in
the form of Exhibit E to the Existing Collateral Agreement, or (ii)
entered into among the Borrower or any Subsidiary Guarantor, a
Depositary Bank and the Administrative Agent pursuant to subsection 3.1
of the Master Collateral Agreement, as the same may be amended,
modified, supplemented, extended or renewed from time to time.
"Board of Governors": the Board of Governors of the Federal
Reserve System and any Governmental Authority which succeeds to the
powers and functions thereof.
"Borrower": as defined in the preamble to this Agreement.
"Borrowing Base": at any time, (i) an amount, calculated based
upon the Borrowing Base Certificate delivered pursuant to subsection
6.2(e) and thereafter the most recent Borrowing Base Certificate
delivered pursuant to this Agreement, equal to the sum of (a) the
Available Inventory Amount as of the most recent Calculation Date, plus
(b) the Available
5
12
Accounts Receivable Amount as of the most recent Accounts Receivable
Calculation Date, plus (c) the Available L/C Amount as of the most
recent Calculation Date, plus (d) the Available Mortgaged Real Property
Amount as of the most recent Calculation Date, plus (e) In-Transit Cash
calculated as of the Wednesday immediately preceding the most recent
Calculation Date, minus (f) the Cumulative Asset Sale Reserve, and
minus (g) the Interim Reserve Amount, plus (ii) on each Borrowing Date,
the Available Cash Equivalents Amount as of such Borrowing Date. The
Borrowing Base established based upon a particular Borrowing Base
Certificate shall remain in effect until the delivery of a subsequent
Borrowing Base Certificate. The Agents shall have the right, in
connection with any periodic audit or appraisal of the Inventory
performed by or on behalf of the Agents, any reports provided to the
Agents by the Borrower, or as a result of changing market conditions,
in their sole discretion exercised commercially reasonably and in
accordance with customary business practices for comparable asset based
transactions of $100,000,000 or more and upon at least 10 days prior
written notice to the Borrower, to require that additional reserves of
the types described below be included in the determination of the
Available Inventory Amount: (a) additional reserves relating to new
categories of inventory (e.g. produce) unrelated to the current or
disclosed future business of the Borrower and the Subsidiary
Guarantors; (b) additional reserves to reflect substantial changes in
the overall composition or mix of the Inventory which have the effect
of materially reducing the Net Recoverable Value of the Inventory taken
as a whole; (c) additional reserves relating to changes in the
marketability of Inventory (including, for example, as a result of a
recession) which have the effect of materially reducing the Net
Recoverable Value of the Inventory taken as a whole; (d) additional
reserves relating to a material negative variance between the
Borrower's or a Subsidiary Guarantor's cost and the market price of a
major product category (e.g., a decline in the price of gold), and (e)
additional GOB Inventory reserves. In the event the Borrower is unable
to deliver or perform the Post Closing Real Estate Requirements as to
any parcel of Eligible Mortgaged Real Property, on the 31st day after
the notice from the Administrative Agent of the failure to deliver or
perform any such Post Closing Real Estate Requirement (or such later
date as agreed by the Administrative Agent), such parcel of Eligible
Mortgaged Real Property shall no longer qualify as Eligible Mortgaged
Real Property and shall not thereafter be included as such in the
Borrowing Base calculation.
"Borrowing Base Certificate": as defined in subsection 7.2(c).
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 3.2 or 3.15 as a date on which the Borrower
requests the Lenders to make Loans hereunder.
"Business": as defined in subsection 5.14(b).
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close, provided, that, when used in connection with
a Eurodollar Loan, the term "Business Day" shall also exclude any day
on which banks are not open for dealings in Dollar deposits in the
London interbank market.
"Business Plan": a business plan of the Borrower and its
Subsidiaries through the period ending December 31, 2001, which shall
contain forecasted expenditures, revenues, net income and cash flow
during such period, and the Borrower's business strategy, including
store openings and closings, store consolidations, capital
expenditures, expense reductions, and similar strategic plans relating
to the conduct of the business of the Borrower and its Subsidiaries.
6
13
"Calculation Date": at any time, the last day of any period
covered by the most recent Borrowing Base Certificate.
"Capital Expenditures": for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities during
such period) by the Borrower or any Restricted Subsidiary during such
period that, in conformity with GAAP, are required to be included in
"capital expenditures", "additions to property, plant, equipment or
intangibles" or similar fixed asset accounts reflected in the
consolidated balance sheet of the Borrower and the Restricted
Subsidiaries which are consolidated Subsidiaries of the Borrower
(including equipment which is purchased simultaneously with the
trade-in of existing equipment owned by the Borrower or any Restricted
Subsidiary to the extent of the gross amount of such purchase price
less the book value of the equipment being traded-in at such time), but
excluding expenditures made in connection with the replacement or
restoration of assets to the extent reimbursed or financed from
insurance proceeds paid on account of the loss of or the damage to the
assets being replaced or restored, or from awards of compensation
arising from the taking by condemnation or eminent domain of such
assets being replaced and deducting cash amounts (including free rent)
received by the Borrower and the Restricted Subsidiaries from other
Persons during such period in reimbursement of Capital Expenditures
made by the Borrower and the Restricted Subsidiaries.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"Cash Dominion Trigger Event": means the occurrence of the
Effective Date.
"Cash Equivalents": means (a) direct obligations of, or
obligations guaranteed by, the United States of America or any agency
thereof, (b) commercial paper issued in the United States of America
and rated at least A-1 or P-1 by at least one nationally recognized
rating organization, (c) certificates of deposit issued by or
eurodollar deposits made with any Lender, any affiliate of any Lender,
or any bank or trust company which has (or the parent of which has)
capital, surplus and undivided profits aggregating at least
$100,000,000 (or the equivalent amount in another currency), (d) loan
participations in respect of loans made in the United States by any
bank or trust company referred to in clause (c) above to borrowers
which have short-term ratings of at least A-1 or P-1 by at least one
nationally recognized rating organization, (e) drafts accepted by any
bank or trust company referred to in clause (c) above or any other
negotiable instrument guaranteed or endorsed with full recourse by any
such bank or trust company, (f) repurchase agreements with respect to
any of the foregoing types of securities described in clause (a), (b)
and (d) above, (g) investments in money market funds substantially all
of whose assets are comprised of securities of the types described in
clauses (a) through (f) above, (h) obligations the return with respect
to which is excluded from gross income under Section 103 of the Tax
Code, with a maturity of not more than six months or with the right of
the holder to put such obligations for purchase at par upon not more
than seven days' notice and which are rated at least A-l or P-1 by at
least one nationally recognized rating organization, (i) (A) tax free
money market funds that invest solely in the securities described in
clause (h) above or (B) money market preferred municipal bond funds
which have a term of not more than seven days and which are rated at
least AAA or the equivalent thereof by Standard & Poor's Ratings Group
or at least Aaa or the equivalent thereof by Xxxxx'x Investors
Services, Inc., and (j) any other securities reasonably acceptable to
the Administrative Agent which are rated at least A-1 or P-1 by at
least one nationally recognized rating organization, or which are of an
equivalent credit quality in the reasonable judgment of
7
14
the Administrative Agent, provided that (i) all such obligations,
commercial paper, certificates of deposit, eurodollar deposits, loan
participations, drafts, investments, instruments, securities and
repurchase agreements are denominated in Dollars, (ii) each such
obligation, commercial paper, certificate of deposit, draft,
investment, security and instrument (including those subject to
repurchase agreements) is evidenced by an instrument or a security
(each as defined in the UCC) of which (and of any confirmations related
thereto) the Administrative Agent or its agents promptly take
possession unless such items are Permitted Book-Entry Securities or, at
the Borrower's or the relevant Subsidiary Guarantor's option, an
Excepted Cash Equivalent or, in the case of eurodollar deposits or loan
participations, are held in the name of the Administrative Agent or any
agent therefor, and in the case of loan participations, are evidenced
by facsimile or other written confirmation, (iii) each such obligation,
certificate of deposit, draft, investment, security and instrument
(including those subject to repurchase agreements) matures within six
months after it is acquired by the Borrower or any Subsidiary Guarantor
and (iv) each item of such commercial paper (including those subject to
repurchase agreements) matures within three months after it is acquired
by the Borrower or any Subsidiary Guarantor.
"Cash Proceeds": all Proceeds of Collateral consisting of
cash, checks, credit card proceeds, money orders or commercial paper of
any kind whatsoever.
"Chattel Paper": with respect to the Borrower or any
Subsidiary Guarantor, all "chattel paper" (as such term is defined in
the UCC) now owned or hereafter acquired by such Borrower or Subsidiary
Guarantor.
"CIBC": as defined in subsection 6.1(w).
"Citicorp": as defined in the preamble to this Agreement.
"Collateral": collectively, the Pledged Stock, all other
Pledged Securities, the Mortgaged Property, the Mortgage Assignments,
all Security, all Proceeds of the foregoing and all other property in
which the Administrative Agent is granted a Lien from time to time
hereunder or under any Security Document, subject to the limitations
set forth in subsection 2.9 of the Master Collateral Agreement.
"Collateral Account": the account maintained by the
Administrative Agent at Citibank, N.A. in New York, New York entitled
the "Citicorp USA, Inc., as Administrative Agent: Service Merchandise
Company, Inc. -- Collateral Account".
"Collateral Monitoring Agent": as defined in the preamble to
this Agreement.
"Commitment": with respect to any Lender, such Lender's
Revolving Credit Commitment, and collectively, as to all the Lenders,
the "Commitments".
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Tax Code.
"Confidential Information": as defined in subsection 11.17.
8
15
"Consolidated": when used in connection with any defined term,
and not otherwise defined, means such term as it applies to any Person
and its Subsidiaries on a consolidated basis, after eliminating all
intercompany items.
"Continuing Directors": as defined in Section 9(j).
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its material property is bound.
"Credit Agreement Obligations": the collective reference to
the unpaid principal of and interest on the Loans and the Reimbursement
Obligations and all other obligations and liabilities of the Borrower
to the Administrative Agent or the Lenders (including interest accruing
at the then applicable rate provided for herein after the maturity of
the Loans or Reimbursement Obligations and interest accruing at the
then applicable rate provided for herein after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter incurred, which may
arise under, out of, or in connection with, this Agreement, any Letters
of Credit, the other Loan Documents or any other document made,
delivered or given in connection herewith or therewith, whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including all fees and
disbursements of counsel to the Agents or to the Lenders that are
required to be paid by the Borrower pursuant to the terms of this
Agreement or any other Loan Document).
"Credit Card Issuer": any bank or other Person which issues
credit cards and extends credit to cardholders in connection with a
Credit Card Program.
"Credit Card Program": a private credit card program and/or
co-branded Visa, Mastercard or other credit card program created and
operated or maintained by the Credit Card Subsidiaries pursuant to (a)
the Private Label Credit Card Agreement, dated as of January 28, 1997,
among World Financial Network National Bank, the Borrower and Service
Credit Corp. (formerly known as Service Merchandise Co. No. 80, Inc.),
(b) any other similar agreement or arrangement with terms and
conditions reasonably satisfactory to the Administrative Agent.
"Credit Card Subsidiaries": any direct or indirect Subsidiary
of the Borrower, and any wholly-owned Subsidiaries of such Subsidiary,
existing from time to time that are created in connection with a Credit
Card Program, as long as (i) such Subsidiaries engage in no business or
transactions other than (x) the issuance (or providing for the
issuance) of credit cards, the extension of credit to cardholders
pursuant thereto, and other transactions arising from or related
thereto (including the sale or transfer of Accounts or credit card
receivables pursuant to asset backed financing transactions) and (y)
the entering into and performance of agreements with a Credit Card
Issuer that facilitate the Credit Card Issuer's doing business in
connection with a Credit Card Program and (ii) the liabilities of the
Credit Card Subsidiaries are without recourse to the Borrower and its
Restricted Subsidiaries (other than the Credit Card Subsidiaries),
provided that the Borrower and its Restricted Subsidiaries may enter
into customary commitments and/or underwriting agreements on behalf of
the Credit Card Subsidiaries for the purpose of customary securities
law or regulatory indemnifications.
9
16
"Cumulative Asset Sale Reserve": as of any date, the reserve
against the Borrowing Base established in connection with Asset Sales
permitted hereunder.
"Current Assets": cash, accounts receivable, inventory and all
other assets (other than Fixed Assets) used in the operation of the
business of the Borrower and its Subsidiaries.
"Custody and Control Agreement": any "Custody and Control
Agreement" (i) entered into among the Borrower or any Subsidiary
Guarantor, an Intermediary (as therein defined) and the Existing
Administrative Agent, pursuant to Section 9(e) of the Existing Pledge
Agreement, or (ii) entered into among the Borrower or any Subsidiary
Guarantor, an Intermediary (as therein defined) and the Administrative
Agent, pursuant to Section 9(e) of the Pledge Agreement, as the same
may be amended, modified, supplemented, extended or renewed from time
to time.
"Customer Credit Liability Amount": as of any Reserve
Calculation Date, an amount equal to 50% of the aggregate amount of
gift certificates, merchandise credits and special order deposits then
outstanding entitling the holders thereof to use all or a portion
thereof to pay all or a portion of the purchase price for any Inventory
as of such day which are not being held for escheatment or which have
not been escheated as of such day.
"Customs Broker Inventory": any Inventory which has arrived in
the United States and is located at a customs broker's warehouse
facility, so long as such Inventory (a) is fully paid and subject only
to a Lien in favor of the Administrative Agent (other than Permitted
Inventory Liens), (b) is in the possession of such customs broker, and
(c) such Inventory is reported in a Borrowing Base Certificate
separately from other Inventory included in the calculation of the
Available Inventory Amount.
"Customs Broker Waiver": a waiver in form and substance
satisfactory to the Administrative Agent in respect of Inventory of the
Borrower or any Subsidiary Guarantor which is temporarily located at a
customs broker's warehouse facility.
"Debt Issuance Proceeds": means in respect of the issuance of
any debt securities or other incurrence of Indebtedness by the Borrower
or any Restricted Subsidiary (other than Indebtedness permitted by
subsection 8.7), the gross cash proceeds received from such issuance or
incurrence, minus all taxes, discounts, commissions and other fees and
expenses incurred in connection therewith, including, without
limitation, the reasonable fees and disbursements of counsel.
"Default": any of the events specified in Section 9 which,
with the giving of notice, the lapse of time, or both, or the
satisfaction of any other condition specified in Section 9, would
become an Event of Default.
"Depositary Bank": each bank or financial institution at which
the Borrower or any Subsidiary Guarantor maintains any depositary
account into which Cash Proceeds are deposited, including each bank or
financial institution listed on Schedule 5.23.
"Derivative Agreements": any foreign exchange contracts,
interest rate and currency swap agreements, floors, caps, collars,
swaptions and similar derivative contracts, in each case, between the
Borrower or any Subsidiary Guarantor, on the one hand, and any Lender
or any Affiliate of any Lender, on the other hand.
10
17
"Designated Material Real Property": collectively, at any
time, (a) all parcels of Material Real Property which are then subject
to a first priority Lien granted pursuant to a Mortgage, (b) the
Excluded Properties, (c) all parcels of Material Real Property deemed
to be parcels of Designated Material Real Property pursuant to
subsection 8.3(k) or 8.3(q) and (d) the parcels of real property
identified on Schedule 5.19 under the heading "Other Material Real
Property."
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Dollar Equivalent": at any date of determination thereof with
respect to the face amount of any Letter of Credit issued in any
currency other than Dollars or any Reimbursement Obligations in respect
of any such Letter of Credit, an amount in dollars equivalent to such
face amount calculated at the rate of exchange quoted by the
Administrative Agent on such date of determination (at the hour on such
date of determination at which it customarily makes such determination)
to prime banks in the interbank market where its foreign currency
exchange operations in respect of the currency in which such Letter of
Credit is issued are then being conducted for the spot purchase of such
currency with Dollars.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction (including territories)
within the United States of America, excluding the Inactive
Subsidiaries, Securitization Entities, Excluded Subsidiaries, Special
Purpose Subsidiaries and Foreign Holding Companies.
"EBITDA": with respect to any period, Consolidated Net Income
of the Borrower and its Consolidated Subsidiaries for such period plus
(a) in each case to the extent deducted in determining such
Consolidated Net Income for such period, the sum of the following
(without duplication): (i) Consolidated Interest Expense of the
Borrower and its Consolidated Subsidiaries, (ii) consolidated income
tax expense of the Borrower and its Consolidated Subsidiaries, (iii)
consolidated depreciation and amortization expense of the Borrower and
its Consolidated Subsidiaries, including, without limitation,
depreciation and amortization included in selling, general and
administrative expenses of the Borrower and its Consolidated
Subsidiaries, (iv) any non-cash expenses, non-cash losses or other
non-cash charges resulting from the write-down in the valuation of any
assets, (v) any non-recurring charge or restructuring charge which, in
accordance with GAAP is excluded from operating income, and (vi)
losses, expenses and other charges, including related severance
payments in respect of going-out-of-business sales to the extent such
cash losses, expenses and other charges do not exceed the cash proceeds
received from such sales, minus (b) to the extent added in determining
such Consolidated Net Income for such period, any non-cash gains
resulting from the write-up in the valuation of any assets, plus or
minus (c) the amount of cash received or expended in such period in
respect of any amount which, under clause (v) above, was taken into
account in determining EBITDA for such or any prior period.
"Effective Date": the date on which the conditions set forth
in subsection 6.1 are satisfied.
"Eligible Adjusted Inventory Amount": as of any Calculation
Date, (a) the Eligible Inventory Amount, plus (b) the Available GOB
Inventory Amount, minus (c) the Shrink Reserve in respect of such
Eligible Inventory Amount, in each case as of such Calculation Date.
"Eligible Assignee": as defined in subsection 11.6(c).
11
18
"Eligible Inventory Amount": as of any Calculation Date, (a)
the Inventory Value as of such Calculation Date of all Inventory of the
Borrower and the Subsidiary Guarantors that consists of finished goods,
loose diamonds or colored stones, plus (b) Customs Broker Inventory,
plus (c) Landed Inventory, minus (d) the sum of (i) the Ineligible
Inventory Amount as of such Calculation Date and (ii) the GOB Inventory
Amount as of such Calculation Date.
"Eligible Mortgaged Real Property": at any time, any parcel of
Material Real Property of the Borrower or any Subsidiary Guarantor as
to which each of the following conditions has been satisfied at such
time:
(a) (i) Such parcel of Material Real Property (A) is comprised
of a developed retail store, distribution center, shopping center or
office building with respect to which a certificate of occupancy or
temporary certificate of occupancy or the local equivalent thereof (or
any other similar proof of completion) shall have been issued by the
relevant Governmental Authority or the Administrative Agent shall have
received other evidence reasonably satisfactory to it of the completion
of such retail store, distribution center, shopping center or office
building or (B) is undeveloped and has a book value (excluding soft
costs) of at least $1,000,000, (ii) a Lien on such parcel of Material
Real Property shall have been granted by the Borrower or such
Subsidiary Guarantor, as the case may be, in favor of the
Administrative Agent pursuant to a Mortgage or a Mortgage Assignment,
(iii) each Mortgage and Mortgage Assignment shall be in full force and
effect in favor of the Administrative Agent at such time, (iv) each
Mortgage and Mortgage Assignment shall have been recorded in the
appropriate jurisdiction or jurisdictions to perfect and assign to the
Administrative Agent the Lien granted pursuant to such Mortgage,
provided, that such Mortgage need not have been so recorded if an
effective title insurance policy (naming the Administrative Agent as
the insured thereunder) shall have been issued that otherwise complies
with the requirements of clause (c) (i) or (ii) of this definition and
that provides "gap" coverage insuring against any exceptions that may
arise prior to the actual recording of such Mortgage, and (v) all
applicable mortgage recording taxes shall have been paid, and provided,
further, that in respect of the requirements of clause (a)(iv) of this
definition, the Mortgage Assignments shall be deemed to have been
recorded and filed of record in the appropriate jurisdictions as of the
date they are executed and delivered by the Existing Administrative
Agent to the Administrative Agent until such time, if any, as the
recording or filing of any such Mortgage Assignment is rejected by such
jurisdiction, at which time the related parcel of Material Real
Property shall not be considered Eligible Mortgaged Real Property until
such time as the Mortgage Assignment is accepted for recordation and
actually filed of record.
(b) the Administrative Agent and, in the case of clause (i),
the title insurance company issuing the policy referred to in clause
(c) of this definition shall have received (i) maps or plats of an
as-built survey of the sites of the Material Real Property covered by
such Mortgage certified to the Administrative Agent and such title
insurance company in a manner reasonably satisfactory to them, dated a
date reasonably satisfactory to the Administrative Agent and such title
insurance company, by an independent professional licensed land
surveyor reasonably satisfactory to the Administrative Agent and such
title insurance company, which maps or plats and the surveys on which
they are based shall be made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such
maps, plats or surveys the following: (A) the locations on such sites
of all the buildings, structures and other improvements and the
established building setback lines (where setback information is
readily obtainable); (B) the lines of streets abutting such sites and
the width thereof; (C) all access and other easements appurtenant to
such sites or
12
19
necessary to use such sites; (D) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar
encumbrances affecting such sites, whether recorded, apparent from a
physical inspection of such sites or otherwise known to the surveyor;
(E) any encroachments on any adjoining property by the building
structures and improvements on such sites; and (F) if such sites are
described as being on a filed map, a legend or other information
relating the survey to said map or (ii) in the case of any such parcel
of Material Real Property listed on Part I of Schedule 5.19, a copy of
either (A) an as-built survey of such parcel of Material Real Property
if such parcel of Material Real Property was developed as of the
Effective Date or a boundary survey of such parcel of Material Real
Property if such parcel of Material Real Property was undeveloped as of
the Effective Date, in each case prepared within five years prior to
the Effective Date or (B) a copy of a survey delivered pursuant to the
Existing Credit Agreement in connection with any Mortgage on such
parcel of Material Real Property delivered pursuant to the Existing
Credit Agreement;
(c) the Administrative Agent shall have received in respect of
such parcel of Material Real Property (i) a mortgagee's title policy
(or policies) or marked-up unconditional binder (or binders) for such
insurance dated a date reasonably satisfactory to the Administrative
Agent, and such policy shall (A) be in an amount not less than the
Mortgage Value (as of the date such parcel of Material Real Property
becomes a parcel of Eligible Mortgaged Real Property) of such parcel of
Material Real Property, (B) be issued at ordinary rates, (C) insure
that the Mortgage insured thereby creates a valid first Lien on such
parcel of Material Real Property free and clear of all defects and
encumbrances, except such as may be approved by the Administrative
Agent and Permitted Mortgage Liens, (D) name the Administrative Agent
for the benefit of the Lenders as the insured thereunder, (E) be in the
form of ALTA Loan Policy - 1992 (or such local equivalent thereof as is
reasonably satisfactory to the Administrative Agent), (F) contain a
comprehensive lender's endorsement and (G) be issued by Chicago Title
Insurance Company, First American Title Insurance Company, Lawyers
Title Insurance Corporation or any other title company reasonably
satisfactory to the Administrative Agent (including any such title
companies acting as co-insurers or reinsurers) or (ii) in the case of
any such parcel of Material Real Property subject to a Mortgage
pursuant to the Existing Credit Agreement as of the Effective Date, an
endorsement endorsing the previously issued mortgagee's title policy
issued by Lawyers Title Insurance Corporation in connection with the
Existing Credit Agreement to the Administrative Agent, and a date down
endorsement to such title policy, both on the same terms and conditions
as such title policy was initially issued. The Administrative Agent
shall have received (x) evidence satisfactory to it that all premiums
in respect of each such policy or endorsement, as the case may be, have
been paid and (y) a copy of all documents referred to, or listed as
exceptions to title, in such title policy (or policies);
(d) the Administrative Agent shall have received an Existing
Appraisal with respect to such parcel of Material Real Property;
(e) with respect to any such parcel of Material Real Property
upon which a Mortgage is granted pursuant to subsection 7.10(a) or
which is designated as a "Phase I Property" on Schedule 5.19, a Phase I
environmental report with respect to such parcel of Material Real
Property, dated a date not more than one year prior to the date such
parcel became Eligible Mortgaged Real Property under the Existing
Credit Agreement, or not more than one year prior to the date such
parcel becomes Eligible Mortgaged Real Property under this Agreement,
showing no material condition of environmental concern shall have been
delivered to the Administrative Agent and in form reasonably
satisfactory to the Administrative Agent;
13
20
(f) if such parcel of Material Real Property is subject to a
ground lease in favor of the Borrower or any Subsidiary Guarantor as
lessee, no consent shall be required under such ground lease to
mortgage or foreclose upon such parcel of Material Real Property (or
such consent shall have been obtained); and
(g) such parcel of Material Real Property shall be in
compliance, or, as applicable, the Loan Party which is the owner or
lessee thereof, shall be in compliance, with all of the terms,
covenants, conditions, representations and warranties set forth in
Schedule 1.1(b), provided that, (i) if any such term, covenant,
condition, representation or warranty shall reference any provision of
this Agreement, such reference shall be read without giving effect to
any qualification or limitation contained therein regarding a Material
Adverse Effect, and (ii) if such parcel of Material Real Property or,
as applicable, the Loan Party which is the owner or lessee thereof
ceases to be in compliance with any of the terms, covenants,
conditions, representations or warranties set forth in Schedule 1.1(b),
such parcel of Material Real Property shall cease (effective as of the
delivery of the next succeeding Borrowing Base Certificate) to be
Eligible Mortgaged Real Property during the continuation of such
non-compliance if such non-compliance could reasonably be expected to
have a material adverse effect on the value of such parcel of Material
Real Property, but such non-compliance shall not constitute, in and of
itself, a Default or Event of Default.
If a parcel of Material Real Property of the type described in
clause (a)(i)(B) of this definition becomes a parcel of Eligible
Mortgaged Real Property and is thereafter subsequently developed such
that such parcel of Eligible Mortgaged Real Property satisfies the
requirements of clause (a)(i)(A) of this definition, the Borrower may,
at its option, deliver a notice to the Administrative Agent to the
effect that the Borrower wishes to cause such parcel of Material Real
Property to satisfy the requirements of this definition as if (x) such
parcel of Material Real Property became a parcel of Material Real
Property as of the date of such notice, (y) such parcel of Material
Real Property was not then a parcel of Eligible Mortgaged Real Property
and (z) if applicable, such parcel of Material Real Property was not
subject to a Mortgage as of the Effective Date. Upon delivery of any
such notice, the Administrative Agent shall commission a new appraisal
with respect to such parcel of Material Real Property. Upon
satisfaction of the conditions set forth in this definition following
such date with respect to such parcel of Material Real Property (other
than the condition set forth in clause (e) above, such parcel of
Material Real Property shall, without duplication, be deemed to become
a parcel of Eligible Mortgaged Real Property as of the date such
conditions are satisfied and the Mortgage Value of such parcel of
Eligible Mortgaged Real Property shall be included in the Borrowing
Base effective as of the delivery of the Borrowing Base Certificate in
respect of the fiscal month in which such conditions are satisfied.
"Eligible Trade Accounts Percentage": as of any Accounts
Receivable Calculation Date, up to 85%, provided that, in connection
with each periodic audit or appraisal of the Accounts of the Borrower
and the Subsidiary Guarantors performed by or on behalf of the
Administrative Agent, the Administrative Agent shall have the right in
its sole discretion exercised commercially reasonably and in accordance
with customary business practices, upon at least 10 days prior written
notice to the Borrower, to change the "Eligible Trade Accounts
Percentage" to the percentage estimated to be the percentage of the
aggregate amount of the Accounts as of such Accounts Receivable
Calculation Date which satisfy each of the following criteria:
(a) such Account has been adjusted to reflect the return or
rejection of, or any loss of or damage to any of the Inventory giving
rise to such Account and is not subject to bona fide set-offs,
counterclaims, defenses, or disputes asserted with respect to such
Account (it being
14
21
understood that such Account shall not include material financing
charges, or late or other fees);
(b) the Account Debtor with respect to such Account is not
insolvent or the subject of any bankruptcy case or insolvency
proceeding of any kind, unless such Account is due from such Account
Debtor as an administrative claim under the Bankruptcy Code and the
Administrative Agent, in the exercise of its reasonable business
judgment, deems the Account Debtor to be creditworthy;
(c) the Account Debtor in respect of such an Account has a
place of business within the United States of America (excluding Puerto
Rico, the Virgin Islands and any other territory of the United States);
(d) the Account Debtor in respect of such Account is not the
United States of America or any state, territory, subdivision,
department, or agency thereof, unless all applicable requirements of
the Assignment of Claims Act of 1940 have been satisfied;
(e) such Account does not arise out of transactions with an
employee, officer, director, Subsidiary, or Affiliate of the Borrower
or any Subsidiary Guarantor;
(f) no amount payable in respect of such Account has remained
unpaid for a period exceeding sixty days after the due date stated on
the invoice therefor (excluding the amount of any net credit balances
relating to Accounts with invoice dates more than 60 days from the due
date);
(g) such Account is owed by an Account Debtor which does not
then have balances on its Accounts which are more than 60 days past due
which exceed 50% of the total balance of all such Accounts owed by such
Account Debtor;
(h) such Account has not been and is not required to be
charged off or written off as uncollectible in accordance with the
customary business practice of the Borrower and the Subsidiary
Guarantors;
(i) such Account does not arise out of any claim in tort, is
not evidenced by chattel paper, a promissory note, a negotiable
instrument, or any other instrument of any kind or, if such Account is
evidenced by chattel paper, a promissory note, a negotiable instrument
or any other instrument, such chattel paper, promissory note,
negotiable instrument or other instrument has been delivered to the
Administrative Agent and is subject to a first priority security
interest in favor of the Administrative Agent;
(j) the amount of the face value of such Account listed on any
schedule of Accounts and shown on all invoices and statements delivered
to the Agent with respect to such Account is not subject to any
asserted bona fide retainages or holdbacks of any type, is actually and
absolutely owing, and is not contingent on any condition, in each case,
other than in respect of repurchase or return agreements that (i) arise
in the ordinary course of the Borrower's business and (ii) are
consistent with the Borrower or such Subsidiary Guarantor's historical
business practice;
(k) such Account does not arise out of a cash on delivery
sale; and
(l) such Account does not arise out of the sale of samples.
15
22
In addition, to the extent that any Accounts or credit card receivables
that arise in connection with a Credit Card Program are included in
Eligible Trade Accounts Receivable at the option of the Borrower, the
Eligible Trade Accounts Percentage shall include such reserves and the
Available Accounts Receivable Amount shall reflect eligibility criteria
as the Administrative Agent shall require in its sole discretion with
respect to such Accounts and credit card receivables as a separate
class of Accounts based upon the results of any periodic audit or
appraisal of the Accounts of the Borrower and the Subsidiary Guarantors
performed by or on behalf of the Administrative Agent, provided that no
such Accounts or credit card receivables shall be included in "Eligible
Trade Accounts Receivable" until a satisfactory audit or appraisal of
such Accounts and credit card receivables has been performed by or on
behalf of the Administrative Agent.
It is understood that, to the extent that information is not
available to determine the amount of Accounts which satisfy the
criteria described above, the Administrative Agent shall estimate the
amount of such Accounts which satisfy such criteria in determining the
Eligible Trade Accounts Percentage. The Borrower shall, at the request
of the Administrative Agent in connection with any periodic audit or
appraisal of the Accounts of the Borrower and the Subsidiary Guarantors
related to the Credit Card Program, deliver a calculation in reasonable
detail of all Accounts which satisfy the criteria described above to
the extent such information is reasonably available to the Borrower and
the Subsidiary Guarantors.
"Eligible Trade Accounts Receivable Amount": as of any
Accounts Receivable Calculation Date, an amount equal to the Eligible
Trade Accounts Percentage of the aggregate amount of all Accounts of
the Borrower and the Subsidiary Guarantors as of such Accounts
Receivable Calculation Date that satisfy all of the following criteria
as of such Accounts Receivable Calculation Date:
(a) such Account is owned solely by the Borrower or a
Subsidiary Guarantor and is evidenced by an invoice and has arisen from
the sale of goods which have been shipped or delivered to an Account
Debtor on an absolute sale basis, have not been shipped or delivered on
a consignment, approval, or sale-return basis, and are not subject to
any repurchase or return agreement or arrangement, other than those
repurchase or return agreements or arrangements that (i) arise in the
ordinary course of the Borrower's business and (ii) are consistent with
the Borrower or such Subsidiary Guarantor's historical business
practices; and
(b) such Account is subject to a Lien in favor of the
Administrative Agent and is not subject to Liens other than Permitted
Account Liens.
"Environmental Laws": any and all foreign, federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating or
imposing liability or standards of conduct concerning protection of
human health or the environment, as are now or may at any time
hereafter be in effect.
"Environmental Reserve Amount": at any time, an amount equal
to the product of (a) $75,000 and (b) the number of parcels of Eligible
Mortgaged Real Property which are included in the Borrowing Base at
such time.
"Equipment": all equipment, machinery, chattels, tools, dies,
jigs, molds, parts, machine tools, furniture, furnishings, fixtures and
supplies, of every nature, now owned or hereafter acquired by the
Borrower or any Subsidiary Guarantor, wherever located, additions,
accessories and improvements thereto and substitutions therefor and all
parts and equipment
16
23
which may be attached to or which are necessary for the operation and
use of such personal property or fixtures, whether or not the same
shall be deemed to be affixed to real property and in any event all
"equipment" (as such term is defined in the UCC), but excluding
Inventory.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors or
other Governmental Authority having jurisdiction with respect thereto)
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board of Governors)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate for deposits in Dollars for the period commencing on
the first day of such Interest Period and ending on the last day of
such Interest Period which appears on Telerate Page 3750 as of 11:00
A.M., London time, two Business Days prior to the beginning of such
Interest Period. If at least two rates appear on such Telerate Page for
such Interest Period, the "Eurodollar Base Rate" shall be the
arithmetic mean of such rates. If the "Eurodollar Base Rate" cannot be
determined in accordance with the immediately preceding sentences with
respect to any Interest Period, the "Eurodollar Base Rate" with respect
to each day during such Interest Period shall be the rate per annum
equal to the average (rounded upward to the nearest 1/100th of 1%) of
the respective rates notified to the Administrative Agent by each of
the Lenders as the rate at which such Lender is offered Dollar deposits
at or about 10:00 A.M. New York City time, two Business Days prior to
the beginning of such Interest Period in the interbank eurodollar
market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Interest Period for the number of
days comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Term Loans and Revolving Loans the rate of
interest applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excepted Cash Equivalents": Cash Equivalents up to an
aggregate amount outstanding at any one time equal to the amount set
forth in subsection 8.8(b) and not required to be pledged to the
Administrative Agent by reason of subsection 8.8(b).
17
24
"Excluded Properties": as defined in subsection 7.10(b).
"Excluded Subsidiaries": SMC-SPE-1, Inc., SMC-SPE-2, Inc.,
SerPlus Assurance Co., Ltd., and Service Credit Corp.
"Existing Administrative Agent": as defined in the first
recital to this Agreement.
"Existing Collateral Agreement": the Master Collateral
Agreement dated as of September 10, 1997, among the Borrower, certain
of the Borrower's Subsidiaries, and the Existing Administrative
Agreement, as heretofore amended.
"Existing Pledge Agreement": the Amended and Restated
Securities Pledge Agreement dated as of September 10, 1997, among the
Borrower, each of the Pledgors party thereto, and the Existing
Administrative Agreement, as heretofore amended.
"Existing Appraisal": with respect to any parcel of Material
Real Property, a final complete appraisal of the value of such parcel
of Material Real Property, commissioned in connection with the Existing
Credit Agreement (and delivered to the Administrative Agent) or this
Agreement and valued on an "alternative use" basis which in the
reasonable judgment of the Administrative Agent satisfies all
applicable requirements of FIRREA and the Uniform Standards of
Professional Appraisal Practice.
"Existing Credit Agreement": as defined in the first recital
to this Agreement.
"Existing Lenders": as defined in the first recital to this
Agreement.
"Existing Loan Documents": as defined in subsection 11.25.
"Extension of Credit": with respect to any Lender, (a) the
making of a Loan by such Lender and (b) the issuance or extension of a
Letter of Credit in which such Lender has a participating interest.
"FANB": as defined in subsection 6.1(x).
"Federal Funds Rate": means for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of such
lessee.
"FIRREA": the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.
"First Union Permitted Mortgage Financing": all Indebtedness,
if any, and other obligations of the Borrower and its Subsidiaries, now
existing or hereafter arising, under or in
18
25
connection with (a) that certain Loan Agreement dated as of October 4,
1996 by and between SMC-SPE-l, Inc., as borrower, and First Union
National Bank of North Carolina, as lender, and the guaranties,
mortgage and security and other agreements, instruments and other
documents from time to time executed and delivered in connection
therewith and (b) that certain Loan Agreement dated as of October 4,
1996 by and between SMC-SPE-2, Inc., as borrower, and First Union
National Bank of North Carolina, as lender, and the guaranties,
mortgage and security and other agreements, instruments and other
documents from time to time executed and delivered in connection
therewith, in each case, subject to compliance with the terms hereof,
as the same may now or hereafter be amended, restated, modified,
increased, extended, refinanced, replaced or refunded.
"Fiscal Year": each fiscal year of the Borrower. Fiscal Years
are referred to herein by reference to the calendar year in which a
majority of the days comprising such Fiscal Year fall.
"Fixed Assets": plant, machinery, equipment, furniture and
fixtures, leasehold improvements and other tangible property used in
the operation of the business of the Borrower and its Subsidiaries, and
including (except in respect of the OSS Disposition) the Proceeds of
the sale of all or substantially all of the Capital Stock of a
Subsidiary Guarantor (except to the extent of the allocated value of
any Current Assets included in the Proceeds of such sale of Capital
Stock).
"Floor Planning Facility": as to the Borrower or any
Restricted Subsidiary, any manufacturer- or vendor-sponsored Inventory
financing program (whether directly from the manufacturer or vendor or
through a third party financing source) extending loans or trade terms
to the Borrower or such Restricted Subsidiary and secured solely by
such manufacturer's or vendor's named brand or identified Inventory,
subject to the prior approval of the Administrative Agent in its
reasonable discretion and execution and delivery of an intercreditor
agreement reasonably acceptable to the Administrative Agent.
"Foreign Holding Company": any Subsidiary organized under the
laws of any jurisdiction (including territories) within the United
States of America whose sole assets (exclusive of assets with an
aggregate book value not exceeding $5,000,000 and assets consisting of
advances or loans to the Borrower or any of its Subsidiaries) consist
of the Capital Stock of one or more Foreign Subsidiaries or other
Foreign Holding Companies.
"Foreign L/C Commitment Sublimit": at any time, the lesser of
(a) $10,000,000 and (b) the Revolving Credit Commitments then in
effect.
"Foreign Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction outside the United States of
America, excluding Inactive Subsidiaries, but including in any event
Foreign Holding Companies.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time, provided that, solely
for purposes of determining compliance with subsection 8.1, "GAAP"
shall mean generally accepted accounting principles in the United
States of America in effect as of the Effective Date.
"GOB Deal Shrink": an amount equal to (i) the difference
between (A) the Inventory Value of the GOB Inventory and (B) the value
of the GOB Inventory as determined by a physical inventory count taken
immediately prior to the commencement of a going-out-of-business or
similar sale at the GOB Stores, or (ii) in the absence of a physical
count of the
19
26
GOB Inventory, 3% of the Inventory Value of the GOB Inventory on the
date of commencement of the going-out-of-business or similar sales.
"GOB Discount Amount": an amount equal to (i) the weighted
average discount offered to customers during the applicable period of
the going-out-of-business or similar sale, expressed as a percentage,
multiplied by (ii) the GOB Inventory Amount.
"GOB Inventory": all Inventory located at GOB Stores as of the
Calculation Date after the date of commencement of a
going-out-of-business or similar sale at such GOB Stores.
"GOB Inventory Amount": as of any Calculation Date, the
Inventory Value of the GOB Inventory as of such Calculation Date, minus
(a) the Shrink Reserve in respect of such GOB Inventory, minus (b) the
GOB Deal Shrink, minus (c) GOB Inventory remaining on the 91st day
after the commencement of the going-out-of-business or similar sales.
"GOB Stores": the Borrower's and the Subsidiary Guarantors'
stores which are in the process of being liquidated and closed.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), without duplication, any obligation, contingent or otherwise,
of the guaranteeing person (a) under a guarantee, reimbursement,
indemnity or similar obligation guaranteeing or in effect guaranteeing
any Indebtedness of any other Person, in any manner, whether directly
or indirectly, (b) to reimburse any other Person for drawings under
undrawn letters of credit issued by such other Person for the account
of the guaranteeing person, or (c) under a guarantee, reimbursement,
indemnity or similar obligation to the extent the obligations of the
guaranteeing person in respect thereof should be reflected as a
liability in a consolidated balance sheet of the guaranteeing person
(or should be reflected in the notes thereto) in accordance with GAAP,
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (i) an amount
equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (ii) the maximum
amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless
such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by such guaranteeing person in good
faith.
"IE System": the Borrower's electronic inventory evaluation
system which tracks Inventory on a store-by-store basis.
"In-Transit Cash": as of the date of determination, the
aggregate amount of (i) cash and cash equivalents of the Borrower and
the Subsidiary Guarantors which is deposited into deposit accounts
covered by Blocked Account Agreements, plus (ii) the net amount
receivable by the Borrower and the Subsidiary Guarantors in respect of
Visa, Mastercard or other branded credit card receivables (after
deduction of discounts and fees payable to the processors of such
credit card receivables) to the extent such amounts are credited to
deposit accounts
20
27
covered by Blocked Account Agreements or other arrangements acceptable
to the Agents in their sole discretion exercised commercially
reasonably, in each case prior to the transfer of such amounts to the
Collateral Account.
"Inactive Subsidiary": any Subsidiary of the Borrower which
(and only for so long as such Subsidiary) (a) does not own assets with
an aggregate book value in excess of $5,000,000 and (b) is not then
engaged in any business.
"Indebtedness": of any Person at any date (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services (other than trade liabilities and accounts payable
incurred in the ordinary course of business and payable in accordance
with the Borrower's and its Restricted Subsidiaries' customary
practices and extensions thereof), (b) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations (to the extent capitalized for
accounting purposes) of such Person under Financing Leases, (d) all
obligations of such Person in respect of acceptances issued or created
for the account of such Person, (e) all obligations of the types
described in the other clauses of this definition secured by any Lien
on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof and (f) all
obligations of such Person in respect of interest rate and currency
hedging agreements. For purposes of this Agreement, (x) the amount of
any Indebtedness referred to in clause (f) of the preceding sentence
shall be the net amounts (including by offset of amounts payable
thereunder), including any net termination payments, required to be
paid to a counterparty rather than any notional amount with regard to
which payments may be calculated and (y) any obligations described in
clauses (a) through (e) above denominated in a currency other than
Dollars shall be determined after giving effect to related currency
swap and hedging agreements. It is understood and agreed that
"Indebtedness" of a Person (i) shall include advances or loans to such
Person under Floor Planning Facilities and (ii) shall not include (A)
obligations of such Person in respect of letters of credit to the
extent such obligations are not reflected as liabilities on the
consolidated balance sheet of such Person (excluding the notes to such
balance sheet) in accordance with GAAP or (B) obligations of such
Person in respect of consignments of Inventory to such Person.
"Indemnified Liabilities": as defined in subsection 11.5.
"Indenture": as defined in subsection 6.1(x).
"Ineligible Inventory Amount": as of any Calculation Date, the
Inventory Value of all Inventory of the Borrower and the Subsidiary
Guarantors that falls in any one or more of the following categories as
of such Calculation Date:
(a) Inventory that (i) is not owned solely by the Borrower or
any such Subsidiary Guarantor or (ii) is leased by or on consignment or
sale-or-return to the Borrower or any such Subsidiary Guarantor;
(b) Inventory that is not located at (or in transit between)
property that is owned or leased by the Borrower or any Subsidiary
Guarantor, other than Landed Inventory and Customs Broker Inventory;
(c) Inventory that is subject to a layaway purchase by any
customer;
(d) Inventory that is damaged or defective or has otherwise
been segregated for return to the vendor thereof;
21
28
(e) Inventory that is not located in the United States of
America;
(f) Inventory which is not subject to a Lien in favor of the
Administrative Agent or is subject to any Lien (other than Permitted
Inventory Liens);
(g) Inventory which is subject to a Lien in connection with
Floor Planning Facilities;
(h) Inventory that is being repaired or is used in the repair
of other Inventory; and
(i) Inventory consisting of "Samples" which is not included in
the normal merchandising assortment but has been supplied by vendors
for consideration to be included in the merchandising assortment.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Instrument": any "instrument" (as such term is defined in the
UCC) now owned or hereafter acquired by the Borrower or any Subsidiary
Guarantor.
"Intellectual Property": as defined in subsection 5.17.
"Intercompany Debt" means, with respect to the Borrower, any
Indebtedness of the Borrower to any Subsidiary Guarantor, and with
respect to any Subsidiary Guarantor, any Indebtedness of such
Subsidiary Guarantor to the Borrower or any other Subsidiary Guarantor,
including all amounts payable in respect thereof whether in respect of
principal, interest or otherwise.
"Interest Expense": of any Person for any period, (a) the
amount of interest expense, both expensed and capitalized, of such
Person and its Consolidated Subsidiaries determined on a consolidated
basis in accordance with GAAP for such period, plus, without
duplication, that portion of payments under Financing Leases of such
Person attributable to interest expense of such Person for such period
in accordance with GAAP minus (b) the amount of interest income of such
Person and its Consolidated Subsidiaries determined on a consolidated
basis in accordance with GAAP for such period.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each month, (b) as to any Eurodollar Loan having an Interest Period
of three months or less, the last day of such Interest Period, (c) as
to any Eurodollar Loan having an Interest Period longer than three
months, each day which is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such
Interest Period and (d) as to any Swing Line Loan, the last day of each
month.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less
than
22
29
three Business Days prior to the last day of the then current Interest
Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would otherwise end on a
day that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend
beyond, in the case of Eurodollar Loans which are Revolving
Loans, the Revolving Credit Termination Date or, in the case
of Eurodollar Loans which are Term Loans, beyond the Term Loan
Termination Date, as the case may be;
(3) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(4) from the Effective Date until such time as the
Administrative Agent notifies the Borrower of the completion
of the syndication of this credit facility, "Interest Period"
shall mean the period commencing on the borrowing or
conversion date, as the case may be, with respect to all
Eurodollar Loans and ending seven or fourteen days or one
month thereafter, as selected by the Borrower in its notice of
borrowing or notice of conversion, as the case may be, given
with respect thereto, and agreed to by the Administrative
Agent.
"Interim Maximum Amount": as defined in subsection 3.1 of this
Agreement.
"Interim Reserve Amount": an amount equal to, (a) from the
Effective Date until the date (i) the Administrative Agent accepts the
Business Plan and (ii) the Borrower and the Agents mutually agree on
new and revised covenants pursuant to subsection 11.23 (such date, the
"Plan Acceptance Date"), $125,000,000, and (b) from and after the Plan
Acceptance Date, zero.
"Inventory": goods now owned or hereafter acquired by the
Borrower or any Subsidiary Guarantor and held for sale or lease or to
be furnished under contracts of service or so leased or furnished, and
all raw materials, work in process or materials used or consumed in a
business, and in any event including all "inventory" (as such term is
defined in the UCC) but excluding Equipment.
"Inventory Value": with respect to any Inventory of the
Borrower or any Subsidiary Guarantor reflected on the Borrower's
Borrowing Base Certificate, the value of such Inventory valued at cost
on the IE System on a basis consistent with the Borrower's or such
Subsidiary Guarantor's current and historical accounting practice
(without giving effect to markdowns, intercompany profit, rebates and
discounts, accounts payable inventory accruals and capitalized
inventory costs on the consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries in respect of Inventory), plus freight
charges incurred in connection therewith, minus accruals for deferred
volume rebates (it being understood that the amount of freight
23
30
charges and accruals for deferred volume rebates shall be determined
monthly as of the end of the most recent fiscal month, notwithstanding
the fact that Borrowing Base Certificates may be delivered more
frequently than monthly pursuant to this Agreement). The value of the
Inventory as set forth above will, without duplication for any element
of the Shrink Reserve, be calculated net of the reserve established by
the Borrower or any Subsidiary Guarantor on a basis consistent with the
Borrower's or such Subsidiary Guarantor's current and historical
accounting practice in respect of lost, misplaced or stolen Inventory
at such time.
"Investment": as defined in subsection 8.8.
"Investment Securities": all Instruments or "securities" (as
such term is defined in the UCC) now owned or hereafter acquired by the
Borrower or any Subsidiary Guarantor, other than (a) Pledged Stock, (b)
Capital Stock of any Subsidiary that is not expressly required to be
pledged pursuant this Agreement or the Pledge Agreement, (c) Cash
Equivalents and (d) any note, debenture, bond or other instrument
evidencing Intercompany Debt.
"Issuing Banks": initially, each Lender and Affiliate of a
Lender specified on Schedule 1.1(a) as an Issuing Bank in its capacity
as issuer of a Letter of Credit. Additional Lenders or Affiliates of
Lenders may from time to time be designated as "Issuing Banks" by the
Borrower (with the consent of such Lender and with the consent (which
shall not be unreasonably withheld) of the Administrative Agent) by
written notice to such effect from the Borrower to the Administrative
Agent.
"Judgment Currency": as defined in subsection 11.19.
"Landed Inventory": any Inventory which has arrived in the
United States and cleared customs but which has not been delivered to
property that is owned or leased by the Borrower or any Subsidiary
Guarantor so long as such Inventory is (a) fully paid and subject only
to a Lien in favor of the Administrative Agent (other than Permitted
Inventory Liens), (b) is in the possession of the Borrower or any
Subsidiary Guarantor or any agent thereof and (c) such Inventory is
reported in a Borrowing Base Certificate separately from other
Inventory included in the calculation of the Available Inventory
Amount.
"Landlord Lien Reserve Amount": a reserve established by the
Administrative Agent with respect to Inventory located at any leased
location of the Borrower or the Subsidiary Guarantors for which the
Administrative Agent has not received a Landlord Lien Waiver, equal to
(i) if the leased location is in any of the states of Washington,
Virginia or Pennsylvania, an amount equal to three months' rental
expense for each such leased location, (ii) if the leased location is
in any of the states of Alabama, Arizona, Arkansas, Florida, Iowa,
Kentucky, New Mexico, Oregon or Texas or in the District of Columbia,
an amount equal to three months' rental expense for each such leased
location for which the Borrower or such Subsidiary Guarantor is past
due in the payment of rental obligations for such leased location, and
(iii) if the leased location is located in any other state, zero;
provided that the Administrative Agent reserves the right, in its sole
discretion exercised commercially reasonably, to add or remove any
state from the list of states in clauses (i) and (ii) of this
definition as a result of any changes in applicable law which impacts
such state's treatment of statutory or common law lien priorities as
between lenders and landlords.
"Landlord Lien Waiver": a waiver in form and substance
reasonably satisfactory to the Administrative Agent, waiving a
landlord's security interest in respect of Inventory located at any
location not owned by the Borrower or its Restricted Subsidiaries.
24
31
"L/C Commitment": the lesser of (a) $200,000,000 and (b) the
Revolving Credit Commitments then in effect.
"L/C Fee Payment Date": the last day of each month and the
Revolving Credit Termination Date.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the Trade Letter of Credit Outstandings at such time and (b) the
Standby Letter of Credit Outstandings at such time.
"L/C Participants": the collective reference to all the
Revolving Credit Lenders.
"Lenders": as defined in the preamble to this Agreement,
provided that Issuing Banks shall be deemed parties to this Agreement
and Lenders in the Security Documents for all purposes thereof.
"Letters of Credit": as defined in subsection 3.6(a).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Loan": any Term Loan, Revolving Loan or Swing Line Loan, as
the case may be.
"Loan Documents": this Agreement, any Notes, the Master
Collateral Agreement, the Subsidiaries Guarantee, the Security
Documents, any Applications, the Blocked Account Agreements, the other
documents executed or delivered pursuant to subsection 6.1 by the
Borrower or any Subsidiary of the Borrower, any Derivative Agreements,
and all other instruments, agreements and written contractual
obligations between the Borrower and any Subsidiary of the Borrower, on
the one hand, and any of the Agents or the Lenders, on the other hand,
in each case delivered to either the Administrative Agent or such
Lender before, on, or after the Effective Date pursuant to or in
connection with the transactions (including, without limitation, the
cash management arrangements) contemplated hereby.
"Loan Parties": the collective reference to the Borrower, the
Subsidiary Guarantors and any other Subsidiary from time to time party
to any Loan Document.
"Lockbox Agreement": any "Lockbox Agreement" (i) entered into
among the Borrower or any Subsidiary Guarantor, a Depositary Bank and
the Existing Administrative Agent, in substantially the form of Exhibit
F to the Existing Collateral Agreement, or (ii) entered into among the
Borrower or any Subsidiary Guarantor, a Depositary Bank and the
Administrative Agent pursuant to subsection 3.1 of the Master
Collateral Agreement, as the same may be amended, modified,
supplemented, extended or renewed from time to time.
"LTCB Permitted Mortgage Financing": all Indebtedness, if any,
and other obligations of the Borrower and its Subsidiaries, now
existing or hereafter arising, under or in connection with (a) that
certain Indenture dated June 28, 1990 by and among the Borrower, X.X.
Xxxxxx Co., Inc., The Long-Term Credit Bank of Japan, Limited, New York
Branch, as administrative agent, and The Bank of New York (as successor
trustee to Sovran Bank/Central
25
32
South), as trustee, and (b) the guaranties, mortgage and security and
other agreements, instruments and other documents from time to time
executed and delivered in connection therewith, in each case, subject
to compliance with the terms hereof, as the same may now or hereafter
be amended, restated, modified, increased extended, refinanced,
replaced or refunded.
"Majority Lenders": at any time, Lenders the Voting
Percentages of which aggregate more than 50%.
"Majority Revolving Credit Lenders": at any time, Revolving
Credit Lenders the Revolving Credit Commitment Percentages of which
aggregate more than 50%.
"Majority Term Loan Lenders": at any time, Term Loan Lenders
whose Term Loans aggregate more than 50% of the outstanding principal
amount of all Term Loans.
"Management Restructuring Consultant": Xxx Xxxx & Associates.
"Mandatory Prepayment Event": any event which requires the
Borrower or any Restricted Subsidiary to make any mandatory prepayment
in respect of the principal of any Subordinated Debentures or any other
Subordinated Debt or to make (or offer to make) any mandatory
redemption, defeasance or purchase of any Subordinated Debentures or
any other Subordinated Debt, in any such case prior to the stated
maturity thereof.
"Master Collateral Agreement": the Amended and Restated Master
Collateral Agreement to be made by the Borrower and each Subsidiary
Guarantor party thereto in favor of the Administrative Agent, in
substantially the form of Exhibit C, as the same may be amended,
supplemented or otherwise modified from time to time.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, performance, property, or condition
(financial or otherwise) of the Borrower and its Subsidiaries taken as
a whole or (b) the ability of the Borrower or any Subsidiary Guarantor
to perform their respective obligations under this Agreement or any of
the other Loan Documents or the material rights or remedies, of the
Administrative Agent or the Lenders hereunder or thereunder.
"Material Real Property": real property not subject to a
mortgage, deed of trust or other similar instrument (other than
pursuant hereto or any other Loan Document) that (a) (i) is owned in
fee by the Borrower or any Subsidiary Guarantor and is not subject to a
ground lease in favor of any other Person as lessee, (ii) is located in
the United States or Puerto Rico and (iii) (A) has been developed with
a retail store, distribution center, shopping center or office building
with respect to which a certificate of occupancy or temporary
certificate of occupancy or the local equivalent thereof (or any other
similar proof of completion) shall have been issued by the relevant
Governmental Authority, (B) is being developed with a retail store,
distribution center, shopping center or office building which is under
construction as of the Effective Date or (C) is undeveloped and has a
book value (excluding soft costs) of at least $1,000,000 or (b) (i) (A)
consists of a developed retail store, distribution center, shopping
center or office building with respect to which a certificate of
occupancy or temporary certificate of occupancy or the local equivalent
thereof (or any other similar proof of completion) shall have been
issued by the relevant Governmental Authority, or (B) is being
developed with a retail store, distribution center, shopping center or
office building which was under construction as of the Effective Date,
(ii) is located on property which is subject to a ground lease in favor
of the Borrower or any Subsidiary Guarantor as lessee and no consent
26
33
shall be required under such ground lease to mortgage or foreclose upon
such property (or such consent shall have been obtained), (iii) is or,
upon completion, will be classified as an owned retail store,
distribution center, shopping center or office building by the Borrower
or such Subsidiary Guarantor and (iv) is located in the United States
or Puerto Rico.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Mechanics' Lien Reserve Amount": with respect to any parcel
of Eligible Mortgaged Real Property at any time, an amount equal to the
excess, if any, of (a) the sum of all outstanding amounts which are
then secured by mechanics' liens on such parcel of Eligible Mortgaged
Real Property and which have been outstanding for a period in excess of
one year over (b) $200,000.
"Mortgage Assignment": each assignment of a Mortgage
(including any Mortgage held by the Borrower or any Subsidiary
Guarantor as an assignee of any other Person) executed and delivered
from time to time to and in favor of the Administrative Agent pursuant
to this Agreement or the Master Collateral Agreement, in a form
reasonably satisfactory to the Administrative Agent and the Borrower
and as appropriate under applicable law in the jurisdiction in which
such real property is located, as the same may be amended, modified,
supplemented, extended or renewed from time to time.
"Mortgage Value": with respect to any parcel of Eligible
Mortgaged Real Property, the lesser of (a) the maximum stated amount
secured by the Lien on such parcel of Eligible Mortgaged Real Property
granted in favor of the applicable secured mortgagee pursuant to the
relevant Mortgage and (b) the value of such parcel of Eligible
Mortgaged Real Property set forth in the Existing Appraisal delivered
with respect thereto.
"Mortgaged Property": all property of the Borrower and any
Subsidiary Guarantor in which the Administrative Agent is granted a
lien or security interest pursuant to the Mortgages.
"Mortgages": the collective reference to the fee and ground
leasehold mortgages, deeds of trust and other similar documents
executed and delivered from time to time by the Borrower and the
Subsidiary Guarantors in favor of the Administrative Agent, pursuant to
the Master Collateral Agreement, the Existing Credit Agreement, the
credit agreement amended and restated by the Existing Credit Agreement,
or this Agreement, including those mortgages and deeds of trust
assigned to the Administrative Agent in connection with this Agreement,
and substantially in the form of Exhibit B to the Master Collateral
Agreement (other than in the case of a Mortgage delivered in connection
with the credit agreement amended and restated by the Existing Credit
Agreement) or, if such Exhibit is not appropriate under applicable law
in the jurisdiction in which the relevant real property is located, in
such other form as shall be reasonably satisfactory to the Borrower and
the Administrative Agent, as each of the same may be amended,
supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
27
34
"Net Income": of any Person for any period, net income of such
Person and its Consolidated Subsidiaries, determined on a consolidated
basis in accordance with GAAP for such period.
"Net Recoverable Value": as to the Inventory of the Borrower
and the Subsidiary Guarantors, the amount determined based upon
periodic audits or appraisals of such Inventory to be equal to the
percentage of the cost of Inventory which could be realized (net of
disposal costs and expenses) in a liquidation sale of the Inventory at
such time.
"Non-Excluded Taxes": as defined in subsection 4.10.
"Notes": the collective reference to any Term Notes, Revolving
Credit Notes or Swing Line Notes.
"Operating Assets" means assets employed by any Loan Party in
the operation of its business (including, without limitation, assets
constituting property, plant or equipment but excluding assets held for
investment).
"Original Mortgages": the Mortgages executed and delivered
pursuant to the Existing Credit Agreement or any credit agreement
amended and restated by the Existing Credit Agreement, after giving
effect to the provisions of subsection 2.12 of the Master Collateral
Agreement.
"OSS Disposition": the sale or other disposition of the
Capital Stock in, or all or substantially all of the assets of, the OSS
Subsidiary for fair market value and on terms and conditions reasonably
satisfactory to the Administrative Agent.
"OSS Subsidiary": the Borrower's office supply Subsidiary.
"Overdraft": at any time, the amount by which the aggregate
amount debited from any deposit, concentration, operating or
disbursement account maintained by the Borrower or any Subsidiary
Guarantor with any Lender or any Affiliate of any Lender, as a result
of processing of payment orders issued by the Borrower or such
Subsidiary Guarantor or otherwise, exceeds the aggregate funds on
deposit in such account.
"parcel": when used in connection with any parcel of real
property, means such parcel of real property, together with all of the
structures, buildings and other improvements located thereon and all
other property associated therewith and, when used in connection with
any parcel of real property subject to a ground lease in favor of the
Borrower or any Subsidiary Guarantor as lessee, means the leasehold
interest in such ground lease.
"Participant": as defined in subsection 11.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental
Authority which succeeds to the powers and functions thereof.
"Permanent Mortgage Financing": collectively, the LTCB
Permitted Mortgage Financing and the First Union Permitted Mortgage
Financing.
"Permitted Account Liens": the collective reference to Liens
permitted by subsections 8.3(a), 8.3(b) and 8.3(l).
28
35
"Permitted Book-Entry Securities": securities which conform in
all respects to the requirements set forth in the definition of Cash
Equivalents except that such securities are not evidenced by an
Instrument and the Administrative Agent or its agent does not have
possession thereof; provided that with respect to any security of which
the Administrative Agent or its agent does not have physical
possession, the Administrative Agent shall have acquired a perfected
first priority security interest therein or in the security entitlement
with respect thereto in the manner provided by the UCC.
"Permitted Inventory Liens": the collective reference to Liens
permitted by subsections 8.3(a), 8.3(b) and 8.3(1).
"Permitted Mortgage Liens": the collective reference to Liens
permitted by subsections 8.3(a), 8.3(b), 8.3(e) and 8.3(l).
"Permitted Sale-Leaseback": as defined in subsection 8.11.
"Permitted Trade L/C Facility": all Indebtedness, if any, and
other obligations of the Borrower and its Subsidiaries, now existing or
hereafter arising, under or in connection with (a) any letters of
credit issued at any time for the account of the Borrower or any of its
Subsidiaries pursuant to that certain Letter of Credit Application
Agreement dated May 31, 1997 by and among Wholesale Supply Company,
Inc., the Borrower and First American National Bank and (b) the
commitment letters, security agreements, guarantees, instruments and
other documents executed and delivered from time to time in connection
therewith, in each case, subject to compliance with the terms hereof,
as the same may now or hereafter be amended, restated, modified,
increased, extended, refinanced, replaced or refunded from time to
time.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, limited liability company, Governmental Authority or other
entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Plan Acceptance Date": as defined in the definition of
"Interim Reserve Amount".
"Pledge Agreement": the Second Amended and Restated Securities
Pledge Agreement to be made by the Borrower and certain of the
Subsidiary Guarantors in favor of the Administrative Agent, in
substantially the form of Exhibit C to the Master Collateral Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time.
"Pledged Securities": the collective reference to (i) the
Pledged Stock, (ii) all Investment Securities, (iii) all Cash
Equivalents (including any Permitted Book-Entry Securities) and funds
held or on deposit from time to time in the Securities Accounts, and
(iv) all Proceeds thereof, except as provided for in Section 4 of the
Pledge Agreement.
"Pledged Stock": the shares of Capital Stock set forth on
Schedule A to the Pledge Agreement and other shares of Capital Stock
pledged thereunder from time to time pursuant to Section 3(d) thereof.
29
36
"Pledgors": the collective reference to the pledgors parties
to the Pledge Agreement.
"Post Closing Real Estate Matters": as defined in subsection
7.10(c).
"Proceeds" has the meaning assigned to such term in the UCC.
"Protective Advance": as defined in subsection 3.16(f).
"Qualified Stock": any stock of the Borrower which does not by
its terms mature or require repurchase or redemption thereof in whole
or in part on or prior to the first anniversary of the Revolving Credit
Termination Date or the Term Loan Maturity Date.
"Real Property Amortization Amount": with respect to any
parcel of Eligible Mortgaged Real Property at any time, an amount equal
to the product of (a) an amount equal to 1.5% of the initial Mortgage
Value of such parcel of Eligible Mortgaged Real Property (after giving
effect to the delivery of any Existing Appraisal with respect thereto),
times (b) the number of full three-month periods that have been elapsed
since the Effective Date.
"Register": as defined in subsection 11.6(d).
"Regulation U": Regulation U of the Board of Governors as in
effect from time to time.
"Regulation X": Regulation X of the Board of Governors as in
effect from time to time.
"Reimbursement Agreement": as defined in subsection 6.1(w).
"Reimbursement Obligation": the obligation of the Borrower
pursuant to subsection 3.10(a) to reimburse each Issuing Bank for
amounts drawn under any Letter of Credit issued by such Issuing Bank.
"Releasees": as defined in subsection 11.24.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043 of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .27, .28, .29, .30, .31, .32,
.34 or .35 of PBGC Reg. ss. 4043.
"Required Lenders": at any time, Lenders the Voting
Percentages of which aggregate more than 66-2/3%.
"Requirement of Law": as to any Person, the Certificate or
Articles of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any law, statute, ordinance,
code, decree, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject (including, without
limitation, laws, ordinances and regulations pertaining to the zoning,
occupancy and subdivision of real property).
30
37
"Reserve Calculation Date": the date of the second Borrowing
Base Certificate of any month, in which Borrowing Base Certificate the
various reserve amounts shall be calculated and/or revised based upon
the operating results as of the end of the previous fiscal month.
"Responsible Officer": the chief executive officer, the
president, any executive vice president, the chief financial officer or
the treasurer of the Borrower or, with respect to financial matters,
the chief executive officer, the president, the executive vice
president-finance, the chief financial officer or treasurer of the
Borrower, provided that, for purposes of subsection 6.3(f) of the
Master Collateral Agreement and subsection 7.7 and Section 9(d) only, a
"Responsible Officer" shall also include the general counsel and any
assistant treasurer of the Borrower.
"Restricted Payments": as defined in subsection 8.6.
"Restricted Subsidiaries": collectively, the Domestic
Subsidiaries and Foreign Subsidiaries.
"Revolving Credit Applicable Margin": for each Type of
Revolving Loan, the rate per annum set forth under the relevant column
heading below:
ABR Loans Eurodollar Loans
--------- ----------------
1.50% 2.75%
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender to make Revolving Loans to and/or participate
in Swing Line Loans to and/or issue or participate in Letters of Credit
issued on behalf of the Borrower hereunder in an aggregate principal
and/or face amount at any one time outstanding not to exceed the amount
set forth opposite such Lender's name on Schedule 1.1(a) under the
heading "Revolving Credit Commitment", as such amount may be reduced
from time to time pursuant to this Agreement or as such amount may be
adjusted from time to time pursuant to subsection 11.6.
"Revolving Credit Commitment Percentage": as to any Lender (a)
at any time prior to the termination of the Revolving Credit
Commitments, the percentage of the Revolving Credit Commitments then
constituted by such Lender's Revolving Credit Commitment and (b) at any
time after the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of (x) such Lender's Revolving Loans then
outstanding plus (y) the product of such Lender's Revolving Credit
Commitment Percentage immediately prior to the termination of the
Revolving Credit Commitments (after giving effect to any permitted
assignment pursuant to subsection 11.6) times the sum of (1) the
aggregate principal amount of Swing Line Loans then outstanding plus
(2) the L/C Obligations then outstanding then constitutes of (ii) the
sum of (x) the aggregate principal amount of Revolving Loans of all the
Lenders then outstanding plus (y) the aggregate principal amount of all
Swing Line Loans then outstanding plus (z) the aggregate L/C
Obligations then outstanding.
"Revolving Credit Commitment Period": the period from and
including the Effective Date to but not including the Revolving Credit
Termination Date or such earlier date on which the Revolving Credit
Commitments shall terminate as provided herein.
"Revolving Credit Extensions of Credit": as to any Lender at
any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Loans made by such Lender then outstanding and
(b) such Lender's Revolving Credit Commitment Percentage of
31
38
the sum of (i) the aggregate principal amount of Swing Line Loans then
outstanding and (ii) the L/C Obligations then outstanding.
"Revolving Credit Lender": any Lender with an unused Revolving
Credit Commitment hereunder and/or any Revolving Loans outstanding
hereunder.
"Revolving Loans": as defined in subsection 3.1(a).
"Revolving Credit Note": as defined in subsection 4.13(d).
"Revolving Credit Termination Date": July 20, 2001.
"Sale-Leaseback": as defined in subsection 8.11.
"SEC": the Securities and Exchange Commission and any
Governmental Authority which succeeds to the powers and functions
thereof.
"Secured Obligations": all of the following, in each case
whether now existing or hereafter incurred or created, except to the
extent otherwise expressly provided in the agreements or instruments
relating thereto:
(i) the Credit Agreement Obligations;
(ii) all sums payable by the Borrower and the
Subsidiary Guarantors under the Master Collateral Agreement or
any Security Document;
(iii) all sums payable by any Subsidiary Guarantor
under the Subsidiaries Guarantee;
(iv) liabilities of the Borrower or any Subsidiary
Guarantor for Overdrafts;
(v) liabilities and obligations of the Borrower or
any Subsidiary Guarantor under Derivative Agreements; and
(vi) obligations of the Borrower or any Subsidiary
Guarantor under subsections 4.10, 4.11, 10.7, 11.5 and 11.20
of the Existing Credit Agreement.
When used in this Agreement or any of the other Loan Documents with
respect to any of the Secured Obligations that constitute the
obligations of the Borrower or any Subsidiary Guarantor in respect of a
Letter of Credit issued on behalf of the Borrower or such Subsidiary
Guarantor or under any Derivative Agreement or any similar obligation,
the term "outstanding" shall include, at any time, without duplication,
the aggregate of the principal, interest and other amounts then
outstanding that are the subject of such Letter of Credit or similar
obligation that have not then been reimbursed by the Borrower or the
relevant Subsidiary Guarantor and the amount then available to be drawn
or demanded under such Letter of Credit or similar obligation (assuming
compliance with all conditions to drawing) or the termination
liabilities, if any, of the Borrower or the Subsidiary Guarantor under
such Derivative Agreement.
"Securitization Entity": with respect to the Borrower or any
Subsidiary, a corporation, partnership, trust, limited liability
company or other entity that is formed by the
32
39
Borrower or such Subsidiary for the purpose of effecting or
facilitating a Securitization Transaction and which engages in no
business and incurs no Indebtedness or other liabilities other than
those related to or incidental to the Securitization Transaction.
"Securitization Transaction": a transaction or series of
related transactions pursuant to which a corporation, partnership,
trust, limited liability company or other entity incurs obligations or
issues interests, the proceeds of which are used to finance a discrete
pool (which may be fixed or revolving) of receivables, leases or other
financial assets, or a discrete portfolio of real property or
equipment, subject in each case to the approval of the Agents.
"Securities Account": any account which is maintained with the
Administrative Agent or any agent thereof in accordance with Section
9(e) of the Pledge Agreement, in which all Pledged Securities which are
Cash Equivalents (other than Excepted Cash Equivalents) are to be held
by the Administrative Agent or a custodian or other agent of the
Administrative Agent, subject to release upon request by the relevant
Pledgor strictly in accordance with Section 9(c) of the Pledge
Agreement, and in each of which the Administrative Agent shall have a
perfected first priority security interest.
"Security": as defined in Section 2 of the Security Agreement.
"Security Agreement": the Second Amended and Restated Security
Agreement and Collateral Assignment to be made by the Borrower and the
Subsidiary Guarantors in favor of the Administrative Agent,
substantially in the form of Exhibit A-1 to the Master Collateral
Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
"Security Documents": the collective reference to the Master
Collateral Agreement, the Security Agreement, the Pledge Agreement, the
Blocked Account Agreements, the Custody and Control Agreements, the
Lockbox Agreements, the Mortgages, the Mortgage Assignments and each
other agreement entered into pursuant to subsection 7.3(b) of the
Master Collateral Agreement.
"Senior Notes Indenture": the Indenture, dated as of October
15, 1993, between the Borrower and State Street Bank and Trust Company
(as successor trustee to The First National Bank of Boston), as
trustee, as amended, supplemented or otherwise modified from time to
time.
"Shrink Reserve": as of any Calculation Date, an amount equal
to 1.75% of the cost of Inventory as reflected on the IE System. Such
Shrink Reserve percentage shall adjust from time to time at the Agents'
sole discretion exercised commercially reasonably in accordance with
customary business practices, based on the results of the Borrower's
cycle and physical Inventory counts.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Special Purpose Subsidiary": any Subsidiary of the Borrower
organized solely for the purpose of (a) holding a license or permit
issued by any Governmental Authority and used in connection with the
business of the Borrower and/or its Subsidiaries or (b) providing
employee services for use in the foreign operations of the Borrower or
any of its Subsidiaries, provided that such Subsidiary shall only be a
"Special Purpose Subsidiary" for so long as such Subsidiary does not
own any assets (other than any such license or permit and other than
any
33
40
assets with a book value not exceeding $5,000,000 in the aggregate) and
does not engage in any business other than holding such license or
permit or providing such employee services and, in each case,
activities directly related thereto.
"Standby L/C Fee Rate": at any time, the rate per annum equal
to 2.375% on the aggregate undrawn amount of Standby Letters of Credit;
provided, however, during the continuance of an Event of Default the
Standby L/C Fee Rate shall equal 4.375% per annum.
"Standby Letter of Credit": as defined in subsection
3.6(b)(i).
"Standby Letter of Credit Outstandings": at any time, an
amount equal to the sum of (a) the aggregate then undrawn and unexpired
amount of the then outstanding Standby Letters of Credit issued in
Dollars, (b) the Dollar Equivalent of the aggregate then undrawn and
unexpired amount of then outstanding Letters of Credit issued in
currencies other than Dollars (such Dollar Equivalent to be determined
as of the date of issuance of such Standby Letter of Credit), (c) the
aggregate amount of Reimbursement Obligations in respect of Standby
Letters of Credit issued in Dollars which have not then been paid
pursuant to subsection 3.10(a) and (d) (i) the Dollar Equivalent of the
aggregate amounts of Reimbursement Obligations in respect of Standby
Letters of Credit issued in currencies other than Dollars which have
not been reimbursed pursuant to subsection 3.10(a) (such Dollar
Equivalent to be calculated as of the date such Reimbursement
Obligation becomes due and payable) and which have not been converted
into Dollars in accordance with subsection 3.10(a) and (ii) the
aggregate amount of Reimbursement Obligations in respect of Standby
Letters of Credit issued in currencies other than Dollars which have
not been reimbursed pursuant to subsection 3.10(a) and which have been
converted into Dollars in accordance with such subsection.
"Subordinated Debentures": the Borrower's 9% Senior
Subordinated Debentures due 2004 issued pursuant to the Subordinated
Debt Indenture.
"Subordinated Debt Indenture": the Indenture, dated as of
February 15, 1993, between the Borrower and First American National
Bank, as trustee, as amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.
"Subsidiaries Guarantee": the Second Amended and Restated
Subsidiaries Guarantee to be executed and delivered by each Subsidiary
Guarantor, substantially in the form of Exhibit B, as the same may be
amended, supplemented or otherwise modified from time to time.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary set forth on Schedule
5.13 under the heading "Initial Subsidiary Guarantors", together with
each other Subsidiary that becomes a party to the Subsidiaries
Guarantee in compliance with subsection 7.11(b).
34
41
"Swing Line Commitment": the lesser of (a) $50,000,000 and (b)
the Revolving Credit Commitments then in effect.
"Swing Line Lender": Citicorp and any other Lender acceptable
to the Administrative Agent that agrees to be a Swing Line Lender.
"Swing Line Loans": as defined in subsection 3.14.
"Swing Line Note": as defined in subsection 4.13(f).
"Tax Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Telerate Page 3750": the display page currently so designated
on the Dow Xxxxx Telerate Service (or such other page as may replace
that service for the purpose of displaying comparable rates or prices).
"Term Loan": as defined in subsection 2.1.
"Term Loan Applicable Margin": for each Type of Term Loan, the
rate per annum set forth under the relevant column heading below:
ABR Loans Eurodollar Loans
--------- ----------------
1.50% 2.75%
"Term Loan Lender": any Lender with Term Loans outstanding
hereunder.
"Term Loan Maturity Date": July 20, 2001.
"Term Note": as defined in subsection 4.13(e).
"Trade L/C Fee Rate": at any time the rate per annum equal to
1.25% on the aggregate undrawn amount of Trade Letters of Credit;
provided, however, during the continuance of any Event of Default, the
Trade L/C Fee Rate shall equal 3.25% per annum.
"Trade Letter of Credit": as defined in subsection 3.6(b)(i).
"Trade Letter of Credit Outstandings": at any time, an amount
equal to the sum of (a) the aggregate then undrawn and unexpired amount
of the then outstanding Trade Letters of Credit issued in Dollars, (b)
the Dollar Equivalent of the aggregate then undrawn and unexpired
amount of the then outstanding Trade Letters of Credit issued in
currencies other than Dollars (such Dollar Equivalent to be calculated
as of the date of issuance of such Letters of Credit), (c) the
aggregate amount of Reimbursement Obligations in respect of Trade
Letters of Credit issued in Dollars which have not then been paid
pursuant to subsection 3.10(a) and (d) (i) the Dollar Equivalent of the
aggregate amount of Reimbursement Obligations in respect of Trade
Letters of Credit issued in currencies other than Dollars which have
not then been paid pursuant to subsection 3.10(a) (such Dollar
Equivalent to be calculated as of the date such Reimbursement
Obligation becomes due and payable) and which have not been converted
into Dollars in accordance with subsection 3.10(a) and (ii) the
aggregate amount of Reimbursement
35
42
Obligations in respect of Trade Letters of Credit issued in currencies
other than Dollars which have not been reimbursed pursuant to
subsection 3.10(a) and which have been converted into Dollars in
accordance with such subsection.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such
Eurodollar Loans shall originally have been made on the same day).
"Transferee": as defined in subsection 11.6(f).
"Transaction Costs": the fees, costs and expenses payable by
the Borrower in connection with the execution, delivery and performance
of the Loan Documents and the transactions contemplated thereby.
"Type": as to any Term Loan or Revolving Loan, its nature as
an ABR Loan or a Eurodollar Loan.
"UCC": the Uniform Commercial Code as in effect in the State
of New York from time to time or, where applicable as to specific
Collateral, any other relevant state.
"UCC Filing Collateral": Collateral (other than fixtures) as
to which filing financing statements under the UCC of the applicable
jurisdiction is an appropriate method of perfection of a security
interest in such Collateral.
"UCC Local Filing Collateral": with respect to any State, UCC
Filing Collateral located in such State as to which a security interest
may be perfected only by filing a UCC financing statement in each
county or other local filing office of such State in which such
Collateral is located.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended or revised from time to
time.
"Voting Percentage": as to any Lender (a) at any time prior to
the termination of the Revolving Credit Commitments, the percentage
which (i) the sum of (x) such Lender's Revolving Credit Commitment plus
(y) the outstanding principal amount of such Lender's Term Loan then
constitutes of (ii) the sum of (x) the Revolving Credit Commitments of
all the Lenders plus (y) the aggregate principal amount of Term Loans
of all the Lenders then outstanding, and (b) at any time after the
termination of the Revolving Credit Commitments, the percentage which
(i) the sum of (x) the principal amount of such Lender's Loans (other
than Swing Line Loans) then outstanding plus (y) the product of such
Lender's Revolving Credit Commitment Percentage times the L/C
Obligations and Swing Line Loans then outstanding then constitutes of
(ii) the sum of (x) the aggregate principal amount of Loans of all the
Lenders then outstanding plus (y) the aggregate L/C Obligations of all
the Lenders then outstanding.
"Warehouseman's Waiver": a waiver from the owner/operator of a
third party warehouse facility in form and substance satisfactory to
the Administrative Agent in respect of Inventory of the Borrower and
any Subsidiary Guarantor located at such warehouse facility.
"Y2K Compliance": the ability of a computer program to (i)
record, store, process, calculate, present and, where appropriate,
insert time and accurate dates and calculations for
36
43
calendar dates falling on or after (and, if applicable, spans of time
including) January 1, 2000, (ii) record, store, process, calculate and
present any information and/or data dependent on or relating to such
dates in the same manner, and with the same functionality, data
integrity and performance, as the Software records, stores, processes,
calculates and presents calendar dates on or before December 31, 1999
and in such fashion as to respond to two-digit date input in a way that
eliminates all ambiguities as to the century of concern, and treats the
year 2000 as a leap-year and correctly and accurately regards and
processes data and information with respect thereto, and (iii) lose no
functionality with respect to the introduction of records, including
but not limited to back-up and archived information and/or data,
containing dates falling on or after January 1, 2000 and "Y2K
Compliant" has the correlative meaning.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Loan Document or any certificate or other document
made or delivered pursuant hereto or thereto.
(b) As used herein and in any other Loan Document, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The word "including" shall mean "including, without
limitation" unless the context otherwise requires.
(e) The meanings given to defined terms herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNTS AND TERMS OF TERM LOANS
2.1 Term Loans. On the Effective Date (i) Term Loans
outstanding under the Existing Credit Agreement in an aggregate principal amount
of $46,000,000 shall be deemed converted to Revolving Credit Loans, (ii) the
balance of the Term Loans outstanding under the Existing Credit Agreement in an
aggregate principal amount of $150,000,000 shall be deemed to be Term Loans
outstanding under this Agreement and (iii) after giving effect thereto and to
the assignments by Citicorp and BankBoston to the other Lenders on the Effective
Date, which assignments are without recourse or representation to the assignors,
are effected by the execution and delivery of this Agreement by the parties
hereto and are agreed to by all of the parties hereto, each Term Loan Lender
shall have outstanding a Term Loan owing to it by the Borrower in a principal
amount equal to the amount set forth opposite such Lender's name on Schedule
1.1(a). The Term Loans may from time to time be (i) Eurodollar Loans, (ii) ABR
Loans or (iii) a combination thereof, as determined by the Borrower and notified
to the Administrative Agent in accordance with subsection 4.2.
2.2 Repayment of Term Loans; Amortization. The Borrower hereby
agrees to pay interest on the unpaid principal amount of the Term Loans from
time to time outstanding from the Effective Date until payment in full thereof
at the rates per annum, and on the dates, set forth in subsection 4.4. The
principal amount of the Term Loans shall be payable in nine equal quarterly
installments, each in an aggregate principal amount equal to $375,000 on the
first Business Day of the
37
44
months of January, April, July and October, beginning on April 1, 1999, and a
final installment in an aggregate principal amount equal to the remaining
principal balance thereof on the Term Loan Maturity Date. The Borrower hereby
further agrees to pay interest on the unpaid principal amount of the Term Loans
from time to time outstanding from the Effective Date until payment in full
thereof at the rates per annum, and on the dates, set forth in subsection 4.4.
SECTION 3. AMOUNTS AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Loans") to the Borrower from time to time
during the Revolving Credit Commitment Period in an aggregate principal amount
at any one time outstanding which, when added to such Revolving Credit Lender's
Revolving Credit Commitment Percentage of an amount equal to the sum of (i) the
aggregate principal amount of Swing Line Loans then outstanding plus (ii) the
then outstanding L/C Obligations (in each case, after giving effect to the use
of proceeds of such Revolving Loans), does not exceed the amount of such
Revolving Credit Lender's Revolving Credit Commitment, provided that no
Revolving Credit Lender shall be required to make a Revolving Loan to the extent
that, after giving effect thereto, the Aggregate Outstanding Extensions of
Credit at such time would exceed (x) the Borrowing Base at such time or (y)
during the period from the Effective Date to the Plan Acceptance Date,
$600,000,000 (the "Interim Maximum Amount"). During the Revolving Credit
Commitment Period, the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying and reborrowing the Revolving Loans in whole or in part,
all in accordance with the terms and conditions hereof.
(b) The Revolving Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Administrative Agent in accordance with
subsections 3.2 and 4.2.
(c) On the Effective Date (i) all Revolving Loans under the
Existing Credit Agreement and $46,000,000 of principal amount of Term Loans
under the Existing Credit Agreement shall be deemed to be Revolving Loans
outstanding under this Agreement, (ii) the Revolving Credit Commitments shall be
reduced from $700,000,000 to $600,000,000, and (iii) after giving effect thereto
and to the assignments by Citicorp and BankBoston of Revolving Loans and
Revolving Credit Commitments to the other Lenders on the Effective Date, which
assignments are without recourse to or representation by the assignors, are
effected by the execution and delivery of this Agreement by the parties hereto
and are agreed to by all of the parties hereto, the Revolving Credit Commitment
of and the Revolving Loans owed by the Borrower to each Revolving Credit Lender
shall be as set forth opposite such Lender's name under the heading "Revolving
Credit Commitment" on Schedule 1.1(a).
3.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Revolving Loans are to be initially Eurodollar Loans or (b) one Business Day
prior to the requested Borrowing Date, otherwise), which notice may be given by
telephone (to be promptly confirmed in writing, including by facsimile),
specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans, ABR Loans or a
combination thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Periods therefor. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in the
case of ABR Loans (except as otherwise provided in subsection 3.16(a)),
$5,000,000 or a whole multiple of $1,000,000 in
38
45
excess thereof (or, if the then Available Revolving Credit Commitments are less
than $5,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$10,000,000 or a whole multiple of $l,000,000 in excess thereof. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Revolving Credit Lender thereof. Each Revolving Credit Lender will
make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in subsection 11.2 prior to 1:00 P.M., New York
City time, on the Borrowing Date requested by the Borrower in Dollars and in
funds immediately available to the Administrative Agent. Such borrowing will be
made available to the Borrower promptly (but in no event later than 1:00 P.M.,
New York City time) by the Administrative Agent crediting the account of the
Borrower on the books of such office of the Administrative Agent with the
aggregate of the amounts made available to the Administrative Agent by the
Revolving Credit Lenders and in like funds as received by the Administrative
Agent.
3.3 Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Credit Lender a
non-refundable commitment fee for the period from and including the first day of
the Revolving Credit Commitment Period to but not including the Revolving Credit
Termination Date, computed at a rate per annum equal to the Applicable
Commitment Fee Rate then in effect on the average daily amount of the Available
Revolving Credit Commitment of such Revolving Credit Lender during the period
(calculated as if no Swing Line Loans were outstanding during such period) for
which payment is made, payable monthly in arrears on the last day of each month
and on the Revolving Credit Termination Date (whether by stated maturity or
otherwise) or such earlier date as the Revolving Credit Commitments shall
terminate as provided herein, commencing on the first of such dates to occur
after the Effective Date.
3.4 Termination or Reduction of Commitments. The Borrower
shall have the right, upon not less than two Business Days' notice to the
Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments, provided
that no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Revolving Loans made on the effective date
thereof, the aggregate principal amount of the Revolving Loans then outstanding,
when added to the then outstanding L/C Obligations and the aggregate principal
amount of then outstanding Swing Line Loans, would exceed the Revolving Credit
Commitments then in effect. Any such reduction shall be in an amount equal to
$10,000,000 or a whole multiple of $l,000,000 in excess thereof and shall reduce
permanently the Revolving Credit Commitments then in effect. Upon receipt of any
notice pursuant to this subsection 3.4, the Administrative Agent shall promptly
notify each Revolving Credit Lender thereof.
3.5 Repayment of Revolving Loans. The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Revolving Credit Lender the then unpaid principal amount of each Revolving
Loan of such Revolving Credit Lender on the Revolving Credit Termination Date
(or such earlier date on which the Revolving Loans become due and payable
pursuant to Section 9). The Borrower hereby further agrees to pay interest on
the unpaid principal amount of the Revolving Loans from time to time outstanding
from the Effective Date until payment in full thereof at the rates per annum,
and on the dates, set forth in subsection 4.4.
3.6 L/C Commitment. (a) Subject to the terms and conditions
hereof, each Issuing Bank, in reliance on the agreements of the other Lenders
set forth in subsection 3.9(a), agrees to issue letters of credit ("Letters of
Credit") for the account of the Borrower on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by such Issuing Bank; provided that no Issuing Bank shall have any
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations at such time would exceed the L/C Commitment,
(ii) the Standby Letter of Credit Outstandings at such time would exceed
39
46
$100,000,000, (iii) the Aggregate Revolving Credit Outstandings at such time
would exceed the aggregate amount of the Revolving Credit Commitments at such
time, (iv) in the case of Letters of Credit issued in currencies other than
Dollars only, the L/C Obligations in respect of Letters of Credit issued in
currencies other than Dollars would exceed the Foreign L/C Commitment Sublimit
at such time or (v) the Aggregate Outstanding Extensions of Credit at such time
would exceed (x) the Borrowing Base at such time or (y) if applicable, the
Interim Maximum Amount.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars or such other currency that as
of the date of issuance thereof is in the reasonable judgment of the
relevant Issuing Bank (which shall be binding on the L/C Participants)
freely convertible or exchangeable into Dollars as the Borrower, the
relevant Issuing Bank and the Administrative Agent may from time to
time agree, and shall be either (A) a standby letter of credit issued
to support obligations of the Borrower or a Subsidiary, contingent or
otherwise (a "Standby Letter of Credit"), or (B) a commercial letter of
credit issued in respect of the purchase of inventory or other goods or
services by the Borrower and its Subsidiaries in the ordinary course of
business (a "Trade Letter of Credit"), and
(ii) expire no later than the earlier of (A) five Business
Days prior to the Revolving Credit Termination Date and (B) one year
after the date of issuance thereof, provided that, subject to clause
(A) above, any Letter of Credit may, at the request of the Applicant as
set forth in the applicable Application, be automatically renewed on
each anniversary of the issuance thereof for an additional period of
one year or less unless the Issuing Bank which issued such Letter of
Credit shall have given at least sixty days prior written notice to the
Borrower and the beneficiary of such Letter of Credit that such Letter
of Credit will not be renewed, in which case such Letter of Credit may,
at the option of the Borrower, provide that the beneficiary of such
Letter of Credit will be entitled to draw on such Letter of Credit at
any time during the thirty days prior to the expiry thereof.
(c) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
(d) No Issuing Bank shall at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
such Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.7 Procedure for Issuance of Letters of Credit. An Applicant
may from time to time request that an Issuing Bank issue a Letter of Credit by
delivering (a) to such Issuing Bank at its address for notices specified herein
in such manner as may be agreed by or be reasonably acceptable to such Issuing
Bank (including by electronic transmission) an Application therefor, completed
to the satisfaction of such Issuing Bank, and such other certificates, documents
and other papers and information as such Issuing Bank may reasonably request and
(b) a notice to the Administrative Agent that such Letter of Credit has been
requested. Upon receipt of any Application, each Issuing Bank agrees to process
such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall such Issuing Bank be required to issue any Letter
of Credit earlier than two Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by such Issuing Bank
and the Borrower. Each Issuing Bank shall furnish a copy of each Letter of
Credit issued
40
47
by such Issuing Bank to the Borrower and the Administrative Agent promptly
following the issuance thereof.
3.8 Letter of Credit Fees, Commissions and Other Charges. (a)
The Borrower shall pay to the relevant Issuing Bank with respect to each Letter
of Credit issued by such Issuing Bank under this Agreement, for the account of
such Issuing Bank, a fronting fee with respect to the period from the date of
issuance of such Letter of Credit to the expiration or termination date of such
Letter of Credit, computed at a rate per annum equal to 0.375% on the average
aggregate amount available to be drawn under such Letter of Credit during the
period for which such fee is calculated. Such fronting fee shall be payable
monthly in arrears on each L/C Fee Payment Date to occur after the issuance of
such Letter of Credit and on the Revolving Credit Termination Date or on such
earlier date as the Revolving Credit Commitments shall terminate as provided
herein and shall be nonrefundable.
(b) The Borrower shall pay to the Administrative Agent, for
the account of the L/C Participants, a letter of credit commission with respect
to each Trade Letter of Credit issued under this Agreement with respect to the
period from the date of issuance of such Trade Letter of Credit to the
expiration or termination date of such Letter of Credit, computed at a rate per
annum equal to the Trade L/C Fee Rate in effect from time to time on the average
aggregate amount available to be drawn under such Trade Letter of Credit during
the period for which such fee is calculated. Such commission shall be shared
ratably among the L/C Participants in accordance with their respective Revolving
Credit Commitment Percentages. Such commission shall be payable in arrears on
each L/C Fee Payment Date to occur after the issuance of such Letter of Credit
and on the Revolving Credit Termination Date (or on such earlier date as the
Revolving Credit Commitments shall terminate as provided herein) and shall be
nonrefundable.
(c) The Borrower shall pay to the Administrative Agent, for
the account of the L/C Participants, a letter of credit commission with respect
to each Standby Letter of Credit with respect to the period from the date of
issuance of such Standby Letter of Credit to the expiration or termination date
of such Letter of Credit, computed at a rate per annum equal to the Standby L/C
Fee Rate in effect from time to time on the average aggregate amount available
to be drawn under such Standby Letter of Credit during the period for which such
fee is calculated. Such commission shall be shared ratably among the L/C
Participants in accordance with their respective Revolving Credit Commitment
Percentages. Such commission shall be payable in arrears on each L/C Fee Payment
Date to occur after the issuance of such Letter of Credit and on the Revolving
Credit Termination Date (or on such earlier date as the Revolving Credit
Commitments shall terminate as provided herein) and shall be nonrefundable.
(d) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse each Issuing Bank for such normal and customary
costs and expenses as may be agreed upon by the Borrower and such Issuing Bank
in connection with issuing, effecting payment under, amending or otherwise
administering any Letter of Credit issued by such Issuing Bank.
(e) The Administrative Agent shall, promptly following its
receipt thereof, distribute to each Issuing Bank and the L/C Participants all
fees and commissions received by the Administrative Agent for their respective
accounts pursuant to this subsection.
3.9 L/C Participations. (a) Each Issuing Bank irrevocably
agrees to grant and hereby grants to each L/C Participant (other than such
Issuing Bank), and, to induce such Issuing Bank to issue Letters of Credit
hereunder, each such L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from such Issuing Bank, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage in such Issuing Bank's obligations and
41
48
rights under each Letter of Credit issued by such Issuing Bank hereunder and the
amount of each draft paid by such Issuing Bank thereunder. Each such L/C
Participant unconditionally and irrevocably agrees with each Issuing Bank that,
if a draft is paid under any Letter of Credit issued by such Issuing Bank for
which such Issuing Bank is not reimbursed in full by the Borrower in accordance
with the terms of this Agreement, such L/C Participant shall pay to the
Administrative Agent for the account of such Issuing Bank upon demand an amount
equal to such L/C Participant's Revolving Credit Commitment Percentage of the
amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to any Issuing Bank pursuant to subsection 3.9(a) in respect of any unreimbursed
portion of any payment made by such Issuing Bank under any Letter of Credit
issued by such Issuing Bank is paid to such Issuing Bank within three Business
Days after the date such payment is due, such L/C Participant shall pay to such
Issuing Bank on demand an amount equal to the product of (i) such amount, times
(ii) the daily average Federal Funds Rate, during the period from and including
the date such payment is required to the date on which such payment is
immediately available to such Issuing Bank, times (iii) a fraction the numerator
of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to subsection 3.9(a) is not in fact made available to any
Issuing Bank by such L/C Participant within three Business Days after the date
such payment is due, such Issuing Bank shall be entitled to recover from such
L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Revolving Credit Loans that
are ABR Loans hereunder. A certificate of any Issuing Bank submitted to any L/C
Participant with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after any Issuing Bank has made
payment under any Letter of Credit issued by such Issuing Bank and has received
from any L/C Participant its pro rata share of such payment in accordance with
subsection 3.9(a), such Issuing Bank receives any payment related to such Letter
of Credit (whether directly from the Borrower or otherwise, including proceeds
of collateral applied thereto by such Issuing Bank), or any payment of interest
on account thereof, such Issuing Bank will distribute to such L/C Participant
its pro rata share thereof.
(d) If any payment received by any Issuing Bank pursuant to
subsection 3.10 with respect to any Letter of Credit issued by it shall be
required to be returned by such Issuing Bank, each L/C Participant shall pay to
such Issuing Bank its pro rata share thereof.
3.10 Letter of Credit Reimbursement Obligations. (a) The
Borrower agrees to reimburse each Issuing Bank for the amount of (i) any draft
paid by such Issuing Bank under any Letter of Credit issued by such Issuing Bank
and (ii) any taxes, fees, charges or other costs or expenses reasonably incurred
by such Issuing Bank in connection with such payment (including any such costs
and expenses related to any conversion of any such amount into Dollars as
contemplated by the next succeeding sentence). Except as otherwise agreed by the
Borrower and the relevant Issuing Bank, each such payment shall be made to the
relevant Issuing Bank at its address for notices specified herein in the
currency in which the relevant Letter of Credit was issued in immediately
available funds in such currency, provided that if the Borrower does not
reimburse the relevant Issuing Bank for any draft paid by such Issuing Bank
under any Letter of Credit issued by such Issuing Bank in a currency other than
Dollars on the date required pursuant to subsection 3.10(b), such Issuing Bank
shall convert such amount into Dollars at the rate of exchange then available to
such Issuing Bank in the interbank market where its foreign currency exchange
operations in respect of such currency are then being conducted and the Borrower
shall thereafter be required to reimburse in Dollars such Issuing Bank for such
amount with interest pursuant to subsection 3.10(b).
42
49
(b) If any draft shall be presented for payment under any
Letter of Credit issued by any Issuing Bank, such Issuing Bank shall promptly
notify the Borrower of the date and amount thereof. The Borrower shall reimburse
each Issuing Bank pursuant to subsection 3.10(a) with respect to any drawing
under any Letter of Credit issued by such Issuing Bank on (i) the Business Day
on which such drawing is paid by such Issuing Bank, if notice of such drawing is
given to the Borrower by such Issuing Bank prior to 12:00 Noon, New York City
time, on the date such drawing is paid, or (ii) the first Business Day after
notice of such drawing is given to the Borrower by the Issuing Bank, if such
notice is given after 12:00 Noon, New York City time, on the date such drawing
is paid, and, if such drawing is reimbursed after the date of such drawing,
interest shall be payable on the amount of such drawing for the period from the
date such drawing is paid by the Issuing Bank until reimbursed by the Borrower
at the rate then applicable to Revolving Credit Loans that are ABR Loans
hereunder. If any amount payable under this subsection is not paid when due,
interest shall be payable on such amount from the date such amount becomes
payable under this subsection until payment in full thereof at the rate which
would be payable on any outstanding ABR Loans which were then overdue.
3.11 Obligations Absolute. (a) The Borrower's obligations
under this Section 3 in respect of Letters of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower or any Applicant may have
or have had against any Issuing Bank or any beneficiary of any Letter of Credit.
(b) The Borrower also agrees with each Issuing Bank that such
Issuing Bank shall not be responsible for, and the Borrower's Reimbursement
Obligations shall not be affected by, among other things, (i) the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any
dispute between or among the Borrower, any Applicant and any beneficiary of any
Letter of Credit or any other party to which such Letter of Credit may be
transferred or (iii) any claims whatsoever of the Borrower or any Applicant
against any beneficiary of such Letter of Credit or any such transferee.
(c) No Issuing Bank shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit issued by
such Issuing Bank, except for errors or omissions caused by such Issuing Bank's
gross negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by
any Issuing Bank under or in connection with any Letter of Credit issued by such
Issuing Bank or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the UCC and the Uniform Customs, shall be binding on the Borrower
and shall not result in any liability of such Issuing Bank to the Borrower.
3.12 Letter of Credit Payments. The responsibility of each
Issuing Bank to the Borrower in connection with any draft presented for payment
under any Letter of Credit issued by such Issuing Bank shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.
3.13 Letter of Credit Applications. To the extent that any
provision of any Application related to any Letter of Credit is inconsistent
with the provisions of this Section 3 or any other terms of this Agreement or
any other Loan Document, the provisions of this Section 3 shall apply and such
inconsistent provision of such Application shall be of no force and effect.
3.14 Swing Line Commitment. Subject to the terms and
conditions hereof, each Swing Line Lender, in reliance on the agreements of the
other Lenders set forth in subsection 3.16,
43
50
agrees to make swing line loans ("Swing Line Loans") to the Borrower from time
to time during the Revolving Credit Commitment Period, provided that (a) no
Swing Line Lender shall have any obligation to make a Swing Line Loan if, after
giving effect to any such Swing Line Loans and the use of proceeds thereof, (i)
the aggregate principal amount of Swing Line Loans then outstanding would exceed
the Swing Line Commitment, (ii) the Aggregate Revolving Credit Outstandings at
such time would exceed the Revolving Credit Commitments in effect at such time
or (iii) the Aggregate Outstanding Extensions of Credit at such time would
exceed (x) the Borrowing Base at such time or (y) if applicable, the Interim
Maximum Amount, and (b) all borrowings and prepayments of Swing Line Loans shall
be made such that the aggregate principal amount of Swing Line Loans of each
Swing Line Lender outstanding at any time shall be equal. During the Revolving
Credit Commitment Period, the Borrower may use the Swing Line Commitment by
borrowing, prepaying and reborrowing the Swing Line Loans in whole or in part,
all in accordance with the terms and conditions hereof. All Swing Line Loans
shall be ABR Loans.
3.15 Procedure for Swing Line Borrowing. The Borrower may
borrow under the Swing Line Commitment during the Revolving Credit Commitment
Period on any Business Day, provided that the Borrower shall give the relevant
Swing Line Lender and the Administrative Agent irrevocable notice (which notice
may be given by telephone (to be promptly confirmed in writing, including by
facsimile) and must be received by the Swing Line Lender prior to 1:00 P.M. New
York City time) on the requested Borrowing Date specifying the amount of the
requested Swing Line Loan which shall be in an aggregate minimum amount of
$l,000,000 or a whole multiple of $100,000 in excess thereof (or, if less, the
unused portion of the Swing Line Commitment). The proceeds of the Swing Line
Loan will be made available by the relevant Swing Line Lender to the Borrower at
the office of the Swing Line Lender by 4:00 P.M., New York City time, on the
Borrowing Date by crediting the account of the Borrower at such office with such
proceeds. The Borrower may at any time and from time to time, subject to
subsection 3.14, prepay the Swing Line Loans, in whole or in part, without
premium or penalty, by notifying (which notice may be given by telephone (to be
promptly confirmed in writing, including by facsimile)) the relevant Swing Line
Lender and the Administrative Agent prior to 2:00 P.M., New York City time, on
any Business Day of the date and amount of prepayment. If any such notice is
given, the amount specified in such notice shall be due and payable on the date
specified therein. Partial prepayments shall be in an aggregate principal amount
of $100,000 or a whole multiple of $100,000 in excess thereof.
3.16 Refunding of Swing Line Loans; Participations in Swing
Line Loans. (a) Except as otherwise provided in subsection 3.16(f), in the event
that (i) the aggregate average daily outstanding principal amount of Swing Line
Loans during any weekly period ending on Thursday (or, in the event Thursday is
not a Business Day, on the next succeeding Business Day) of any week exceeds
$30,000,000, and (ii) the principal amount of Swing Line Loans outstanding on
the last day of such period exceeds $30,000,000, the Borrower shall, or the
Administrative Agent may, on behalf of the Borrower (which hereby irrevocably
authorizes the Administrative Agent to act on its behalf in such regard) request
each Revolving Credit Lender to make a Revolving Loan (which shall be an ABR
Loan) in an amount equal to such Lender's Revolving Credit Commitment Percentage
of the amount by which the aggregate outstanding principal amount of Swing Line
Loans on the last day of such period exceeds $20,000,000, regardless of whether
the conditions set forth in subsection 6.2 have been satisfied in connection
therewith. The Swing Line Lenders may, on behalf of the Borrower (which hereby
authorizes the Swing Line Lenders to act on its behalf in such regard), at any
time request each Revolving Credit Lender (including the Swing Line Lenders) to
make a Revolving Credit Loan (which shall be an ABR Loan) in an amount equal to
such Lender's Revolving Credit Commitment Percentage of the aggregate principal
amount of Swing Line Loans then outstanding, regardless of whether the
conditions set forth in subsection 6.2 have been satisfied in connection
therewith. Unless any of the events described in paragraph (f) of Section 9
shall have occurred with respect to the Borrower (in which event the procedures
of paragraph (c) of this subsection 3.16 shall apply) each Lender shall make
44
51
the proceeds of its Revolving Loan available to the Administrative Agent for the
account of the relevant Swing Line Lender at the Administrative Agent's office
specified in or pursuant to subsection 11.2 prior to 11:00 A.M., New York City
time, in funds immediately available in Dollars on the Business Day next
succeeding the date such notice is given. The proceeds of such Revolving Loans
shall be immediately applied to repay the relevant Swing Line Loan. Effective on
the day such Revolving Loans are made, the relevant Swing Line Loan so paid
shall no longer be outstanding as a Swing Line Loan and shall no longer be due
under the Swing Line Note. The Borrower authorizes each Swing Line Lender, upon
written notice to the Borrower, to charge the Borrower's accounts with such
Swing Line Lender (up to the amount available in each such account) in order to
immediately pay the amount of its outstanding Swing Line Loans to the extent
amounts received from the Lenders are not sufficient to repay in full such
outstanding Swing Line Loans.
(b) Notwithstanding anything herein to the contrary, and
except as provided in subsection 3.16(f), no Swing Line Lender shall make any
Swing Line Loans if the Swing Line Lender has received written notice that the
conditions set forth in subsection 6.2 have not been satisfied in connection
with the making of such Swing Line Loans and no Swing Line Lender shall
otherwise be required to determine that, or take notice whether, the conditions
precedent set forth in subsection 6.2 have been satisfied in connection with the
making of any Swing Line Loan.
(c) If prior to the making of a Revolving Loan pursuant to
subsection 3.16(a) one of the events described in paragraph (f) of Section 9
shall have occurred and be continuing with respect to the Borrower, each Lender
will, on the date such Revolving Loan was to or would have been made pursuant to
the notice in subsection 3.16(a), purchase an undivided participating interest
in the outstanding Swing Line Loans in an amount equal to (i) its Revolving
Credit Commitment Percentage times (ii) the aggregate principal amount of Swing
Line Loans then outstanding. Each Lender will immediately transfer to the Swing
Line Lender, in immediately available funds, the amount of its participation.
(d) Whenever, at any time after any Lender has purchased a
participating interest in a Swing Line Loan, any Swing Line Lender receives any
payment on account thereof, such Swing Line Lender will distribute to such
Lender its participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Lender's participating interest was outstanding and funded), provided, that in
the event that such payment received by such Swing Line Lender is required to be
returned, such Lender will return to such Swing Line Lender any portion thereof
previously distributed by such Swing Line Lender to it.
(e) Each Lender's obligation to make the Revolving Loans
referred to in subsection 3.16(a) and to purchase participating interests
pursuant to subsection 3.16(c) shall be absolute and unconditional and shall not
be affected by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Lender or the
Borrower may have against the relevant Swing Line Lender, the Borrower or any
other Person for any reason whatsoever, (ii) the occurrence or continuance of a
Default or an Event of Default, (iii) any adverse change in the condition
(financial or otherwise) of the Borrower, (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any Subsidiary or any other Lender, or
(v) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(f) (i) The Administrative Agent may, as a Swing Line Lender
hereunder, from time to time, after the occurrence and during the continuance of
any Default or Event of Default, and subject to clause (C) of this subsection
3.16(f), and notwithstanding the requirements of subsections 6.2(a) and 6.2(b),
make such disbursements and advances pursuant to the Loan Documents, in the form
of Swing Line Loans, which the Administrative Agent, in its sole discretion,
deems necessary or desirable to preserve or protect the Collateral or any
portion thereof or to enhance the likelihood or
45
52
maximize the amount of repayment of the Loans and other Credit Agreement
Obligations; provided that, after giving effect to any such Swing Line Loans and
the use of proceeds thereof, (A) the aggregate principal amount of Swing Line
Loans then outstanding would not exceed the Swing Line Commitment, (B) the
Aggregate Revolving Credit Outstandings at such time would not exceed the
Revolving Credit Commitment in effect at such time and (C) the Aggregate
Outstanding Extensions of Credit at such time would not exceed (x) the Borrowing
Base at such time or (y) if applicable, the Interim Maximum Amount
(collectively, "Protective Advances"). The Administrative Agent shall notify the
Borrower and each Lender in writing of such Protective Advance. All outstanding
principal of, and interest on, the Protective Advances shall constitute Credit
Agreement Obligations secured by the Collateral until paid in full by the
Borrower.
3.17 Annual Revolving Credit Clean-Down. The Borrower agrees
that during the period beginning on December 1 of each calendar year and ending
on the following February 28 of the next calendar year, there shall be a period
of at least 30 consecutive days during which the sum of the aggregate principal
amount of all outstanding Loans shall not exceed $400,000,000.
3.18 Other Fees. The Borrower agrees to pay to the
Administrative Agent the fees in the amounts and on the dates set forth in the
Fee Letter dated January 7, 1999 from Citicorp and Xxxxxxx Xxxxx Xxxxxx Inc, to
the Borrower, and accepted by the Borrower on the same date.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO
LOANS AND LETTERS OF CREDIT
4.1 Optional and Mandatory Prepayments. (a) Subject to
subsection 4.1(e), the Borrower may, at any time and from time to time, prepay
the Loans, in whole or in part, without premium or penalty (except, with respect
to Eurodollar Loans that are prepaid on a date other than the last day of the
Interest Period with respect thereto, as provided under subsection 4.11), upon
(i) in the case of prepayments of Eurodollar Loans, at least three Business
Days' irrevocable notice (which notice may be given by telephone (to be promptly
confirmed in writing, including by facsimile) to the Administrative Agent and
(ii) in the case of prepayments of ABR Loans (other than Swing Line Loans),
irrevocable notice (which notice may be given by telephone (to be promptly
confirmed in writing, including by facsimile)) to the Administrative Agent prior
to 11:30 A.M., New York City time, on the date of such prepayment, in each case
specifying the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of any such notice the
Administrative Agent shall promptly notify each affected Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with any amounts payable
pursuant to subsection 4.11 in connection therewith and, in the case of
prepayments of the Term Loans only, accrued interest to such date on the amount
prepaid. Amounts prepaid on account of the Term Loans may not be reborrowed and
will be applied to the installments thereof in the scheduled order of maturity
thereof. Partial prepayments under this subsection 4.1(a) shall be, in the case
of Eurodollar Loans, in an aggregate principal amount of $10,000,000 or a whole
multiple of $1,000,000 in excess thereof and in the case of ABR Loans, in an
aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.
(b) If, at any time, the Aggregate Outstanding Extensions of
Credit at such time exceed (x) the Borrowing Base at such time or (y) if
applicable, the Interim Maximum Amount, the Borrower shall, without notice or
demand, immediately repay Swing Line Loans then outstanding and/or, after the
Swing Line Loans have been paid in full, Revolving Loans in an aggregate
principal amount equal to the lesser of (i) the amount of such excess and (ii)
the aggregate principal amount of Swing Line Loans and Revolving Loans then
outstanding, together with interest accrued to the date of
46
53
such payment or prepayment on the principal so prepaid and any amounts payable
under subsection 4.11 in connection therewith. To the extent that after giving
effect to any prepayment of Swing Line Loans and Revolving Loans required by the
preceding sentence, the Aggregate Outstanding Extensions of Credit at such time
exceed the Borrowing Base at such time or the Interim Maximum Amount, if
applicable, the Borrower shall, without notice or demand, immediately deposit in
the Collateral Account upon terms reasonably satisfactory to the Administrative
Agent an amount equal to the lesser of (i) the aggregate then outstanding L/C
Obligations and (ii) the amount of such remaining excess. The Administrative
Agent shall apply any cash deposited in the Collateral Account (to the extent
thereof) to pay any Reimbursement Obligations which become due thereafter. To
the extent that after giving effect to any prepayment of the Revolving Loans and
cash deposits required by the preceding sentences, the Aggregate Outstanding
Extensions of Credit at such time exceed the Borrowing Base at such time or the
Interim Maximum Amount, if applicable, the Borrower shall, without notice or
demand, immediately repay the Term Loans in the scheduled order of maturity
thereof in an aggregate principal amount equal to the lesser of (i) the amount
of such excess and (ii) the aggregate principal amount of Term Loans then
outstanding, together with interest accrued to the date of such payment or
prepayment on the principal so prepaid and any amounts payable under subsection
4.11 in connection therewith. The Borrower shall also prepay the Revolving Loans
to the extent required to comply with subsection 3.16.
(c) (i) The Borrower shall prepay the Term Loans and, if there
are no Term Loans outstanding, the Revolving Loans, within three
Business Days after the receipt by the Borrower or any Restricted
Subsidiary of any Debt Issuance Proceeds in an amount equal to such
Debt Issuance Proceeds.
(ii) Subject to subsection 4.1(e), the Borrower shall
repay the Revolving Loans, within three Business Days after the receipt
by the Borrower or any Restricted Subsidiary of any Asset Sale Proceeds
in respect of the Collateral, in an amount equal to such Asset Sale
Proceeds, and concurrently therewith the Cumulative Asset Sale Reserve
shall be increased by 50% of the positive difference between (A) the
amount of such Asset Sale Proceeds and (B) the amount of such Asset
Sale Proceeds which were included in the Borrowing Base immediately
prior to such disposition.
(d) Subject to subsection 4.1(e), the Borrower agrees that all
available funds in the Collateral Account (except for Asset Sale Proceeds and
Debt Issuance Proceeds) shall be applied first, pro rata, to the amount of the
Swing Line Loans and any Reimbursement Obligations then outstanding, next to the
outstanding principal amount of the Revolving Loans, then (i) on any Business
Day that any funds are on deposit in the Collateral Account and no Default or
Event of Default has occurred and is continuing, the Borrower may direct the
Administrative Agent to transfer to the Borrower's disbursement account funds up
to the difference between the Borrowing Base as reflected in the most recent
Borrowing Base Certificate and 100% of the remaining Secured Obligations and
(ii) on any Business Day that any funds are on deposit in the Collateral Account
and a Default or Event of Default has occurred and is continuing, the Borrower
may direct the Administrative Agent to transfer to the Borrower's disbursement
account funds up to the difference between the Borrowing Base as reflected in
the most recent Borrowing Base Certificate and 105% of the remaining Secured
Obligations. The Borrower shall utilize funds on deposit in the Collateral
Account that are available to it pursuant to the terms hereof prior to
requesting Revolving Loans to be made hereunder.
(e) The Borrower agrees that, (i) to the extent there are
Asset Sale Proceeds as a result of the sale of any Eligible Mortgaged Real
Property located within the State of Florida, such Asset Sale Proceeds shall
only be applied in repayment of the Term Loans, and (ii) to the extent the
Borrowing Base includes any Eligible Mortgaged Real Property located in the
State of Florida, the Term Loans may not be reduced, as a result of the
operation of subsection 4.1, by an amount less than
47
54
the aggregate Mortgage Value with respect to all such parcels of Eligible
Mortgaged Real Property which are located within the State of Florida. The
Mortgage Value of Eligible Mortgaged Real Property located in the State of
Florida as of the date hereof is shown on Schedule 4.1(e).
4.2 Conversion and Continuation Options. (a) The Borrower may,
subject to paragraph (b) below, elect from time to time to convert Eurodollar
Loans to ABR Loans by giving the Administrative Agent irrevocable notice of such
election prior to 1:00 P.M., New York City time, three Business Days prior to
the date of conversion, which notice may be given by telephone (to be promptly
confirmed in writing, including by facsimile), provided that any such conversion
of Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert ABR Loans
to Eurodollar Loans by giving the Administrative Agent irrevocable notice of
such election prior to 1:00 P.M., New York City time, three Business Days prior
to the date of conversion, which notice may be given by telephone (to be
promptly confirmed in writing, including by facsimile). Any such notice of
conversion to Eurodollar Loans shall specify the length of the initial Interest
Period or Interest Periods therefor. Upon receipt of any such notice the
Administrative Agent shall promptly notify each affected Lender thereof. All or
any part of outstanding Eurodollar Loans and ABR Loans may be converted as
provided herein, provided that (i) no ABR Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and
(ii) no ABR Loan may be converted into a Eurodollar Loan after the date that is
one month prior to the Revolving Credit Termination Date (in the case of
conversions of Revolving Loans) or prior to the Term Loan Maturity Date (in the
case of conversions of Term Loans).
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Eurodollar
Loans, which notice may be given by telephone (to be promptly confirmed in
writing, including by facsimile), provided that no Eurodollar Loan may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has notified the Borrower that it has determined
that such a continuation is not appropriate or (ii) after the date that is one
month prior to the Revolving Credit Termination Date (in the case of
continuations of Revolving Loans) or prior to the Term Loan Maturity Date (in
the case of continuations of Term Loans), and provided further, that if the
Borrower shall fail to give such notice or if such continuation is not permitted
such Eurodollar Loans shall be automatically converted to ABR Loans on the last
day of such then expiring Interest Period. Upon receipt of any notice pursuant
to this subsection 4.2(b), the Administrative Agent shall notify each affected
Lender thereof.
4.3 Minimum Amounts and Maximum Number of Tranches. All
borrowings, conversions and continuations of Eurodollar Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, after giving effect thereto, the aggregate
principal amount of Eurodollar Loans comprising each Tranche shall be equal to
$10,000,000 or a whole multiple of $l,000,000 in excess thereof. In no event
shall there be more than 20 Tranches outstanding at any time.
4.4 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
Interest Period plus (i) in the case of Eurodollar Loans which are Revolving
Loans, the Revolving Credit Applicable Margin or (ii) in the case of Eurodollar
Loans which are Term Loans, the Term Loan Applicable Margin.
48
55
(b) Each ABR Loan shall bear interest at a rate per annum
equal to the ABR plus (i) in the case of ABR Loans which are Revolving Loans,
the Revolving Credit Applicable Margin or (ii) in the case of ABR Loans which
are Term Loans, the Term Loan Applicable Margin.
(c) Each Swing Line Loan shall bear interest at a rate per
annum equal to (i) the ABR plus the Revolving Credit Applicable Margin for ABR
Loans.
(d) Notwithstanding the rate of interest specified in this
subsection 4.4 or elsewhere herein, effective immediately upon the occurrence of
any Event of Default and for so long thereafter as such Event of Default is
continuing, the principal balance of all Loans shall bear interest at a rate per
annum which is the rate that would otherwise be applicable thereto pursuant to
this Agreement plus 2% per annum. If all or a portion of (i) any interest
payable on any Loan, (ii) any commitment fee or (iii) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), any such overdue interest, commitment fee or other
amount shall bear interest at a rate per annum which is the rate described in
paragraph (b)(i) of this subsection plus 2%, in each case from the date of such
non-payment until such overdue interest, commitment fee or other amount is paid
in full (as well after as before judgment).
(e) Interest shall be payable in arrears on each Interest
Payment Date, provided that (i) interest accruing pursuant to subsection 4.4(d)
shall be payable from time to time on demand, (ii) interest on the Term Loans
shall also be payable on the Term Loan Maturity Date (or such earlier date on
which the Term Loans become due and payable pursuant to Section 9) and (iii)
interest on the Revolving Loans shall also be due and payable on the Revolving
Credit Termination Date (or such earlier date on which the Revolving Loans
become due and payable pursuant to Section 9).
4.5 Computation of Interest and Fees. (a) Commitment fees and,
whenever it is calculated on the basis of Citibank's prime rate, interest shall
be calculated on the basis of a 365- (or 366-, as the case may be) day year for
the actual days elapsed; and otherwise interest and fees and commissions in
respect of Letters of Credit shall be calculated on the basis of a 360-day year
for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the affected Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the affected Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
presumed correct in the absence of manifest error.
(c) Each Lender shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Lenders shall be unable or shall otherwise fail to supply such rates to
the Administrative Agent upon its request, the rate of interest shall, subject
to the provisions of this subsection 4.5, be determined on the basis of the
quotations of the remaining Lenders or Lender.
4.6 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
49
56
(b) the Administrative Agent shall have received notice from any Lender
that the making or continuation of any Eurodollar Loan has become impracticable
as a result of a contingency occurring after the date hereof which materially
and adversely affects the London interbank market,
the Administrative Agent shall give facsimile or telephonic notice thereof to
the Borrower and the affected Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as ABR Loans, (y) any ABR Loans that were
to have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans
which the Borrower has requested to continue as such pursuant to subsection
4.2(b) shall be converted, on the first day of such Interest Period, to ABR
Loans, provided that, in the case of clause (b) above, only the Eurodollar Loan
of a Lender which delivers a notice pursuant to such clause shall be subject to
this sentence and the following sentence. Until such notice has been withdrawn
by the Administrative Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower have the right to convert ABR Loans to
Eurodollar Loans.
4.7 Pro Rata Treatment and Payments. (a) Except as otherwise
provided in subsections 3.6 through 3.16, all payments (including prepayments)
to be made by the Borrower hereunder, whether on account of principal, interest,
fees or otherwise, shall be made without set off or counterclaim and shall be
made prior to 1:00 P.M., New York City time, on the due date thereof to the
Administrative Agent, for the account of the Revolving Credit Lenders or the
Term Loan Lenders, as the case may be, at the Administrative Agent's office
specified in or pursuant to subsection 11.2 (except as otherwise provided
herein) in Dollars and in immediately available funds. The Administrative Agent
shall distribute such payments to the Lenders entitled to receive the same
promptly upon receipt in like funds as received. If any payment hereunder (other
than payments on Eurodollar Loans) becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding Business
Day, and, with respect to payments of principal. Interest thereon shall be
payable at the then applicable rate during such extension. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day (and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension) unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its portion of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Rate for the period until such
Lender makes such amount immediately available to the Administrative Agent. A
certificate of the Administrative Agent submitted to any Lender with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's portion of such borrowing is not made available
to the Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans
hereunder, on demand, from the Borrower.
(c) Each borrowing by the Borrower of Revolving Loans shall be
made ratably from the Revolving Credit Lenders in accordance with their
respective and Revolving Credit Commitment Percentages. Any reduction of the
Revolving Credit Commitments shall be made ratably
50
57
among the Lenders, in accordance with their respective Revolving Credit
Commitment Percentages. Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Revolving Loans shall be made pro
rata according to the respective outstanding principal amounts of the Revolving
Loans then held by the Revolving Credit Lenders. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the Term
Loans shall be made pro rata according to the respective outstanding principal
amounts of the Term Loans then held by the Term Loan Lenders.
4.8 Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, such Lender shall give
prompt notice thereof to the Borrower and the Administrative Agent and
thereafter (a) the commitment of such Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans
shall forthwith be suspended during the period of illegality and (b) such
Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to ABR Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 4.11.
4.9 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof shall increase the cost to such Lender, by an
amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or reduce any amount receivable hereunder in respect thereof
including any such cost or reduced amount receivable resulting from (i) any tax
of any kind whatsoever with respect to this Agreement, any Note, any Eurodollar
Loan, any Letter of Credit issued or participated in by it or any Application,
or change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by subsection 4.10 and changes in the
rate of tax on the overall gross or net income of such Lender) or (ii) any
reserve, special deposit, compulsory loan or singular requirement against assets
held by deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination of
the Eurodollar Rate hereunder, then, in any such case, within 15 days after
demand therefor (accompanied by the certificate contemplated by subsection
4.9(c) with respect thereto) the Borrower shall pay such Lender such additional
amount or amounts as will compensate such Lender for such increased cost or
reduced amount receivable.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time,
within 15 days after demand therefor (accompanied by the certificate
contemplated by subsection 4.9(c) with respect thereto), the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
for such reduction.
51
58
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection 4.9, it shall promptly notify the Borrower
(with a copy to the Administrative Agent) of the event by reason of which it has
become so entitled, provided that no Lender shall be entitled to claim any such
additional amount (i) with respect to the period which is more than 180 days
prior to the delivery of such notice or (ii) if such Lender shall not seek as a
result of such event payment of any similar amounts from at least one other
borrower to whom it has extended credit. A certificate as to any additional
amounts payable pursuant to this subsection 4.9 submitted by such Lender to the
Borrower (with a copy to the Administrative Agent) setting forth in reasonable
detail the calculation of such amounts and the basis therefor shall be
conclusive in the absence of manifest error. The agreements in this subsection
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
4.10 Indemnification for Taxes. (a) All payments made by the
Borrower under this Agreement and any Notes shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and franchise
and excise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent or such Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or any
Note). If any such non-excluded taxes, levies, imposts, duties, charges, fees
deductions or withholdings ("Non-Excluded Taxes") are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder or
under any Note, the amounts so payable to the Administrative Agent or such
Lender shall be increased to the extent necessary to yield to the Administrative
Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, that the Borrower shall not be required to increase
any such amounts payable to any Lender that is not organized under the laws of
the United States of America or a state thereof if such Lender fails to comply
with the requirements of paragraph (b) of this subsection 4.10. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure. The agreements in this subsection shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) in the case of a Lender or a Transferee that is a
"bank" under Section 881(c)(3)(A) of the Tax Code:
(A) on or before the date it becomes a party to this
Agreement (or, in the case of a Participant, on or before the
date such Participant becomes a Participant hereunder),
deliver to the Borrower and the Administrative Agent (I) two
duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or
52
59
successor applicable form, as the case may be, and (II) an
Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be;
(B) deliver to the Borrower and the Administrative
Agent two further copies of any such form or certification on
or before the date that any such form or certification expires
or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Administrative Agent; and
(ii) in the case of a Lender or a Transferee that is not
a "bank" under Section 881(c)(3)(A) of the Tax Code:
(A) on or before the date it becomes a party to this
Agreement (or, in the case of a Participant, on or before the
date such Participant becomes a Participant hereunder),
deliver to the Borrower and the Administrative Agent (I) a
statement under penalties of perjury that such Lender or
Transferee (x) is not a "bank" under Section 881(c)(3)(A) of
the Tax Code, is not subject to regulatory or other legal
requirements as a bank in any jurisdiction, and has not been
treated as a bank for purposes of any tax, securities law or
other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for
any exemption from tax, securities law or other legal
requirements, (y) is not a 10-percent shareholder within the
meaning of Section 881(c)(3)(B) of the Tax Code and (z) is not
a controlled foreign corporation receiving interest from a
related person within the meaning of Section 881(c)(3)(C) of
the Tax Code and (II) a properly completed and duly executed
internal Revenue Service Form W-8 or applicable successor
form;
(B) deliver to the Borrower and the Administrative
Agent two further properly completed and duly executed copies
of such Form W-8, or any successor applicable form, on or
before the date that any such Form W-8 expires or becomes
obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to
the Borrower or upon the request of the Borrower; and
(C) obtain such extensions of time for filing and
completing such forms or certifications as may be reasonably
requested by the Borrower or the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall certify (i) in the case of a
Form 1001 or 4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes and
(ii) in the case of a Form W-8 or W-9 provided pursuant to subsection
4.10(b)(i)(A)(II) that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 11.6 shall, upon the effectiveness of the related
transfer, be required
53
60
to provide all of the forms and statements required pursuant to this subsection,
provided that in the case of a Participant such Participant shall furnish all
such required forms and statements to the Lender from which the related
participation shall have been purchased.
4.11 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or reasonable expense which such
Lender may sustain or incur as a consequence of (a) default by the Borrower in
making a borrowing of, conversion into or continuation of Eurodollar Loans,
after the Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan, after the Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (c) the making of a
prepayment or conversion of Eurodollar Loans on a day which is not the last day
of an Interest Period with respect thereto, which loss shall be equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid or converted, or not so borrowed, converted or continued, for
the period from the date of such prepayment or conversion or of such failure to
borrow, convert or continue to the last day of such Interest Period (or proposed
Interest Period), respectively, in each case at the applicable Eurodollar Rate
(exclusive of any Revolving Credit Applicable Margin or Term Loan Applicable
Margin) for such Eurodollar Loans provided for herein over (ii) the amount of
interest (as reasonably determined by such Lender) which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market (it being
understood that the Borrower shall not be required to indemnify any Lender for
lost profits). A certificate as to any amounts payable pursuant to this
subsection 4.11 submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
4.12 Change of Lending Office. Each Lender agrees that if it
makes any demand for payment under subsection 4.9 or 4.10(a), or if any adoption
or change of the type described in subsection 4.8 shall occur with respect to
it, it will use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 4.9 or
4.10(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 4.8.
4.13 Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Lender resulting from the Loans of such
Lender, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.
(b) The Administrative Agent shall maintain the Register
pursuant to subsection 11.6(d), and a subaccount therein for each Lender, in
which shall be recorded (i) the amount of each Loan made hereunder, the Type
thereof and each Interest Period (if any) applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 4.13(a) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, that the failure of any
Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Loans in accordance with the
terms of this Agreement.
54
61
(d) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing the Revolving Loans of
such Lender, substantially in the form of Exhibit D (each, "Revolving Credit
Note"), payable to the order of such Lender. Each Lender is hereby authorized to
record the date, Type and amount of each Revolving Loan of such Lender, the date
and amount of each payment or prepayment of principal thereof, each continuation
of all or a portion thereof as the same Type, each conversion of all or a
portion thereof to another Type and, in the case of Eurodollar Loans, the length
of each Interest Period and Eurodollar Rate with respect thereto, on the
schedule (or any continuation of the schedule) annexed to and constituting a
part of its Revolving Credit Note, as the case may be, and any such recordation
shall, to the extent permitted by applicable law, constitute prima facie
evidence of the accuracy of the information so recorded, provided that the
failure to make any such recordation (or any error therein) shall not affect the
obligation of the Borrower to repay (with applicable interest) the Revolving
Loans in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Term Loan Lender, the Borrower will execute and
deliver to such Term Loan Lender a promissory note of the Borrower evidencing
the Term Loan of such Term Loan Lender, substantially in the form of Exhibit E
(a "Term Note"), payable to the order of such Term Loan Lender and in a
principal amount equal to, the outstanding Term Loan of such Term Loan Lender.
Each Term Loan Lender is hereby authorized to record the date, Type and amount
of the Term Loan of such Term Loan Lender, the date and amount of each payment
or prepayment of principal thereof, each continuation of all or a portion
thereof as the same Type, each conversion of all or a portion thereof to another
Type and, in the case of Eurodollar Loans, the length of each Interest Period
and Eurodollar Rate with respect thereto, on the schedule (or any continuation
of the schedule) annexed to and constituting a part of its Term Note, as the
case may be, and any such recordation shall, to the extent permitted by
applicable law, constitute prima facie evidence of the accuracy of the
information so recorded, provided that the failure to make any such recordation
(or any error therein) shall not affect the obligation of the Borrower to repay
(with applicable interest) the Term Loans in accordance with the terms of this
Agreement.
(f) The Borrower agrees that, upon the request to the
Administrative Agent by any Swing Line Lender, the Borrower will execute and
deliver to such Swing Line Lender a promissory note of the Borrower evidencing
the Swing Line Loans of such Swing Line Lender, substantially in the form of
Exhibit F (a "Swing Line Note"), payable to the order of such Swing Line Lender
and in a principal amount equal to the Swing Line Commitment. Each Swing Line
Lender is hereby authorized to record the date and amount of each Swing Line
Loan made by it and the date and amount of each payment or prepayment of
principal thereof on the schedule (or any continuation of the schedule) annexed
to and constituting a part of its Swing Line Note, as the case may be, and any
such recordation shall, to the extent permitted by applicable law, constitute
prima facie evidence of the accuracy of the information so recorded, provided
that the failure to make any such recordation (or any error therein) shall not
affect the obligation of the Borrower to repay (with applicable interest) the
Swing Line Loans in accordance with the terms of this Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make or continue to make the Extensions of Credit,
the Borrower hereby represents and warrants to the Administrative Agent and each
Lender that:
5.1 Financial Condition. The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at December 28, 1997 and the
related consolidated statements of income
55
62
and retained earnings and cash flows for the Fiscal Year ended on such date,
reported on by Deloitte & Touche, copies of which have heretofore been furnished
to each Lender, are complete and correct in all material respects and present
fairly the consolidated financial condition of the Borrower and its Consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the Fiscal Year then ended. The unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at September 30, 1998 and the related unaudited consolidated statements of,
financial condition, income and retained earnings and cash flows for the
nine-month period ended on such date, certified by a Responsible Officer, copies
of which have heretofore been furnished to each Lender, are complete and correct
and present fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the nine-month period then
ended (subject to normal year-end audit adjustments). All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). Except as set forth on Schedule 5.1,
neither the Borrower nor any of its Consolidated Subsidiaries had, at the date
of the most recent balance sheet referred to above, any material Guarantee
Obligation not permitted under subsection 8.2, material contingent liability or
liability for taxes, or any material long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto. Except as set forth on Schedule
5.1, during the period from December 28, 1997 to and including the date hereof,
there has been no sale, transfer or other disposition by the Borrower or any of
its Consolidated Subsidiaries of any material part of its business or property
and no purchase or other acquisition of any business or property (including any
capital stock of any other Person) material in relation to the consolidated
financial condition of the Borrower and its Consolidated Subsidiaries at
December 28, 1997.
5.2 No Change. Except as set forth on Schedule 5.2, since
September 30, 1998, there has been no development or event which has had or
could reasonably be expected to have a Material Adverse Effect.
5.3 Existence; Compliance with Law. Each of the Borrower and
its Restricted Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation, foreign
limited liability company or foreign limited partnership, as the case may be,
and in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification and (d) is in compliance with all Requirements of Law except, in
each case, where the failure to be so organized, existing, in good standing or
qualified, or the failure to have such power or authority or to so comply, could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
5.4 Power; Authorization; Enforceable Obligations. Each of the
Borrower and its Restricted Subsidiaries has the power and authority, and the
legal right, to make, deliver and perform the Loan Documents to which it is a
party and (in the case of the Borrower) to borrow and obtain the other
Extensions of Credit hereunder and has taken all necessary corporate or other
action to authorize the Extensions of Credit on the terms and conditions of this
Agreement and any Notes and to authorize the execution, delivery and performance
of the Loan Documents to which it is a party. No consent or authorization of,
filing with, notice to, or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the Extensions of
Credit hereunder or with the execution, delivery, performance, validity or
enforceability of the Loan Documents to which the Borrower or any of its
Restricted Subsidiaries is a party except as may be necessary to perfect the
56
63
Liens created pursuant to the Security Documents, except as described on
Schedule 5.4 and except those which have been obtained, made or waived. This
Agreement has been, and each other Loan Document will be, duly executed and
delivered on behalf of the Borrower and each of its Restricted Subsidiaries that
is a party thereto. This Agreement constitutes, and each other Loan Document
when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower and each of its Restricted Subsidiaries that is a
party thereto enforceable against the Borrower and each such Restricted
Subsidiary in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5.5 No Legal Bar. The execution, delivery and performance of
the Loan Documents to which the Borrower or any of its Restricted Subsidiaries
is a party, the Extensions of Credit hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or Contractual Obligation of the
Borrower or of any of its Restricted Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than pursuant to the Loan Documents), except as of
any date after the Effective Date, to the extent (a) that any such violations
(individually or in the aggregate) could not reasonably be expected to have a
Material Adverse Effect and (b) that any such Liens would otherwise be permitted
under subsection 8.3.
5.6 No Material Litigation. Except as set forth on Schedule
5.6, no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Restricted Subsidiaries or
against any of its or their respective properties or revenues (a) with respect
to any of the Loan Documents or any of the transactions contemplated hereby or
thereby or (b) which could reasonably be expected to have a Material Adverse
Effect.
5.7 No Default. As of the date hereof, except as set forth on
Schedule 5.7, neither the Borrower nor any of its Restricted Subsidiaries is in
default under or with respect to any of its Contractual Obligations, and no
other party is in default under or with respect to any Contractual Obligation in
respect of Indebtedness or other obligations greater than $1,000,000 owed to the
Borrower or any of its Restricted Subsidiaries. As of any date after the
Effective Date, except as set forth on Schedule 5.7, (i) neither the Borrower
nor any of its Restricted Subsidiaries is in default under or with respect to
any Contractual Obligation in respect of Indebtedness or other obligations
greater than $1,000,000, and (ii) no other party is in default under or with
respect to any Contractual Obligation in respect of Indebtedness or other
obligations greater than $1,000,000 owed to the Borrower or any of its
Restricted Subsidiaries, in each case which could reasonably be expected to have
a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
5.8 No Burdensome Restrictions. Except as set forth on
Schedule 5.8, no Requirement of Law or Contractual Obligation of the Borrower or
any of its Restricted Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
5.9 Taxes. Each of the Borrower and its Restricted
Subsidiaries has filed or caused to be filed all tax returns which, to the
knowledge of the Borrower, are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its property (including, without limitation, any Material Real Property)
and all other taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority (other than any such tax returns, taxes, fees or
other charges (i) the amount or validity of which are then being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Borrower or its
Subsidiaries, as the case may be,
57
64
or (ii) which, if not paid or filed, could not reasonably be expected to have a
Material Adverse Effect); no tax Lien has been filed, and, to the knowledge of
the Borrower, no claim is being asserted, with respect to any such tax, fee or
other charge (other than with respect to any such tax, fee or other charge the
amount or validity of which is then being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or its Subsidiaries, as the case may be)
which could reasonably be expected to have a Material Adverse Effect.
5.10 Federal Regulations. No part of the proceeds of any
Extension of Credit will be used in violation of Regulation U and in no event
shall "margin stock" constitute 25% or more of the assets of the Borrower and
its Restricted Subsidiaries that are subject to the restrictions contained in
Section 8.
5.11 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Tax Code or
Section 302 of ERISA) which could reasonably be expected to have a Material
Adverse Effect has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan. Each
Plan has complied in all material respects with the applicable provisions of
ERISA and the Tax Code, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect. No termination of a
Single Employer Plan has occurred, except where such a termination could not
reasonably be expected to have a Material Adverse Effect, and no Lien in favor
of the PBGC or a Plan has arisen, during such five-year period. The present
value of all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plan) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits,
except to the extent any such excess (individually or in the aggregate) could
not reasonably be expected to have a Material Adverse Effect. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, except where such withdrawal could not
reasonably be expected to have a Material Adverse Effect, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made, except where such liability could not reasonably be expected to
have a Material Adverse Effect. No such Multiemployer Plan is in Reorganization
or Insolvency.
5.12 Investment Company Act; Other Regulations. The Borrower
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
To the best knowledge of the Borrower, the Borrower is not subject to regulation
under any federal or state statute or regulation (other than Regulation X) which
limits its ability to incur Indebtedness.
5.13 Subsidiaries. Schedule 5.13 sets forth all the
Subsidiaries of the Borrower at the date hereof.
5.14 Environmental Matters. To the knowledge of the Borrower,
except as set forth on Schedule 5.14:
(a) The Mortgaged Properties do not contain any Materials of
Environmental Concern in amounts or concentrations or under such conditions
which (i) constitute a violation of, or (ii) could reasonably be expected to
give rise to liability under, any Environmental Law, except in either case
insofar as such violation or liability, or any aggregation thereof, could not
reasonably be expected to have a Material Adverse Effect.
58
65
(b) The Mortgaged Properties and all operations at the
Mortgaged Properties are in compliance, and have within the periods covered by
the applicable statute of limitations been in compliance, in all material
respects with all applicable Environmental Laws, and there is no contamination
at, under or about the Mortgaged Properties or violation of any Environmental
Law with respect to the Mortgaged Properties or the business operated by the
Borrower or any of its Restricted Subsidiaries at the Mortgaged Properties (the
"Business"), except for any such noncompliance, contamination or violation (or
any aggregation thereof) which could not reasonably be expected to have a
Material Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, noncompliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Mortgaged Properties or the
Business, nor does the Borrower have knowledge or reason to believe that any
such notice will be received or is being threatened, except insofar as such
notice or threatened notice, or any aggregation thereof, does not involve a
matter or matters that could reasonably be expected to have a Material Adverse
Effect.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Mortgaged Properties in violation of, or in
a manner or to a location which could reasonably be expected to give rise to
liability under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of
the Mortgaged Properties in violation of, or in a manner that could reasonably
be expected to give rise to liability under, any applicable Environmental Law
except insofar as any such violation or liability referred to in this paragraph,
or any aggregation thereof, could not reasonably be expected to have a Material
Adverse Effect.
(e) No judicial proceeding or governmental or administrative
action is pending or threatened under any Environmental Law to which the
Borrower or any Restricted Subsidiary is or could reasonably be expected to be
named as a party with respect to the Mortgaged Properties or the Business, nor
are there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Mortgaged Properties
or the Business except insofar as such proceeding, action, decree, order or
other requirement, or any aggregation thereof, could not reasonably be expected
to have a Material Adverse Effect.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the Mortgaged Properties, or
arising from or related to the operations of the Borrower or any Restricted
Subsidiary in connection with the Mortgaged Properties or otherwise in
connection with the Business, in violation of or in amounts or in a manner that
could reasonably give rise to liability under Environmental Laws except insofar
as any such violation or liability referred to in this paragraph, or any
aggregation thereof, could not reasonably be expected to have a Material Adverse
Effect.
(g) Each of the representations and warranties set forth in
subsections 5.14(a) through (f) is true and correct with respect to each parcel
of real property owned or operated by the Borrower or any of its Restricted
Subsidiaries (other than the Mortgaged Properties) except to the extent that the
facts and circumstances giving rise to any such failure to be so true and
correct could not reasonably be expected to have a Material Adverse Effect.
5.15 The Security Documents. (a) The provisions of the
Security Agreement are effective to create in favor of the Administrative Agent
a legal and valid security interest in all right, title and interest of the
Borrower or any Subsidiary Guarantor party thereto in the collateral described
59
66
therein (subject to Section 10 thereof), and, pursuant to the financing
statements referred to in Schedule 5.15, the Administrative Agent has a fully
perfected security interest in all right, title and interest of the Borrower or
such Subsidiary Guarantor, as the case may be, in all "accounts", "chattel
paper", "inventory", "investment property" or "general intangibles" (each as
defined in the applicable UCC) described in such financing statements, all other
UCC Filing Collateral (other than UCC Local Filing Collateral) described in such
financing statements and all UCC Local Filing Collateral described in such
financing statements, in each case superior (to the extent that priority can be
obtained by filing UCC financing statements) in right to any Liens of any third
person against such collateral or interests therein, subject only to Liens
permitted under subsection 8.3;
(b) The provisions of the Pledge Agreement, together with
possession by the Administrative Agent (or any agent acting on its behalf) of
the Pledged Securities described therein (or, in the case of Pledged Securities
constituting "securities" (as defined in the applicable UCC), together with the
"transfer" to the Administrative Agent (or any agent acting on its behalf) of
such Pledged Securities in accordance with the applicable UCC) (or any other
appropriate method for the perfection of the security interest in such Pledged
Securities in accordance with the applicable UCC), are effective to create in
favor of the Administrative Agent a legal and valid security interest in all
right, title and interest of the Borrower or any Subsidiary Guarantor party
thereto, as the case may be, in the Pledged Securities (subject to Section 14 of
the Pledge Agreement). Thereafter, the Administrative Agent will have a fully
perfected security interest in the Pledged Stock and all other Pledged
Securities described in the Pledge Agreement which are then in the possession of
the Administrative Agent (or any agent acting on its behalf) (or, in the case of
Pledged Securities constituting "securities" (as defined in the applicable UCC),
which have been "transferred" to the Administrative Agent (or any agent acting
on its behalf) in accordance with the applicable UCC (or the security interest
in which has otherwise been perfected in accordance with the applicable UCC)),
which security interest is (i) in the case of Pledged Stock, superior in right
to any Liens of any third person against such collateral or interests therein,
subject to Section 14 of the Pledge Agreement and to Liens permitted under
subsection 8.3(a) and (ii) in the case of all other Pledged Securities, superior
(to the extent that priority can be obtained by possession or "transfer" (or any
other appropriate method for the perfection in accordance with the applicable
UCC) of such other Pledged Securities) in right to any Liens of any third person
against such collateral or interests therein, subject to Section 14 of the
Pledge Agreement and to Liens permitted by subsection 8.3(a); and
(c) Following the execution and delivery of Mortgage
Assignments relating thereto, each Mortgage will be effective to create in favor
of the Administrative Agent, a legal, valid and enforceable Lien on all right,
title and interest of the Borrower or any Subsidiary Guarantor party thereto, as
the case may be, in the Mortgaged Property thereunder. When each Mortgage and
Mortgage Assignment and the related fixture filings are duly recorded in the
appropriate office or offices and any mortgage recording fees and taxes in
respect thereof have been paid and compliance is otherwise had with the formal
requirements of state law applicable to the recording of real estate mortgages
generally, such Mortgage will constitute a fully perfected Lien on and security
interest in that portion of the Mortgaged Property constituting real property or
fixtures (prior to all mortgages on the Mortgaged Property other than those
which have been assigned to the Administrative Agent and those in existence on
the Effective Date), subject only to the encumbrances and exceptions to title
expressly set forth or referred to in such Mortgage, and to Liens permitted by
subsection 8.3;
subject, in the case of clauses (a) through (c) above, to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and to principles of equity whether considered in
a proceeding in equity or at law.
5.16 Ownership of Property; Liens. Each of the Borrower and
each Restricted Subsidiary has good title in fee simple to, or valid ground
leasehold interests in, their respective
60
67
Material Real Properties and has good title in fee simple to their other owned
real property and valid ownership interests in their owned personal property, in
each case that is material to the operation of their respective businesses,
subject to defects in title and leasehold and other interests which are not
material to the business, operations and financial condition of the Borrower and
its Restricted Subsidiaries taken as a whole and other than those items referred
to in the applicable Mortgages or in the schedules to the applicable Mortgages,
and none of such property is subject to any Lien other than Liens permitted
under subsection 8.3.
5.17 Intellectual Property. The Borrower and each of its
Restricted Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). Except as set forth on Schedule 5.17, no claim has
been asserted and is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, which could reasonably be expected to have a Material
Adverse Effect, nor does the Borrower know of any valid basis for any such
claim. Except as set forth on Schedule 5.17, to the Borrower's knowledge, the
use of such Intellectual Property by the Borrower and its Restricted
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.18 Pledged Stock. As of the date hereof, the shares of
Capital Stock listed on Schedule A to the Pledge Agreement will constitute all
the issued and outstanding shares of Capital Stock of the issuers thereof listed
on said Schedule that are owned by the Borrower or the Subsidiary Guarantors
party to the Pledge Agreement; all such shares have been duly and validly issued
and are fully paid and nonassessable; the relevant Pledgor of said shares is the
record and beneficial owner of said shares; and said shares are free of any
Liens or options in favor of, or claims of, any other Person, except the Lien of
the Pledge Agreement (subject to Section 14 thereof) and Liens permitted under
subsection 8.3(a).
5.19 Real Estate Matters. The real property described on
Schedule 5.19 constitutes all of the Material Real Property of the Borrower or
any Subsidiary Guarantor on the date hereof.
5.20 [Reserved]
5.21 Purpose of Loans; Use of Proceeds. The proceeds of the
Revolving Loans, and Swing Line Loans will be used to pay Transaction Costs, to
provide working capital from time to time for the Borrower and its subsidiaries
and for other general corporate purposes.
5.22 Accuracy of Information. All statements and other
information (other than statements and information constituting projections or
forward-looking statements) contained in any written documents or other
materials provided to the Administrative Agent and the Lenders by the Borrower
are, when taken as a whole, correct in all material respects and do not contain
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were made.
All statements and other information constituting projections which are
contained in any written documents or other materials provided to the
Administrative Agent and the Lenders by the Borrower were prepared based on good
faith estimates and assumptions of the Borrower believed to be reasonable at the
time such projections were prepared.
61
68
5.23 Depositary Accounts. Schedule 5.23 sets forth a true and
complete list of all bank accounts maintained by the Borrower and its Restricted
Subsidiaries as of the date hereof.
5.24 Senior Indebtedness. All Secured Obligations owing by the
Borrower under the Loan Documents constitute "Senior Indebtedness" under and as
defined in the Subordinated Debt Indenture. No Indebtedness (other than the
Secured Obligations owing by the Borrower under the Loan Documents) has been
designated as "Designated Senior Debt" under the Subordinated Debt Indenture.
5.25 Y2K Compliance. Except as disclosed on Schedule 5.25, the
Borrower
(a) has reviewed the areas within its operations and the
operations of its Subsidiaries that utilize computers;
(b) has completed the development of a program for testing
whether all computer systems necessary for the current operation of its business
and the business of its Subsidiaries taken as a whole are Y2K Compliant;
(c) has tested all such computer systems for Y2K compliance
and furnished to the Administrative Agent a written report of the results
thereof;
(d) has developed a written course of action to make all the
computer systems utilized by it or any of its Subsidiaries and necessary for the
business of the Borrower and its Subsidiaries taken as a whole Y2K Compliant and
furnished to the Administrative Agent a copy thereof;
(e) has identified all the changes, modifications and
corrections indicated in the course of action referred to in clause (d) above;
(f) has identified those of its customers, suppliers and
others who are critical to its business and that of its Subsidiaries taken as a
whole or with whom it electronically transmits or receives data and inquired of
them as to whether the computer systems utilized by such customers, suppliers
and others and critical for their operations are Y2K Compliant, and summarized
the results of such inquiries in a written report, a copy of which it has
furnished to the Administrative Agent;
(g) has tested each computer system necessary to the business
of the Borrower and its Subsidiaries taken as a whole interfacing with
customers, suppliers and others identified pursuant to clause (f) above;
(h) has implemented all the changes, modifications and
corrections required by the tests refereed to in clause (g) above;
(i) has developed a written contingency plan for action to be
taken by the Borrower and its Subsidiaries in the event that any of the computer
systems utilized by it in its business and the business of its Subsidiaries or
by the customers, suppliers and others identified pursuant to clause (f) above
and critical for their operations is not Y2K Compliant; and
(j) has no reason to believe and does not believe that it will
be unable to complete the testing or make the modifications not yet completed
that are shown on Schedule 5.25 or implement any contingency plan referred to in
clause (i) above except for any inability that will not have a Material Adverse
Effect.
62
69
5.26 Subordinated Debentures and Senior Note Indenture . As of
the Effective Date, the Borrower has delivered to the Administrative Agent a
complete and correct copy of the Subordinated Debt Indenture and the Senior
Notes Indenture. The subordination provisions of the Subordinated Debentures are
enforceable against the holders of the Subordinated Debentures by the
Administrative Agent and the Lenders.
SECTION 6. CONDITIONS
6.1 Conditions to Effectiveness. This Agreement shall become
effective upon satisfaction or waiver of the following conditions (except that
subsection 11.21(b) shall become effective upon satisfaction of the condition
set forth in subsection 6.1(q)):
(a) Execution of Loan Documents. The Administrative Agent
shall have received (i) this Agreement, executed and delivered by a duly
authorized officer of the Borrower, with a counterpart for the Administrative
Agent and each Lender, (ii) each of the Security Documents, each executed and
delivered by a duly authorized officer of each Loan Party that is a party
thereto, with a copy for each Lender, and (iii) the Subsidiaries Guarantee,
executed and delivered by a duly authorized officer of each Subsidiary Guarantor
that is a party thereto, with a copy for each Lender.
(b) Closing Certificate. The Administrative Agent shall have
received, with a copy for each Lender, a certificate of the Borrower, dated the
Effective Date, substantially in the form of Exhibit G, with appropriate
insertions and attachments, executed by the President or any Vice President and
the Secretary or any Assistant Secretary of the Borrower.
(c) Corporate Proceedings of the Borrower. The Administrative
Agent shall have received, with a copy for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the Administrative
Agent, of the Board of Directors of the Borrower authorizing (i) the execution,
delivery and performance of this Agreement and the other Loan Documents to which
it is a party (ii) the Extensions of Credit contemplated hereunder and (iii) the
granting by it of the Liens created pursuant to the Security Documents,
certified by the Secretary or an Assistant Secretary of the Borrower as of the
Effective Date, which certificate shall be in form and substance reasonably
satisfactory to the Administrative Agent and shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded.
(d) [Reserved]
(e) Borrower Incumbency Certificate. The Administrative Agent
shall have received, with a copy for each Lender, a certificate of the Borrower,
dated the Effective Date, as to the incumbency and signature of the officers of
the Borrower executing any Loan Document reasonably satisfactory in form and
substance to the Administrative Agent, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of the Borrower.
(f) Corporate Proceedings of Subsidiaries. The Administrative
Agent shall have received, with a copy for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the Administrative
Agent, of the Board of Directors or sole shareholder of each Restricted
Subsidiary which is a party to a Loan Document authorizing (i) the execution,
delivery and performance of the Loan Documents to which it is a party and (ii)
the granting by it of the Liens created pursuant to the Security Documents to
which it is a party certified by the Secretary or an Assistant Secretary of each
such Subsidiary as of the Effective Date, which certificate shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall state
that the resolutions thereby certified have not been amended, modified, revoked
or rescinded.
63
70
(g) Subsidiary Incumbency Certificates. The Administrative
Agent shall have received, with a copy for each Lender, a certificate of each
Restricted Subsidiary of the Borrower which is a party to a Loan Document, dated
the Effective Date, as to the incumbency and signature of the officers of such
Subsidiary acknowledging and consenting to the execution and delivery of this
Agreement by the Borrower, reasonably satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Subsidiary.
(h) Fees. The Administrative Agent, the Collateral Monitoring
Agent, the Arranger and Book Manager and each Lender shall have received or
concurrently receive the Transaction Costs payable on or prior to the Effective
Date (including, without limitation, the reasonable legal fees of counsel to the
Existing Administrative Agent) and the Administrative Agent shall have been
reimbursed for all expenses for which invoices have been presented to the
Borrower.
(i) Legal Opinions. The Administrative Agent shall have
received, with a copy for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Shearman & Sterling,
counsel to the Borrower and the other Loan Parties, substantially in
the form of Exhibit H-1;
(ii) the executed legal opinion of counsel in each of
the jurisdictions listed on Schedule 6.1(i), which opinions shall be
substantially to the effect set forth in Exhibit H-2 (with such
modifications thereto as are reasonably acceptable to the
Administrative Agent) and otherwise be reasonably satisfactory in form
and substance to the Administrative Agent (it being understood that
certain matters of New York law required to be covered pursuant to this
clause (ii) may be covered by the opinion delivered pursuant to clause
(i) above); and
(iii) such other legal opinions as the Administrative
Agent may reasonably require.
(j) UCC Filings. The Administrative Agent shall have received
evidence in form and substance reasonably satisfactory to them that all the
filings described in Schedule 5.15 shall have been completed (or arrangements,
reasonably satisfactory to the Administrative Agent, for the completion thereof
shall have been made).
(k) Assignments of Mortgages. The Administrative Agent shall
have received Mortgage Assignments, each executed and delivered by a duly
authorized officer of the party thereto, with respect to each parcel of Material
Real Property listed in Part I of Schedule 5.19 other than with respect to a
parcel of Material Real Property not subject to an Original Mortgage to the
extent the Administrative Agent so agrees (any such parcel of Material Real
Property to become subject to a Mortgage as soon after the Effective Date as the
Administrative Agent shall reasonably require) (it being understood and agreed
that certain Mortgages executed in connection with the Existing Credit Agreement
are being amended in connection with this Agreement (such amendments to be in
form and substance reasonably satisfactory to the Administrative Agent) and that
all Mortgages delivered pursuant to the Existing Credit Agreement, and the
credit agreement amended and restated by the Existing Credit Agreement, as
amended, shall satisfy the requirements of this Agreement with respect to the
parcels of Material Real Property subject thereto).
(l) Lien Searches. The Administrative Agent shall have
received the results of a recent search in the jurisdictions listed on Schedule
6.1(l) of the UCC, judgment and tax lien filings (as indicated on such Schedule)
which may have been filed with respect to personal property of the
64
71
Borrower and the Subsidiary Guarantors, and the results of such search shall be
reasonably satisfactory to the Administrative Agent.
(m) [Reserved].
(n) No Material Adverse Change. Except as set forth on
Schedule 5.2, there shall have occurred no material adverse change in the
business, condition (financial or otherwise), operations, performance or
properties of the Borrower and its subsidiaries since September 30, 1998.
(o) No Litigation. There shall exist no action, suit,
investigation, litigation or proceeding pending or threatened in any court or
before any arbitrator or governmental instrumentality that, if adversely
determined, could reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its subsidiaries.
(p) Consents and Approvals. All governmental and third party
consents and approvals necessary in connection with the Credit Facility and
grant of security interests shall have been obtained (without the imposition of
any conditions that are not reasonably acceptable to the Lenders) and shall
remain in effect; and no law or regulation shall be applicable in the reasonable
judgment of the Lenders that restrains, prevents or imposes materially adverse
conditions upon the transactions contemplated hereby.
(q) Insurance and Bonding. The Lenders shall be satisfied with
the amount, types and terms and conditions of all insurance and bonding
maintained by the Borrower and its subsidiaries, and the Lenders shall have
received endorsements naming the Administrative Agent, on behalf of the Lenders,
as an additional insured and loss payee under all insurance policies to be
maintained with respect to the properties of the Borrower and its Subsidiaries
forming part of the Lenders' Collateral.
(r) [Reserved]
(s) Flood Insurance. To the extent required by applicable law,
the Administrative Agent shall have received (i) evidence of a policy of flood
insurance which (A) covers any parcel of Material Real Property subject to a
first priority Mortgage located in an area identified as an area having special
flood hazards by the Secretary of Housing and Urban Development or other
applicable agency, and (B) otherwise complies with such applicable law and (ii)
confirmation that the Borrower has received the notice required pursuant to
Section 208(e)(3) of Regulation H of the Board of Governors.
(t) Management Restructuring Consultant. The Borrower shall
have retained the Management Restructuring Consultant.
(u) [Reserved]
(v) Payment of Obligations under the Existing Credit
Agreement. On the Effective Date the Company shall have paid all interest, fees
and expenses accrued under the Existing Credit Agreement through the Effective
Date whether or not due and payable on the Effective Date.
(w) CIBC Amendment and Waiver. The Administrative Agent shall
have received an amendment and waiver from Canadian Imperial Bank of Commerce,
New York Agency ("CIBC") in respect of that certain Amended and Restated
Reimbursement Agreement dated as of October 25, 1994, as amended (the
"Reimbursement Agreement"), by and among the Borrower, certain
65
72
of its Subsidiaries, the lenders party thereto, and CIBC as agent, waiving any
defaults which may have occurred or may presently exist under the Reimbursement
Agreement and amending certain of the covenants and terms thereunder, which
amendment and waiver shall be in form and substance reasonably acceptable to the
Administrative Agent in its sole discretion exercised commercially reasonably.
(x) FANB Amendment and Waiver. The Administrative Agent shall
have received an amendment and waiver from First American National Bank ("FANB")
in respect of that certain Indenture dated as of February 15, 1993, as amended
(the "Indenture"), by and among the Borrower, as issuer, and FANB, as trustee,
waiving any defaults which may have occurred or may presently exist under the
Indenture and amending certain of the covenants and terms thereunder, which
amendment and waiver shall be in form and substance reasonably acceptable to the
Administrative Agent in its sole discretion exercised commercially reasonably.
(y) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be reasonably satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
6.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any Extension of Credit requested to be made by it on any
date (including, without limitation, its initial Extension of Credit) is subject
to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Loan Parties in or pursuant to
Section 5 and in or pursuant to the other Loan Documents shall be true and
correct in all material respects and as of such date as if made on and as of
such date, except to the extent such representations and warranties related to a
specific earlier date in which case such representations and warranties shall be
true and correct in all material respects as of such earlier date, provided,
that if such earlier date is the "date hereof", such representation and warranty
shall also be true and correct in all material respects on and as of the
Effective Date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the Extension
of Credit requested to be made on such date.
(c) Borrowing Base. After giving effect to the Extensions of
Credit requested to be made on any such date and the use of proceeds thereof,
the Aggregate Outstanding Extensions of Credit at such time shall not exceed the
Borrowing Base at such time or the Interim Maximum Amount, if applicable.
(d) No Legal Impediment. The making of the Loans on such date
does not violate any Requirement of Law and is not enjoined, temporarily,
preliminarily or permanently.
(e) Borrowing Base Certificate. The Administrative Agent shall
have received a Borrowing Base Certificate, executed and delivered by a duly
authorized officer of the Borrower.
(f) Interim Reserve Amount. From and after the first
anniversary of the date hereof, the Interim Reserve Amount shall have been
reduced to zero in accordance with the definition of Interim Reserve Amount.
66
73
Each Extension of Credit to the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date thereof that, except
to the extent waived in accordance with this Agreement, the conditions contained
in this subsection have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect or any Letter of Credit remains outstanding or any amount is
owing to any Lender or the Administrative Agent hereunder or under any other
Loan Document, the Borrower shall and (except in the case of delivery of
financial information, reports and notices) shall cause each of its Restricted
Subsidiaries to:
7.1 Financial Statements. Furnish to the Administrative Agent
with a copy for each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each Fiscal Year of the Borrower, a copy of the consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures as of the end of and for the previous Fiscal Year,
reported on without a qualification as to the scope of the audit, by Deloitte &
Touche or other independent certified public accountants of nationally
recognized standing, together with a copy of the Borrower's Form 10-K filed with
the SEC for such Fiscal Year;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each Fiscal
Year of the Borrower, the unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of the Borrower and its Consolidated Subsidiaries for such quarter and the
portion of the Fiscal Year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous Fiscal Year as set
forth in the Borrower's Form 10-Q filed with the SEC for such quarterly period,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
(c) as soon as available, but in any event not later than 30
days after the end of each fiscal month (other than a fiscal month which is also
the end of a quarterly period), an unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries in summary form as at the end of such
fiscal month and the related unaudited consolidated statement of income of the
Borrower and its Consolidated Subsidiaries in summary form for such fiscal
month, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
(d) as soon as available, but in any event not later than 60
days after the commencement of each Fiscal Year, an annual review of the results
of operations for the preceding Fiscal Year setting forth a comparison to the
projections of the operating budget and cash flow budget for such preceding
Fiscal Year delivered to the Lenders and containing a discussion in reasonable
detail of any material differences therein; and
(e) as soon as available, but in any event not later than 120
days after the Effective Date, the Business Plan.
All such financial statements referred to in paragraphs (a) and (b) above shall
be complete and correct in all material respects (subject to, in the case of the
financial statements referred to in paragraph (b)
67
74
above, normal year-end adjustments) and shall be prepared in reasonable detail
and in accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such accountants
or officer, as the case may be, and disclosed therein). The financial statements
referred to in paragraph (c) above shall be prepared in summary form and
otherwise in a manner consistent with the Borrower's current internal reporting
practices.
7.2 Certificates; Other Information. Furnish to the
Administrative Agent with a copy for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in making
the examination necessary therefor no knowledge was obtained of any Default or
Event of Default under subsection 8.1, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of a Responsible
Officer (i) stating that such Responsible Officer has obtained no knowledge of
any Default or Event of Default with respect to the period covered by such
financial statements except as specified in such certificate and (ii) setting
forth, in reasonable detail, a calculation of the financial covenants set forth
in subsection 8.1 for the period corresponding to such financial statements;
(c) on or prior to Thursday of each week, an officer's
certificate as of the previous Sunday substantially in the form of Exhibit I (a
"Borrowing Base Certificate"), certified by a Responsible Officer as true and
correct, provided that any reserves of the types described in the definition of
"Borrowing Base" shall be calculated and/or revised in each Borrowing Base
Certificate delivered on the Reserve Calculation Date, and provided, further,
that as to each Borrowing Base Certificate, (A) Available Cash Equivalents shall
be calculated as of the date of delivery of the Borrowing Base Certificate, and
(B) In-Transit Cash shall be calculated as of the date immediately preceding the
date of delivery of the Borrowing Base Certificate.
(d) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of a Responsible
Officer setting forth a list of all stores and distribution centers owned or
leased and classified as owned by the Borrower or any of its Restricted
Subsidiaries for which a certificate of occupancy or a temporary certificate of
occupancy has been issued during the period covered by such financial
statements;
(e) not later than (i) 90 days after the beginning of each
Fiscal Year of the Borrower (or in the case of the 1999 Fiscal Year, 120 days
after the Effective Date), a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its Subsidiaries for
such Fiscal Year, such projections to be accompanied by a certificate of a
Responsible Officer to the effect that such projections have been prepared on
the basis of assumptions believed to have been reasonable when made and (ii) 45
days after the first day of the third fiscal quarter of such fiscal year, a
certificate of a Responsible Officer updating such projections and budgets for
any significant changes since the delivery thereof;
(f) promptly after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and
promptly after the same are filed, copies of all reports on Form 8-K which the
Borrower may make to, or file with, the SEC; and
68
75
(g) promptly, such additional financial, Collateral and other
information and business reports as the Agents (on their own behalf or on behalf
of any Lender) may from time to time reasonably request.
7.3 Payment of Obligations. Except as set forth on Schedule
7.3, pay, discharge or otherwise satisfy (whether by exchange, compromise,
settlement or similar satisfaction of such obligations) at or before maturity or
before they become delinquent, as the case may be, all its obligations of
whatever nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the Borrower
or its Subsidiaries, as the case may be, and except where the failure to so pay,
discharge or otherwise satisfy such obligation could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
7.4 Maintenance of Existence; Compliance with Contractual
Obligations and Requirements of Law. Except as set forth on Schedule 7.4,
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except as otherwise
permitted pursuant to subsection 8.4 and except where the failure to maintain
such rights, privileges and franchises could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect; comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, be reasonably expected to have a Material
Adverse Effect.
7.5 Maintenance of Property; Insurance. Keep its property
necessary in its business in good working order and condition, ordinary wear and
tear excepted, if the failure to do so could reasonably be expected to have a
Material Adverse Effect; maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
similar companies of comparable size engaged in the same or a similar business
and owning or operating similar properties in localities where the Borrower and
its Restricted Subsidiaries operate and furnish upon the written request of the
Administrative Agent information as to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and, upon
reasonable prior written notice, permit representatives of the Administrative
Agent or the Majority Lenders to visit and inspect any of its properties and
examine and make abstracts from the books of account of the Borrower and its
Restricted Subsidiaries at any reasonable time and as often as may reasonably be
desired and, during normal business hours, to discuss the business, operations,
properties and financial and other condition of the Borrower and its Restricted
Subsidiaries with officers and employees of the Borrower and its Restricted
Subsidiaries and, in the presence of a Responsible Officer, with its independent
certified public accountants.
7.7 Notices. Promptly upon a Responsible Officer becoming
aware thereof, give notice to the Administrative Agent (which shall promptly
give notice thereof to each Lender) of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Restricted Subsidiaries which could
reasonably be expected to have a Material Adverse Effect or (ii) litigation,
investigation or proceeding which may exist at any time between the
69
76
Borrower or any of its Subsidiaries and any Governmental Authority, which could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
of its Subsidiaries in which the amount involved is $20,000,000 or more to the
extent not covered by insurance or in which injunctive or similar relief is
sought which, in any such case, could reasonably be expected to have a Material
Adverse Effect;
(d) the following events, as soon as administratively
practicable and in any event within 30 days after the Borrower knows or has
reason to know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan which, in any case, could reasonably be expected to have a
Material Adverse Effect or (ii) the institution of proceedings or the taking of
any other action by the PBGC or the Borrower or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan which, in any case, could
reasonably be expected to have a Material Adverse Effect; and
(e) if the Borrower or any of the Subsidiary Guarantors cease
to perform cycle counts in accordance with historical practices.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
7.8 Environmental Laws. (a) Comply with all applicable
Environmental Laws and obtain and comply in all material respects with and
maintain any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws except in any such case to the
extent that failure to do so could not be reasonably expected to have a Material
Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, and promptly comply in all material
respects with all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws except to the extent that the same are being
contested in good faith by appropriate proceedings and the pendency of such
proceedings could not be reasonably expected to have a Material Adverse Effect.
7.9 Further Assurances. Upon the request of the Administrative
Agent at any time, promptly perform or cause to be performed any and all acts
and execute or cause to be executed any and all documents (including, without
limitation, financing statements and continuation statements) for filing under
the provisions of the UCC or any other Requirement of Law which are necessary
or, in the reasonable opinion of the Administrative Agent, advisable to maintain
in favor of the Administrative Agent Liens on the Collateral that are duly
perfected (to the extent that the same are contemplated to be so perfected under
the terms of the Loan Documents) in accordance with all applicable Requirements
of Law.
70
77
7.10 Mortgages; Etc. (a) With respect to any parcel of
Material Real Property acquired after the Effective Date or any parcel of
property that initially qualifies as a parcel of Material Real Property after
the Effective Date (other than any parcel of Excluded Property), within 90 days
thereafter (or, if the Borrower intends to incur secured Indebtedness permitted
under subsection 8.3(g), within 180 days thereafter), execute and deliver to the
Administrative Agent a Mortgage with respect to such parcel of Material Real
Property unless a Lien is granted in favor of third parties on such parcel of
Material Real Property pursuant to subsection 8.3(g), (i), (j), (k), (q) or (r)
or such parcel of Material Real Property has been sold.
(b) With respect to each parcel of real property described on
Schedule 7.10(b) ("Excluded Properties"), execute and deliver to the
Administrative Agent a Mortgage with respect to such parcel of Excluded Property
unless a Lien is granted in favor of one or more third parties on such parcel of
Excluded Property pursuant to subsection 8.3(f), (g), (i), (j), (k), (q) or (r)
or the consent of any lessor of such parcel of Excluded Property that is subject
to a ground lease is required and not obtained.
(c) With respect to any parcel of Eligible Mortgaged Real
Property as of the Effective Date that initially qualifies for inclusion in the
Borrowing Base as a parcel of Eligible Mortgaged Real Property, on or before 30
days after the Effective Date (or such later date as agreed by the
Administrative Agent) the Borrower shall use reasonable best efforts to deliver
or perform each of the post-closing requirements listed on Schedule 7.10(c) (the
"Post Closing Real Estate Requirements"); provided that the Borrower or a
Subsidiary Guarantor shall comply with clauses (4) and (5) on Schedule 7.10(c)
regardless of whether such Mortgaged Property is Eligible Mortgaged Real
Property.
7.11 Additional Collateral. (a) Subject to the terms of the
Reimbursement Agreement, with respect to any assets acquired after the Effective
Date by the Borrower or any Subsidiary Guarantor that are intended to be subject
to the Lien created by any of the Security Documents but which are not so
subject (other than any assets described in subsection 7.10 or paragraph (b),
(c) or (d) of this subsection), promptly (and in any event within 30 days after
the acquisition thereof): (i) execute and deliver to the Administrative Agent
such amendments to the relevant Security Documents or such other documents as
the Administrative Agent shall reasonably deem necessary or advisable to grant
to the Administrative Agent a Lien on such assets, (ii) take all actions
reasonably deemed necessary or advisable by the Administrative Agent to cause
such Lien to be duly perfected (to the extent contemplated therein and in the
other Loan Documents) in accordance with all applicable Requirements of Law,
including, without limitation the filing of financing statements in such
jurisdictions as may be requested by the Administrative Agent (it being agreed
that no action shall be required pursuant to this clause (ii) to perfect a Lien
(1) in assets that would not constitute UCC Filing Collateral or (2) in assets
constituting UCC Filing Collateral if such perfection relates to assets
constituting UCC Filing Collateral with an aggregate book value of less than
$1,000,000), and (iii) with respect to assets constituting UCC Filing Collateral
with a book value in excess of $1,000,000 that are perfected under the laws of
any jurisdiction, if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described in clauses
(i) and (ii) immediately preceding, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(b) With respect to any Person that, subsequent to the
Effective Date, becomes a Domestic Subsidiary (other than a Credit Card
Subsidiary) promptly: (i) execute and deliver to the Administrative Agent a new
pledge agreement or such amendments to the relevant Pledge Agreement as the
Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent a Lien on the Capital Stock of such Domestic Subsidiary
which is owned by the Borrower or any of its Subsidiaries, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers executed and delivered in blank by a duly authorized
officer of the
71
78
pledgor thereof, (iii) cause such new Domestic Subsidiary (A) to become a party
to the Subsidiaries Guarantee and the Subsidiaries Security Agreement, in each
case pursuant to documentation which is in form and substance satisfactory to
the Administrative Agent, and (B) to take all actions reasonably deemed
necessary or advisable by the Administrative Agent to cause the Lien created by
the Subsidiaries Security Agreement to be duly perfected (to the extent
contemplated therein and in the other Loan Documents) in accordance with all
applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be requested by the
Administrative Agent (it being agreed that no action shall be required pursuant
to this clause (iii) to perfect a Lien in assets that would not constitute UCC
Filing Collateral or in assets constituting UCC Filing Collateral if such
perfection relates to assets constituting UCC Filing Collateral with an
aggregate book value of less than $1,000,000) and (iv) with respect to assets of
any such Domestic Subsidiary with a book value in excess of $l,000,000 that are
perfected under the laws of any jurisdiction, if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the
matters described in clauses (i), (ii) and (iii) immediately preceding, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(c) With respect to any Person that, subsequent to the
Effective Date, becomes a Foreign Subsidiary with a net worth in excess of
$l,000,000 or Inventory with a book value in excess of $1,000,000, promptly upon
the request of the Administrative Agent: (i) execute and deliver to the
Administrative Agent a new pledge agreement or such amendments to the relevant
Pledge Agreement as the Administrative Agent shall deem necessary or advisable
to grant to the Administrative Agent a Lien on the Capital Stock of such
Subsidiary which is owned by the Borrower or any of its Subsidiaries (provided
that in no event shall more than 65% of the Capital Stock of any such Subsidiary
be required to be so pledged) and (ii) deliver to the Administrative Agent any
certificates representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the Borrower or
such Subsidiary, as the case may be, and take or cause to be taken all such
other actions under the law of the jurisdiction of organization of such Foreign
Subsidiary as may be necessary or advisable to perfect such Lien on such Capital
Stock.
(d) If the Borrower or any Subsidiary Guarantor shall acquire
any Investment Securities (other than Investment Securities of any issuer
aggregating less than $1,000,000) such Loan Party shall deliver certificates
representing such Investment Securities to the Administrative Agent or its agent
or custodian (or otherwise "transfer" such Investment Security (within the
meaning of the applicable UCC) to the Administrative Agent or its agent or
custodian (or take such other action as shall be required to perfect the
security interest of the Collateral in accordance with the applicable UCC)),
together with, when necessary or appropriate, undated powers as provided in
Section 2(b) of the Pledge Agreement, to be held by the Administrative Agent (or
its agent or custodian) as Pledged Securities, subject to the terms of the
Pledge Agreement, as collateral security for the Secured Obligations.
7.12 Management Restructuring Consultant. Unless the
Administrative Agent determines in its sole discretion that a management
restructuring consultant is no longer required, upon the resignation of the
Management Restructuring Consultant, the Borrower shall be required to retain
another management restructuring consultant with duties and responsibilities
substantially the same as the Management Restructuring Consultant and otherwise
satisfactory to the Administrative Agent within 30 Business Days after such
resignation.
7.13 Business Plans and Projections. Furnish to the
Administrative Agent annual updates of the Borrower's Business Plan and
financial projections and, not later than each August 31, an update of the
Borrower's Business Plan and financial projections through the following January
31st.
72
79
7.14 Depositary Account and Payments System; Cash Dominion.
The Borrower shall establish a depositary account and payments system reasonably
satisfactory to the Administrative Agent, all as more fully described in the
Master Collateral Agreement, enter into cash management arrangements reasonably
satisfactory to the Administrative Agent with respect to cash dominion, and make
arrangements in respect of Securities Accounts; provided, that if within 30 days
after the Effective Date the Borrower is unable to establish a depositary
account and payment system or cash management arrangements satisfactory to the
Administrative Agent with any particular financial institution, the
Administrative Agent may direct the Borrower to relocate, and the Borrower
promptly shall relocate, its depositary accounts from such financial institution
to another financial institution willing to establish such a depository account
and payments system and cash management arrangements as are satisfactory to the
Administrative Agent in its sole discretion acting commercially reasonably.
7.15 Ongoing Y2K Reports. The Borrower will certify to the
Administrative Agent each month that the representation and warranty contained
in subsection 5.25 remains true and correct and, if exceptions are set forth on
Schedule 5.25, the progress made during the preceding month with respect to the
elimination thereof will in any event eliminate the exception set forth on
Schedule 5.25 with respect to clauses (e) and (f) of Schedule 5.25 by March 31,
1999, to clauses (g) and (h) of Schedule 5.25 by June 30, 1999 and to clauses
(i) and (j) of Schedule 5.25 by September 30, 1999.
7.16 Securing of Waivers. The Borrower will use its best
efforts to obtain such Customs Broker Waivers, Landlord Lien Waivers and
Warehouseman's Waivers as the Administrative Agent shall request in writing in
its sole discretion exercised commercially reasonably and in accordance with
customary business practices.
The covenants in this Section 7 are subject to amendment and revision as
mutually agreed between the Borrowers and the Agents in accordance with
subsection 11.23.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect or any Letter of Credit remains outstanding or any amount is
owing to any Lender or the Administrative Agent hereunder or under any other
Loan Document, the Borrower shall not, and (except in the case of subsection
8.1) shall not permit any of its Restricted Subsidiaries to, directly or
indirectly:
8.1 Financial Condition Covenants.
(a) [Reserved].
(b) Capital Expenditures. For each Fiscal Year described
below, make cumulative Capital Expenditures in any fiscal period of such Fiscal
Year in an aggregate and cumulative year-to-date amount in excess of the amount
set forth next to such fiscal period:
MAXIMUM CUMULATIVE
FISCAL PERIOD CAPITAL EXPENDITURE
------------- -------------------
1999:
1st Quarter $20,000,000
2nd Quarter 35,000,000
3rd Quarter 45,000,000
4th Quarter 50,000,000
73
80
2000:
1st Quarter 20,000,000
2nd Quarter 35,000,000
3rd Quarter 45,000,000
4th Quarter 50,000,000
2001:
1st Quarter 20,000,000
2nd Quarter 35,000,000
3rd Quarter 45,000,000
4th Quarter 50,000,000
provided, however, for any Fiscal Year in which the Capital Expenditures made by
the Borrower and its Restricted Subsidiaries are less than the amount permitted
pursuant hereto, the Capital Expenditure limit for the next Fiscal Year shall be
increased by 50% of the difference between the amount permitted pursuant hereto
for such Fiscal Year and such actual Capital Expenditures made during such
Fiscal Year, and the expenditures of such excess may be made at any time during
the applicable carry-forward Fiscal Year. Notwithstanding the foregoing, no
Capital Expenditures shall be made if, before or after giving effect to the
making of such Capital Expenditure, a Default or Event of Default then exists or
thereafter would exist.
8.2 Limitation on Guarantee Obligations. Create, incur, assume
or suffer to exist any Guarantee Obligation except:
(a) the Subsidiaries Guarantee and any Guarantee Obligations
arising under any of the other Loan Documents;
(b) Guarantee Obligations in existence on the Effective Date
and (i) set forth on Schedule 8.2(b) or (ii) otherwise not exceeding $5,000,000
in the aggregate;
(c) Guarantee Obligations of the Borrower or any Restricted
Subsidiary of obligations (other than the Subordinated Debentures) of any
Restricted Subsidiary or the Borrower which obligations are otherwise permitted
under this Agreement;
(d) Guarantee Obligations entered into in connection with
surety, appeal, payment and performance bonds (and other obligations of a like
nature) incurred in the ordinary course of business;
(e) subject to subsection 8.8(e), Guarantee Obligations of the
Borrower or any Restricted Subsidiary of Indebtedness or other obligations
incurred in the ordinary course of business of Subsidiaries that are not
Subsidiary Guarantors (including, without limitation, obligations in respect of
indemnifications on behalf of Credit Card Subsidiaries as contemplated by the
proviso to the definition of Credit Card Subsidiaries, to the extent such
obligations constitute Guarantee Obligations); provided that the aggregate
amount of the Indebtedness or other obligations shall not exceed (i) in the case
of Indebtedness and other obligations in respect of non-Credit Card Program
obligations, together with Investments permitted pursuant to subsection 8.8(e),
$10,000,000 and (ii) in the case of Indebtedness and other obligations in
respect of Credit Card Program obligations, together with Investments permitted
pursuant to subsection 8.8(h), $25,000,000;
(f) Guarantee Obligations in respect of obligations of vendors
to the Borrower and its Restricted Subsidiaries created in the ordinary course
of business;
74
81
(g) Guarantee Obligations of the Borrower or any Restricted
Subsidiary of Indebtedness or other obligations of Securitization Entities
incurred in connection with Securitization Transactions;
(h) Guarantee Obligations in respect of (i) the Permitted
Trade L/C Facility and other obligations in respect of Trade Letters of Credit
and (ii) other obligations in respect of Standby Letters of Credit, provided
that the aggregate outstanding amount of all such Guarantee Obligations (not
otherwise permitted pursuant to this subsection 8.2) shall at no time exceed, in
the case of clause (i) $100,000,000, and in the case of clause (ii) $10,000,000;
and
(i) Guarantee Obligations of the Borrower or any Restricted
Subsidiary incurred in the ordinary course of business in respect of obligations
(other than Indebtedness) of others and other Guarantee Obligations (in each
case not otherwise permitted pursuant to this subsection 8.2) incurred after the
Effective Date, provided that the aggregate amount of all such Guarantee
Obligations for the Borrower and its Restricted Subsidiaries shall not exceed
$15,000,000 at any one time outstanding.
8.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its Subsidiaries,
as the case may be, in conformity with GAAP (or, in the case of Foreign
Subsidiaries, generally accepted accounting principles in effect from time to
time in their respective jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', landlord's,
materialmen's, repairmen's or other like Liens (including statutory Liens and
other Liens arising by operation of law) arising in the ordinary course of
business securing amounts which do not in the aggregate impair the use thereof
in the operation of the business of the Borrower and its Restricted
Subsidiaries, which are not overdue for a period of more than 60 days or which
are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;
(c) (i) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements and (ii) Liens granted to banks in the ordinary
course of business in connection with deposit, disbursement or concentration
accounts (other than in connection with borrowed money) maintained with such
banks on funds and other items in such accounts;
(d) Liens granted and deposits made in connection with the
performance of bids, trade arrangements and real estate related contracts
entered into in the ordinary course of business (in each case, other than for
borrowed money), utilities, leases, statutory obligations, surety, appeal and
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, restrictions, subdivisions,
parcelizations and other similar encumbrances incurred in the ordinary course of
business which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the Borrower or such Restricted Subsidiary;
75
82
(f) Liens in existence on the Effective Date and (i) listed on
Schedule 8.3(f) securing Indebtedness or other obligations described on such
Schedule or (ii) otherwise securing Indebtedness or other obligations not
exceeding $8,000,000 in the aggregate;
(g) Liens securing Indebtedness or other obligations of the
Borrower and its Restricted Subsidiaries incurred after the Effective Date to
finance the acquisition, construction or completion of fixed or capital assets
(whether pursuant to a loan, a Financing Lease or otherwise), including, without
limitation, improvements, provided that (i) such Liens are created within 180
days after such acquisition, construction or completion and (ii) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness or other obligations and the proceeds thereof; and the Indebtedness
or other obligations secured by such Liens do not exceed a principal amount of
$35,000,000.
(h) Liens on assets of any Foreign Subsidiary securing
Indebtedness of such Foreign Subsidiary and other obligations incurred in the
ordinary course of business;
(i) Liens on the fixed assets of a corporation which becomes a
Restricted Subsidiary after the Effective Date and Liens existing on fixed
assets acquired by the Borrower or a Restricted Subsidiary after the Effective
Date, in either case securing Indebtedness or other obligations, provided that
no such Liens shall cover any current assets (including Accounts or Inventory)
of the Borrower or any Restricted Subsidiary, the Capital Stock of any
Subsidiary (including, without limitation, any Securitization Entity or Credit
Card Subsidiary) or any Indebtedness of the Borrower or any Subsidiary, and
provided, further, that (A) such Liens existed at the time such corporation
became a Restricted Subsidiary or such fixed asset was acquired and were not
created in anticipation thereof, (B) any such Lien is not spread to cover any
additional property or assets of such corporation after the time such
corporation becomes a Restricted Subsidiary or such fixed asset is acquired, and
(C) the amount of Indebtedness or other obligations secured thereby is not
increased;
(j) Liens securing Indebtedness or other obligations which
refunds, refinances extends or otherwise restructures any other Indebtedness or
other obligations to the extent such refunded or refinanced Indebtedness or
other obligation was originally permitted to be secured pursuant to this
subsection, provided that the principal amount of such Indebtedness is not
increased (other than by an amount equal to any costs and expenses incurred in
connection with such refunding or refinancing) and that no such Lien is spread
to cover additional property;
(k) Liens (not otherwise permitted hereunder) which secure
Indebtedness or other obligations not exceeding (as to the Borrower and all its
Restricted Subsidiaries) $20,000,000 in aggregate principal or face amount at
any time outstanding, provided that no such Liens shall cover any current assets
(including Accounts or Inventory) of the Borrower or any Restricted Subsidiary,
the Capital Stock of any Subsidiary (including, without limitation, any
Securitization Entity or Credit Card Subsidiary) or any Indebtedness of the
Borrower or any Subsidiary;
(l) Liens created pursuant to the Security Documents;
(m) Liens created in favor of any Person who delivers goods
under a consignment to the Borrower or a Restricted Subsidiary, provided that
the Borrower or such Restricted Subsidiary treats and designates on its books
and records such goods as "goods on consignment" for all purposes and such goods
are not included as Inventory of the Borrower or such Restricted Subsidiary, as
the case may be, on the books of the Borrower or such Restricted Subsidiary, as
the case may be;
(n) Subject to execution and delivery of intercreditor
agreements reasonably satisfactory to the Administrative Agent, Liens granted to
secure the Borrower's or any Restricted
76
83
Subsidiary's obligations under any Floor Planning Facility, provided that such
Liens are limited to the goods financed pursuant to such Floor Planning Facility
and the proceeds of such goods;
(o) Liens covering Accounts, credit card receivables and
related assets owned or that may be deemed owned by the Borrower and its
Restricted Subsidiaries in connection with a Credit Card Program;
(p) Liens arising from offsets, deposits or restricted assets
granted by any Credit Card Subsidiary in respect of a Credit Card Program;
(q) Liens on (i) real property (and related fixtures and
leases) owned or leased by the Borrower or any Restricted Subsidiary securing
Indebtedness including, Designated Material Real Property, and (ii) other assets
not constituting real property securing Indebtedness to the extent such Liens on
such other assets are purchase money security interests in such assets, provided
that if any such Lien is granted on a parcel of Designated Material Real
Property to replace (x) any then existing Lien on any parcel of real property
which secures any Permanent Mortgage Financing or (y) any letter of credit
issued after the Effective Date to replace a Lien on any parcel of real property
which previously secured any Permanent Mortgage Financing, in each case in
accordance with the terms thereof, then (1) such parcel of Designated Material
Real Property shall cease to be a parcel of Designated Material Real Property
for purposes of this Agreement and (2) the parcel of real property which is then
or was previously subject to a Lien to secure any Permanent Mortgage Financing
(A) must have a fair market value valued on an "alternative use" basis (as
determined in good faith by the Borrower) approximately equal to the fair market
value valued on an "alternative use" basis (as determined in good faith by the
Borrower) of the relevant parcel of Designated Material Real Property and (B)
shall be deemed to be a parcel of Designated Material Real Property for all
purposes of this Agreement;
(r) Liens arising under or in connection with Permitted
Sale-Leasebacks;
(s) Liens (including possessory Liens) on cash (and
corresponding Liens on cash collateral accounts and all investments of amounts
on deposit therein), commercial documents relating to goods financed under the
relevant facility or trade letters of credit, such goods and the proceeds
thereof, in each case securing the Permitted Trade L/C Facility and other
obligations in respect of Trade Letters of Credit, provided that no such Lien
may extend to or cover such commercial documents, goods or related proceeds
after such goods are delivered to a warehouse, distribution center or store
owned or leased by the Borrower or a Restricted Subsidiary (it being understood
that the Administrative Agent may (and, to the extent the same is reasonably
satisfactory to it, shall) enter into one or more intercreditor agreements with
respect to the Permitted Trade L/C Facility or other Trade Letters of Credit
with respect to the foregoing);
(t) Liens arising out of the deposit arrangement described on
Schedule 5.23;
(u) Liens arising in connection with Acquisitions and other
Investments permitted pursuant to subsection 8.8(l); and
(v) From the date hereof until 90 days after the date hereof,
Liens in respect of (i) that certain Security Agreement dated as of June 25,
1997, between Transamerica Commercial Finance Corporation, the Borrower and
certain Subsidiaries, and (ii) that certain Restated Security Agreement dated as
of July 9, 1997, between NationsCredit Commercial Corporation of America and the
Borrower, in each case to the extent and solely to the extent that no monetary
or other obligations remain outstanding thereunder from and after the date
hereof;
77
84
provided that, notwithstanding the foregoing, no Lien created, incurred, assumed
or suffered to exist pursuant to this subsection 8.3 (other than Permitted
Inventory Liens and Liens permitted under subsections 8.3(h), 8.3(m), 8.3(n),
8.3(s) and 8.3(v)) shall be a Lien on Inventory or Accounts of the Borrower or
any of its Restricted Subsidiaries.
8.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets except:
(a) any Restricted Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any one or more wholly
owned Subsidiaries of the Borrower (provided that a Subsidiary Guarantor or
wholly owned Restricted Subsidiary or Restricted Subsidiaries shall be the
continuing or surviving corporation and provided, further, that if one of the
parties to such transaction (i) is a Subsidiary Guarantor then the continuing or
surviving corporation shall be a Subsidiary Guarantor or (ii) is not a
Restricted Subsidiary, no Default shall result therefrom);
(b) any Restricted Subsidiary may convey, sell, lease,
transfer, assign or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any Subsidiary Guarantor
or any wholly owned Restricted Subsidiary of the Borrower (provided that if such
selling Restricted Subsidiary is a Subsidiary Guarantor then the acquiring
Restricted Subsidiary shall be a Subsidiary Guarantor); and
(c) any Restricted Subsidiary may be merged or consolidated
with or into, or convey, sell, lease, transfer, assign or otherwise dispose of
any or all of its assets to, any Person to the extent that the sale or other
disposition of the assets of such Restricted Subsidiary would be permitted under
subsection 8.5.
8.5 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Restricted Subsidiary,
issue or sell any shares of such Restricted Subsidiary's Capital Stock to any
Person (other than the Borrower or any Subsidiary Guarantor or, if such
Restricted Subsidiary is not (x) a wholly-owned Restricted Subsidiary, pro-rata
to the owners of the equity securities of such Restricted Subsidiary or (y) a
Subsidiary Guarantor, to any Restricted Subsidiary), except:
(a) the sale or other disposition of uneconomical, obsolete,
surplus or worn out assets in the ordinary course of business, including,
without limitation, in connection with store closures and real estate
development or divestiture activities;
(b) the sale or other disposition of Inventory and other
Current Assets not subject to Liens in the ordinary course of business
(including sales of Inventory and other Current Assets not subject to Liens in
connection with closed stores or stores to be closed or sold and sales of
discontinued Inventory pursuant to the Business Plan) and transfers of assets
among the Borrower and the Subsidiary Guarantors pursuant to reasonable business
requirements;
(c) (i) the sale or discount of accounts receivable arising in
the ordinary course of business in connection with the compromise or collection
thereof and (ii) sales or other dispositions of Cash Equivalents in the ordinary
course of business in each case at fair market value and on commercially
reasonable terms;
78
85
(d) as permitted by subsection 8.4(b);
(e) the OSS Disposition;
(f) Asset Sales of any assets (other than, directly or
indirectly, Inventory) in connection with Permitted Sale-Leasebacks or
Securitization Transactions, provided that (i) in the case of an Asset Sale in
connection with a Permitted Sale-Leaseback to the extent otherwise permitted
hereunder (other than an Asset sale in connection with a Securitization
Transaction), the proceeds of any such Permitted Sale-Leaseback shall be
entirely in cash and shall be not less than 100% of the fair market value of the
assets being sold (as determined by the Borrower in good faith) and (ii) in the
case of an Asset Sale in connection with a Securitization Transaction (which may
be in the form of a capital contribution to the relevant Securitization Entity),
the purchase price (including the Capital Stock of any Securitization Entity
owned by the Borrower or any Restricted Subsidiary) with respect to the assets
sold or disposed shall be not less than the fair market value of such assets (as
determined by the Borrower in good faith);
(g) the sale or other disposition of any property (other than,
directly or indirectly, Inventory and other Current Assets, and other than any
sale or other disposition which is otherwise permitted under this subsection
8.5), provided that at the time of and after giving effect to such sale or
disposition, the aggregate fair market value of all assets so sold or disposed
of in any Fiscal Year pursuant to this paragraph (f) shall not exceed an amount
equal to $125,000,000;
(h) subject to the other terms and provisions hereof, leases
or subleases (or assignments of leases) or licenses or sublicenses (or
assignments of licenses or sublicenses) of any assets in the ordinary course of
business;
(i) sales and other dispositions of assets in connection with
Investments (other than Investments received in respect of the sale or
disposition of Fixed Assets) permitted under subsection 8.8;
(j) sales or other dispositions of Accounts, credit card
receivables and related assets in connection with a Credit Card Program; and
(k) issuances, sales and other dispositions of Capital Stock
by any Credit Card Subsidiary to any Person so long as after giving effect
thereto, such Credit Card Subsidiary remains a Subsidiary.
8.6 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock or Qualified Stock of the
Borrower or options or warrants with respect thereto) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase redemption, defeasance, retirement or other acquisition of, any shares
of any class of Capital Stock (including Qualified Stock) of the Borrower or any
warrants or options to purchase any such Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Restricted Subsidiary (such declarations, payments, setting apart,
purchases, redemptions, defeasances, retirements, acquisitions and distributions
being herein called "Restricted Payments"), except that the Borrower may (i)
purchase or exchange then-existing employee stock options for consideration
consisting solely of (subject to subsection 8.15) Capital Stock of the Borrower
and (ii) may purchase or redeem up to $1,000,000 in Capital Stock solely for the
purpose of purchasing minority interests in order for such Subsidiaries to
become wholly owned Subsidiaries of the Borrower.
79
86
8.7 Limitation on Indebtedness. The Borrower shall not create
or suffer to exist, or permit any Restricted Subsidiary to create or suffer to
exist, any Indebtedness except:
(a) the Credit Agreement Obligations;
(b) Guarantee Obligations permitted by subsection 8.2;
(c) current or non-current liabilities for goods or services
purchased in the ordinary course of business;
(d) Intercompany Debt;
(e) Indebtedness secured by Liens permitted by subsection 8.3,
including without limitation, in respect of Floor Planning Facilities permitted
under subsection 8.3(n) and Acquisitions permitted under subsection 8.3(u);
(f) Indebtedness outstanding on the Effective Date and listed
on Schedule 8.7(f) and refinancings thereof to the extent permitted under
subsection 8.9; and
(g) Indebtedness of the Borrower arising pursuant to
Derivative Agreements entered into with any Lender for the purpose of hedging
the Borrower's interest rate exposure and not for speculative purposes, and
Indebtedness in respect of cash management obligations.
8.8 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of any Person or consummate
any Acquisition (an "Investment"), except for:
(a) extensions of trade credit and prepaid expenses made in
the ordinary course of business;
(b) Investments in Cash Equivalents; provided that the maximum
amount of Cash Equivalents held in accounts over which the Administrative Agent
does not have "control" (as defined in the UCC) shall not exceed the sum of (i)
$2,000,000 plus (ii) the product of $20,000 multiplied by the number of the
Borrower's or its Subsidiary Guarantors' stores operating on the date of
determination;
(c) (i) loans to officers of the Borrower or any Subsidiary,
(ii) loans and advances to employees of the Borrower or its Subsidiaries for
travel, entertainment and relocation expenses in the ordinary course of
business, and (iii) loans by the Borrower to its employees (other than to
officers of the Borrower or any Subsidiary) in connection with management
incentive plans, provided that the aggregate outstanding principal amount of all
such loans and advances shall not exceed $5,000,000 at any time;
(d) Investments by the Borrower in Subsidiary Guarantors and
Investments by Restricted Subsidiaries in the Borrower and in Subsidiary
Guarantors;
(e) Investments not otherwise permitted hereunder by the
Borrower and Restricted Subsidiaries in Subsidiaries that are not Subsidiary
Guarantors, provided that, after giving effect to such Investments, the
aggregate then outstanding amount of all such Investments (including Investments
in such Subsidiaries in the nature of sales and transfers of assets (including,
pursuant to a transaction permitted under subsection 8.4) for less than fair
market value and Guarantee Obligations pursuant to subsection 8.2(e)) made
subsequent to the Effective Date pursuant to this paragraph (e),
80
87
together with Guarantee Obligations permitted pursuant to subsection 8.2(e),
shall not exceed $10,000,000, provided, further, that the conversion of any
Indebtedness owed to the Borrower or any Restricted Subsidiary by any Subsidiary
into equity of such Subsidiary shall not constitute an additional Investment in
such Subsidiary by the Borrower or such Restricted Subsidiary for purposes of
the limitation contained in the immediately preceding proviso;
(f) Investments received in connection with the creation and
collection of accounts receivable in the ordinary course of business;
(g) Investments received as consideration in connection with
any Asset Sale or other disposition of assets permitted hereunder;
(h) Investments not otherwise permitted hereunder in Credit
Card Subsidiaries in an amount, together with Guaranteed Obligations permitted
pursuant to subsection 8.2(e), not to exceed $25,000,000 outstanding at any
time;
(i) Investments by Credit Card Subsidiaries in connection with
the Credit Card Program;
(j) loans and advances to suppliers in the ordinary course of
business consistent with past practice but in any event not in excess of an
outstanding principal amount of $500,000;
(k) purchases of Accounts, credit card receivables and related
assets by Credit Card Subsidiaries in connection with the Credit Card Program;
and
(l) Acquisitions and other Investments not otherwise permitted
hereunder made by the Borrower or any of its Restricted Subsidiaries, provided
that, after giving effect thereto, (i) the aggregate outstanding amount of all
such Investments (other than Acquisitions) made at any time after the Effective
Date, shall not exceed the sum of $2,000,000 and (ii) the aggregate outstanding
amount of all such Acquisitions (including assumed Indebtedness and the fair
market value of Capital Stock issued) and other Investments made at any time
after the Effective Date shall not exceed the sum of $20,000,000.
8.9 Limitation on Optional Payments and Modifications of Debt
Instruments. At any time (a) make any optional payment or prepayment on or
optionally redeem or purchase any Indebtedness (other than the Loans and
Indebtedness of the Borrower or any Restricted Subsidiary to the Borrower or any
Restricted Subsidiary) of the Borrower or any Subsidiary, (b) make any optional
payment or prepayment on account of the principal of, or interest on, or secure
any amendment or waiver of any terms of, or optionally redeem or purchase, any
Subordinated Debentures, provided that the Borrower may pay interest on the
Subordinated Debentures pursuant to the terms of the Subordinated Debt Indenture
or (c) amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms relating to the payment or prepayment
of principal of or interest on, any Indebtedness described in clause (a), or the
Subordinated Debentures or the Subordinated Debt Indenture (other than any such
amendment, modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon); provided, that the Borrower
and its Restricted Subsidiaries may prepay Indebtedness (other than the
Subordinated Debentures) permitted hereunder (A) from the proceeds of new
Indebtedness incurred to refinance such Indebtedness and permitted hereunder to
be incurred, (B) under Financing Leases for stores and other property no longer
occupied or used by the Borrower or such Restricted Subsidiary in connection
with the settlement, termination or assignment of such Financing Lease, (C)
secured by assets in connection with any sale or other disposition of such
assets permitted under subsection 8.5, (D) consisting of Floor Planning
81
88
Facilities, (E) incurred after the Effective Date and otherwise permitted
hereunder to the extent such prepayment is financed with the proceeds of other
Indebtedness (other than Loans) permitted hereunder, (F) consisting of Financing
Leases as long as such Financing Leases are paid in full in connection with any
such prepayment and such prepayment is made in connection with the closure or
sale of a parcel of real property subject to such Financing Lease, (G) secured
by a Lien on any parcel of Material Real Property so long as such Indebtedness
is paid in full in connection with any such prepayment and such prepayment is
financed with the proceeds of other Indebtedness (other than Loans) permitted
hereunder, (H) that is short term Indebtedness and unsecured, and (I) from
proceeds of the issuance of Capital Stock, but only if after giving effect to
such issuance, no Default or Event of Default would have occurred and be
continuing.
8.10 Limitation on Transactions with Affiliates. Except as set
forth on Schedule 8.10, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate unless such transaction is (a) otherwise
permitted under this Agreement or (b) upon fair and reasonable terms no less
favorable to the Borrower or such Restricted Subsidiary, as the case may be,
than it would obtain in a comparable arm's length transaction with a Person
which is not an Affiliate.
8.11 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Restricted Subsidiary of real or personal property (other than Capital Stock)
which has been or is to be sold or transferred by the Borrower or such
Restricted Subsidiary to such Person or to any other Person to whom funds have
been or are to be advanced by such Person on the security of such property or
rental obligations of the Borrower or such Restricted Subsidiary (such
arrangement, a "Sale-Leaseback"), except for Sale-Leasebacks in the ordinary
course of the Borrower's or such Restricted Subsidiary's business, consistent
with past practice and at market rates and subject to compliance with subsection
8.5(e), or Sale-Leasebacks in connection with Securitization Transactions
("Permitted Sale-Leasebacks"), in each case on terms and conditions acceptable
to the Administrative Agent in its sole discretion, exercised commercially
reasonably and in accordance with its customary criteria. For the avoidance of
doubt, Sale-Leasebacks that result in a Financing Lease shall be treated as
Indebtedness for all purposes of this Agreement.
8.12 Fiscal Years and Quarters. Change the last day of the
Fiscal Year of the Borrower (other than to a day on or about January 31 of any
calendar year) or permit any Fiscal Year to be less than a period of
approximately 365 days or permit any fiscal quarter to be less than a period of
approximately 90 days.
8.13 Limitation on Conduct of Business. Enter into any
business either directly or through any Restricted Subsidiary except for
businesses in which the Company and its Subsidiaries are engaged on the date of
this Agreement and businesses related or similar thereto or entered into in
connection with any of the foregoing.
8.14 No Other Designated Senior Debt. Create any "Designated
Senior Debt" other than the Indebtedness of the Borrower hereunder pursuant to
the Subordinated Debt Indenture or any Indenture with respect to Subordinated
Debt the proceeds of which are used to refinance the Subordinated Debentures, in
each case without the prior written consent of the Majority Lenders.
8.15 Limitation on Issuances of Capital Stock. Issue (a) any
preferred stock or (b) any class of redeemable common stock, provided, however,
that the Borrower may issue Qualified Stock.
8.16 Foreign Holding Companies, Inactive Subsidiaries and
Special Purpose Subsidiaries. Permit the aggregate book value of the assets of
all Foreign Holding Companies
82
89
(exclusive of assets consisting of advances or loans to the Borrower or any of
its Subsidiaries and Capital Stock of Foreign Subsidiaries and other Foreign
Holding Companies), Inactive Subsidiaries and Special Purpose Subsidiaries
(exclusive of assets consisting of licenses or permits) to exceed $25,000,000 at
any time.
The covenants in this Section 8 are subject to amendment and revision as
mutually agreed between the Borrowers and the Agents in accordance with
subsection 11.23.
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
when due in accordance with the terms hereof; or the Borrower shall fail to pay
any Reimbursement Obligation within two Business Days after such Reimbursement
Obligation becomes due in accordance with the terms hereof; or the Borrower
shall fail to pay any interest on any Loan, or any other amount payable
hereunder, within five days after any such interest or other amount becomes due
in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document or which
is contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or
performance of any agreement contained in subsection 7.7(a) or 7.12, or Section
8, or the Borrower shall fail to deliver a Borrowing Base Certificate pursuant
to subsection 7.2(c) within 2 Business Days after such Borrowing Base
Certificate was due pursuant to such subsection; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c) of
this Section), and such default shall continue unremedied for a period of 30
days after the earlier of (i) the date upon which written notice thereof is
given to the Borrower by the Administrative Agent or the Majority Lenders or
(ii) the date upon which a Responsible Officer becomes aware of such default; or
(e) The Borrower or any of its Restricted Subsidiaries shall
(i) default in any payment of principal of or interest on any Indebtedness
(other than the Loans) or in the payment of any Guarantee Obligation, beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required (but after the expiration of all
grace periods applicable thereto), such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable; provided,
however, that (x) no Default or Event of Default shall exist under this
paragraph (A) unless the aggregate amount of Indebtedness (other than
Indebtedness in respect of Floor Planning Facilities) and/or Guarantee
Obligations in respect of which any default or
83
90
other event or condition referred to in this paragraph shall have occurred shall
be equal to at least $10,000,000 or (B) unless the aggregate amount of
Indebtedness in respect of Floor Planning Facilities in respect of which any
default or other event or condition referred to in this paragraph shall have
occurred shall be equal to at least $20,000,000 and (y) clause (ii) above shall
not apply to Indebtedness that becomes due solely as a result of the voluntary
sale or transfer of property or assets or prepayments that become due as a
result of any issuance of Capital Stock or incurrence of Indebtedness (in each
case to the extent such, sale, transfer, issuance or incurrence is permitted by
the terms of such Indebtedness); or
(f) (i) The Borrower or any of its Restricted Subsidiaries
shall commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Restricted Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Restricted Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
60 days; or (iii) there shall be commenced against the Borrower or any of its
Restricted Subsidiaries any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (iv) the
Borrower or any of its Restricted Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any of its Restricted Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Tax
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined
in Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Majority Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Majority Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could reasonably be
expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower or any of its Restricted Subsidiaries involving in the aggregate a
liability (to the extent not paid or covered by insurance) of $15,000,000 or
more, and such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof; or
84
91
(i) (i) For any reason (other than any act on the part of the
Administrative Agent or any Lender or any act or failure to act (except to the
extent such act or failure to act constitutes a breach of the relevant Blocked
Account Agreement or Lockbox Agreement on the part of any Depositary Bank) the
Subsidiaries Guarantee or any Security Document ceases to be or is not in full
force and effect in any material respect and such default shall continue
unremedied for 30 days after the earlier of receipt by the Borrower of notice of
such default from the Administrative Agent or actual knowledge of such default
by a Responsible Officer, (ii) the Borrower or any of its Restricted
Subsidiaries shall assert in writing that the Subsidiaries Guarantee or any
Security Document has ceased to be or is not in full force and effect or (iii)
the Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby except to
the extent contemplated hereunder and under the other Loan Documents; or
(j) (i) Any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) (A) shall
have acquired beneficial ownership of 50% or more of any outstanding class of
Capital Stock having ordinary voting power in the election of directors of the
Borrower or (B) shall obtain the power (whether or not exercised) to elect a
majority of the Borrower's directors, or (ii) (A) the Board of Directors of the
Borrower shall not consist of a majority of Continuing Directors; "Continuing
Directors" shall mean the directors of the Borrower on the Effective Date and
each other director, if such other director's nomination for election to the
Board of Directors of the Borrower is recommended by a majority of the then
Continuing Directors and (B) the Chief Executive Officer of the Borrower shall
resign or be removed during the period commencing three months prior to the date
the Board of Directors shall not consist of a majority of Continuing Directors
and ending six months after such date; or
(k) the occurrence of a Mandatory Prepayment Event with
respect to the Subordinated Debentures;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Majority Lenders, the Administrative Agent may, or upon the request of the
Majority Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (ii) with the consent of the Majority Lenders,
the Administrative Agent may, or upon the request of the Majority Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of each
Issuing Bank and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
85
92
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the Notes. After all
such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower. The Borrower shall execute and deliver to the Administrative Agent,
for the account of each Issuing Bank and the L/C Participants, such further
documents and instruments as the Administrative Agent may reasonably request to
evidence the creation and perfection of the security interest in such cash
collateral account.
SECTION 10. ADMINISTRATIVE AGENT AND THE COLLATERAL MONITORING AGENT
10.1 Appointment. Each Lender hereby irrevocably designates
and appoints each Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes each Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto, including, without limitation, all powers, rights
and remedies provided in the Master Collateral Agreement. Notwithstanding any
provision to the contrary elsewhere in this Agreement, neither Agent shall have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the either
Agent.
10.2 Delegation of Duties. Each Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions. No Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by such Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. No Agent shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower.
10.4 Reliance by Agents. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, facsimile, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by such Agent. The Administrative Agent may
86
93
deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
Lenders entitled to so act in accordance with the terms of this Agreement as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Each Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of Lenders
entitled to so act in accordance with the terms of this Agreement, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Loans.
10.5 Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall
promptly give notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by Lenders entitled to so act in accordance with the terms
of this Agreement; provided that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
10.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that no Agent nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by either Agent hereafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by such Agent to any Lender. Each
Lender represents to the Agents that it has, independently and without reliance
upon the Agents or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agents or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, no Agent shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower which may come into the possession of such
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
10.7 Indemnification. The Lenders agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Voting Percentages in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against such Agent in any way relating to
or arising out of, the
87
94
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Loans and all other amounts payable hereunder. Each Agent shall have the right
to deduct any amount owed to it by any Lender under this Agreement from any
payment made by it to such Lender hereunder.
10.8 Agent in Its Individual Capacity. Each Agent and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from and generally engage in any kind of business with the Borrower as
though such Agent were not an Agent hereunder and under the other Loan
Documents. With respect to the Loans made by it or any Letter of Credit issued
or participated in by it, each Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Agent hereunder, and the terms "Lender" and
"Lenders" shall include such Agent in its individual capacity.
10.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 25 Business Days' notice to the Borrower
and the Lenders. If the Administrative Agent shall resign as Administrative
Agent under this Agreement and the other Loan Documents, then the Majority
Lenders shall appoint from among the Lenders a successor agent for the Lenders,
which successor agent (provided that it shall have been approved by the
Borrower), shall succeed to the rights, powers and duties of the Administrative
Agent hereunder. Effective upon such appointment and approval, the term
"Administrative Agent" shall mean such successor agent, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Majority Lenders may, or, with the written consent of the
Majority Lenders or the Administrative Agent, as applicable, may, from time to
time, (a) enter into with the applicable Loan Party or Parties written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding, deleting or revising any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Borrower hereunder or thereunder or (b) waive, on such terms and
conditions as the Majority Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall:
(i) reduce the amount or extend the scheduled date of maturity
of any Loan or of any installment thereof, or reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any payment
thereof or increase the amount or extend the expiration date of any Lender's
Commitments, in each case without the consent of each Lender adversely affected
thereby,
88
95
(ii) (A) amend, modify or waive any provision of this subsection
or consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement and the other Loan Documents or any other
provision of any other Loan Document, release or subordinate the interest of the
Administrative Agent in the Collateral or the Subsidiary Guarantors, except that
(x) the Administrative Agent may release or subordinate the
Administrative Agent's interest in up to $10,000,000 of the Collateral,
with the consent of the Agents,
(y) the Administrative Agent may release or subordinate the
Administrative Agent's interest in $10,000,001 to $50,000,000 of the
Collateral, with the consent of the Required Lenders, and
(z) the Administrative Agent may release or subordinate the
Administrative Agent's interest in more than $50,000,000 of the
Collateral, with the consent of all the Lenders, or
(B) reduce the percentage specified in the definition of
Majority Lenders or Required Lenders without the written consent of all the
Lenders,
(iii) increase (A) any percentage set forth in the definition of
Borrowing Base, Available Inventory Amount or Available Accounts Receivable
Amount or Available L/C Amount without the consent of all the Lenders; provided,
the Agents may increase the percentages set forth in the definition of Borrowing
Base, Available Inventory Amount, Available Accounts Receivable Amount or
Available L/C Amount by up to an additional 5% above the percentages as of the
Effective Date with the consent of the Required Lenders, (B) the amount set
forth in clause (ii) of the definition of Available Mortgaged Real Estate Amount
without the consent of the Required Lenders and the Agents, (C) the maximum
aggregate amount of Commitments hereunder without the consent of the Required
Lenders or (D) the amount set forth in the definition of Interim Reserve Amount
or the structure of the Cumulative Asset Sale Reserve without the consent of the
Required Lenders and the Agents,
(iv) amend, modify or waive any provision of Section 2 or
subsection 4.1(c) without the written consent of the Majority Term Loan Lenders
or reduce the percentage specified in the definition of Majority Term Loan
Lenders without the consent of all the Term Loan Lenders,
(v) amend, modify or waive any provision of Section 3 or of
subsection 6.2 without the prior written consent of the Majority Revolving
Credit Lenders or reduce the percentage specified in the definition of Majority
Revolving Credit Lenders without the consent of all the Revolving Credit
Lenders,
(vi) amend, modify or waive any provision of subsection 4.7(c) of
this Agreement or of Section 3.5(a) or 3.5(b) of the Master Collateral Agreement
without the written consent of the Majority Term Loan Lenders and the Majority
Revolving Credit Lenders,
(vii) amend, modify or waive any provision of subsections 3.6
through 3.13 without the consent of each Issuing Bank adversely affected in any
material respect thereby,
(viii) amend, modify or waive any provision of subsections 3.14,
3.15 or 3.16 without the consent of the Swing Line Lender, or
(ix) amend, modify or waive any provision of Section 10 without
the written consent of the Agent adversely affected thereby.
89
96
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Borrower, the Lenders, and the Administrative Agent
shall be restored to their former positions and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon. If, in
connection with any proposed amendment, supplement, modification, consent or
waiver of any provisions of this Agreement or any other Loan Documents as
contemplated by this subsection 11.1, the consent of Lenders whose Voting
Percentages aggregate at least 90% is obtained but the consent of one or more of
the other Lenders is not obtained, then the Borrower may replace each such
non-consenting Lender or Lenders with one or more replacement Lenders pursuant
to subsection 11.7 so long as at the time of such replacement, each replacement
Lender consents to the proposed amendment, supplement, modification, consent or
waiver, provided, that the Borrower shall not have the right to replace any
Lender solely as a result of the exercise of such Lender's rights (and the
withholding of any required consent of such Lender) pursuant to clauses (i),
(ii) or (iii) of the first proviso of this subsection 11.1.
11.2 Notices. Unless otherwise expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by facsimile transmission) and shall be
deemed to have been duly given or made (a) in the case of delivery by hand
(including by overnight courier), when delivered, (b) in the case of delivery by
mail, three days after being deposited in the mails, postage prepaid, or (c) in
the case of delivery by facsimile transmission, when sent and receipt has been
confirmed, addressed as follows in the case of the Borrower and the Agents, and
as set forth in Schedule 11.2 in the case of the other parties hereto, or to
such other address as may be hereafter notified by the respective parties
hereto:
The Borrower: Service Merchandise Company, Inc.
0000 Xxxxxxx Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Treasurer
Fax: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Telephone: (000) 000-0000
The Collateral
Monitoring Agent: BankBoston, N.A.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
90
97
The Administrative
Agent: Citicorp USA, Inc.
000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
Telephone: (000) 000-0000
With a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
Telephone: (000) 000-0000
provided that any notice, request or demand to or upon the Agents or the Lenders
pursuant to subsections 3.2, 3.4, 3.6, 3.15, 4.1, 4.2 or 4.7 shall not be
effective until received. Whenever either Agent sends a notice by mail, such
Agent will use reasonable efforts to also send such notice by one of the other
means of notice permitted hereunder, provided that the failure to do so shall
not affect in any way the validity of any delivery by mail pursuant to this
subsection or otherwise result in any liability to the Agents or the Lenders.
11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
11.5 Payment of Expenses and Taxes; Indemnity. The Borrower
agrees (a) to pay or reimburse the Agents for all its reasonable out-of-pocket
costs and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of one counsel for all of the Agents together,
(b) (i) to pay or reimburse the Agents for all its reasonable out-of-pocket
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, costs and expenses which the
Administrative Agent may incur in enforcing or protecting its Liens on or rights
and interest in the Collateral, and the fees and disbursements of counsel to the
Agents, and (ii) to pay or reimburse each Lender for all its reasonable
out-of-pocket costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents following the occurrence and during the continuation of
a Default or an Event of Default, including, without limitation, the fees and
disbursements of counsel to each Lender, (c) to pay, indemnify, and hold each
Lender and the Agents (and their respective
91
98
directors, officers, employees and agents) harmless from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise (other than excise taxes imposed in lieu of
net income taxes) and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the Agents (and
their respective directors, officers, employees and agents) harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits and reasonable out-of-pocket costs, expenses or
disbursements (including, without limitation, the reasonable fees and expenses
of the same counsel for all of the Lenders or the Agents (absent a conflict of
interest or inability to join the relevant actions or proceedings, in which
additional counsel may be retained by the Agents and Lenders)) of any kind or
nature whatsoever with respect to any claim, litigation, investigation or
proceeding relating to the execution, delivery, enforcement, performance and
administration of this Agreement and the other Loan Documents and any such other
documents or any use of any of the Extensions of Credit, including, without
limitation, any of the foregoing relating to the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
the Borrower, any of its Subsidiaries or any of the Properties (all the
foregoing in this clause (d), collectively, the "Indemnified Liabilities"),
provided that the Borrower shall have no obligation hereunder to the Agents or
any Lender (or their respective directors, officers, employees or agents) with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of the Agents or any such Lender (or their respective directors,
officers, employees or agents, as the case may be), provided, however, that in
connection with the enforcement or preservation of any rights under this
Agreement or the other Loan Documents, the Borrower shall not be required to pay
or reimburse the Lenders for more than one counsel to all of the Lenders and for
one counsel to each of the Agents. The agreements in this subsection shall
survive the termination of this Agreement and the repayment of the Loans and all
other amounts payable hereunder.
11.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agents and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, any interest of such Lender in any Letter of Credit,
any Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, and the Borrower and the Agents shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Loan Documents. No
Lender shall be entitled to create in favor of any Participant, in the
participation agreement pursuant to which such Participant's participating
interest shall be created or otherwise, any right to vote on, consent to or
approve any matter relating to this Agreement or any other Loan Document except
for those specified in clauses (i) and (ii) of the proviso to subsection 11.1.
The Borrower agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a
92
99
Lender under this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in subsection 11.8(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 4.9, 4.10 and 4.11 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it were a Lender; provided that, in the case of subsection 4.10, such
Participant shall have complied with the requirements of said subsection and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such subsection than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred. Each Lender promptly shall notify the Administrative Agent in writing
of the sale of any participating interest in a Loan to any Participant.
(c) Any Lender may, in the ordinary course of its business of
making or investing in loans and in accordance with applicable law, at any time
and from time to time assign to any Lender or any affiliate thereof or, with the
consent of the Agents (which shall not be unreasonably withheld), to an
additional bank, financial institution or other entity that is then engaged in
the business of lending money (an "Assignee") all or any part of its rights and
obligations under this Agreement and the other Loan Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit J, executed by
such Assignee and such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the Agents) and
delivered to the Agents for its acceptance and recording in the Register, with a
copy thereof to the Borrower, provided that (a) in the case of any such
assignment (other than to a Lender or an Affiliate of a Lender), the sum of the
aggregate principal amount of the Loans, the aggregate amount of the L/C
Obligations and the aggregate amount of the unused Commitments being assigned
and, if such assignment is of less than all of the rights and obligations of the
assigning Lender, the sum of the aggregate principal amount of the Loans, the
aggregate amount of the L/C Obligations and the aggregate amount of the unused
Commitments remaining with the assigning Lender are each not less than
$10,000,000 (or such lesser amount as may be agreed to by the Borrower and the
Agents), (b) assignments shall not be required to be made on a ratable basis
between the Commitments and/or Loans held by any Lender, (c) assignments by a
Revolving Credit Lender of all or a portion of its Revolving Loans and/or
Revolving Credit Commitment must be to either (i) a commercial bank having total
assets in excess of $5,000,000,000 or any of its Affiliates, or (ii) a finance
company, insurance company or other financial institution or fund which is
regularly engaged in the making of, purchasing or investing in loans and having
total assets in excess of $300,000,000 ("Eligible Assignee"), (d) any Lender may
make an assignment consisting solely of Term Loans (without regard to the
requirements of clause (a) above) so long as the aggregate principal amount of
Term Loans so assigned is at least $5,000,000, and (e) the consent of the
Borrower shall be required in connection with any assignment to a Lender or an
Affiliate of a Lender solely to the extent that after giving effect thereto such
Lender or Affiliate would be entitled to receive any greater payment under
subsection 4.9, 4.10 or 4.11 at such time than the assigning Lender is entitled
to receive at such time. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto). Notwithstanding any
provision of this paragraph (c) and paragraph (e) of this subsection, the
consent of the Borrower shall not be required (other than as to the minimum
amount of any assignment required under this paragraph), and, unless requested
by the Assignee and/or the assigning Lender, new Notes shall not be required to
be executed and delivered by the Borrower, for any assignment which occurs at
any time
93
100
when any of the events described in Section 9(f) with respect to the Borrower
shall have occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in subsection
11.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
and the Commitments of, and principal amounts of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and the
Lenders may (and, in the case of any Loan or other obligation hereunder not
evidenced by a Note, shall) treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder shall be effective only upon appropriate entries with
respect thereto being made in the Register. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the
Administrative Agent) together with payment to the Administrative Agent of a
registration and processing fee of $5,000, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower; provided, however, that no such registration and processing fee
shall be paid in connection with the initial syndication of the Loans.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
subject to the provisions of subsection 11.17, any and all financial information
in such Lender's possession concerning the Borrower and its Affiliates which has
been delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection do not prohibit any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors or other applicable law
or the creation of a security interest by any Lender other than a commercial
bank.
(h) So long as no Default or Event of Default shall have then
occurred and be continuing, no assignment by a Lender pursuant to this
subsection 11.6 shall be permitted without the consent of the Administrative
Agent and the Borrower if, after giving effect thereto, any Lender other than
the Agents would hold in excess of 20% of the aggregate Voting Percentages at
any such time.
11.7 Replacement of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to subsection 4.9 or 4.10, (b) has
received a written notice from the Borrower of an impending change in law that
would entitle such Lender to payment of additional amounts under subsection 4.9
or 4.10(a), unless such Lender designates a different lending office before such
change in law becomes effective and such alternate lending office obviates the
need for the Borrower to make payments of additional amounts under subsection
4.9 or 4.10(a), (c) is affected in the manner described in subsection 4.6(b) or
4.8 and as a result thereof any of the actions described in subsection 4.6 or
4.8, as the case may be, are required to be taken, (d) does not consent to any
proposed amendment, supplement, modification,
94
101
consent or waiver of any provisions of this Agreement or any other Loan Document
as contemplated by the last sentence of subsection 11.1, or (e) defaults in its
obligation to make Loans or issue, or participate in, any Letter of Credit,
provided that (i) such replacement does not conflict with any Requirement of
Law, (ii) no Event of Default shall have occurred and be continuing at the time
of such replacement, (iii) the Borrower shall repay (or the replacement bank or
institution shall purchase, at par) all Loans and other amounts owing to such
replaced Lender prior to the date of replacement, (iv) the Borrower shall be
liable to such replaced Lender under subsection 4.11 if any Eurodollar Loan
owing to such replaced Lender shall be prepaid (or purchased) other than on the
last day of the Interest Period relating thereto, (v) the replacement bank or
institution, if not already a Lender, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent, (vi)
the replaced Lender shall be obligated to make such replacement in accordance
with the provisions of subsection 11.6 (provided that the Borrower or
replacement Lender shall be obligated to pay the registration and processing fee
referred to therein), (vii) until such time as such replacement shall be
consummated, the Borrower shall pay all additional amounts (if any) required
pursuant to subsection 4.9 or 4.10, as the case may be, and (viii) any such
replacement shall not be deemed to be a waiver of any rights which the Borrower,
the Administrative Agent or any other Lender shall have against the replaced
Lender.
11.8 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans or
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 9(f), or
otherwise), and, after giving effect to any such payment or the receipt of any
such collateral, such benefitted Lender shall have received a greater
proportionate payment (determined in accordance with subsection 4.7) or interest
in collateral than that received by any other relevant Lender, if any, in
respect of such other relevant Lender's relevant Loans or, if applicable, the
Reimbursement Obligations owing to it, or interest thereon, such benefitted
Lender shall purchase for cash from the other relevant Lenders a participating
or other similar interest in such portion of each such other relevant Lender's
relevant Loans or, if applicable, the Reimbursement Obligations owing to it, or
shall provide such other relevant Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders entitled to the same under this
subsection, provided, however, that if all or any portion of such excess payment
or benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender and each Affiliate of any Lender shall have the
right, without prior notice to the Borrower but subject to the prior consent of
the Administrative Agent or the Majority Lenders, any such notice being
expressly waived by the Borrower to the extent permitted by applicable law, upon
any amount becoming due and payable by the Borrower hereunder (whether at the
stated maturity, by acceleration or otherwise) which is not paid when due to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender or any Affiliate of such Lender, provided that the failure
to give such notice shall not affect the validity of such set-off and
application.
11.9 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission),
95
102
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
11.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.11 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Agents and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Agents or any Lender relative
to the subject matter hereof or thereof not expressly set forth or referred to
herein or in the other Loan Documents; provided, however, it is understood and
agreed that the provisions of the Commitment Letter dated as of January 7, 1999
from Citibank and Xxxxxxx Xxxxx Xxxxxx Inc, to the Borrower, and accepted by the
Borrower on such date, under the heading "Syndication" shall survive the
execution and delivery of this Agreement.
11.12 Termination. This Agreement shall terminate when the
Commitments have terminated or expired, no Loan or Letter of Credit is
outstanding (other than Letters of Credit which have been cash collateralized in
a manner substantially the same as the manner described pursuant to the
penultimate paragraph of Section 9) and the other then unpaid or accrued Credit
Agreement Obligations have been paid in full.
11.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.14 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) to the extent permitted by applicable law, consents that
any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsection 11.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other court of competent jurisdiction; and
96
103
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential damages.
11.15 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Agents nor any Lender has any fiduciary
relationship with or fiduciary duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Agents and the Lenders, on the one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders or among the Borrower
and the Agents.
11.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.17 Confidentiality. Each of the Administrative Agent, the
Collateral Monitoring Agent and the Lenders agrees to keep confidential all
information provided to it by the Borrower or the Administrative Agent pursuant
to or in connection with this Agreement that is designated by the Borrower in
writing as confidential (the "Confidential Information"); provided that nothing
herein shall prevent any Lender or the Administrative Agent or the Collateral
Monitoring Agent from disclosing any such Confidential Information (i) to the
Administrative Agent, the Collateral Monitoring Agent or any other Lender, (ii)
to any Transferee or prospective Transferee which receives such Confidential
Information having been made aware of the confidential nature thereof and which
has agreed in writing to be bound by the terms of this subsection 11.17, (iii)
to its directors, officers, employees, employees of affiliates, examiners and
professional advisers who have a need to know such Confidential Information in
accordance with customary banking practices and who receive such Confidential
information having been made aware of the restrictions of this subsection and,
in the case of professional advisers, having agreed to be bound thereby, (iv)
upon the request or demand of any Governmental Authority having jurisdiction
over such Lender, (v) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) in connection with the exercise of any remedy
hereunder, (vii) which is now or hereafter becomes generally available to the
public other than as a result of a disclosure by such Lender, the Collateral
Monitoring Agent or the Administrative Agent or a disclosure known to such
Lender, the Collateral Monitoring Agent or the Administrative Agent to have been
made by any person or entity to which such Lender or the Administrative Agent
has delivered such Confidential Information, (viii) which was available to such
Lender, the Collateral Monitoring Agent or the Administrative Agent prior to its
disclosure to such Lender or the Administrative Agent by the Borrower, or (ix)
which becomes available to such Lender or the Administrative Agent from a source
other than the Borrower, provided that such source is not (1) known to such
Lender, the Collateral Monitoring Agent or the Administrative Agent to be bound
by a confidentiality agreement with the Borrower or (2) known to such Lender,
the Collateral Monitoring Agent or the Administrative Agent to be otherwise
prohibited
97
104
from transmitting the information to such Lender, the Collateral Monitoring
Agent or the Administrative Agent by a contractual, legal or fiduciary
obligation.
11.18 Section Headings. The Section and subsection headings in
this Agreement are for convenience in reference only and shall not deemed to
alter or affect the interpretation of any provisions hereof.
11.19 Judgment Currency. The obligation of the Borrower under
this Agreement to make payments in respect of each Reimbursement Obligation in
the currency in which it is outstanding (the "Agreement Currency") shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any other currency (the "Judgment Currency")
except to the extent that such tender or recovery of the Judgment Currency
results in the effective receipt by the Lenders or the relevant Issuing Banks,
as the case may be, of the full amount of the Agreement Currency payable under
this Agreement and the Borrower agrees to indemnify the Lenders or the relevant
Issuing Banks, as the case may be (and the Lenders or the relevant Issuing
Banks, as the case may be, shall have an additional legal claim) for any
difference between such full amount and the amount effectively received by such
Lenders or such Issuing Banks, as the case may be, pursuant to any such tender
or recovery. Each Lender's or Issuing Bank's determination of amounts
effectively received by such Lender or Issuing Bank shall be presumed correct
absent manifest error. If a judgment in respect of the obligations of the
Borrower hereunder is rendered in a currency other than the Agreement Currency
and if, upon receipt of the full amount of such judgment in such currency and
the conversion into, and receipt of such amount in the Agreement Currency, such
amount of the Agreement Currency exceeds the obligations of the Borrower
hereunder, such excess amount shall be remitted to the Borrower by the Lenders
or the relevant Issuing Banks, as the case may be. The obligations of the
Borrower under this subsection shall survive the termination of this Agreement
and the repayment of the Loans and all other amounts payable hereunder.
11.20 Special Provisions. (a) The Lenders (which are Revolving
Credit Lenders under the Existing Credit Agreement) hereby waive any
requirements for notice of prepayment, commitment terminations, minimum amounts
of prepayments of Revolving Loans (as defined in the Existing Credit Agreement),
ratable reductions of Revolving Credit Commitments (as defined in the Existing
Credit Agreement) and ratable payments on account of the principal or interest
of any Revolving Loan (as defined in the Existing Credit Agreement) under the
Existing Credit Agreement to the extent such prepayment, reductions or payments
are required pursuant to subsection 6.1(p).
(b) The Lenders hereby confirm that, from and after the making
of the initial Loans, all participations of the Lenders in respect of Letters of
Credit outstanding hereunder pursuant to subsection 3.9(a) shall be based upon
the Revolving Credit Commitment Percentages of the Lenders (after giving effect
to this Agreement).
11.21 Amendments to Original Mortgages. The Borrower, the
Agents and the Lenders acknowledge that certain provisions of the Original
Mortgages are being amended and modified as provided in the Master Collateral
Agreement.
11.22 Review of Business Plan. Promptly after delivery of the
Business Plan to the Administrative Agent pursuant to subsection 7.1(e), the
Administrative Agent will (i) review the Business Plan and (ii) use reasonable
efforts to facilitate the Borrower's presentation thereof to the Lenders. In the
event the Administrative Agent does not accept the Business Plan as submitted,
the Administrative Agent promptly will provide the Borrower with an explanation
of the reasons for such rejection.
98
105
11.23 Negotiation of Revised Covenants. As soon as practicable
after the Administrative Agent's acceptance of the Business Plan, the Borrower
and the Agents will (i) review the provisions of subsection 3.17 and Sections 7
and 8, (ii) negotiate in good faith to determine whether any of such provisions
should be revised as a result of the acceptance of the Business Plan and (iii)
negotiate in good faith additional provisions or covenants, including EBITDA or
similar cash flow covenants appropriate for this facility as a result of the
acceptance of the Business Plan. Any such revised or additional provisions or
covenants must be approved by the Majority Lenders.
11.24 Releases. In further consideration of the Agents' and
the Lenders' execution of this Agreement, the Borrower and each of the other
Loan Parties hereby release the Existing Administrative Agent and the Existing
Lenders, and the Agents and the Lenders, and each of their respective
affiliates, officers, employees, directors, agents and attorneys (collectively,
the "Releasees") from any and all claims, demands, liabilities,
responsibilities, disputes, causes of action (whether at law or equity) and
obligations of every nature whatsoever, whether liquidated or unliquidated,
known or unknown, matured or unmatured, fixed or contingent, that the Borrower
or any other Loan Party may have against the Releasees which arise from or
relate to any act or omission to act of any Releasee prior to the date hereof
with respect to the Existing Credit Agreement and the other Existing Loan
Documents. Each of the Borrower and the other Loan Parties agree that it will
not, by reason of any act or omission to act of the Existing Administrative
Agent or any Existing Lender, (i) assert or claim against the Agents or any
Lender, (ii) seek to avoid any liability or obligation under, on account of, or
arising out of, this Agreement or any of the other Loan Documents, (iii) assert
or claim that any liability or obligation under this Agreement or the other Loan
Documents is not enforceable strictly in accordance with its terms.
11.25 Documents Evidence the Same Indebtedness. This Agreement
and the other Loan Documents together evidence the same Indebtedness heretofore
evidenced by, and this Agreement and the other Loan Documents together amend and
restate in their entirety, the Existing Credit Agreement and the Loan Documents
(as defined in the Existing Credit Agreement) (the "Existing Loan Documents");
provided that this Agreement and the other Loan Documents shall not be construed
to evidence a payment and readvance of the loan principal, interest and other
sums, if any, heretofore evidenced by the Existing Credit Agreement and the
Existing Loan Documents, it being the intention of the Borrower, and by their
acceptance hereof, the Agent and the Lenders, that all such documents evidence
the same Indebtedness.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
99
106
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amended and Restated Credit Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the day and year first above written.
SERVICE MERCHANDISE COMPANY, INC.,
as the Borrower
By:
--------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Treasurer
Signature Page to Service Merchandise Company, Inc.
Second Amended and Restated Credit Agreement
107
CITICORP USA, INC.,
as Administrative Agent, as a Lender
By:
--------------------------------
Xxxxx X. Xxxxxx
Attorney-in-Fact
CITIBANK, N.A.,
as an Issuing Bank
By:
--------------------------------
Xxxxx X. Xxxxxx
Attorney-in-Fact
Signature Page to Service Merchandise Company, Inc.
Second Amended and Restated Credit Agreement
108
BANKBOSTON, N.A.,
as Documentation Agent and
Collateral Monitoring Agent, as a
Lender, and as an Issuing Bank
By:
--------------------------------
Xxxxx Xxxxx
Vice President
Signature Page to Service Merchandise Company, Inc.
Second Amended and Restated Credit Agreement
109
NATIONAL CITY COMMERCIAL FINANCE, INC.
as a Lender
By:
--------------------------------
Name:
Title:
Signature Page to Service Merchandise Company, Inc.
Second Amended and Restated Credit Agreement
110
XXXXXX FINANCIAL, INC.
as a Lender
By:
--------------------------------
Name:
Title:
Signature Page to Service Merchandise Company, Inc.
Second Amended and Restated Credit Agreement
111
FOOTHILL INCOME TRUST, L.P.,
as a Lender
By: FIT GP, LLC,
its general partner
By:
----------------------------
Name:
Title: Managing Member
FOOTHILL CAPITAL CORPORATION
as a Lender
By:
--------------------------------
Name:
Title:
Signature Page to Service Merchandise Company, Inc.
Second Amended and Restated Credit Agreement
112
XXXXXXX NATIONAL LIFE INSURANCE
COMPANY, as a Lender
By: PPM FINANCE, INC.,
its Attorney-in-Fact
By:
---------------------------
Name:
Title:
Signature Page to Service Merchandise Company, Inc.
Second Amended and Restated Credit Agreement
113
Schedule 1.1(a)
TO CREDIT AGREEMENT
COMMITMENTS
==============================================================================================================
LENDER TOTAL REVOLVER TERM LOAN
==============================================================================================================
Citicorp USA, Inc. 175,000,000 140,000,000 35,000,000
--------------------------------------------------------------------------------------------------------------
BankBoston, N.A. 175,000,000 140,000,000 35,000,000
--------------------------------------------------------------------------------------------------------------
National City Commercial 100,000,000 80,000,000 20,000,000
Finance Inc. *
--------------------------------------------------------------------------------------------------------------
Xxxxxx Financial, Inc. * 100,000,000 80,000,000 20,000,000
--------------------------------------------------------------------------------------------------------------
Foothill Income Trust, L.P. * 50,000,000 40,000,000 10,000,000
--------------------------------------------------------------------------------------------------------------
Foothill Capital Corporation * 50,000,000 40,000,000 10,000,000
--------------------------------------------------------------------------------------------------------------
Xxxxxxx National Life Insurance 100,000,000 80,000,000 20,000,000
Company *
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
TOTAL 750,000,000 600,000,000 150,000,000
==============================================================================================================
* Managing Agents
114
Schedule 4.1(e)
TO CREDIT AGREEMENT
ELIGIBLE MORTGAGE REAL ESTATE IN XXXXXXX
XXXXX # XXXXXX XXXX XXXXX ZIP USE HOLDING
------- ------ ---- ----- --- --- -------
0262 0000 Xxxxxxxxxxxx Xxxxxx Xxxxx XX 00000 SMC Fee
0295 000 Xxxx Xxxx Xxxx Xxxxxxx XX 00000 SMC Fee
0390 00000 Xxxx Xxxxxxx Xxxx. Xxxxxxx XX 00000 SMC Fee
0059 00000 X.X. 00 Xxxx Xxxxxx XX 00000 SMC Gr/Lease
0303 000 X. Xxxxx Xxxx 000 Xxxxxxxxx XX 00000 SMC Gr/Lease
Springs
0347 0000 Xxxxxxx Xxxx Xxxxx Xxxxxx XX 00000 SMC Gr/Lease
0388 0000 X.X. 00xx Xxxxxx Xxxxx XX 00000 SMC Gr/Lease
115
Schedule 5.1
TO CREDIT AGREEMENT
CHARGES
1. See Schedule 5.6, Litigation, hereof, which is incorporated herein by
reference.
2. The following list of properties were disposed of by the Borrower since
December 28, 1997, either through sale or lease termination/assignment:
STORE LOCATION HOLDING STORE CLOSED DISPOSITION DATE
-------------- ------- ------------ ----------------
NASHVILLE TN LEASE ---- 12/31/1997
FT. WORTH TX LEASE 07/10/1997 12/31/1997
TAMPA FL GR/LEASE 01/15/1998 12/31/1997
ROANOKE VA FEE ---- 01/22/1998
MEMPHIS TN LEASE 01/15/1998 01/31/1998
BLOOMINGTON IN LEASE 10/11/1994 01/31/1998
SOUTHFIELD MI LEASE 07/10/1997 02/28/1998
COLLEGE PARK GA LEASE 01/15/1998 02/28/1998
LOS ANGELES CA LEASE 07/10/1997 12/31/1997
FULLERTON CA LEASE 07/10/1997 03/01/1998
PORT XXXXX LA FEE ---- 05/14/1998
BRENTWOOD TN FEE ---- 05/20/1998
COLUMBIA SC FEE 07/10/1997 06/26/1998
ARLINGTON TX GR/LEASE 07/10/1997 06/30/1998
FORT XXXXX IN LEASE 07/10/1997 06/30/1998
GARDEN GROVE CA LEASE 07/10/1997 06/30/1998
XXXXXXXX OH FEE 07/10/1997 07/01/1998
LAHABRA CA LEASE 07/10/1997 07/01/1998
MILPITAS CA LEASE 07/10/1997 07/10/1998
SOUTH DADE FL LEASE 05/10/1998 07/31/1998
LOMBARD IL LEASE 07/01/1986 07/31/1998
HOLLYWOOD FL LEASE 01/15/1998 08/06/1998
DURHAM NC LEASE 05/10/1998 08/27/1998
VICTORVILLE CA FEE 07/10/1997 09/09/1998
DENTON TX FEE 07/10/1997 09/24/1998
DALLAS TX FEE 07/10/1997 09/25/1998
COLUMBUS OH FEE ---- 09/25/1998
COLORADO SPR CO FEE ---- 10/19/1998
NEWARK CA GR/LEASE 07/10/1997 00/00/0000
XXXX XXXXXXXX XX GR/LEASE 07/10/1997 11/30/1998
SALINAS CA LEASE 07/10/1997 12/01/1998
RENO NV FEE 07/10/1997 12/23/1998
N. COLLEGE HILLS OH FEE 07/10/1997 12/28/1998
116
Schedule 5.1
TO CREDIT AGREEMENT
(CONTINUED)
3. Partnership Interest in The Cool Springs Pointe, Brentwood, TN Shopping
Center was disposed of January 1999.
4. Interest Rate Swaps as of 12/28/98.
SWAP VAR RATE CURRENT STATE PAYMENT
AMOUNT MATURITY BANK DATE BASE VAR RATE FIXED RATE DATES
------ -------- ---- ---- ---- -------- ---------- -----
35,000,000.00 12/20/00 BANK OF 12/22/97 3 MO LIBOR 5.23375000 5.97700000 3/22/99, 6/22/99,
AMERICA 9/22/99, 12/22/99
30,000,000.00 12/22/00 CITIBANK 12/22/97 3 MO LIBOR 5.23375000 5.98000000
BANK OF
60,000,000.00 12/22/00 BOSTON 12/22/97 3 MO LIBOR 5.23375000 5.96500000
--------------
125,000,000.00
5. See attached list of public disclosures.
6. See list of Letters of Credit attached to Schedule 8.7(f) which is
incorporated herein by reference.
117
Schedule 5.1
TO CREDIT AGREEMENT
(Attachment)
SERVICE MERCHANDISE COMPANY
SECURITIES FILINGS SINCE DECEMBER 28, 1997
DATE
FORM TYPE FILED
-----------------------------------------------------------------------------
8-K 02/03/98
8-A12B 02/03/98
SC 13G 02/12/98
SC 13G 03/03/98
DEF 14A 03/13/98
10-K405 03/30/98
10-Q 05/13/98
11-K 06/26/98
10-Q 08/12/98
8-K 10/30/98
8-K 11/04/98
8-A12B/A 11/04/98
10-Q 11/12/98
8-K 12/15/98
8-K 01/12/99
118
SERVICE MERCHANDISE COMPANY, INC.
PRESS RELEASES
Earnings Releases:
------------------
02/06/98 Service Merchandise reports fourth quarter results
04/14/98 Service Merchandise reports first quarter results
07/14/98 Service Merchandise reports second quarter results
10/13/98 Service Merchandise reports third quarter results
Management Changes:
-------------------
01/29/98 Service Merchandise Chair Xxxxxxx Xxxxxxxxx to
retire; Board Member Xxxxx Xxxxx selected as Board
Chairman
04/29/98 Xxxxxxxxx to join Service Merchandise as Senior
VP/Hardlines
05/13/98 Service Merchandise promotes XxXxxxxx to
VP/Marketing/Advertising
06/01/98 Xxxxxxx-Xxxxxxxx appointed AVP
06/30/98 Bayer appointed VP/GMM
07/29/98 Service Merchandise appoints Xxxx Xxxxxx SVP/Human
Resources
07/30/98 Xxxxxxxxxxx appointed VP
08/03/98 Service Merchandise expands Board; elects two
seasoned retail veterans
08/13/98 Hollands appointed AVP/DMM
01/08/99 Service Merchandise obtains $750 Million financing
commitment; close to naming new CEO
01/11/99 Service Merchandise appoints Xxxxxxx X. Xxxxx Interim
CEO; Company engages Xxx Xxxx & Associates to lead
turnaround efforts
Other:
------
12/31/97 Service Merchandise to close Tampa, FL Store
12/31/97 Service Merchandise to close Hollywood, FL Store
12/31/97 Service Merchandise to close Memphis, TN Store
01/07/98 Service Merchandise launches whole new look on the
Internet
01/13/98 Dream Home announcement
119
01/21/98 Super Bowl contest winners
01/23/98 Xxxxx to receive humanitarian award
02/02/98 Valentine Sweepstakes announcement
02/03/98 Service Merchandise delivers on credit initiative;
credit card processing conversion accomplished on
schedule; should add up to $12-15 Million in pre-tax
income
02/03/98 Service Merchandise adopts shareholder rights plan;
plan replaces the rights agreement scheduled to
expire on February 8, 1998
02/10/98 Service Merchandise gives Xxxx Xxxxxxx green flag
02/18/98 Service Merchandise to Consolidate call center
operations in Johnson City, TN
03/09/98 Nashville call center consolidation
03/17/98 New MDA board, officers
04/01/98 $10,000 reward for Cincinnati robbery info
04/06/98 Service Merchandise to close one Miami, FL store
04/06/98 Service merchandise to close Caselberry, FL store
04/06/98 Service Merchandise to close Durham, NC store
04/06/98 Service Merchandise to close Saratoga Springs store
04/14/98 Xxxxxxxxx award winners
04/30/98 Service Merchandise to open "Treasure Quest"
Clearance Center in Bowling Green, KY
06/02/98 Treasure Quest grand opening
06/18/98 All-star contest announcement (local)
06/18/98 All-star contest announcement (trade)
06/25/98 Service Merchandise corrects DCR Credit Rating
Announcement
07/02/98 All-star contest winners
08/06/98 Service Merchandise on target to roll out new
"self-serve" shopping format, new merchandise mix by
Labor Day
08/21/98 Service Merchandise to Convert Denver, CO store to
Clearance Outlet
08/21/98 Service Merchandise to Convert Springfield, OH store
to Clearance Outlet
120
08/21/98 Service Merchandise to Convert Two Columbus, OH
stores to Clearance Outlets
08/21/98 Service Merchandise to Convert Clay, NY store to
Clearance Outlet
09/01/98 Think there's nothing new at Service Merchandise
Company? Labor Day weekend launch will entice
customers to "Discover the New Merchandise"
09/10/98 Service Select/Elizabethtown, KY
09/10/98 Service Select/Casselberry, FL
09/10/98 Service Select/Spring Hill, FL
09/10/98 Service Select/Bowling Green, KY
09/10/98 Service Select/Kissimmee, FL
09/10/98 Service Merchandise experiences favorable customer
response to Labor Day weekend kick-off event of new
format
09/24/98 Service Merchandise to open five new Service Select
stores; Kissimmee, FL store opens September 26
10/28/98 Service Merchandise amends covenant to credit
agreement
10/29/98 Service Merchandise Superstore: The Fine Jewelry and
Home Decorative Solution; Test concept store from
Service Merchandise to open November 21 in Bradenton,
FL
11/03/98 Service Merchandise Board amends shareholder rights
plan
12/02/98 Service Merchandise issues first of three holiday
sales updates
12/07/98 With $150,000 Prize, Holiday Looking Bright for Lucky
Couple - Oxford, MI couple wins big in Gift Registry
at Service Merchandise/Dream Home Sweepstakes
12/15/98 Service Merchandise issues second of three holiday
sales updates; company reports decreased sales and
exercises interest grace period on 9% subordinated
debentures
12/15/98 Dream Home local winner - Detroit
12/15/98 Reno, NV store to close
12/15/98 Wichita, KS store to close
12/15/98 Waterbury, CT store to close
12/30/98 Service Merchandise issues third holiday sales update
01/05/99 East Meadow, NY store to close
121
01/05/99 Tewksbury, MA store to close
01/13/99 Service Merchandise pays interest due on 9%
Subordinated debentures
122
Schedule 5.2
TO CREDIT AGREEMENT
CHANGES
There have been no changes since September 30, 1998, except for the following:
1. Xxxxx X. Xxxxx, Chairman of the Board of Directors and Xxxx X. Xxxxxx,
President, CEO and Director, have each resigned their roles with the
Borrower.
2. Borrower has received threats from vendors indicating their intention
to file a Petition of Involuntary Bankruptcy under Chapter 7 of the
U.S. Bankruptcy Code. To date, to the Borrower's knowledge, no vendor
has actually filed such a petition. Such a filing, if made, could have
a Material Adverse Effect.
3. Borrower has experienced operating losses and declining operational and
financial performance through fourth quarter 1998 as disclosed to the
Lenders and may continue to experience operating loss and declining
operational and financial performance as indicated on projections
delivered to the Lenders prior to the date hereof.
4. Borrower's failure to have paid amounts due to its trade debt, factors
and related entities.
5. Borrower's failure to have paid amounts due to landlords and lessors
under the Borrower's real property and equipment leases.
6. Borrower's failure to negotiate with public bond holders for a
reduction or change in interest and/or principal terms and/or exchange
offer terms.
7. Borrower's inability to maintain the existing Credit Card Program, or
establish a new credit card program.
8. Borrower's loss of key management and key employees.
9. Breach by CIT of an agreement to return approximately $18 million to
Borrower pursuant to an agreement to provide vendor financing if the
Borrower were to file under Chapter 11 of the U.S. Bankruptcy Code.
123
Schedule 5.4
TO CREDIT AGREEMENT
CONSENTS
None.
124
Schedule 5.6
TO CREDIT AGREEMENT
MATERIAL LITIGATION
State of Florida, Office of the Attorney General, Department of Legal Affairs v.
Service Merchandise, Inc., No. 98-7125 in the Circuit Court, Second
Judicial Circuit of Florida in and for Xxxx county - The Attorney
General for the State of Florida has alleged that Service Merchandise
violated the Florida Unfair and Deceptive Trade and Practices Act and
certain Florida lottery and gaming statutes, in conducting its 1998
Valentine's Day sales. The state has demanded billions of dollars in
their complaint.
TCSHC, Inc. v. Service Merchandise Company, Inc., U.S. District Court, Middle
District of Tennessee, Case No. 3:93-0759 - On November 14, 1989,
TCSHC, Inc. sued Service Merchandise Company, Inc. ("SMC") for breach
of contract for $987,067, plus interest, arising out of the Stock
Purchase Agreement pursuant to which TCSHC purchased all of the
outstanding stock of The Computer Shoppe from SMC. In its answer, SMC
denied all allegations and counterclaimed against Plaintiff for
$125,938, plus interest, which is the amount still due SMC under the
Stock Purchase Agreement. The Plaintiff subsequently amended its
complaint to add claims for breach of warranties and misrepresentations
and to increase its damage claim to $17 million. The breach of warrant
and misrepresentation claims are based on TCSHC's claims that the
financial statements provided to them at closing failed to correctly
reflect liabilities, inventory and other assets. The Court granted
SMC's Motion to add two individuals as counter-defendants. This case is
set for trial in February of 1999.
Informal SEC Investigation: Service Merchandise Company, Inc. is currently
subject to an informal, non-public inquiry by the Enforcement Division
of the SEC. The SEC has asked for information regarding the Borrower's
1997 restructuring plan. SMC has been and will continue to be fully
cooperative with the inquiry until concluded.
In Re: RDM Sports Group, Inc., Xxxxxxx X. Xxxx, Xx., as Chapter 11 Trustee
for Sports Group, Inc. v. Service Merchandise Company, Inc., United
States Bankruptcy Court, Northern District of Georgia, Case No.
98-1125-WHD. The Chapter 11 Trustee for Sports Group, Inc. ("SG"),
filed a Complaint to Enforce Settlement Agreement. SG was a vendor of
Service Merchandise Company, Inc. ("SMC") selling exercise equipment.
As the result of several months of negotiating between the parties, SG
agreed to accept $1.35 million for total settlement of its account.
However, because SMC elected to utilize its thirty (30) day grace
period and delay making the interest payment under its 9% Senior
Subordinated Debentures, and during that 30 day period evaluate its
strategic alternatives, the SG settlement has not been paid. The basis
of Plaintiff's suit is that the Court had granted authority to the
Trustee to settle the claim on behalf of the estate, and SMC has failed
to forward the check. (The Borrower believes the $1.35 million dollar
settlement is still enforceable).
In Re: X. Xxxxx & Son, Inc., The Official Committee of Unsecured Creditors
of X. Xxxxx & Son, Inc. v. Service Merchandise Company, Inc., United
States Bankruptcy Court Southern District of Florida Miami Division,
Case No. 97-16731-BKC-RAM. In November 1995, X. Xxxxx & Son, Inc.
("Luria") obtained a jury verdict against Service Merchandise Company,
Inc. ("SMC") in the amount of $13.8 million in Luria & Son, Inc. v.
Service Xxxxx Limited Partnership of Service Merchandise Company, Inc.,
Case No. 93-15792(21) in the Circuit court for the Seventeenth Judicial
Circuit in and for Broward County, Florida. SMC appealed the decision
citing numerous
125
errors at the trial court level. While the case was on appeal, SMC and
Luria settled the case for $1.85 million in consideration of a release
of all claims, and the dismissal of the Appeal. It is the Unsecured
Creditors Committee's ("Committee") position that the Settlement
Agreement "effected a transfer of Luria's property for which it
received less than reasonably equivalent value," thereby resulting in a
fraudulent transfer (no fraud is alleged on the part of SMC). The
Committee is seeking to void the Settlement Agreement and reinstitute
the Judgment. SMC filed a Motion to Dismiss and is awaiting the Court's
ruling.
TJR & Associates v. SMC. TJR has filed an action against SMC alleging
copyright and trademark infringement with regard to certain jewelry
produced and sold by SMC. The case is in early stages and no demand has
been made.
Borrower has received threats from vendors indicating their intention to file a
Petition of Involuntary Bankruptcy under Chapter 7 of the U.S.
Bankruptcy Code. To date, to the Borrower's knowledge, no vendor has
actually filed such a petition.
126
Schedule 5.7
TO CREDIT AGREEMENT
DEFAULT
1. The Borrower is currently in default with respect to obligations owed
to its trade and consignment vendors, factors and related entities,
[real estate and equipment lessors] and other vendors, including, but
not limited to, printers and technology vendors, with regard to terms
and/or debt.
127
Schedule 5.8
TO CREDIT AGREEMENT
BURDENSOME RESTRICTIONS
None.
128
Schedule 5.13
TO CREDIT AGREEMENT
SUBSIDIARIES
INITIAL SUBSIDIARY STATE OF
GUARANTORS INCORPORATION OWNERSHIP and INTEREST
-------------------------------------------------------------------------------------------------------
X.X. Xxxxx Co., Inc. TN Service Merchandise Company, Inc.
100% common shares
X.X. Xxxxxx Co., Inc. LA Service Merchandise Company, Inc.
100% common shares
X.X. Xxxxxx Co. Realty, Inc. TX Service Merchandise Company, Inc.
100% common shares
Homeowners Warehouse, Inc. FL Service Merchandise Company, Inc.
100% common shares
Service Merchandise Co. Broad, Inc. TN Service Merchandise Company, Inc.
100% common shares
Service Merchandise Co. No. 30, Inc. TN Service Merchandise Company, Inc.
100% common shares
Service Merchandise Co. No. 34, Inc. TN Service Merchandise Company, Inc.
100% common shares
Service Merchandise Co. No. 35, Inc. TN Service Merchandise Company, Inc.
100% common shares
Service Merchandise Co. No. 51, Inc. IL Service Merchandise Company, Inc.
100% common shares
Service Merchandise Co. No. 93, Inc. TN Service Merchandise Company, Inc.
100% common shares
Service Merchandise Co. No. 99, Inc. NV Service Merchandise Company No. 51, Inc.
100% common shares
Service Merchandise Co. of Iowa, Inc. TN Service Merchandise Company, Inc.
100% common shares
Service Merchandise Co. of Kansas, TN Service Merchandise Company, Inc.
Inc. 100% common shares
Service Merchandise Financial Co., TN Service Merchandise Company, Inc.
Inc. 100% common shares
Service Merchandise Indiana Partners N/A Service Merchandise Co. No. 34, Inc.
61% partnership interest
Service Merchandise Co. No. 35, Inc.
39% partnership interest
129
INITIAL SUBSIDIARY STATE OF
GUARANTORS INCORPORATION OWNERSHIP and INTEREST
-------------------------------------------------------------------------------------------------------
Service Merchandise of Tennessee DE Service Merchandise Company, Inc.
Limited Partnership 1% General Partnership interest
Service Merchandise Co. No. 99, Inc.
Shareholders
99% Limited Partnership interest
Service Merchandise of Texas Limited DE Service Merchandise Company, Inc.
Partnership 1% General Partnership interest
Service Merchandise of Kansas, Inc.
99% Limited Partnership interest
SMC-HC, Inc. DE Service Merchandise Company, Inc.
100% common shares
The Toy Store, Inc. TN Service Merchandise Company, Inc.
100% common shares
Wholesale Supply Company, Inc. TN Service Merchandise Company, Inc.
100% common shares
130
SUBSIDIARIES WHICH ARE NOT STATE OF
SUBSIDIARY GUARANTORS INCORPORATION OWNERSHIP and INTEREST
-------------------------------------------------------------------------------------------------------
Ser Plus Assurance Co. Limited (Bermuda) Service Merchandise Company, Inc.
100% common shares
Service Credit Corp. TN Service Merchandise Company, Inc.
100% common shares
A.F.S. Marketing Services, Inc. TN Service Merchandise Company, Inc.
100% common shares
Service Merchandise Company of New TN Service Merchandise Company, Inc.
York, Inc. 100% common shares
Service Merchandise Office Supply, TN X.X. Xxxxx Company, Inc.
Inc. 100% common shares
Service Merchandise Showrooms, Inc. TN Service Merchandise Company, Inc.
100% common shares
Service Merchandise RM, Inc. TN X.X. Xxxxxx Co., Inc.
(formerly, The Lingerie Store, Inc.) 100% common shares
SMC-SPE-1, Inc. DE SMC-HC, Inc.
100% common shares
SMC-SPE-2, Inc. DE SMC-HC, Inc.
100% common shares
The XxXxxxx Supply Company TN Service Merchandise Company, Inc.
100% common shares
Travel Management Consultants, Inc. TN Service Merchandise Company, Inc.
100% common shares
Promotables, Inc. TN Service Merchandise Company, Inc.
100% common shares
SMC Aviaton, Inc. NH Service Merchandise Company, Inc.
Articles of Dissolution have been filed. 100% common shares
Once tax clearance is given, this
Subsidiary will be officially dissolved.
131
Schedule 5.14
TO CREDIT AGREEMENT
ENVIRONMENTAL MATTERS
None.
132
Schedule 5.15
TO CREDIT AGREEMENT
FILING JURISDICTIONS AND CHIEF EXECUTIVE OFFICES
DEBTOR NAME AND LOCATION OF CHIEF FILING LOCATION FOR UCC-3 ASSIGNMENTS
EXECUTIVE OFFICE
------------------------------------------------------------------------------------------------------
X.X. Xxxxx Co., Inc. Central Filing Office in: Tennessee
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
X.X. Xxxxxx Co., Inc. Central Filing Offices in: Xxxxxxx, Xxxxxxxx,
0000 Service Merchandise Drive Colorado, Connecticut, Florida, Kansas,
Xxxxxxxxx, XX 00000 Kentucky, Louisiana, Maine, Massachusetts,
Tax I.D. Number: 00-0000000 Michigan, Mississippi, Missouri, New
Hampshire, New Mexico, New York, North
Carolina, Oklahoma, South Carolina,
Tennessee, Texas and Vermont
Arkansas County Clerks of: Sebastian County,
Pulaski County, Washington County
Georgia County Clerks of: Xxxx County,
Chatham County, Xxxxxxx County, Xxxx
County, DeKalb County, Xxxxxx County,
Gwinett County, Muscogee County, Richmond
County
Kentucky County Clerks of: Jefferson County,
Fayette County, Franklin County, Xxxxxx
County, Xxxxx County, Davies County,
XxXxxxxxx County
Louisiana Parish Clerks of: Bossier Parish,
Caddo Parish, Calcasieu Parish, East Baton
Rouge Parish, Xxxxxxxxx Xxxxxx, Lafayette
Parish, Orleans Parish, Ouachita Parish,
Rapides Parish, St. Tammany Parish,
Terrebonne Parish, West Baton Rouge Parish
133
DEBTOR NAME AND LOCATION OF CHIEF FILING LOCATION FOR UCC-3 ASSIGNMENTS
EXECUTIVE OFFICE
------------------------------------------------------------------------------------------------------
X.X. Xxxxxx Co., Inc., cont. Massachusetts Town Clerks of: Tewksbury,
Somerville, Burlington, Natick, Lanesborough,
Holyoke, Auburn, Saugus, Stoughton
Mississippi County Clerks of: Xxxxx County,
Lauderdale County, Xxxxx County, Xxxxxxxx
County
Missouri County Clerks of: St. Louis County,
Xxxxxxx County, Xxxxxx County, St Xxxxxxx
County
New Hampshire Town Clerks of: Nashua,
Manchester, Dover, Salem, Plastow
New York County Clerks of; Suffolk County,
Saratoga County, Nassau County, Rockland
County, Westchester County, Albany County,
Xxxxxx County, Dutchess County, Monroe
County, Orange County, Queens County,
Clinton County, Oneida County, New York
County
North Carolina County Clerks of: Cumberland
County, Xxxxxx County, Mecklenburg County,
Guilford County
X.X. Xxxxxx Co. Realty, Inc. Central Filing Offices in: Louisiana, Tennessee
7100 Service Merchandise Drive and Texas
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000 The Recorder of Mortgages of Orleans Parish,
Louisiana
134
DEBTOR NAME AND LOCATION OF CHIEF FILING LOCATION FOR UCC-3 ASSIGNMENTS
EXECUTIVE OFFICE
------------------------------------------------------------------------------------------------------
Homeowners Warehouse, Inc. Central Filing Offices in: Florida, Illinois, Ohio,
7100 Service Merchandise Drive Tennessee and Virginia
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000 Ohio County Clerks of: Franklin County,
Xxxxx County, Xxxxx County, Xxxxx County,
Richland County, Xxxxxxxx County, Clermont
County, Summit County, Xxxxx County
Virginia County Clerks of: Virginia Beach
County, Fairfax County, Henrico County,
Chesterfield County, Chesapeake County,
Spotsylvania County, Prince Xxxxxxx County,
Hampton County
Service Merchandise Co. Broad, Inc. Central Filing Office in: Tennessee
7100 Service Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise Co. No. 30, Inc. Central Filing Offices in: Michigan and
7100 Service Merchandise Drive Tennessee
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise Co. No. 34, Inc. Central Filing Office in: Tennessee
7100 Service Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise Co. No. 35, Inc. Central Filing Office in: Tennessee
7100 Service Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise Co. No. 51, Inc. Central Filing Offices in: Illinois and Tennessee
0000 Xxxxxxx Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise Co. No. 93, Inc. Central Filing Offices in: New Jersey and
7100 Service Merchandise Drive Tennessee
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
135
DEBTOR NAME AND LOCATION OF CHIEF FILING LOCATION FOR UCC-3 ASSIGNMENTS
EXECUTIVE OFFICE
------------------------------------------------------------------------------------------------------
Service Merchandise Co. No. 99, Inc. Central Filing Offices in: Nevada and
1325 Air Xxxxxx Xxx Xxxxxxxxx
Xxxxx 000
Xxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise Company, Inc. Central Filing Offices in: Alabama, Arizona,
7100 Service Merchandise Drive Arkansas, California, Colorado, Connecticut,
Xxxxxxxxx, XX 00000 Delaware, Florida, Illinois, Indiana, Iowa,
Tax I.D. Number: 00-0000000 Kansas, Kentucky, Louisiana, Maine,
Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Missouri, Nebraska,
Nevada, New Hampshire, New Jersey, New
Mexico, New York, North Carolina, Ohio,
Oklahoma, Pennsylvania, South Carolina,
Tennessee, Texas, Vermont, Virginia and
Washington
Arkansas County Clerks of: Sebastian County,
Pulaski County, Washington County
Georgia County Clerks of: Chatham County,
Xxxx County, DeKalb County, Xxxxxx County,
Richmond County
Kentucky County Clerks of: Jefferson County,
Franklin County
The Recorder of Mortgages of Orleans Parish,
Louisiana
Massachusetts Town Clerks of: Tewksbury,
Somerville, Burlington, Natick, Lanesborough,
Holyoke, Auburn, Saugus, Stoughton
Mississippi County Clerks of: Xxxxx County,
Lauderdale County, Xxxxx County, Xxxxxxxx
County
136
DEBTOR NAME AND LOCATION OF CHIEF FILING LOCATION FOR UCC-3 ASSIGNMENTS
EXECUTIVE OFFICE
------------------------------------------------------------------------------------------------------
Service Merchandise Company, Inc. cont. Missouri County Clerks of: St. Louis County,
Xxxxxxx County, Xxxxxx County, Xx. Xxxxxxx
Xxxxxx
Xxx Xxxxxxxxx Xxxx Clerks of: Nashua,
Manchester, Dover, Salem, Plastow
New York County Clerks of: Suffolk County,
Saratoga County, Nassau County, Rockland
County, Westchester County, Albany County,
Xxxxxx County, Dutchess County, Monroe
County, Orange County, Queens County,
Clinton County, Oneida County, New York
County
North Carolina County Clerks of: Cumberland
County, Xxxxxx County, Mecklenburg County,
Durham County, Guilford County
Ohio County Clerks of: Franklin County,
Xxxxx County, Xxxxx County, Xxxxx County,
Richland County, Xxxxxxxx County, Clermont
County, Summit County, Xxxxx County
Pennsylvania County Clerks of: Allegheny
County, Lehigh County, Xxxxxxxxxxxx
County, Delaware County, Philadelphia
County, Dauphin County, Luzerne County,
Lancaster County, Berks County, Lackawana
County
Virginia County Clerks of: Virginia Beach
County, Fairfax County, Henrico County,
Chesterfield County, Chesapeake County,
Spotsylvania County, Prince Xxxxxxx County,
Hampton County
137
DEBTOR NAME AND LOCATION OF CHIEF FILING LOCATION FOR UCC-3 ASSIGNMENTS
EXECUTIVE OFFICE
------------------------------------------------------------------------------------------------------
Service Merchandise Company of Kansas, Central Filing Offices in: Alabama, Kansas,
Inc. Pennsylvania and Tennessee
7100 Service Merchandise Drive
Brentwood, TN 37027 Pennsylvania County Clerks of: Allegheny
Tax I.D. Number: 00-0000000 County, Lehigh County, Xxxxxxxxxxxx
County, Delaware County, Philadelphia
County, Dauphin County, Luzerne County,
Lancaster County, Berks County, Lackawana
County
Service Merchandise Company of Iowa, Inc. Central Filing Offices in: Iowa and Tennessee
0000 Xxxxxxx Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise Financial, Co., Inc. Central Filing Office in: Tennessee
7100 Service Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise Indiana Partners Central Filing Offices in: Indiana and
7100 Service Merchandise Drive Tennessee
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise of Tennessee Limited Central Filing Office in: Tennessee
Partnership
7100 Service Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
Service Merchandise of Texas Limited Central Filing Offices in: Tennessee and Texas
Partnership
0000 Xxxxxxx Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
SMC-HC, Inc. Central Filing Office in: Tennessee
7100 Service Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000
138
DEBTOR NAME AND LOCATION OF CHIEF FILING LOCATION FOR UCC-3 ASSIGNMENTS
EXECUTIVE OFFICE
------------------------------------------------------------------------------------------------------
The Toy Store, Inc. Central Filing Offices in: Kentucky and
7100 Service Merchandise Drive Tennessee
Xxxxxxxxx, XX 00000
Tax I.D. Number: 00-0000000 County Clerk of Jefferson County, Kentucky
Wholesale Supply Company, Inc. Central Filing Offices in: California, Florida,
7100 Service Merchandise Drive Kentucky, New York, South Carolina,
Xxxxxxxxx, XX 00000 Tennessee, Texas and Washington
Tax I.D. Number: 00-0000000
Clerk of the Superior Court of Chatham
County, Georgia
139
Schedule 5.17
TO CREDIT AGREEMENT
INTELLECTUAL PROPERTY MATTERS
None.
140
Schedule 5.19
TO CREDIT AGREEMENT
MATERIAL REAL PROPERTY
I. MORTGAGED PROPERTIES
STATE STORE LOCATION HOLDING OWNER
----- ----- -------- ------- -----
XX 00 DOVER GROUND LEASE Service Merchandise Co., Inc.
NC 28 CHARLOTTE GROUND LEASE Service Merchandise Co., Inc.
PA 82 SCRANTON FEE Service Merchandise Co., Inc.
PA 129 XXXXXX-XXXXX FEE Service Merchandise Co., Inc.
TN 163 CHATTANOOGA FEE Service Merchandise Co., Inc.
AZ 169 MESA FEE Service Merchandise Co., Inc.
AZ 170 GLENDALE FEE Service Merchandise Co., Inc.
TN 186 ANTIOCH FEE Service Merchandise Co., Inc.
TX 197 LEWISVILLE FEE Service Merchandise Co., Inc.
PA 198 HARRISBURG FEE Service Merchandise Co., Inc.
TX 205 LAREDO GROUND LEASE Service Merchandise Co., Inc.
NY 206 HENTRIETTA GROUND LEASE Service Merchandise Co., Inc.
MD 231 SALISBURY GROUND LEASE Service Merchandise Co., Inc.
MO 246 CRESTWOOD FEE Service Merchandise Co., Inc.
GA 251 SMYRNA FEE X.X. Xxxxxx Co., Inc.
FL 262 TAMPA FEE Service Merchandise Co., Inc.
AZ 274 MESA FEE Service Merchandise Co., Inc.
GA 278 ALPHARETTA FEE X. X. Xxxxxx Co., Inc.
FL 295 ORLANDO FEE Service Merchandise Co., Inc.
FL 303 ALTAMONTE GROUND LEASE Service Merchandise Co., Inc.
SPRINGS
SC 308 CHARLESTON FEE Service Merchandise Co., Inc.
IL 310 CRYSTAL LAKE FEE Service Merchandise Co., Inc.
CT 340 MANCHESTER GROUND LEASE X. X. Xxxxxx Co., Inc.
FL 347 CORAL GABLES GROUND LEASE X. X. Xxxxxx Co., Inc.
DE 351 WILMINGTON GROUND LEASE Service Merchandise Co., Inc.
IL 355 SCHAUMBURG GROUND LEASE Service Merchandise Co., Inc.
TX 369 HOUSTON GROUND LEASE Service Merchandise Co., Inc.
TX 370 HOUSTON FEE X. X. Xxxxxx Co., Inc.
TX 381 SOUTH GROUND LEASE X. X. Xxxxxx Co., Inc.
ARLINGTON
FL 388 MIAMI GROUND LEASE Service Merchandise Co., Inc.
FL 390 SUNRISE FEE Homeowners Warehouse, Inc.
IL 402 NORTHLAKE FEE Service Merchandise Co., Inc.
LA 416 XXXXXX FEE X. X. Xxxxxx Co., Inc.
TX 469 MESQUITE FEE X. X. Xxxxxx Co., Inc.
MI 533 NOVI GROUND LEASE Service Merchandise Co., Inc.
TN 980 NASHVILLE FEE Service Merchandise Co., Inc.
SC 152 CHARLESTON GROUND LEASE Service Merchandise Co., Inc.
MS 342 JACKSON GROUND LEASE X. X. Xxxxxx Co., Inc.
PA 779 WEST MIFFLIN GROUND LEASE Service Merchandise Co., Inc.
PA 786 GREENSBURG GROUND LEASE Service Merchandise Co., Inc.
KY 160 OWENSBORO FEE Service Merchandise Co., Inc.
AL 185 HUNTSVILLE FEE Service Merchandise Co., Inc.
141
STATE STORE LOCATION HOLDING OWNER
----- ----- -------- ------- -----
KY 177 PADUCAH FEE Service Merchandise Co., Inc.
TN 777 FRANKLIN FEE Service Merchandise Co., Inc.
TN 99K2 BRENTWOOD FEE Service Merchandise Co., Inc.
(excluding 6 acres of
out-parcel)
II. EXCLUDED PROPERTIES
See Schedule 7.10(b).
142
Schedule 5.23
TO CREDIT AGREEMENT
DEPOSITARY ACCOUNTS
Account Name: Service Merchandise Co., Inc.
Consolidated:
BANK/NAME ACCOUNT ADDRESS CITY STATE POSTAL/CODE
--------- ------- ------- ---- ----- -----------
XxXxxxx 000000 000 Xxxxxx Xxxxxx Xxxxxxxxxxx XX 00000
ABM-AMRO Bank 106032121 Xxx XXX Xxxxx Xxxxxxxxx XX 00000-0000
Bank of America CA 1235002185 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx XX 00000
Suite 0000
Xxxx xx Xxxxxx XX 00000000 000 Xxxxxxx Xxxxxx, Xxxxxx XX 00000
Mail Stop 00-00-00
Xxxx xx Xxxxxx XX 67417305 000 Xxxxxxx Xxxxxx Xxxxxx XX 00000
Mail Stop 01-07-08
Bank of Oklahoma 207904778 P. O. Xxx 0000 Xxxxx XX 00000
Bank One LA 2101348590 000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx XX 00000-0000
X. X. Xxx 0000
Xxxxx Xxxxxxxxx Xxxx 323514790 000 Xxxx Xxxxxx Xxx Xxxx XX 00000
Chase Texas 101395961 P. O. Xxx 0000 Xxxxxxx XX 00000-0000
Comerica Bank 1840081622 000 Xxxxxxxxxxx Xxxxxx Xxxxxxx XX 00000
Deposit Guaranty 5002938694 1 Deposit Guaranty Xxxxxxx XX 00000
Plaza,
P. O. Box 1200
Fifth Third Bank 00000000 Xxxxx Xxxxx Xxxxxx Xxxxxxxxxx XX 00000
First American National 1569847 000 Xxxxx Xxxxxx - 0xx Xxxxxxxxx XX 00000-0000
Bank Floor
Xxxxx Fargo Bank 4159528785 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx XX 00000
Suite 400
First National Bank of 00000000 00 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx XX 00000
Maryland
First Union National Bank 2020000176239 000 Xxxxxx Xxx, Xxxxx Xxxxxxxxx XX 00000
Fleet Bank 9384700997 Xxx Xxxxxxxx Xxxxx, Xxxxxxxx XX 00000-0000
000 Xxxxxxx Xxxx.
Xxxxxx Trust & Savings 4065223 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx XX 00000
Bank P. O. Box 755
Key Bank OH 700394698 0000 Xxxxxxx Xxxx, Xxxx Xxxxxxxxx XX 00000
Code OH-01-00-0409
Merchantile Bank 4331409286 P. O. Xxx 00000 Xxxxxx Xxxx XX 00000-0000
NationsBank 1290149138 Xxx Xxxxxxx Xxxxx Xxxxxxxxx XX 00000-0000
TN1-100-05-07
NBD Bank 715001255143 Xxx Xxxxxx Xxxxxx Xxxx Xxxxx XX 00000-0000
Norwest Bank 1019132720 0000 Xxxxxxxx Xxxxxx XX 00000-0000
PNC Bank 300158269 000 Xxxx Xxxxxxxxx Xxxxxx Xxxxxxxxxx XX 00000-0000
143
Schedule 5.23
TO CREDIT AGREEMENT
(Continued)
DEPOSITARY ACCOUNTS
Account Name: Service Merchandise Co., Inc.
Non-consolidated:
BANK/NAME ACCOUNT ADDRESS CITY STATE POSTAL/CODE
--------- ------- ------- ---- ----- -----------
Chase-San Xxxxxx Xxxxxx 06300280569 Xxxxxx Xxxx Xxx Xxxxxx XX 00000
Citizens Bank & Trust 0000000 000 Xxxxxxxx, Xxxxxxx XX 00000
P. O. Box 2400
Crestar 202219542 Ric 7694, Xxxxxxxx XX 00000-0000
First Bank Southwest 03600189193 P. O. Xxx 00000 Xxxxxxxx XX 00000-0000
Xxxxxxx Bank 070332908 P. O. Xxx 0000 Xxxxxxxxx XX 00000
Laredo National Bank 0000000 0000 XxXxxxxxx Xxxx Xxxxxx XX 00000
NBD Xxxx XX 0000000 000 Xxxxxxxx Xxxxxx Xxxxxxx XX 00000
Permanent Federal 581636117 P. O. Xxx 0000 Xxxxxxxxxx XX 00000
Savings
Rapides Bank & Trust 000024066 P. O. Xxx 00 Xxxxxxxxxx XX 00000
Regions 3700335207 P. O. Xxx 0000 Xxxxxxxx XX 00000
Terre Haute First National 2509288 Springhill Branch, Xxxxx Xxxxx XX 00000
Bank 0000 Xxxxx Xxx Xxxx
Xxxxx Gulf Bank 1000708255 P. O. Drawer H Freeport TX 77566
CASH COLLATERAL ACCOUNTS: See Schedule 8.3(f) item 14 which is incorporated
herein by reference.
144
Schedule 5.25
TO CREDIT AGREEMENT
Y2K COMPLIANCE EXCEPTIONS
(a) Completed
(b) A non-software based testing methodology of mission-critical
corporate/non-store business systems ("Corporate/Non-store Systems")
and core retail/store systems ("Store systems") has been implemented by
Borrower.
(c) At this time, Borrower has reviewed and tested a significant portion of
its material Corporate/Non-store Systems for Y2K compliance. Testing of
Store Systems for Y2K Compliance has been scheduled, but has not been
undertaken at this time. (Store Systems known to be non-compliant are
not scheduled for testing.) All scheduled Store System testing is
projected to be completed in the first half of 1999. System testing and
Y2K modifications are being conducted simultaneously by Borrower and as
a result, Borrower is approximately eighty-seven percent (87%) complete
with all testing and modifications for Y2K Compliance for
Corporate/Non-store Systems.
(d) Borrower has completed an extensive plan of action, as generally
described below, Borrower has identified and plans to implement the
following changes and modifications to the Store Systems for Y2K
Compliance:
1. Hardware/Operating System - (1) replace all primary
store servers with new Intel-based servers; and (2)
eliminate use of all CDOS-based store platforms and
replace with a Y2K compliant Windows NT 4.0 platform.
2. Business Applications - Transfer CDOS-based
applications to Visual Basic applications,
functioning in a Windows NT 4.0 environment.
3. Software - Related Software Development will also be
required to achieve Y2K Compliance.
The above plan of action will require a project capital
expenditure of approximately $3,300,000.00.
(e) See response to 5.25(d) above.
(f) Through joint participation with other national retailers and the
National Retail Federation ("NRF"), Borrower is in the process of
completing a general survey for Corporate/Non-store Systems and Store
Systems of its major merchandise and expense vendors/suppliers (the
"NRF Survey"), Borrower is awaiting the results of this survey.
145
(g) Once the NRF Survey results are obtained and tabulated, appropriate
testing will be conducted.
(h) Change implementation will be undertaken by Borrower and a written
contingency plan will be developed in the near future by Borrower.
(i) All Y2K Compliance changes, modifications and corrections to Borrower's
mission critical Corporate/Non-store Systems, which are known by
Borrower to be necessary for Y2K compliance, are projected to be
completed in the first half of 1999. Significant progress has also been
accomplished by Borrower in making required program changes and
software upgrades to the Store Systems in order to achieve Y2K
Compliance, including pilot testing of new Hardware and Operating
Systems which is underway at this time.
146
Schedule 5.25
TO CREDIT AGREEMENT
(ATTACHMENT)
[SERVICE MERCHANDISE LETTERHEAD]
STORE SYSTEMS REVIEW
JANUARY 13, 1999
147
Store System Summary
Current State of Store System
Store Server
- Motorola 68040
- Last Manufactured in 1994
- Motorola Xxxx (X0X0) operating system is no longer supported
Store Equipment - Registers and Peripherals
- Mix of Registers
- Perry 9310 (6,989) last manufactured in 1986. Failure rate -
46.5%. Parts no longer available.
- Perry 9380 (1,437) last manufactured in 1989. Failure rate
84.9%. Parts no longer available.
- Merit (1,983) last manufactured in 1995. Failure rate 12.9%.
- Ultimate Technology (725) still manufactured. PC based
register.
- Microbilt payment processing equipment (credit, signature capture, and
check) is no longer manufactured. Most replacement parts are no longer
available.
- Radio Frequency Network - Symbol Spectrum 24, Strong RF network using
current technology.
Business Applications - CDS Business Basic (CDOS)
- The majority of applications have been developed in house over the last
twenty years.
- CDOS is not Year 2000 compliant.
- CDOS has very limited support. SMC is primary user of CDOS.
Developer/architect of CDOS is no longer alive.
- SMC uses packaged software for printing of tags and signs and labor
scheduling. Neither of these packages are Y2K compliant.
Business Risks with Store System
- Motorola server is no longer supported by the manufacturer. Motorola
UNIX is no longer supported by software or database vendors.
- High failure rate of obsolete hardware increases cost of ownership. SMC
maintains a dedicated staff just to repair obsolete registers and
Microbilt equipment. Parts must be salvaged from old equipment.
- CDOS is a proprietary language with minimal, if any, support.
- Layaways will not be able to calculate final layaway payment date after
April 30, 1999. Average layaway sales in excess of $5 million / month.
Purchase orders and publications that have a term date in 2000 can not
be processed by the Store System.
- Software packages for labor scheduling and printing of tags are not Y2K
compliant. No alternative in the Motorola UNIX environment is available
that is Y2K compliant.
2
148
- No outside contract help is available for the current work environment.
SMC resources are limited to what SMC can hire and train.
- Staff retention in the current environment is challenging. Coupled with
the company's financial problems, staff turnover will be very high. The
technical staff is holding on to gain the experience gained by working
on current technology.
- Point of sale system lacks flexibility and is too complex.
- No system redundancy to protect against system down time.
- Customer service is adversely affected by slow and broken equipment.
Current Direction for Store Systems
Store Server
- Dual server strategy leveraging the Administration Workstation as the
backup server, Manual fall over protection for system failures.
- Hardware evaluation completed. Dell has been selected as the provider
of the store server. Dell's final quote was over $6,000 per store
cheaper than Compaq, IBM or NCR.
Store Equipment - Registered Peripherals
- The Perry registers are planned to be replaced in 1999 through 2001.
- Replacement for the Microbilt equipment is planned for 1999 and 2000.
SMC is working with Checkmate, Verifone and Penware on the replacement
solution.
Business Applications - CDS Business Basic (CDOS)
- CDOS applications have been "ported" to Visual Basic for a Windows NT
environment. Currently installed at the Hickory Hollow (#186) store.
- NCR has been selected to stage and install a new store server, backup
server and Jewelry Receiving in the stores. A contract has been signed
with NCR.
- Installation of the new hardware and "ported" software is scheduled to
be completed by the end of March. We are behind due to the recent
transition. Orders need to be placed and installation schedules need to
be finalized this week.
- ELT has provided SMC with a Y2K upgrade for the NT server for printing
of tags and signs.
- Final negotiations have been completed on a current version of labor
scheduling software. This software runs on the NT. Contract needs to be
signed by the end of this week.
- POS software will be either re-written or replaced to simplify the
business process and take advantage of current technology.
3
149
Cost of Store Technology Conversion
Projection for 210 Stores
This Week 30 Days Remaining 1999 2000
140 Stores 70 Stores
--------------------------------------------------------------------------------------------------------------------------
Servers/Installation $2,182,600 $1,091,300 $15,590 / add. store
Quick Staff $85,000
Registers $460,000 $8,120,000
Microbilt Replacement $137,300 $2,746,000
Software/Services $1,100,000 $2,500,000
Total Investment $2,247,600 $1,091,300 $1,697,300 $13,366,000
Plus Additional Stores
Year 2000 Summary
Current State
Hardware
- Motorola servers are Y2K compliant. Tests have been performed to ensure
the hardware will boot in the Year 2000.
- POS Perry registers are dumb ASCII terminals with no imbedded chips.
These terminals only run an ADM1A terminal emulation. No dates are
stored or calculated on these devices.
- Merit POS registers are a 386 PC based register that only emulates the
ADM1A terminal.
- Ultimate POS registers are 486 PC based registers.
Operating System:
- Motorola UNIX will boot for the year 2000. No extensive tests have been
performed on date calculations in the UNIX environment.
- CDOS is an operating system that resides on top of UNIX and is
responsible for the running the Business Applications. CDOS is NOT Y2K
compliant. Date storage and date calculations are not handled correctly
for the new millennium.
Business Applications:
- Business applications are NOT Y2K compliant under the CDOS operating
system. Layaways, Special Orders, Purchase Orders, Sale Publications
and Communications are date sensitive.
4
150
Plan of Action
Service Merchandise's plan to address Y2K for the store system has been made on
the premise that the store server will be replaced with an Intel based server,
the business applications will be ported to Visual Basic and packaged software
will be upgraded to a current Y2K compliant package. The application port has
been completed and has been in pilot in one store since November 11. Y2K
compliance testing with the new port applications is still in process scheduled
to be completed by 3/1/99.
Hardware/ Operating System:
- Replace the Motorola as the primary server with a new Intel based
server. The Motorola will be used only as a "terminal server". No
business applications will reside on the Motorola.
- Merit and Ultimate registers will be tested for Y2K compliance.
- Port to the Windows NT 4.0 platform. Eliminate all use of CDOS.
Business Applications:
- Ported CDOS applications to Visual Basic running in a Windows NT 4.0
environment.
- Program changes have been completed in the Visual Basic applications to
handle Y2K date calculations and storage.
- Software for printing tags and labor scheduling have been upgraded to
the Windows NT version that is Y2K compliant.
Testing:
- Nine resources are committed to testing Y2K. Testing will be complete
by 3/1/99.
- Interfaces between store system and corporate systems are incorporated
into the text scripts.
- Over 2000 detail test scripts of 160 key store system applications will
be executed.
Capital Projection to complete Y2K compliance - $3.3 M
Store System Contracts
Active Contracts:
NCR Store Reconfiguration - Development contract for the project to port CDOS
applications to Visual Basic. Contract covers a term through April 1999.
NCR Staging and Installation (New Servers) - Service contract signed in December
to provide staging and installation services for the new store servers,
workstations and "ported" software.
Cronus Interactive - Maintenance contract for automated testing tool.
5
151
Symbol Maintenance Agreement - Maintenance contract for all Symbol radio
frequency equipment and Comtec printers.
ELT - Maintenance contract for the packaged software used in the stores to print
signs, display tags and tickets.
Pending Contracts:
Dell Computers - Hardware purchase contract for new store servers and
workstation.
Federated Quick Staff - Maintenance contract extending Service Merchandise the
rights to Quick Staff labor scheduling software.
Store System Staffing
Support - 11 resources
- Daily phone support for the stores
- Support for Mail Order, Protection Services, Warehouse and Corporate
Time Clocks and Technical Services
- Problem resolution
- Small development
- Software turnover and distribution
Development - 16 resources
- Major project development
- Y2K testing for store system
- Y2K development for Mail Order Warehouse, Warehouse and Corporate time
clocks, Protection Services and Technical Services
Store System's Key Projects
1998 Key Initiatives
- Store Reconfiguration Project - worked with NCR to "port" the store
system applications from CDOS to Visual Basic. A pilot store was
installed on November 11.
15,000 hour project.
- Interim Store Format - Major changes were implemented to accommodate
the transition to a bulked out format rather than the traditional
Catalog Showroom format. Changes were made primarily to inventory
management and replenishment.
6
152
- Physical Inventory - The Physical Inventory process was re-written to
take advantage of the radio frequency infra-structure that has been put
in place. Rather than using the registers strapped to a buggy, PI was
completed using the RF equipment.
1999 Key Initiatives
- Store Server Rollout - Installation and support of the new "ported"
system and store servers. Estimated completion date - mid-April.
- Year 2000 - This project includes compliance testing for the store
system.
- "Port" from CDOS to Visual Basic and make Y2K changes for: Technical
Services, Mail Order Warehouse System, Protection Service (Loss
Prevention) and the corporate and warehouse time keeping systems.
- Implement replacement for Microbilt equipment.
- POS enhancements for processing of coupons (tax and customer service
implications) and transaction discounting.
- Begin writing new POS system to take simplify the checkout process and
leverage PC technology in new PC registers.
7
153
Y2K STATUS 01/08/99
SYTEMS COMPLETED
Original Actual Percent
Hour Hours Hours Completion
Systems Estimate Total Used Date
------- -------- ----- ---- ----
M2 Millenium Rel. 3.0 (DBS) 500 763 153% 11/1/96
FA Fixed Assets (DBS) 600 667 115% 11/8/96
AP Accounts Payable 244 68 28% 6/2/97
FB Flash Payroll Budget 738 1396 189% 8/29/97
DE Data Entry 538 14 3% 8/11/97
HA Honeywell to Xxxxxx 36 13 36% 8/19/97
FC Financial Collections 170 0 0% 8/19/97
AA Advertising Accrual 65 0 0% 8/19/97
VF Vendor Freight 108 133 123% 9/26/97
VC Vendor Control 1268 2030 160% 10/17/97
VE Vendor ED 440 455 103% 10/17/97
VI Vendor Invoices 948 1110 117% 10/17/97
AH Huron to DMS 54 70 130% 11/7/97
CC Credit Cards 259 381 147% 11/21/97
CU Corporate Systems 381 246 65% 1/2/98
SE Special Events 704 67 10% 1/16/98
GR Gift Registry 1308 595 45% 3/6/98
LP Loss Prevention 646 15 2% 4/7/98
AO Associate Scheduling 1076 1044 97% 4/8/98
FS Financial Systems 59 14.5 25% 4/8/98
GL General Ledger (DBS) 1300 1376 106% 4/13/98
GL General Ledger 67 0 0% 4/13/98
RA Return Authorization 0 10 0% 5/15/98
MENU Online Menu 16 5 31% 5/15/98
TP Transaction Processing 117 10 9% 5/15/98
BC BAP Inventory Control 48 0 0% 5/21/98
BP BAP ADT System 508 398 78% 5/21/98
BR BAP Accounts Pauable 160 149.5 93% 5/21/98
BX BAP System 101 8 8% 5/21/98
SL Credit Slips 737 172.5 23% 5/21/98
8
154
Original Actual Percent
Hour Hours Hours Completion
Systems Estimate Total Used Date
------- -------- ----- ---- ----
SS New Store Sales 71 129 182% 5/21/98
OM Order Management 959.0 651.0 68% 6/1/98
AD Associate Discount 615.0 34.0 6% 6/3/98
AT Xxxxxx Planning 28 0 0% 6/5/98
CM Cash Management 37.0 67.5 182% 6/2/98
OH Online Household 318.0 0.0 0% 6/4/98
LC Layered Cost 220.0 48.0 22% 6/11/98
HH Household 2542.0 1940.0 75% 6/17/98
FR Customer Friendly Rel. 1952.0 778.0 40% 6/25/98
MA Media Accounting 1139.0 962.0 84% 7/20/98
SA Sales Accounting 388.0 593.5 153% 7/15/98
AC Award Certificate 1245.0 152.0 12% 8/18/98
NY New York Pilot 537.0 516.0 96% 9/30/98
FLFB Flash 194.0 1627.0 839% 9/30/98
BY Buyer Menu 16.0 12 75% 10/31/98
CD Competitive Pricing 28.0 58.5 209% 10/31/98
ST Store Reporting 34.0 25 74% 10/31/98
CG Companion Item 16 12 75% 11/6/98
DF Defective Management 40 12 30% 11/6/98
DP Departmentals 16 10 63% 11/8/98
HR/PN Human Resources/PCN 2153.0 2207.0 103% 11/4/98
DT Display Tags/Tickets 40 20 50% 11/13/98
MP Merchandise Reporting 104 52 50% 11/25/98
PC Product Class 40 42 105% 11/25/98
RE Reports Parameters 16 6 38% 11/25/98
PB Publications 152 57.5 38% 12/9/98
CR Cashier Exception Rpt. 43 57 133% 12/18/98
NS Supplies Purchasing 9 94 1044% 12/14/98
FP Replenishment 140 283 202% 12/30/98
SH Sales History 28 9 32% 12/30/98
CU Common Systems 192 39 20% 12/30/98
EX Employee Commission 81 17 21% 12/30/98
SU System Utilities 96 0 0% 12/30/98
9
155
Original Actual Percent
Hour Hours Hours Completion
Systems Estimate Total Used Date
------- -------- ----- ---- ----
IS Imports 0 0 0% 12/39/98
DW Data Warehouse 0 0 0% 12/30/98
DB Database Services 0 0 0% 12/30/98
EM Electronic Mail 0 0 0% 12/30/98
HS Security Administration 0 0 0% 12/30/98
HU Huron Software Data 0 0 0% 12/30/98
MR Market Research 0 0 0% 12/30/98
NC Netcom 0 0 0% 12/30/98
NE Netman-SYS Analysis 0 0 0% 12/30/98
ON Print Order Newspaper 20 0 0% 12/30/98
OP Computer Operation 0 0 0% 12/30/98
RM Risk Management 0 0 0% 12/30/98
SC Schedule and Control 0 0 0% 12/30/98
SP Sys.&Prog.(Purch) 157 0 0% 12/30/98
TA MIS Training Admin 0 0 0% 12/30/98
TM Tape Management 0 0 0% 12/30/98
MO Mail Order 702.0 998.0 142% 1/11/99
Total Complete 2756.6 22741.5 82%
10
156
Y2K STATUS 01/08/99
APPLICATIONS IN PROCESS OR REMAINING
Original Actual Estimated
Hour Hours Hours Percent Completion
System Lang. Estimate Total Remaining Completed Date Status
------ ----- -------- ----- --------- --------- ---- ------
IC Inventory Control Huron 118 303 20 94% 1/29/99 Testing
IE Inventory Evaluation Huron 104 187 20 90% 1/29/99 Testing
CO Customer Orders Huron 328 37 291 11% 1/29/99 Researching
SO Special Orders Huron 256 80 176 31% 1/29/99 Researching
SI Showroom Interface Cobol 52 0 52 0% 3/30/99 Not Started
SF Store File Maintenance Huron 103 65.5 33.5 66% 3/30/99 Testing
FM File Maintenance Huron 172 91.5 80.5 53% 1/29/99 Testing
MT Manifest Training 10MS 631.0 2022.0 10.0 100% 1/29/99 Ready for Turnover
PI Physical Inventory Huron 104 19 85 18% 1/29/99 Researching
PO Purchase Order Suspense Huron 102 14 88 14% 1/29/99 Testing
PV Purchase Orders Huron 208 18 190 9% 1/29/99 Testing
VM Stock Balancing Huron 18 32.5 8 80% 1/29/99 Ready for Turnover
AP/PO DBS Accounts Payable DBS 1688.0 1454.5 213.5 87% 2/7/99 Testing
AR Accounts Receivable DBS 1576 230 1346 15% 6/30/99 Researching
CA Capital Projects (DBS) DBS 196 0 196 0% 6/30/99 Not Started
GC Gift Certificates DBS 94 0 94 0% 6/30/99 Not Started
RV Records Verifications (DBS) DBS 32 0 32 0% 6/30/99 Not Started
TC Telecommunication (DBS) DBS 20 0 20 0% 6/30/99 Not Started
PS Personal Systems DBS-HR 32 0 32 0% 3/30/99 Not Started
WM Warehouse Management Cobol 1400.0 5100.5 665.5 88% 2/26/99 Testing
TS Tech Support Support 196 157 39 80% 6/30/99 In Process
CV Culinet Operation System Support 24 0 24 0% 6/30/99 Not Started
DS Data Security Support 76 0 76 0% 6/30/99 Not Started
DY Dynaplan Utilities Support 0 0 0 0% 6/30/99 Not Started
ED Electronic Data Interface Support 128 0 128 0% 6/30/99 Not Started
FT FRT Traffic (Purch-DSI) Support 0 0 0 0% 6/30/99 Not Started
G1 (Purchased Software) Support 117 0 117 0% 6/30/99 Not Started
GW Gateway Systems Support 0 0 0 0% 6/30/99 Not Started
11
157
Original Actual Estimated
Hour Hours Hours Percent Completion
System Lang. Estimate Total Remaining Completed Date Status
------ ----- -------- ----- --------- --------- ---- ------
IN Internal Download Support 0 0 0 0% 6/30/99 Not Started
LA Loss Prevention Support 0 0 0 0% 6/30/99 Not Started
NT NT Systems Support 0 0 0 0% 6/30/99 Not Started
TK Tech Services Doc. Support 0 0 0 0% 6/30/99 Not Started
TL Tch Library Support Support 52 0 52 0% 6/30/99 Not Started
WA Traffic (Purch Pkg) Support 0 0 0 0% 6/30/99 Not Started
WE WMS Distribution Support 0 0 0 0% 6/30/99 Not Started
Miscellaneous Systems 0.0 47.0 Complete
Total In Process 7806.0 9658.6 4000.00 71%
Project Management 8122.0 3053.6 1249.5 71%
Total Complete 27556.0 22741.6 0.0 100%
41494.0 35853.6 5330.5 87%
Total
12
158
Schedule 6.1(i)
TO CREDIT AGREEMENT
LOCAL COUNSEL JURISDICTIONS
Florida
Illinois
New York
Tennessee
Texas
159
Schedule 6.1(j)
TO CREDIT AGREEMENT
UCC FILINGS
DEBTOR: X.X. XXXXX CO., INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/30/97 Tennessee
#971-521235 Secretary of State
DEBTOR: X. X. XXXXXX CO., INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 Alabama
#97-37927 Secretary of State
9/12/97 Arkansas
#1093226 Xxxxxxxxx xx Xxxxx
0/0/00 Xxxxxxxxx Xxxxxx,
#00-000 Xxxxxxxx
4/3/98 Xxxxxxx Xxxxxx,
#00 000000 Xxxxxxxx
4/3/98 Washington County,
#9801058 Arkansas
9/11/97 Colorado
#1997-2077309 Secretary of State
9/11/97 Connecticut
#1800874 Secretary of State
5/6/97 Florida
#97-0000098047 Secretary of State
9/10/97 Florida
#97-0000204096 Secretary of State
160
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/15/97 Xxxx County,
#11-97-4839 Georgia
4/22/97 Chatham County,
#000-00-000000 Georgia
4/7/97 Xxxxxxx County,
#000-00-000000 Georgia
6/12/97 Xxxxxxx County
#000-00-000000 Georgia
4/7/97 Xxxx County,
#000-00-000000 Georgia
6/12/97 Xxxx County,
#000-00-000000 Georgia
4/22/97 DeKalb County,
#000-00-000000 Georgia
12/16/97 DeKalb County,
#000-00-000000 Georgia
4/8/97 Xxxxxx County,
#000-00-000000 Georgia
6/13/97 Xxxxxx County,
#000-00-000000 Georgia
4/7/97 Gwinett County,
#000-00-000000 Georgia
4/22/97 Muscogee County,
#000-00-000000 Georgia
4/22/97 Richmond County,
#121-97-001401 Georgia
9/11/97 Kansas
#2386380 Secretary of State
9/11/97 Kentucky
#153419 Secretary of State
161
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
10/31/97 Xxxxx County,
#257901 Kentucky
9/15/97 Davies County,
#0-77229 Kentucky
10/31/97 Fayette County
#97-003857 Kentucky
9/16/97 Jefferson County,
#97-07806 Kentucky
9/16/97 XxXxxxxxx County,
#9707631 Kentucky
9/15/97 Xxxxxx County,
#122373-00 Kentucky
3/18/98 Franklin County,
#70809 Kentucky
4/23/97 Bossier Parish,
#08-374409 Louisiana
4/11/97 Caddo Parish,
#09-947633 Louisiana
6/27/97 Caddo Parish,
#09-950607 Louisiana
4/23/97 Calcasieu Parish,
#00-0000000 Louisiana
4/10/97 East Baton Rouge Parish,
#17-1131350 Louisiana
0/0/00 Xxxxxxxxx Xxxxxx,
#00-000000 Louisiana
6/27/97 Xxxxxxxxx Xxxxxx,
#26-216047 Louisiana
4/23/97 Lafayette Parish,
#28-373539 Louisiana
162
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
6/27/97 Lafayette Parish,
#28-374061 Louisiana
4/8/97 Orleans Parish,
#36-116516 Louisiana
9/11/97 Orleans Parish,
#36-121352 Louisiana
9/11/97 The Recorder of Mortgages
#121353 of Orleans Parish,
Louisiana
4/8/97 Ouachita Parish,
#37-65019 Louisiana
4/18/97 Rapides Parish,
#40-031610 Louisiana
0/00/00 Xx. Xxxxxxx Xxxxxx,
#00-00000 Xxxxxxxxx
4/23/97 Terrebonne Parish,
#52-996311 Louisiana
6/27/97 West Baton Rouge Parish,
#61-1997000184 Louisiana
9/11/97 Maine
#1236336 Secretary of State
9/11/97 Massachusetts
#496279 Secretary of State
0/0/00 Xxxx xx Xxxxxxxxx,
#000 Book 98 Massachusetts
0/0/00 Xxxx xx Xxxxxxxxxx,
#000 Xxxxxxxxxxxxx
0/0/00 Xxxx xx Xxxxxxxxxx,
#000 Xxxxxxxxxxxxx
4/8/98 Town of Natick,
#141 Massachusetts
163
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
0/0/00 Xxxx xx Xxxxxxxxxxxx,
#00 drawer #3 Massachusetts
4/8/98 Town of Holyoke,
#37588 Massachusetts
4/8/98 Town of Auburn,
#84 Massachusetts
4/8/98 Town of Saugus,
#26992 Massachusetts
4/8/98 Town of Stoughton,
#18385 Massachusetts
9/10/97 Michigan
#79057B Secretary of State
9/11/97 Mississippi
#0-1140471 Secretary of State
4/6/98 Xxxxx County,
#032105 Mississippi
4/21/98 Lauderdale County,
#3642-98 Mississippi
4/20/98 Xxxxx County,
#8-32083 Mississippi
4/3/98 Xxxxxxxx County,
#002698 Mississippi
9/11/97 Missouri
#2828630 Xxxxxxxxx xx Xxxxx
0/0/00 Xx. Xxxxx Xxxxxx,
#0000 Missouri
4/9/98 Xxxxxxx County, Missouri
#J395860
4/3/98 Xxxxxx County, Missouri
#001439
164
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
0/0/00 Xx. Xxxxxxx Xxxxxx, Xxxxxxxx
#00000
9/11/97 New Hampshire Secretary of
#495258 State
4/8/98 Town of Nashua, New
#077044 Hampshire
4/8/98 Town of Manchester, New
#124,314 Hampshire
0/0/00 Xxxx xx Xxxxx, Xxx Xxxxxxxxx
#000
0/0/00 Xxxx xx Xxxxx, Xxx Xxxxxxxxx
#29901
0/0/00 Xxxx xx Xxxxxxxx, Xxx
#0000 Xxxxxxxxx
0/00/00 Xxx Xxxxxx Secretary of State
#97-0911034
9/10/97 New York Secretary of State
#188463
0/0/00 Xxxxxxx Xxxxxx, Xxx Xxxx
#00-00000
0/0/00 Xxxxxxxx Xxxxxx, Xxx Xxxx
#00000
4/6/98 Nassau County, New York
#UC98005809
0/0/00 Xxxxxxxx Xxxxxx, Xxx Xxxx
#0000-00000
0/0/00 Xxxxxxxxxxx Xxxxxx, Xxx Xxxx
#00-00000
0/0/00 Xxxxxx Xxxxxx, Xxx Xxxx
#00-00000
165
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
4/3/98 Xxxxxx County, New York
#1199800828
0/0/00 Xxxxxxxx Xxxxxx, Xxx Xxxx
#00-0000
0/0/00 Xxxxxx Xxxxxx, Xxx Xxxx
#00-0000
0/0/00 Xxxxxx Xxxxxx, Xxx Xxxx
#00000
0/0/00 Xxxxxx Xxxxxx, Xxx Xxxx
#00XX00000
0/0/00 Xxxxxxx Xxxxxx, Xxx Xxxx
#00-0000
4/8/98 Oneida County, New York
#981878
4/10/98 Xxx Xxxx Xxxxxx, Xxx Xxxx
#00XX00000
9/11/97 North Carolina Secretary of
#1499126 State
4/3/98 Cumberland County, North
#002449 Carolina
0/0/00 Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx
#00-000
4/3/98 Mecklenburg County, North
#5064 Carolina
4/8/98 Durham County, North Carolina
Book 98 Page 936
4/3/98 Guilford County, North Carolina
#473456
9/12/97 Oklahoma Secretary of State
#0-47305
166
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 South Carolina Secretary of State
#113952A
9/30/97 Tennessee Secretary of State
#971-521231
9/30/97 Texas Secretary of State
#202015
9/22/97 Vermont Secretary of State
#97-85333
167
DEBTOR: X.X. XXXXXX CO. REALTY, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 The Recorder of Mortgages of
#121352 Orleans Parish, Louisiana
9/30/97 Tennessee Secretary of State
#971-521236
12/18/98 Texas Secretary of State
#9800249755
DEBTOR: HOMEOWNERS WAREHOUSE, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
5/6/97 Florida Secretary of State
#970000098046
9/10/97 Florida Secretary of State
#970000204086
9/10/97 Illinois Secretary of State
#3738134
9/10/97, Ohio Secretary of State
#AN94982
4/3/98 Franklin County, Ohio
#199804030079811
4/3/98 Xxxxx Xxxxxx, Xxxx
#000000
4/3/98 Xxxxx County, Ohio
#0980828
4/3/98 Xxxxx County, Ohio
#9800001175
4/8/98 Richland County, Ohio
#9800009287
168
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
4/15/98 Xxxxxxxx Xxxxxx, Xxxx
#00-00000
4/3/98 Xxxxxxxx Xxxxxx, Xxxx
#000000
0/0/00 Xxxxxx Xxxxxx, Xxxx
#00000000
0/0/00 Xxxxx Xxxxxx, Xxxx
#00000
9/30/97 Tennessee Secretary of State
#971-521221
9/10/97 State Corporation Commission,
#9709107063 Virginia
4/3/98 Xxxxxxxx Xxxxx Xxxxxx, Xxxxxxxx
#00-0000
0/0/00 Xxxxxxx Xxxxxx, Xxxxxxxx
#00-000000
0/0/00 Xxxxxxx Xxxxxx, Xxxxxxxx
#00-000
0/0/00 Xxxxxxxxxxxx Xxxxxx, Xxxxxxxx
#9800736
4/7/98 Xxxxxxxxxx Xxxxxx, Xxxxxxxx
#00000
4/3/98 Spotsylvania County, Virginia
#98-369
0/0/00 Xxxxxx Xxxxxxx Xxxxxx, Xxxxxxxx
#00000 Book 0039
Page 1710
4/3/98 Xxxxxxx Xxxxxx, Xxxxxxxx
#00000
169
DEBTOR: SERVICE MERCHANDISE CO. BROAD, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/30/97 Tennessee Secretary of State
#971521229
DEBTOR: SERVICE MERCHANDISE CO. NO. 30, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/10/97 Michigan Secretary of State
#79059B
9/30/97 Tennessee Secretary of State
971-521234
DEBTOR: SERVICE MERCHANDISE CO. NO. 34, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/30/97 Tennessee Secretary of State
#971-521233
DEBTOR: SERVICE MERCHANDISE CO. NO. 35, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/30/97 Tennessee Secretary of State
#971-521216
170
DEBTOR: SERVICE MERCHANDISE CO. NO. 51, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/10/97 Illinois Secretary of State
#3738133
9/30/97 Tennessee Secretary of State
#971-521230
DEBTOR: SERVICE MERCHANDISE CO. NO. 93, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 New Jersey Secretary of State
#1790875
9/30/97 Tennessee Secretary of State
#971521217
DEBTOR: SERVICE MERCHANDISE CO. NO. 99, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
10/15/97 Nevada Secretary of State
#9717431
9/30/97 Tennessee Secretary of State
#971-521232
171
DEBTOR: SERVICE MERCHANDISE COMPANY OF IOWA, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 Iowa Secretary of State
#K859671
9/30/97 Tennessee Secretary of State
#971-521218
DEBTOR: SERVICE MERCHANDISE COMPANY OF KANSAS, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 Alabama Secretary of State
#97-37926
9/11/97 Kansas Secretary of State
#2386379
9/10/97 Pennsylvania Secretary of State
#27081655
4/7/98 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx
#00-0000
4/8/98 Xxxxxx Xxxxxx, Xxxxxxxxxxxx
#00XX000000
4/3/98 Xxxxxxxxxxxx County,
#1998-799 Pennsylvania
4/3/98 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx
#00-000000
4/3/98 Philadelphia County,
98-1834 Pennsylvania
4/8/98 Dauphin County, Pennsylvania
627-ST-1998
172
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
4/3/98 Luzerne County, Pennsylvania
#565-98
4/8/98 Lancaster County, Pennsylvania
#C1-98-04062
0/0/00 Xxxxx Xxxxxx, Xxxxxxxxxxxx
#00-000XX
0/0/00 Xxxxxxxxx Xxxxxx,
#00000 Pennsylvania
9/30/97 Tennessee Secretary of State
#971-521227
DEBTOR: SERVICE MERCHANDISE FINANCIAL CO., INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/30/97 Tennessee Secretary of State
#971-521224
DEBTOR: SERVICE MERCHANDISE INDIANA PARTNERS
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/30/97 Indiana Secretary of State
#2149206
9/30/97 Tennessee Secretary of State
#971-521220
000
XXXXXX: XXXXXXX XXXXXXXXXXX XX XXXXX LIMITED PARTNERSHIP
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/30/97 Tennessee Secretary of State
#971-521219
9/10/97 Texas Secretary of State
#187568
DEBTOR: SERVICE MERCHANDISE OF TENNESSEE LIMITED PARTNERSHIP
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/10/97 Tennessee Secretary of State
#971-521225
DEBTOR: THE TOY STORE, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 Xxxxxxxxx Xxxxxx, Xxxxxxxx
#00-00000
9/11/97 Kentucky Secretary of State
#153420
6/3/97 Tennessee Secretary of State
#972-043017
174
DEBTOR: SERVICE MERCHANDISE COMPANY, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 Alabama Secretary of State
#97-37929
9/11/97 Arizona Secretary of State
#984212
9/12/97 Arkansas Secretary of State
#1093227
4/3/98 Sebastian County, Arkansas
98-378
4/3/98 Pulaski County, Arkansas
#98-023978
4/3/98 Washington County, Arkansas
#9801057
10/1/97 California Secretary of State
#97-27560661
9/11/97 Colorado Secretary of State
1997-2077314
9/11/97 Connecticut Secretary of State
#1800871
9/11/97 Delaware Secretary of State
#9730618
5/6/97 Florida Secretary of State
#970000098045
9/10/97 Florida Secretary of State
#970000204093
4/10/97 Chatham County, Georgia
#000-00-000000
0/0/00 Xxxx Xxxxxx, Xxxxxxx
#000-00-000000
0/0/00 XxXxxx Xxxxxx, Xxxxxxx
#000-00-000000
175
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
4/8/97 Xxxxxx County, Georgia
#000-00-000000
9/10/97 Xxxxxx County, Georgia
#18765
0/0/00 Xxxxxxxx Xxxxxx, Xxxxxxx
#000-00-000000
0/0/00 Xxxxxxxx Xxxxxx, Xxxxxxx
#000-00-000000
9/10/97 Illinois Secretary of State
#3738135
9/30/97 Indiana Secretary of State
#2149207
9/11/97 Iowa Secretary of State
#K859672
9/11/97 Kansas Secretary of State
#2386378
9/11/97 Kentucky Secretary of State
#153418
9/22/97 Xxxxxxxx Xxxxxx, Xxxxxxxx
#00000
3/2/98 Xxxxxxxx Xxxxxx, Xxxxxxxx
#00000
9/16/97 Jefferson County, Kentucky
#9707805
9/11/97 The Recorder of Mortgages of
#121374 Orleans Parish, Louisiana
9/11/97 Maine Secretary of State
#1236337
9/12/97 Maryland Secretary of State
#17-2588007
176
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 Massachusetts Secretary of State
#496280
0/0/00 Xxxx xx Xxxxxxxxx,
#000 Book 98 Massachusetts
0/0/00 Xxxx xx Xxxxxxxxxx,
#000 Xxxxxxxxxxxxx
4/8/98 Town of Burlington,
#224 Massachusetts
4/8/98 Town of Natick, Massachusetts
#142
4/9/98 Town of Lanesborough,
#27 Drawer #3 Massachusetts
4/8/98 Town of Xxxxxxx, Xxxxxxxxxxxxx
#00000
4/8/98 Town of Xxxxxx, Xxxxxxxxxxxxx
#00
4/8/98 Town of Xxxxxx, Xxxxxxxxxxxxx
#00000
4/8/98 Town of Stoughton,
#18386 Massachusetts
9/10/97 Michigan Secretary of State
#79058B
9/11/97 Minnesota Secretary of State
#1972101
9/11/97 Mississippi Secretary of State
#0-1140472
4/6/98 Xxxxx County, Mississippi
#032104
4/3/98 Lauderdale County, Mississippi
#3081-98
177
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
4/3/98 Xxxxx Xxxxxx, Xxxxxxxxxxx
#0-00000
4/3/98 Xxxxxxxx County, Mississippi
#002699
9/11/97 Missouri Secretary of State
#2328631
0/0/00 Xx. Xxxxx Xxxxxx, Xxxxxxxx
#0000
4/8/98 Xxxxxxx County, Missouri
#J395797
4/3/98 Xxxxxx County, Missouri
#001438
0/0/00 Xx. Xxxxxxx Xxxxxx, Xxxxxxxx
#00000
9/11/97 Nebraska Secretary of State
#743936
10/15/97 Nevada Secretary of State
#9717430
9/11/97 New Hampshire Secretary of
#495257 State
4/8/98 Town of Nashua, New
#077045 Hampshire
4/8/98 Town of Manchester, New
#124,318 Hampshire
0/0/00 Xxxx xx Xxxxx, Xxx Xxxxxxxxx
#000
0/0/00 Xxxx xx Xxxxx, Xxx Xxxxxxxxx
#29902
4/15/98 Town of Plaistow, New
#3291 Hampshire
178
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 New Jersey Xxxxxxxxx xx Xxxxx
#0000000
0/00/00 Xxx Xxxxxx Secretary of State
#97-0911033
9/10/97 New York Secretary of State
#188464
0/0/00 Xxxxxxx Xxxxxx, Xxx Xxxx
#00-00000
4/3/98 Saratoga County, Xxx Xxxx
#00000
0/0/00 Xxxxxx Xxxxxx, Xxx Xxxx
#98005808
0/0/00 Xxxxxxxx Xxxxxx, Xxx Xxxx
#0000-00000
0/0/00 Xxxxxxxxxxx Xxxxxx, Xxx Xxxx
#00-00000
0/0/00 Xxxxxx Xxxxxx, Xxx Xxxx
#00-00000
4/3/98 Xxxxxx County, New York
#U11998000827
0/0/00 Xxxxxxxx Xxxxxx, Xxx Xxxx
#00 1039
0/0/00 Xxxxxx Xxxxxx, Xxx Xxxx
#00-0000
0/0/00 Xxxxxx Xxxxxx, Xxx Xxxx
#00000
0/0/00 Xxxxxx Xxxxxx, Xxx Xxxx
#00XX00000
4/8/98 Clinton County, New York
98 0957
179
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
4/8/98 Oneida County, New York
#981877
4/10/98 Xxx Xxxx Xxxxxx, Xxx Xxxx
#00XX00000
9/11/97 North Carolina Secretary of
#1499127 State
4/3/98 Cumberland County, North
#002448 Carolina
0/0/00 Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx
#00-000
4/3/98 Mecklenburg County, North
#5063 Carolina
4/8/98 Durham County, North Carolina
#Bk. 98 Pg. 937
4/3/98 Guilford County, North Carolina
#473455
9/10/97 Ohio Secretary of State
#AN94983
4/3/98 Franklin County, Ohio
#199804030079809
4/9/98 Xxxxx Xxxxxx, Xxxx
#000000
4/3/98 Xxxxx County, Ohio
#0980829
4/3/98 Xxxxx County, Ohio
#9800001176
4/8/98 Richland County, Ohio
#9800009286
4/15/98 Xxxxxxxx Xxxxxx, Xxxx
#00-00000
OFF7624 643
180
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
4/3/98 Xxxxxxxx Xxxxxx, Xxxx
#000000
0/0/00 Xxxxxx Xxxxxx, Xxxx
#00000000
0/0/00 Xxxxx Xxxxxx, Xxxx
#00000
9/12/97 Oklahoma Secretary of State
#0-47304
9/10/97 Pennsylvania Secretary of State
#27081651
4/7/98 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx
#00-0000
4/8/98 Xxxxxx Xxxxxx, Xxxxxxxxxxxx
#00XX000000
4/3/98 Xxxxxxxxxxxx County,
#1998-800 Pennsylvania
4/3/98 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx
#00-000000
4/3/98 Philadelphia County,
#98-1835 Pennsylvania
4/8/98 Dauphin County, Pennsylvania
#626-ST-1998
4/3/98 Luzerne County, Pennsylvania
#564-98
4/8/98 Lancaster County, Pennsylvania
#C1-98-04061
4/3/98 Berks County, Pennsylvania
#98-855ST
4/3/98 Lackawana County,
#20477 Pennsylvania
181
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/11/97 South Carolina Secretary of State
#114026A
9/30/97 Tennessee Secretary of State
#971-521228
9/10/97 Texas Secretary of State
#187566
9/22/97 Vermont Secretary of State
#97-85334
9/10/97 Virginia Xxxxxxxxx xx Xxxxx
#00-00-00-0000
0/0/00 Xxxxxxxx Xxxxx Xxxxxx, Xxxxxxxx
#00-0000
4/3/98 Fairfax County, Virginia
#98-002982
0/0/00 Xxxxxxx Xxxxxx, Xxxxxxxx
#00-0000
0/0/00 Xxxxxxxxxxxx Xxxxxx, Xxxxxxxx
#9800737
4/3/98 Xxxxxxxxxx Xxxxxx, Xxxxxxxx
#00000
4/3/98 Spotsylvania County, Virginia
#98-370
0/0/00 Xxxxxx Xxxxxxx Xxxxxx, Xxxxxxxx
#00000 book 0039
page 1714
4/3/98 Xxxxxxx Xxxxxx, Xxxxxxxx
#00000
9/11/97 Washington Secretary of State
#00-000-0000
182
DEBTOR: WHOLESALE SUPPLY COMPANY, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
10/1/97 California Secretary of State
#9727560521
9/11/97 Kentucky Secretary of State
#153421
9/10/97 Florida Secretary of State
#970000204095
9/10/97 Chatham County, Georgia
#025199706613
9/10/97 New York Secretary of State
#188461
9/11/97 South Carolina Secretary of State
#114056A
9/30/97 Tennessee Secretary of State
#971-521223
9/10/97 Texas Secretary of State
#187567
9/11/97 Department of Licensing
#00-000-0000 Washington
DEBTOR: SMC-HC, INC.
Filing Date and Filing Number
of Financing Statement Jurisdiction
Assigned
--------------------------------------------------------------------------------
9/30/97 Tennessee Secretary of State
#971-521222
183
Schedule 6.1(1)
TO CREDIT AGREEMENT
UCC LIEN SEARCHES
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
A.F.S. Marketing TNS-S/S UCC n/a
Services, Inc.
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
X.X. Xxxxx Company, TN-S/S UCC Bringdown 8/1/97
Inc.
TN-Davidson County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Davidson Judgment Bringdown 8/1/97
County
X.X. Xxxxxx Co., Inc. AL-S/S UCC Bringdown 8/1/97
AR-S/S UCC Bringdown 8/1/97
CT-S/S UCC Bringdown 8/1/97
CO- Central Index UCC Bringdown 7/1/97
CO-S/S UCC Bringdown 8/1/97
FL-S/S UCC Bringdown 8/1/97
GA-Central Index UCC Bringdown 8/1/97
GA-Xxxx County UCC Bringdown 8/1/97
KS-S/S UCC Bringdown 8/1/97
KY-S/S UCC Bringdown 8/1/97
LA-Central Index UCC Bringdown 8/1/97
LA-Orleans Parish UCC Bringdown 8/1/97
MA-S/S UCC Bringdown 8/1/97
184
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
ME-S/S UCC Bringdown 8/1/97
MI-S/S UCC Bringdown 8/1/97
MO-S/S UCC Bringdown 8/1/97
MS-S/S UCC Bringdown 8/1/97
NH-S/S UCC Bringdown 8/1/97
NM-S/S UCC Bringdown 8/1/97
NY-S/S UCC Bringdown 8/1/97
NC-S/S UCC Bringdown 7/1/97
OK-Oklahoma County UCC Bringdown 8/1/97
SC-S/S UCC Bringdown 8/1/97
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
TX-S/S UCC Bringdown 8/1/97
VT-S/S UCC Bringdown 8/1/97
X. X. Xxxxxx (Co.) TN-S/S UCC Bringdown 8/1/97
Realty, Inc.
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
TX-S/S UCC Bringdown 8/1/97
Homeowners FL-S/S UCC Bringdown 8/1/97
Warehouse, Inc.
IL-S/S UCC Bringdown 8/1/97
OH-S/S UCC Bringdown 7/1/97
185
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Xxxxxxxxxx County Judgment Bringdown 8/1/97
VA-S/S UCC Bringdown 8/1/97
Service Credit Corp. TN-S/S UCC n/a
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
Service Merchandise AL-S/S UCC Bringdown 8/1/97
(Co./Company), Inc.
AZ-S/S UCC Bringdown 8/1/97
AR-S/S UCC Bringdown 8/1/97
CA-S/S UCC Bringdown 8/1/97
CO-Central Index UCC Bringdown 7/1/97
CO-S/S UCC Bringdown 8/1/97
CT-S/S UCC Bringdown 8/1/97
DE-S/S UCC Bringdown 8/1/97
FL-S/S UCC Bringdown 8/1/97
GA-Central Index UCC Bringdown 8/1/97
GA-Xxxxxx County UCC Bringdown 8/1/97
IL-S/S UCC Bringdown 8/1/97
IN-S/S UCC Bringdown 8/1/97
IA-S/S UCC Bringdown 8/1/97
KS-S/S UCC Bringdown 8/1/97
KY-S/S UCC Bringdown 7/1/97
LA-Central Index UCC Bringdown 8/1/97
186
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
LA-Orleans Parish UCC Bringdown 8/1/97
ME-S/S UCC Bringdown 8/1/97
MD-Dept. of Assessments UCC Bringdown 8/1/97
and Taxation
MA-S/S UCC Bringdown 8/1/97
MI-S/S UCC Bringdown 8/1/97
MN-S/S UCC Bringdown 8/1/97
MS-S/S UCC Bringdown 8/1/97
MO-S/S UCC Bringdown 8/1/97
NE-S/S UCC Bringdown 8/1/97
NV-S/S UCC Bringdown 7/1/97
NH-S/S UCC Bringdown 8/1/97
NJ-S/S (Brentwood) UCC Bringdown 8/1/97
NM-S/S UCC Bringdown 7/1/97
NY-S/S UCC Bringdown 8/1/97
NC-S/S UCC Bringdown 7/1/97
OH-S/S UCC Bringdown 7/1/97
OK-Oklahoma County UCC Bringdown 8/1/97
PA-S/S UCC Bringdown 8/1/97
RI-S/S UCC n/a
SC-S/S UCC Bringdown 8/1/97
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
UCC Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
TX-S/S UCC Bringdown 8/1/97
187
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
UT-Division of Corp. and UCC n/a
Comm. Code
VA-S/S UCC Bringdown 8/1/97
Service Merchandise VT-S/S UCC Bringdown 8/1/97
Company (Inc.)
WA-S/S UCC Bringdown 8/1/97
Service Merchandise TN-S/S UCC Bringdown 8/1/97
Company Broad, Inc.
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise MI-S/S UCC Bringdown 8/1/97
Company No. 30, Inc.
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise IN-S/S UCC n/a
Company No. 34, Inc.
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise IN-S/S UCC n/a
Company No. 35, Inc.
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
188
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise IL-S/S UCC Bringdown 8/1/97
Company No. 51, Inc.
IL-S/S Federal Tax Lien 8/1/97
Bringdown
IL-Circuit Court, DuPage Judgment Bringdown 8/1/97
County
TN-S/S UCC Bringdown 8/1/97
Service Merchandise TN-S/S UCC n/a
Co. No. 80, Inc.
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
Service Merchandise NJ-S/S (Brentwood) UCC Bringdown 8/1/97
Company No. 93, Inc.
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise NV-S/S UCC Bringdown 7/1/97
Company No. 99, Inc.
NV-S/S Federal Tax Lien 8/1/97
Bringdown
NV-District Court Washoe Judgment Bringdown 8/1/97
County
TN-S/S UCC Bringdown 8/1/97
Service Merchandise AL-S/S UCC Bringdown 8/1/97
Company of Kansas, Inc.
189
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
KS-S/S UCC Bringdown 8/1/97
PA-S/S UCC Bringdown 8/1/97
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise IA-S/S UCC Bringdown 8/1/97
Company of Iowa, Inc.
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise TN-S/S UCC n/a
Company of New
York, Inc.
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
Service Merchandise TN-S/S UCC Bringdown 8/1/97
Company of Texas
Limited Partnership
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
TX-S/S UCC Bringdown 8/1/97
Service Merchandise IN-S/S UCC n/a
Financial Co., Inc.
MN-S/S UCC n/a
190
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise IN-S/S UCC Bringdown 8/1/97
Indiana Partners
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise of TN-S/S UCC Bringdown 8/1/97
Tennessee Limited
Partners
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Service Merchandise TN-S/S UCC n/a
Office Supply, Inc.
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
Service Merchandise TN-S/S UCC n/a
Showrooms, Inc.
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
Service Merchandise TN-S/S UCC n/a
RM, Inc.
191
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
SMC Aviation, Inc. NH-S/S UCC Bringdown 8/1/97
NH-S/S Federal Tax Lien 0/0/00
Xxxxxxxxx
XX-Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxxx 8/1/97
Rockingham County
NH-Town Clerk of Salem UCC Bringdown 8/1/97
TN-S/S UCC Bringdown 8/1/97
SMC-HC, Inc. DE-S/S UCC n/a
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
SMC-SPE-I, Inc. CT-S/S UCC n/a
DE-S/S UCC n/a
DE-S/S Federal Tax Lien n/a
FL-S/S UCC n/a
GA-Central Index UCC n/a
GA-Xxxxxx County UCC n/a
IN-S/S UCC n/a
LA-Central Index UCC n/a
LA-Orleans Parish UCC n/a
MD-S/S UCC n/a
MI-S/S UCC n/a
NY-S/S UCC n/a
192
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
NC-S/S UCC n/a
OK-Oklahoma County UCC n/a
TN-S/S UCC n/a
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
TX-S/S UCC n/a
VA UCC n/a
SMC-SPE-2, Inc. CT-S/S UCC n/a
DE-S/S UCC n/a
DE-S/S Federal Tax Lien n/a
FL-S/S UCC n/a
GA-Central Index UCC n/a
GA-Xxxxxx County UCC n/a
IN-S/S UCC n/a
LA-Central Index UCC n/a
LA-Orleans Parish UCC n/a
MD-S/S UCC n/a
MI-S/S UCC n/a
NY-S/S UCC n/a
NC-S/S UCC n/a
OK-Oklahoma County UCC n/a
TN-S/S UCC n/a
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
193
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
TX-S/S UCC n/a
VA UCC n/a
The Lingerie Store, TN-S/S UCC n/a
Inc.
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TX-Circuit Court, Xxxxxxxxxx Judgment n/a
County
The XxXxxxx Supply TN-S/S UCC n/a
Company
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TX-Circuit Court, Xxxxxxxxxx Judgment n/a
County
The Toy Store, Inc. AL-S/S UCC n/a
IN-S/S UCC n/a
NC-S/S UCC n/a
KY-S/S UCC Bringdown 8/1/97
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
Travel Management TN-S/S UCC n/a
Consultants, Inc.
TN-Xxxxxxxxxx County Federal Tax Lien n/a
TN-Circuit Court, Xxxxxxxxxx Judgment n/a
County
Wholesale Supply CA-S/S UCC Bringdown 8/1/97
Company, Inc.
FL-S/S UCC Bringdown 8/1/97
194
Loss Party Jurisdiction-Filing Office Type of Search Bringdown Date
---------- -------------------------- -------------- --------------
(if applicable)
GA-Central Index UCC Bringdown 8/1/97
GA-Chatham County UCC Bringdown 8/1/97
KY-S/S UCC Bringdown 8/1/97
NY-S/S UCC Bringdown 8/1/97
SC-S/S UCC Bringdown 8/1/97
TN-S/S UCC Bringdown 8/1/97
TN-Xxxxxxxxxx County Federal Tax Lien 8/1/97
Bringdown
TN-Circuit Court, Xxxxxxxxxx Judgment Bringdown 8/1/97
County
TX-S/S UCC Bringdown 8/1/97
WA UCC Bringdown 8/1/97
195
Schedule 7.3
TO CREDIT AGREEMENT
The Borrower may seek concessions from its trade and consignment
vendors, real estate and equipment lessors and other vendors, including, but not
limited to, printers and technology vendors, with regard to payment and other
terms and/or forgiveness of debt and alternative means of settlement of rent
and/or other costs and/or fees at a reduced amount, as applicable. In connection
with such concessions, the Borrower is considering not making full payment as
due (1) to its trade and consignment vendors; (2) on its real estate leases for
stores closed or to be closed; (3) on its equipment leases; and (4) to its other
vendors, including, but not limited to, printers and technology vendors, which
may have an interest in property of the Borrower.
196
Schedule 7.4
TO CREDIT AGREEMENT
None
197
Schedule 7.10(b)
TO CREDIT AGREEMENT
EXCLUDED PROPERTIES
STATE STORE LOCATION HOLDING OWNER
----- ----- -------- ------- -----
TN 11 NASHVILLE FEE Service Merchandise Co., Inc.
IL 98 BLOOMINGDALE GROUND LEASE Service Merchandise Co., Inc.
TN 99K2 BRENTWOOD (6 acres FEE Service Merchandise Co., Inc.
out of parcel)
MA 188 SWANSEA GROUND LEASE Service Merchandise Co., Inc.
ME 201 AUBURN GROUND LEASE Service Merchandise Co., Inc.
CA 203 VALLEJO GROUND LEASE Service Merchandise Co., Inc.
AZ 204 SCOTTSDALE GROUND LEASE Service Merchandise Co., Inc.
NC 220+ CARY FEE Service Merchandise Co., Inc.
TN 314+ BELLEVUE FEE Service Merchandise Co., Inc.
TX 324 SUGARLAND GROUND LEASE Service Merchandise Co., Inc.
NE 352 LINCOLN FEE Service Merchandise Co., Inc.
MD 434 WHITEMARSH FEE Service Merchandise Co., Inc.
KS 450 WICHITA FEE X.X. Xxxxxx Co., Inc.
TN 466 MALL OF MEMPHIS FEE X.X. Xxxxxx Co., Inc.
CA 537 OCEANSIDE GROUND LEASE Service Merchandise Co., Inc.
IL 548 WAUKEGAN FEE Service Merchandise Co., Inc.
PA 114 PITTSBURGH GROUND LEASE Service Merchandise Co., Inc.
CO 146 AURORA GROUND LEASE Service Merchandise Co., Inc.
SC 153 COLUMBIA GROUND LEASE Service Merchandise Co., Inc.
TN 240 CHATTANOOGA GROUND LEASE Service Merchandise Co., Inc.
VA 315 FREDERICKSBURG GROUND LEASE Service Merchandise Co., Inc.
VA 318 CHESAPEAKE GROUND LEASE Service Merchandise Co., Inc.
MS 366* HATTIESBURG FEE Service Merchandise Co., Inc.
SC 455 SUMTER FEE X.X. Xxxxxx Co., Inc.
TX 472 WACO FEE X.X. Xxxxxx Co., Inc.
198
Schedule 7.10(c)
TO CREDIT AGREEMENT
POST CLOSING REAL ESTATE REQUIREMENTS
1. Delivery of all original mortgagee's title policies insuring the lien
of the Mortgages together with (a) endorsements endorsing such policies
to the Administrative Agent and (b) date-down endorsements to the title
policies insuring title on the same terms and conditions as such title
policies were initially issued
2. Payment of all title premiums, and evidence of same
3. Delivery of as-built ALTA surveys of the sites of the Material Real
Property encumbered by the Mortgages certified to the Administrative
Agent in a manner reasonably satisfactory to Administrative Agent and
dated a date reasonably satisfactory to the Administrative Agent
4. Amendments to the Mortgages in the form executed in connection with the
Existing Credit Agreement
5. Payment of all applicable mortgage recording, documentary stamps and/or
intangible taxes in connection with the assignment and amendment of the
Mortgages
6. Delivery of Phase I environmental reports with respect to parcels of
Material Real Property encumbered by a Mortgage or as required by the
Credit Agreement
7. Payment of any reasonable legal fees of Administrative Agent and local
counsel fees in connection with the foregoing.
199
Schedule 8.2(b)
TO CREDIT AGREEMENT
EXISTING GUARANTEE OBLIGATIONS
A. Private Label Credit Card Program
The obligations of Service Merchandise Company, Inc. contained in the
Private Label Credit Card Program Agreement among World Financial Network
National Bank, Service Merchandise Company, Inc. and Service Credit Corp.
(formerly Service Merchandise Co. No. 80, Inc.), dated as of January 28, 1997.
B. See Schedule 5.1, item 4, Interest Rate Swaps, which is hereby
incorporated by reference.
C. See lists of Letters of Credit attached to Schedule 8.7(f) which are
hereby incorporated by reference.
200
Schedule 8.3(f)
TO CREDIT AGREEMENT
EXISTING LIENS
1. Liens on specific equipment in connection with the financing thereof
included on UCC search results attached hereto and hereby incorporated
by reference.
2. Liens held by The Bank of New York, as successor trustee to Sovran
Bank/Central South, on the following properties (and assets related
thereto) securing the mortgage financing, among others, with The
Long-Term Credit Bank of Japan Limited:
State Store Location Holding Owner
----- ----- -------- ------- -----
FL 19 Stuart Ground Lease Service Merchandise Co., Inc.
AL 24 Huntsville Fee Service Merchandise Co., Inc.
TN 94 Madison Fee Service Merchandise Co., Inc.
OH 95 Toledo Fee Service Merchandise Co., Inc.
IL 98 Bloomingdale Ground Lease Service Merchandise Co., Inc.
KY 171 Louisville Fee Service Merchandise Co., Inc.
MD 225 Waldorf Ground Lease Service Merchandise Co., Inc.
OH 226 Columbus Ground Lease Service Merchandise Co., Inc.
GA 250 Morrow Fee X.X. Xxxxxx Co., Inc.
TX 257 Midland Fee Service Merchandise Co., Inc.
TN 258 Memphis Fee Service Merchandise Co., Inc.
IL 265 Lansing Fee Service Merchandise Co., Inc.
FL 280 Leesburg Fee Service Merchandise Co., Inc.
FL 281 Gainesville Fee Service Merchandise Co., Inc.
OH 283 Toledo Fee Service Merchandise Co., Inc.
IL 000 Xxxxxx Xxxx Ground Lease Service Merchandise Co., Inc.
IL 291 Joliet Ground Lease Service Merchandise Co., Inc.
LA 405 Lafayette Fee X.X. Xxxxxx Co., Inc.
FL 000 Xx. Xxxxxxxxxx Fee X.X. Xxxxxx Co., Inc.
LA 417 Shreveport Fee X.X. Xxxxxx Co., Inc.
MS 446 Gautier Fee X.X. Xxxxxx Co., Inc.
KS 450 Wichita Fee X.X. Xxxxxx Co., Inc.
TX 461 Baytown Fee X.X. Xxxxxx Co., Inc.
TN 466 Memphis Fee X.X. Xxxxxx Co., Inc.
IL 549 Mundelein Fee Service Merchandise Co., Inc.
VA 677 Virginia Beach Fee Service Merchandise Co., Inc.
PA 785 Allentown Fee Service Merchandise Co., Inc.
TN 985 Nashville Fee Service Merchandise Co., Inc.
201
3. Liens held by each existing lienholder on the real property (and assets
related thereto) described below:
State Store City Holding Existing Lienholder Owner
----- ----- ---- ------- ------------------- -----
NC 155 Fayetteville Fee Prudential Life Insurance Service Merchandise
Company Company, Inc.
GA 156 Augusta Ground Lease Union Mutual Life Insurance Service Merchandise
Company Company, Inc.
FL 213 Orlando Fee MetLife Capital Service Merchandise
Company, Inc.
FL 230 Jacksonville Fee Aegon USA Realty Corporation Service Merchandise
Company, Inc.
NY 000 Xxxxxx Fee Key Bank of New York Service Merchandise
Company, Inc.
NC 332 Pineville Fee National Western Life Insurance X.X. Xxxxxx Co., Inc.
Company
FL 337 Xxxxxxx Fee Harvest Life Insurance Company X.X. Xxxxxx Co., Inc.
TX 341 Abilene Fee Redwood Funding Corporation X.X. Xxxxxx Co., Inc.
FL 000 Xxxxxxxx Xxxxx Fee Federal Home Life Insurance X.X. Xxxxxx Co., Inc.
Company
LA 403 Baton Rouge Gr/Lease/SLB Redwood Funding Corporation X.X. Xxxxxx Co., Inc.
OK 439 Xxxxxx Ground Lease Pacific Mutual Life Insurance X.X. Xxxxxx Co., Inc.
Company
TX 468 Austin Fee American Income Life Insurance X.X. Xxxxxx Co., Inc.
Company
202
4. Liens granted on real property and assets related thereto, pursuant to the
mortgage financing arrangement with First Union National Bank of North Carolina
described below:
State Store Location Holding Owner
----- ----- -------- ------- -----
TX 440 Richardson Fee SMC-SPE-1, INC.
TX 359 Dallas Fee SMC-SPE-1, INC.
OK 190 Warr Acres Fee SMC-SPE-1, INC.
TN 259 Knoxville Fee SMC-SPE-1, INC.
MI 532 Westland Fee SMC-SPE-1, INC.
TX 353 Houston Fee SMC-SPE-1, INC.
TX 276 Mcallen Fee SMC-SPE-1, INC.
TX 277 San Antonio Fee SMC-SPE-1, INC.
TX 42 Houston Fee SMC-SPE-1, INC.
LA 214 Houma Fee SMC-SPE-1, INC.
NC 389 Raleigh Fee SMC-SPE-1, INC.
FL 452 Daytona Beach Fee SMC-SPE-1, INC.
CT 316 Newington Fee SMC-SPE-1, INC.
IN 343 Bloomington Fee SMC-SPE-1, INC.
IN 441 Mishawaka Fee SMC-SPE-1, INC.
IN 309 Ft. Xxxxx Fee SMC-SPE-1, INC.
VA 348 Midlothian Fee SMC-SPE-1, INC.
DE 202 Dover Fee SMC-SPE-1, INC.
VA 360 Xxxx Xxxxx Fee SMC-SPE-1, INC.
MD 349 Columbia Fee SMC-SPE-2, INC.
NY 344 Buffalo Fee SMC-SPE-2, INC.
GA 249 Duluth Fee SMC-SPE-2, INC.
GA 252 Xxxxxx Fee SMC-SPE-2, INC.
LA 408 Metairie Fee SMC-SPE-2, INC.
TX 410 Houston Fee SMC-SPE-2, INC.
5. Liens disclosed on any title reports or title insurance delivered to
Chase in connection with the Existing Credit Agreement.
6. Liens on the following property (and assets relating thereto) securing,
among other things, the obligations of the Borrower and the Guarantors
under the CIBC Letter of Credit Facility:
a. Floating Rate Monthly Demand Industrial Development Revenue Bonds
(Service Merchandise Company, Inc. Project) Series 1984 issued by The
City of Thornton, Colorado.
b. Floating Rate Monthly Demand Industrial Development Revenue Bonds
(Service Merchandise Company, Inc. Project) Series 1984 issued by The
Town of Xxxxxxxxxx (New York) Industrial Development Agency.
203
c. Floating Rate Monthly Demand Industrial Development Revenue Bonds
(Service Merchandise Company, Inc. Project) Series 1984 issued by The
Economic Development Corporation of the Charter Township of Meridian,
Michigan.
d. Floating Rate Monthly Demand Industrial Development Revenue Bonds
(Service Merchandise Company, Inc. Project) Series 1983 issued by The
Industrial Development Bonds of the County of Xxxx, Tennessee.
e. Floating Rate Monthly Demand Bonds (Service Merchandise Company,
Inc. Project) Series 1984 of the City of Burbank, Illinois.
f. Floating Rate Monthly Demand Industrial Development Revenue Bonds
(Service Merchandise Company, Inc. Project) Series 1984 issued by the
City of Naperville, Illinois.
7. Liens on the following property (and assets relating thereto) securing,
among other things, the obligations of the Borrower and the Guarantors
under the CIBC Letter of Credit Facility:
State Store Location Holding
----- ----- -------- -------
CO 000 Xxxxxxxx Xxx
XX 147 Lansing Fee
TN 174 Knoxville Ground Lease
IL 181 Naperville Fee
IL 000 Xxxxxxx Xxx
XX 967 Xxxxxxxxxx Lease
8. Liens granted pursuant to the Security Agreement dated as of July 15,
1984 by Service Merchandise Company, Inc. in favor of The Chase
Manhattan Bank, N.A., as Trustee, and Barclays Bank International
Limited, or its successors on machinery and equipment (and assets
related thereto), relating to the $1,400,000 The Economic Development
Corporation of the Charter Township of Meridian Rate Monthly Demand
Limited Obligation Revenue Bonds (Service Merchandise Company, Inc.
Project), Series 1984 and financed by the proceeds of such bonds.
9. Liens granted pursuant to the Security Agreement dated as of September
15, 1984 by Service Merchandise Company, Inc. in favor of The Chase
Manhattan Bank, N.A., as Trustee, and Pittsburgh National Bank, or its
successors on machinery and equipment (and assets related thereto),
relating to the $5,500,000 City of Burbank Floating Rate Monthly Demand
Industrial Building Revenue Bonds (Service Merchandise Company, Inc.
Project), Series 1984 and financed by the proceeds of such bonds.
10. Liens granted pursuant to the Security Agreement dated as of July 15,
1984 by Service Merchandise Company, Inc. in favor of The Chase
Manhattan Bank, N.A., as Trustee, and Barclays Bank International
Limited, or its successors on machinery and equipment (and assets
related thereto), relating to the $1,300,000 The City of Xxxxxxxx
Floating Rate
204
Monthly Demand Industrial Development Revenue Bonds (Service
Merchandise Company, Inc. Project), Series 1984 and financed by the
proceeds of such bonds.
11. Liens pursuant to the Security Agreement dated as of June 28, 1990
between Service Merchandise Company, Inc. and The Bank of New York (as
successor to Sovran Bank/Central South), as Trustee.
12. Liens pursuant to the Security Agreement dated as of June 28, 1990
between X.X. Xxxxxx Co., Inc. and The Bank of New York (as successor to
Sovran Bank/Central South), as Trustee.
13. Liens granted in favor of World Financial Network National Bank
("WFNNB") by Borrower on credit card receivables (and assets related
thereto) pursuant to the Private Label Credit Card Program Agreement
dated as of January 28, 1997 among WFNNB, the Borrower and Service
Merchandise Co. No. 80, Inc.
14. Cash collateral account of $4,000,000 (including investments credited
to such account) granted in favor of First American National Bank
("FANB"), and Liens granted in favor of FANB on inventory financed with
outstanding letters of credit issued by FANB and not yet received at
the Borrower's warehouses.
205
Schedule 8.7(f)
TO CREDIT AGREEMENT
INDEBTEDNESS
1. Indebtedness in connection with that certain Indenture dated as of June
28, 1990, as amended, among Service Merchandise Company, Inc., X. X.
Xxxxxx Co., Inc., The Bank of New York (as successor trustee to Sovran
Bank/Central South), as Trustee, and the Long Term Credit Bank of
Japan, Limited, New York Branch as Administrative Agent relating to $90
Million First and Second Mortgage Secured Notes. Outstanding amount as
of 1/3/99; $69,589,000.
2. Indebtedness in connection with that certain Indenture dated as of
February 15, 1993, as amended, between Service merchandise Company,
Inc., as Issuer, and First American National Bank, as Trustee relating
to $300 Million 9% Senior Subordinated Debentures due 2004. Outstanding
amount as of 1/3/99; $300,000,000;
3. Indebtedness in connection with that certain Indenture dated as of
October 15, 1993, as amended, between Service Merchandise Company,
Inc., as Issuer, and State Street Bank and Trust Company, as Trustee
relating to 8 3/8% Senior Notes. Outstanding amount as of 1/3/99;
$13,799,000.
4. Indebtedness in connection with certain Loan Agreements dated as of
October 4, 1996, as amended, between SMC-SPE-1, Inc. and SMC-SPE-2,
Inc., as borrowers, and First Union National Bank of North Carolina, as
lender. Outstanding amount as of 11/22/98; $69,500,000.
5. Indebtedness in connection with certain separate Mortgage Facilities as
described below:
a. Service Merchandise Company, Inc., as borrower, and Prudential
Life Insurance Company, as lender relating to Store 155;
b. Service Merchandise Company, Inc., as borrower, and Union
Mutual Life Insurance Company, as lender to Store 156;
c. Service Merchandise Company, Inc., as borrower, and MetLife
Capital, as lender relating to Store 213;
d. Service Merchandise Company, Inc., as borrower, and Aegon USA
Realty Corporation, as lender relating to Store 230;
e. Service Merchandise Company, Inc., as borrower, and Key Bank
of New York, as lender relating to Store 275;
f. X.X. Xxxxxx Co., Inc., as borrower, and National Western Life
Insurance Company, as lender relating to Store 332;
206
g. X.X. Xxxxxx Co., Inc., as borrower, and Harvest Life Insurance
Company, as lender relating to Store 337;
h. X.X. Xxxxxx Co., Inc., as borrower, and Redwood Funding
Corporation, as lender relating to Store 341;
i. X.X. Xxxxxx Co., Inc., as borrower, and Federal Home Life
Insurance Company,, as lender relating to Store 364;
j. X.X. Xxxxxx Co., Inc., as borrower, and Redwood Funding
Corporation, as lender relating to Store 403;
k. X.X. Xxxxxx Co., Inc., as borrower, and Pacific Mutual Life
Insurance Company, as lender relating to Store 439;
l. X.X. Xxxxxx Co., Inc., as borrower, and American Income Life
Insurance Company, as lender relating to Store 468;
Outstanding amount as of 11/22/98 for the consolidated Mortgage
Facilities: $21,386,000.
6. Indebtedness is connection with that certain Trade Letter of Credit
Facility, as amended, entered into with First American National Bank
(See attached Chart A which is hereby incorporated by reference).
Outstanding amount as of 1/3/99: $40,126,000.
7. Indebtedness in connection with that certain Amended and Restated
Reimbursement Agreement dated as of October 25, 1994, as amended, among
Service Merchandise Company, Inc. Homeowners Warehouse, Inc. and X.X.
Xxxxxx Co., Inc. as borrowers, Canadian Imperial Bank of Commerce, New
York Agency and The Mitsubishi Bank Limited, New York Branch, as
lenders and Canadian Imperial Bank of Commerce, New York Agency, as
agent (See attached Chart C which is hereby incorporated by reference).
Outstanding amount as of 1/3/99: $25,208,000.
8. Indebtedness in connection with certain Industrial Revenue Bonds (See
Schedule 8.3(f), items 6, 7, 8, 9, 10, which are hereby incorporated by
reference.
207
Schedule 8.7(f)
TO CREDIT AGREEMENT
CHART A
FIRST AMERICAN LETTERS OF CREDIT OUTSTANDING BALANCE
See attached
208
BENEFICIARY
ADESPO S.R.L.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003117 ITL 46,019,730 46,019,730 26,369.00 28,532.23 01/20/1999 0 0.00 1 0.00
Totals 26,369.00
BENEFICIARY
BELDARE ENTERPRISED LTD (TW)
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
002970 USD 415,356 62,365 62,365.80 62,365.80 01/22/1999 0 0.00 0 0.00
Totals 62,365.80
BENEFICIARY
BELDARE ENTERPRISES LTD
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
002996 USD 241,534 53,227 53,227.23 53,227.23 01/30/1999 1 45,876.60 0 0.00
003048 USD 250,942 250,942 250,942.65 250,942.65 02/05/1999 0 0.00 0 0.00
003074 USD 442,408 1,764 1,764.01 54,180.01 01/22/1999 0 0.00 0 0.00
003086 USD 38,246 8,727 8,727.09 8,727.09 02/20/1999 0 0.00 0 0.00
003097 USD 328,842 328,842 328,842.19 304,287.69 03/04/1999 0 0.00 1 0.00
209
BENEFICIARY
BELDARE ENTERPRISES LTD
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003121 USD 1,201,151 1,201,151 1,201,151.45 1,201,151.45 02/05/1999 2 323,400.00 1 0.00
003138 USD 95,064 95,064 95,064.99 95,064.99 02/15/1999 2 51,392.96 0 0.00
000000 XXX 3,388,875 3,388.875 28,683.44 28,683.44 02/20/1999 0 0.00 0 0.00
003166 USD 174,430 174,430 174,430.91 174,430.91 02/22/1999 0 0.00 0 0.00
Totals 2,276,116.76
BENEFICIARY
BELDARE ENTERPRISES LTD (TW)
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003020 USD 453,007 124,842 124,842.18 152,984.50 02/06/1999 2 118,897.00 0 0.00
003041 USD 658,536 199,400.23 199,400.23 199,400.23 01/20/1999 1 189,904.99 0 0.00
003147 USD 82,156 82,156 82,156.10 86,986.10 02/22/1999 0 0.00 0 0.00
003176 USD 58,153 58,153 58,153.10 58,153.10 03/08/1999 0 0.00 0 0.00
Totals 464,551.61
BENEFICIARY
BELDARE ENTERPRISES LTD (TW)
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003019 USD 199,011 24,760 24,760.26 24,760.26 01/22/1999 1 24,428.40 0 0.00
003063 USD 595,463 53,982 53,982.60 53,982.60 01/15/1999 1 37,716.00 0 0.00
003080 USD 85,431 51,810 51,810.15 149,050.65 01/21/1999 3 49,343.00 0 0.00
003087 USD 372,712 138,230 138,230.92 138,230.92 01/21/1999 3 131,648.48 0 0.00
210
003088 USD 167,225 111,133 111,133.02 111,133.02 02/20/1999 1 38,314.80 0 0.00
003113 USD 686,254 635,783 635,783.71 635,783.71 02/05/1999 2 238,971.95 0 0.00
003130 USD 733,515 76,195 76,195.68 76,195.68 01/22/1999 2 53,879.76 0 0.00
003142 USD 225,245 184,775 184,775.51 184,775.51 01/22/1999 5 164,173.24 0 0.00
003149 USD 232,344 232,344 232,344.19 232,344.119 02/26/1999 0 0.00 0 0.00
003164 USD 458,471 458,471 458,471.30 458,471.30 02/22/1999 0 0.00 0 0.00
003173 USD 167,209 167,209 167,209.81 167,209.81 02/08/1999 0 0.00 0 0.00
Totals 2,134,697.15
BENEFICIARY
BERKELEY (TIANJIN) FURNITURE IND.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003159 USD 1,313,187 1,313,187 1,313,187.250 1,313,187.25 02/22/1999 0 0.00 0 0.00
Totals 1,313,187.25
BENEFICIARY
BERKELEY (TIANJIN) FURNITURE IND.
COR
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003094 USD 2,349,600 1,163,794 1,163,794 1,163,794.85 02/05/1999 3 300,598.91 0 0.00
Totals 1,163,794.85
211
BENEFICIARY
CASUAL LIVING WORLDWIDE
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003036 USD 894,055 468,109 468,109.07 468,109.07 02/05/1999 2 254,285.29 0 0.00
Totals 468,109.07
BENEFICIARY
COMPEX INTERNATIONAL CO. LTD.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003115 USD 2,005,826 1,960,515 1,960,515.79 1,960,515.79 02/05/1999 0 0.00 0 0.00
003128 USD 2,098,417 572,241 572,241.07 572,241.07 01/22/1999 1 48,422.16 0 0.00
003140 USD 321,826 321,826 321,826.64 321,826.64 02/05/1999 0 0.00 0 0.00
Totals 2,854,583.50
BENEFICIARY
CREATIVE CERAMICS LTD
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003013 USD 482,336 81 81.52 81.52 01/15/1999 0 0.00 0 0.00
Totals 81.52
212
BENEFICIARY
DIVERSIFIED INVESTMENTS CORP.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003067 USD 107,4420 62,925 62,925.00 107,625.00 01/22/1999 0 0.00 0 0.00
Totals 62,925.000
BENEFICIARY
EMESS LIGHTING
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003177 USD 124,858 124,858 124,858.20 124,858.20 03/08/1999 0 0.00 0 0.00
Totals 124,858.20
BENEFICIARY
EXCEL IMPORTING CORP.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003188 USD 232,600 232,600 232,600.00 232,600.00 01/15/1999 0 0.00 0 0.00
Totals 232,600.00
BENEFICIARY
G.E. CAPITAL FIRST FACTORS CORP.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003095 USD 1,803,817 1,377,063 1,377,063.95 1,377,063.95 02/05/1999 2 148,192.08 0 0.00
Totals 1,377,063.95
213
BENEFICIARY
GREAT AMERICAN FUN HK LTD.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003132 USD 190,616 190,616 190,616.00 190,616.00 01/27/1999 0 0.00 0 0.00
Totals 190,616.00
BENEFICIARY
GROTON INDUSTRIES
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
002994 USD 76,789 38,084 38,084.52 38,084.52 01/30/1999 0 0.00 0 0.00
003161 USD 126,499 126,499 126,499.30 126,499.30 03/08/1999 0 0.00 0 0.00
003167 &SD 117,671 117,671 117,671.25 117,671.25 02/22/1999 0 0.00 1 0.00
Totals 282,255.07
BENEFICIARY
XXXXXX HOLDINGS LIMITED
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003001 USD 92,708 92,708 92,708.00 92,708.00 02/15/1999 0 0.00 0 0.00
Totals 92,708.00
214
BENEFICIARY
HIMARK ENTERPRISES, INC.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003157 USD 38,642 15,120 15,120.00 0.00 01/20/1999 1 15,120.00 0 0.00
Totals 15,120.00
BENEFICIARY
INTERNATIONAL FURNITURE DESIGNS
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
002999 USD 687,187 253,091 253,091.85 253,091.85 01/20/1999 0 0.00 0 0.00
Totals 253,091.85
BENEFICIARY
INTL FURNITURE DESIGNS (HK) LTD.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003009 USD 396,524 396,524 396,524.66 396,524.66 02/05/1999 1 79,490.25 0 0.00
003038 USD 966,206 748,80 748,808.25 748,808.25 03/08/1999 1 277,609.50 0 0.00
003145 USD 342,467 342,467 342,467.36 342,467.36 02/21/1999 0 0.00 0 0.00
Totals 1,487,800.27
BENEFICIARY
J AND H INTERNATIONAL, LTD
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003154 USD 60,930 60,930 60,930.00 60,930.00 01/20/1999 0 0.00 0 0.00
Totals 60,930.00
215
BENEFICIARY
JASMINE ENTERPRISES LTD
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
002985 USD 39,353 39,353 39,353.00 39,353.00 01/16/1999 1 39,353.00 0 0.00
003044 USD 74,025 74,025 74,025.00 74,025.00 01/16/1999 0 0.00 0 0.00
Totals 113,378.00
BENEFICIARY
KENROY INTERNATIONAL
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003016 USD 136,932 80,000 80,000.00 80,000.00 02/05/1999 0 0.00 0 0.00
Totals 80,000.00
BENEFICIARY
KIND LIGHT INDUSTRIES CORP
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003134 UD 43,874 43,874 43,874.80 43,874.80 03/08/1999 0 0.00 0 0.00
Totals 43,874.80
216
BENEFICIARY
L XXXXXX COMPANY
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003053 USD 352,576 28,241 28,241.25 28,241.25 02/05/1999 0 0.00 0 0.00
003085 USD 2,207,438 2,095.146 2,095,146.56 2,095,146.56 01/27/1999 1 46,635.06 0 0.00
003124 USD 983,507 983,507 983,507.46 983,507.46 02/07/1999 1 26,724.50 0 0.00
003153 USD 129,820 129,820 129,820.98 129,820.92 02/05/1999 2 129,820.98 0 0.00
003163 USD 239,458 239,458 239,458.90 239,458.90 02/20/1999 0 0.00 0 0.00
003180 USD 215,878 215,878 215,878.80 215,878.80 02/22/1999 0 0.00 0 0.00
Totals 3,692,053.95
BENEFICIARY
LARAMI COMPANY LTD.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003076 USD 258,270 28,575 28,575.00 28,575.00 02/05/1999 0 0.00 0 0.00
003184 USD 161,737 161,737 161,737.20 161,737.20 02/20/1999 0 0.00 0 0.00
Totals 190,312.20
BENEFICIARY
LIMAX INTERNATIONAL INC.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003175 USD 238,025 238,025 238,025.00 238,025.00 02/20/1999 0 0.00 0 0.00
Totals 238,025.00
217
BENEFICIARY
LINOW HOME DECOR PRODUCTS
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003049 USD 1,279,512 152,733 152,733.00 152,733.00 01/27/1999 0 0.00 0 0.00
003050 USD 1,031,115 292,140 292,140.00 638,220.00 02/20/1999 0 0.00 0 0.00
003127 USD 97,305 299 299.40 299.40 02/05/1999 0 0.00 0 0.00
003158 USD 389,520 389,520 389,520.00 389,520.00 03/18/1999 0 0.00 1 0.00
Totals 834,692.40
BENEFICIARY
X.X. XXXXXX & CO., INC.-HX XXXXXX
XX# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003043 USD 37,619 16,952 16,952.52 16,952.52 02/05/1999 0 0.00 1 0.00
Totals 16,952.52
BENEFICIARY
MARKPEAK LTD.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
002946 USD 222,517 172,496 172,496.24 172,496.24 02/05/1999 0 0.00 1 0.00
Totals 172,496.24
218
BENEFICIARY
MASTERPIECE INDUSTRY CO. LTD
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003075 USD 127,168 127,168 127,168.92 127,168.92 01/21/1999 0 0.00 1 0.00
003144 USD 13,674 13,674 13,674.15 13,674.15 02/12/1999 0 0.00 0 0.00
Totals 140,843.07
BENEFICIARY
MONARCH LUGGAGE CO., INC.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003129 USD 29,735 23,057 23,057.50 23,057.50 02/01/1999 0 0.00 0 0.00
Totals 23,057.50
BENEFICIARY
MUTUAL BENEFIT MFG. & EXP. CO.,
LTD.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003168 USD 123,714 123,714 123,714.00 123,714.00 02/22/1999 0 0.00 0 0.00
Totals 123,714.00
BENEFICIARY
PACIFIC MARKETING INTL (HK) LTD. HL
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003133 USD 473,088 363,156 363,156.71 363,156.71 02/22/1999 1 31,262.00 0 0.00
Totals 363,156.71
219
BENEFICIARY
PACIFIC MARKETING INTL CO., LTD FJ
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003084 USD 184,231 91,068 91,068.52 91,068.52 02/13/1999 0 0.00 0 0.00
003104 USD 46,581 46,581 46,581.56 46,581.56 02/13/1999 0 0.00 0 0.00
Totals 137,650.08
BENEFICIARY
PACIFIC PRODUCTS, LTD.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003089 USD 246,042 81,250 81,250.00 81,250.00 01/31/1999 0 0.00 0 0.00
003160 USD 55,440 55,440 55,440.00 55,440.00 02/22/1999 0 0.00 0 0.00
Totals 136,690.00
BENEFICIARY
RACING CHAMPIONS, LTD.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003118 USD 230,909 230,909 230,909.52 269,242.92 01/26/1999 1 231,051.72 0 0.00
Totals 230,909.52
BENEFICIARY
RGA INDUSTRIES INC.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003092 USD 25,986 19,890 19,890.00 19,890.00 01/15/1999 0 0.00 0 0.00
003106 USD 256,309 256,309 256,309.80 256,309.80 02/22/1999 1 133,426.80 0 0.00
Totals 276,199.80
220
BENEFICIARY
XXXXXX/MAXIM HOUSEARES, INC.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003120 USD 208,448 208,448 208,448.68 208,448.68 02/14/1999 0 0.00 0 0.00
003181 USD 400,511 400,511 400,511.20 400,511.20 03/03/1999 0 0.00 0 0.00
Totals 608,959.88
BENEFICIARY
SANGO OF AMERICA, INC.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003012 USD 918,471 918,471 918,471.00 918,471.00 02/05/1999 5 359,571.00 0 0.00
Totals 918,471.00
BENEFICIARY
SHIAN INDUSTRY CO., LTD.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003119 USD 1,980,606 1,980,606 1,980,606.70 1,980,606.70 03/07/1999 0 0.00 0 0.00
Totals 1,980,606.70
221
BENEFICIARY
XXXXXX & XXXXXX
XX# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
002990 USD 185,312 28,822 28,822.00 11,502.00 01/20/1999 1 28,822.00 0 0.00
003054 USD 60,233 12,006 12,006.00 12,006.00 02/22/1999 0 0.00 0 0.00
Totals 40,828.00
BENEFICIARY
SPRINGFIELD PRECISION COMPANY
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003186 USD 35,918 35,918 35,918.50 35,918.50 02/22/1999 0 0.00 1 0.00
Totals 35,918.50
BENEFICIARY
SUN ISLE INC.
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003042 USD 1,084,470 134,268 134,268.11 281,313.60 01/22/1999 0 0.00 0 0.00
003122 USD 472,486 472,486 472,486.72 472,486.72 02/05/1999 0 0.00 0 0.00
Totals 606,754.83
BENEFICIARY
TAI'S INTERNATIONAL CORPORATION
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003136 USD 82,197 82,197 82,197.92 82,197.92 02/05/1999 1 52,821.68 0 0.00
Totals 82,197.92
222
BENEFICIARY
TEASECO INCORPORATED
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003114 USD 94,833 36,900 36,900.00 36,900.00 01/20/1999 0 0.00 0 0.00
Totals 36,900.00
BENEFICIARY
TENSOR CORPORATION
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
031250 USD 42,325 42,325.00 42,325.00 42,325.00 02/12/99 0 0.00 0 0.00
Totals 42,325.00
BENEFICIARY
TREND LIGHTING
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003126 USD 30,510 30,510 30,510.00 30,510.00 02/6/1999 0 0.00 0 0.00
Totals 30,510.00
BENEFICIARY
WANG'S INTERNATIONAL
LC# CRNOY FACE VALUE FGN BAL U.S. DOL AMT BANK BALANCE EXP DATE NUM TOT AMT NUM TOT AMT
------------------------------------------------------------------------------------------------------------------------------------
003083 USD 46,130 16,879 16,879.50 16,879.50 01/27/1999 0 0.00 0 0.00
Totals 16,879.50
223
TOTAL LC'S NOT EXPIRED 94
=============
TOTAL LC'S EXPIRED 2617
=============
TOTAL LC'S APPROVED BUT NOT ISSUED 0
=============
TOTAL NEGOTIATIONS APPROVED BUT NOT PAID 52
=============
TOTAL AMENDMENTS APPROVED BUT NOT PAID 9
=============
TOTAL U.S. BALANCE 26,158,181.97
=============
TOTAL U.S. BANK BALANCE 26,862,318.41
=============
224
Schedule 8.7(f)
TO CREDIT AGREEMENT
CHART B
BANK OF AMERICA LETTER OF CREDIT OUTSTANDING BALANCE
225
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
ALL-ALUMINUM PRODUCTS, INC.
990017 USD 166,623 166,623 166,623.90 166,623.90 02/22/1999 0 0.00 0 0.00
Totals 166,623.90
ARC INTERNATIONAL
990050 USD 97,752 97,752 97,752.01 01/21/1999 0 0.00 0 0.00
Totals 97,752.01
ARCO TOYS, LTD
990058 USD 10,975 10,975 10,975.20 10,975.20 02/05/1999 0 0.00 0 0.00
Totals 10,975.20
ARTMARK FAR EAST LTD.
990122 USD 13,094 13,094 13,094.40 13,094.00 02/05/1999 0 0.00 1 0.00
Totals 13,094.40
226
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
AT HOME INTERNATIONAL
990081 USD 504,641 504,641 504,641.44 504,641.44 02/10/1999 0 0.00 1 65,277.44
Totals 504,641.44
BEAKIE XXX & CO., LTD.
990089 USD 156,300 156,300 156,300.00 156,300.00 03/03/1999 0 0.00 1 112,590.00
Total 156,300.00
BELDARE ENTERPRISES, LTD (TW)
990077 USD 105,512 105,512 105,512.00 105,512.00 02/17/1999 0 0.00 1 0.00
990091 USD 19,139 19,139 19,139.40 19,139.40 03/31/1999 0 0.00 0 0.00
Totals 124,651.40
BELDARE ENTERPRISES, LTD.
990030 USD 163,207 163,207 163,207.80 163,207.80 03/27/1999 0 0.00 0 0.00
990032 USD 705,248 705,248 705,248.99 705,248.99 04/05/1999 0 0.00 0 0.00
990048 USD 250,798 250,798 250,798.85 250,798.85 02/06/1999 0 0.00 0 0.00
990055 USD 1,938,860 1,938,860 1,938,860.39 1,938,860.39 03/21/1999 0 0.00 1 0.00
990066 USD 2,716,139 2,716,139 2,716,139.00 2,716,139.37 07/06/1999 0 0.00 0 0.00
227
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
990078 USD 1,001,328 1,001,328 1,001,328.31 1,001,328.31 07/19/1999 0 0.00 0 0.00
990079 USD 199,598 199,598 199,598.70 177,565.70 10/10/1999 0 0.00 2 0.00
000000 XXX 3,297,000 3,297,000 25,452.53 25,452.53 04/05/1999 0 0.00 0 0.00
Totals 7,000,634.57
BELDARE ENTERPRISES LTD (TW)
990037 USD 738,644 786,644 786,644.63 786,644.64 03/08/1999 0 0.00 0 0.00
990052 USD 787,575 787,575 787,575.33 787,575.33 02/23/1999 0 0.00 0 0.00
990087 USD 232,242 232,242 232,242.17 232,242.17 04/05/1999 0 0.00 1 0.00
990109 USD 674,203 674,203 674,203.12 674,203.12 04/05/1999 0 0.00 1 0.00
990127 usd 90,153 90,153 90,153.00 90,153.00 03/08/1999 0 0.00 1 163,475.78
Totals 2,570,818.25
BELDARE ENTERPRISES LTD (TW)
990024 USD 447,026 447,026 447,026.77 447,026.77 02/05/1999 0 0.00 0 0.00
990036 USD 583,249 583,249 583,249.28 583,249.28 03/08/1999 0 0.00 0 0.00
990071 USD 507,559 507,559 507,559.17 507,559.17 03/22/1999 0 0.00 0 0.00
990072 USD 284,862 284,862 284,862.38 284,862.38 03/08/1999 0 0.00 0 0.00
990108 USD 360,714 360,714 360,714.90 360,714.90 04/05/1999 0 0.00 0 0.00
228
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
990111 USD 185,111 185,111 185,111.18 185,111.18 04/05/1999 0 0.00 0 0.00
Totals 2,368,523.68
BERKELEY (TIANJIN) FURNITURE IND.
990068 USD 1,284,709 1,284,709 1,284,709.78 1,284,709.78 03/22/1999 0 0.00 0 0.00
Totals 1,284,709.78
CARDINAL, INC.
990033 USD 166,776 166,766 166,766.26 166,766.26 02/20/1999 0 0.00 0 0.00
990096 USD 87,683 87,683 87,683.28 87,683.28 03/08/1999 0 0.00 0 0.00
Totals 254,449.54
CASUAL LIVING WORLDWIDE
990040 USD 377,107 377,107 377,107.57 377,107.57 03/08/1999 0 0.00 1 457,996.57
Totals 377,107.57
CERTIFIED INTERNATIONAL CORP.
990090 USD 76,517 76,517 76,517.00 76,517.00 02/20/1999 0 0.00 0 0.00
Totals 76,517.00
229
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
CHU XXXX XXXX CO., LTD.
990063 USD 184,676 184,676 184,676.00 184,676.00 02/12/1999 0 0.00 0 0.00
990099 USD 332,540 332,540 332,540.00 332,540.00 03/22/1999 0 0.00 0 0.00
Totals 517,216.00
COLUMBIA FRAME, INC.
990075 USD 74,000 74,000 74,000.00 74,000.00 03/08/1999 0 0.00 0 0.00
Totals 74,000.00
COMPEX INTERNATIONAL CO., INC.
990043 USD 2,517,483 2,517,483 2,517,483.50 2,517,483.50 03/08/1999 0 0.00 0 0.00
990098 USD 1,811,042 1,811,042 1,811,042.51 1,811,042.51 04/05/1999 0 0.00 0 0.00
Totals 4,328,526.01
CUDDLE WIT LTD.
990018 USD 46,035 46,035 46,035.00 46,035.00 01/27/1999 0 0.00 0 0.00
Totals 46,035.00
230
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
DRAGON OCEAN TRADING CO.
990084 USD 60,780 60,780 60,780.00 60,780.00 02/05/1999 0 0.00 0 0.00
Totals 60,780.00
EMESS LIGHTING
990113 USD 173,893 173,893 173,893.50 173,893.50 04/07/1999 0 0.00 1 78,750.00
Totals 173,893.50
ENTERTAINMENT PRODUCTS LTD.
990126 USD 50,616 50,616 50,616.00 50,616.00 02/21/1999 0 0.00 1 0.00
Totals 50,616.00
EXCEL IMPORTING CORP.
990074 USD 130,000 130,000 130,000.00 130,000.00 02/26/1999 0 0.00 0 0.00
Totals 130,000.00
EXEC'S PRODUCTS, INC.
990051 USD 20,400 20,400 20,400.00 20,400.00 03/08/1999 0 0.00 0 0.00
Totals 20,400.00
231
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
EXIM BUSINESS CO., LTD.
990044 USD 68,226 68,226 68,226.00 68,226.00 01/20/1999 0 0.00 0 0.00
990114 USD 47,974 47,974 47,974.00 47,974.00 04/05/1999 0 0.00 1 0.00
Totals 116,200.00
EXIM BUSINESS INC.
990034 USD 37,720 37,720 37,720.00 37,720.00 04/05/1999 0 0.00 0 0.00
Totals 37,720.00
XXXXXX-XXXXX, INC.
990049 USD 21,327 21,327 21,327.00 21,327.00 01/22/1999 0 0.00 0 0.00
Totals 21,327.00
GEM OFFICE PRODUCTS, INC.
990027 USD 120,585 120,585 120,585.90 120,585.90 01/20/1999 0 0.00 0 0.00
Totals 120,585.90
232
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
GLOBAL HORIZONS CO.
990026 USD 177,184 177,184 177,184.32 177,184.32 02/15/1999 0 0.00 0 0.00
Totals 177,184.32
GROTON INDUSTRIES
990123 USD 110,747 110,747 110,747.15 110,747.15 04/07/1999 0 0.00 0 0.00
Totals 110,747.15
HASBRO TOY GROUP DIRECT IMPORTS
990083 USD 105,003 105,003 105,003.72 105,003.72 02/27/1999 0 0.00 0 0.00
Totals 105,003.72
HAUSENWARE
990061 USD 53,872 53,872 53,872.00 53,872.00 01/20/1999 0 0.00 0 0.00
Totals 53,872.00
233
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
RIMARK ENTERPRISES, INC.
990029 USD 192,034 192,034 192,034.30 192,034.30 02/26/1999 0 0.00 0 0.00
990069 USD 9,072 9,072 9,072.0 9,072.00 03/21/1999 0 0.00 0 0.00
Totals 201,106.30
XXXXXX PRODUCTS (FAR EAST) LTD.
990013 USD 54,264 54,264 54,264.95 54,264.95 03/08/1999 0 0.00 1 0.00
990104 USD 24,987 24,987 24,987.45 24,987.45 04/05/1999 0 0.00 1 0.00
Totals 79,252.40
HONEYWELL CONSUMER PRODUCTS HK LTD.
990088 USD 229,827 229,827 229,827.25 229,827.25 04/07/1999 0 0.00 0 0.00
Totals 229,827.25
INNOVA HEARTH AND HOME, INC.
990023 USD 51,844 51,844 51,844.00 51,844.00 02/05/1999 0 0.00 0 0.00
990116 USD 25,922 25,922 25,922.00 25,922.00 04/05/1999 0 0.00 0 0.00
Totals 77,766.00
234
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
INTL FURNITURE DESIGNS (HK) LTD.
990046 USD 800,503 800,503 800,503.04 800,503.04 03/03/1999 0 0.00 0 0.00
990100 USD 57,432 57,432 57,432.90 57,432.90 04/05/1999 0 0.00 1 261,448.32
Totals 857,935.94
JAKKS HK LIMITED
909073 USD 13,650 13,650 13,650.00 13,650.00 02/20/1999 0 0.00 0 0.00
Totals 13,650.00 13,650.00
JASMINE ENTERPRISES, LTD.
990086 USD 72,135 72,135 72,135.00 72,135.00 03/20/1999 0 0.00 0 0.00
Totals 72,135.00
KENROY INTERNATIONAL
990106 USD 20,813 20,813 20,813.00 20,813.00 04/05/1999 0 0.00 0 0.00
Totals 20,813.00
235
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
XXXX X. XXXXX, INC.
990019 USD 74,453 74,453 74,453.94 74,453.94 01/27/1999 0 0.00 0 0.00
Totals 74,453.94
X. XXXXXX COMPANY
990039 USD 1,059,256 1,059,256 1,059,256.14 1,059,256.14 02/21/1999 0 0.00 0 0.00
Totals 1,059,256.14
LARAMI COMPANY LTD.
990103 USD 221,440 221,440 221,440.60 221,440.60 04/05/1999 0 0.00 0 0.00
Totals 221,440.60
XXXXXX INDUSTRIES, INC.
990060 USD 172,972 172,972 172,972.80 172,972.80 02/12/1999 0 0.00 0 0.00
Totals 172,972.80
LIMAX INTERNATIONAL, INC.
990082 USD 185,250 185,250 185,250.00 185,250.00 03/08/1999 0 0.00 0 0.00
Totals 185,250.00
236
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
LINON HOME DECOR PRODUCTS
990095 USD 443,385 443,385 443,385.00 443,385.00 02/05/1999 0 0.00 0 0.00
990119 USD 291,915 291,915 291,915.00 291,915.00 04/05/1999 0 0.00 0 0.00
Totals 735,300.00
X.X. XXXXXX & CO., INC. - HK BRANCH
990053 USD 20,298 20,298 20,298.15 20,723.70 02/15/1999 0 0.00 0 0.00
Totals 20,298.15
MARKPEAK, LTD.
990059 USD 385,741 385,741 385,741.44 385,741.44 03/21/1999 0 0.00 0 0.00
Totals 385,741.44
MASTERPIECE INDUSTRY CO., INC.
990041 USD 48,743 48,743 48,743.50 48,743.50 03/08/1999 0 0.00 0 0.00
Totals 48,743.50
237
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
MONARCH LUGGAGE CO., INC.
990094 USD 20,803 20,803 20,803.00 20,803.00 04/04/1999 0 0.00 1 6,678.00
Totals 20,803.00
MUTUAL BENEFIT MFG & EXP. CO., LTD.
990028 USD 120,897 120,897 120,897.00 120,897.00 01/26/1999 0 0.00 0 0.00
Totals 120,897.00
NUMARK INDUSTRIES
990056 USD 103,320 103,320 103,320.00 103,220.00 02/20/1999 0 0.00 0 0.00
Totals 103,320.00
HODDZON/CAP TOYS FAR EAST SERVICES
990062 USD 33,012 33,012 33,012.00 33,012.00 01/26/1999 0 0.00 0 0.00
Totals 33,012.00
PACIFIC MARKETING INTL (HK) LTD. HL
990105 USD 161,609 161,609 161,609.28 161,609.28 04/05/1999 0 0.00 0 0.00
Totals 161,609.28
238
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
PACIFIC PRODUCTS, LTD.
990054 USD 129,308 129,308 129,308.40 129,308.40 03/03/1999 0 0.00 0 0.00
990101 USD 45,678 45,678 45,678.00 45,678.00 04/05/1999 0 0.00 0 0.00
Totals 174,986.40
PARADISA ENTERPRISES CO., LTD. WHSE
990035 USD 45,637 45,637 45,637.20 45,637.20 03/08/1999 0 0.00 0 0.00
Totals 45,637.20
PEACHTREE PLAYTHINGS (HK) LTD.
990080 USD 9,216 9,216 9,216.00 9,216.00 01/31/1999 0 0.00 0 0.00
Totals 9,216.00
PRECIDIO INC.
990007 USD 91,848 91,848 91,848.00 91,848.00 01/31/1999 0 0.00 0 0.00
Totals 91,848.00
239
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
PROGRESSIVE INTERNATIONAL CORP.
990067 USD 67,344 67,344 67,344.00 67,344.00 03/13/1999 0 0.00 0 0.00
Totals 67,344.00
PROMOTION PLUS INTERNATIONAL LTD.
990085 USD 14,700 14,700 14,700.00 14,700.00 02/20/1999 0 0.00 0 0.00
Totals 14,700.00
RACING CHAMPIONS, LTD.
990025 USD 51,420 51,420 51,420.90 51,420.90 02/16/1999 0 0.00 0 0.00
Totals 51,420.90
ROVENTA-HENEX
990057 CHF 540,450 540,450 540,450.00 540,450.00 10/21/1999 0 0.00 0 0.00
Totals 540,450.00
SALTON/MAXIM HOUSEWARES, INC.
990070 USD 204,352 204,352 204,352.14 204,352.14 01/14/1999 0 0.00 0 0.00
Totals 204,352.14
240
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
SANGO OF AMERICA, INC.
990031 USD 194,400 194,400 194,400.00 194,400.00 02/20/1999 0 0.00 0 0.00
990102 USD 338,400 338,400 338,400.00 338,400.00 03/22/1999 0 0.00 0 0.00
Totals 532,800.00
SHIAN INDUSTRY CO., LTD
990092 USD 1,718,655 1,718,655 1,718,655.14 1,718,655.14 03/31/1999 0 0.00 0 0.00
Totals 1,718,655.14
XXXXXX & XXXXXX
990107 USD 53,813 53,813 53,813.70 53,813.70 04/05/1999 0 0.00 0 0.00
Totals 53,813.70
SUN ISLE INC.
990042 USD 970,068 970,068 970,068.92 970,068.92 03/31/1999 0 0.00 0 0.00
Totals 970,068.92
241
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
SYRATECH (HK) LTD.
990045 USD 194,851 194,851 194,851.25 197,737.00 02/20/1999 0 0.00 0 0.00
Totals 194,851.27
TAIPRO CO., LTD. C/O TAIPRO CO. LTD.
990065 USD 430,814 430,814 430,814.04 430,814.04 02/22/1999 0 0.00 0 0.00
Totals 430,814.04
TIGER ELECTRONICS FAR EAST
990076 USD 86,160 86,160 86,160.00 86,160.00 03/09/1999 0 0.00 0 0.00
Totals 86,160.00
TOASTMASTER, INC.
990021 USD 84,878 84,878 84,878.57 84,878.57 02/05/1999 0 0.00 2 0.00
Totals 84,878.57
TREND LIGHTING
990047 USD 50,850 50,850 50,850.00 50,850.00 03/08/1999 0 0.00 0 0.00
Totals 50,850.00
242
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
WEATHERWORKS, INC.
990097 USD 141,704 141,704 141,704.64 141,704.64 03/22/1999 0 0.00 0 0.00
Totals 141,704.64
WORLD HOUSEWARE PRODUCING CO., INC.
990010 USD 64,038 64,038 64,038.24 64,038.24 01/20/1999 0 0.00 0 0.00
Totals 64,038.24
YU SHAN WOODEN WORK CO., LTD.
990064 USD 8,820 8,820 8,820.00 8,820.00 02/12/1999 0 0.00 0 0.00
990093 USD 21,072 21,072 21,072.00 21,072.00 04/03/1999 0 0.00 0 0.00
Totals 29,892.00
243
S.M.C. Program
INTERNATIONAL DEPARTMENT
LETTER OF CREDIT OUTSTANDING BALANCE
===============================================================================
Negs Not Paid Amds Not Insuerd
---------------- -----------------
LC # Crncy Face Value Fgn Bal U.S. Dol Amt Bank Bal Exp Date Num Tot Amt Num Tot Amt
---- ----- ---------- ------- ------------ -------- -------- --- ------- --- -------
Total LC's Not Expired 103
Total LC's Expired 31
Total LC's Approved But Not
Issued 105
Total Negotiations Approved
But Not Paid 0
Total Amendments Approved
But Not Issued 20
Total U.S. Balance 31,604,970.21 *
Total U.S. Bank Balance 31,586,148.29
000
XXXX XX XXXXXXX: CORRECTIONS TO REPORT AND/OR WORK IN THE
PIPELINE NOT ON REPORT:
CORRECTIONS
BENEFICIARY LC# AMOUNT EXPIRY
ARC 990050 537,763.81
BELDARE 990066 13,923.00
BRINNS 990015 142,356.25 2/5/99
CHOSUN 990014 158,894.90 1/26/99
INTL FURNITURE 990046 440,841.00
OGGI 990015 27,750.00 1/31/99
XXXX XXXXX 990018 18,949.00
SHIAN 990092 893,878.00
WORK IN PROGRESS LETTER OF
CREDIT
J&H INTER 990132 49,246.98 3/22/99 THESE NOT ACTUALLY SENT TO BANK YET
SYRATECH 990137 53,095.88 4/14/99 THESE NOT ACTUALLY SENT TO BANK YET
TRENDMASTER 990138 49,862.98 3/13/99 THESE NOT ACTUALLY SENT TO BANK YET
SUPREME TOYS 990139 28,800.00 2/15/99 THESE NOT ACTUALLY SENT TO BANK YET
PARAWIND 990140 118,735.34 3/8/99 THESE NOT ACTUALLY SENT TO BANK YET
MERITUS NONE 10,200.00 LC NOT PROCESSED; BUT WILL BE TMR
BELDARE 990112 110,180.01 4/5/99
NUMARK IND 990115 68,880.00 4/5/99
SPRINGFIELD 990117 17,843.30 4/5/99
XXXX XXXXXXX 990118 52,511.25 4/5/99
HERITAGE 990120 17,775.00 4/5/99
BELDARE 990121 108,842.35 4/8/99
TENSOR 990124 7,125.00 4/7/99
GROTON 990125 36,161.75 4/7/99
RACING CHAMP 990128 78,551.40 3/26/99
BELDARE 990128 282,072.85 4/12/99
XXXXXX 990130 48,420.30 4/11/99
MUTUAL BENE 990131 22,161.60 1/12/99
BELDARE 990133 145,824.74 4/5/99
GLOBAL HORIZ 990134 65,550.00 3/3/99
3K MOBEL 990135 138,240.00 2/15/99
BELDARE 990136 25,458.00 3/18/99
AMENDMENTS
BELDARE 990087 5,279.40
INTL FURNITURE 990100 261,448.32 4/18/99
MONARCH 990084 8,678.00 4/5/99
EMESS 990113 78,750.00
BELDARE 990079 9,607.00
XXXX XXXXXXX 990115 121,788.70
245
BEAKIE XXX 990088 148,790.00
BELDARE 990127 163,475.78 4/5/99
AT HOME 990081 387,183.00 2/15/99 NOT SENT TO BANK YET
CASUAL LIVING 990040 457,996.67 03/31/99 NOT SENT TO BANK YET
XXXXXX 990013 132,585.25 3/22/99 NOT SENT TO BANK YET
PAYMENTS IN PROCESS
TAIPRO 990065 (151,232.70)
EXIM 990044 (55,228.00)
TOTAL ADJUSTMENTS 5,340,435.27
ADD PRIOR O/S 31,504,970.21
TOTAL OUTSTANDING L/C 36,945,406.48
246
Schedule 8.7(f)
TO CREDIT AGREEMENT
CHART C
STANDBY LETTERS OF CREDIT OUTSTANDING BALANCE
247
SERVICE MERCHANDISE COMPANY, INC.
STANDBY LETTERS OF CREDIT
FOR PERIOD ENDING 1/03/98
FACILITY LETTERS OF CREDIT OUTSTANDING:
L/C
LIST# LOCATION LCBANK EXPIRES FEE L/C AMOUNT L/C NUMBER PURPOSE
(0) 0000000 FIRST UNION CHASE 10/3/99 2.250% $1,175,000.00 T-265731 SPE-1
(0) 0000000 FIRST UNION CHASE 10/3/99 2.250% $ 404,410.00 T-265732 SPE-2
(0) 0000000 ARGONAUT COMPANY CHASE 3/1/99 2.250% $1,100,000.00 P271805 COLLATERALIZES GENERAL LIABILITY
& WORKERS COMP LOSSES
(0) 0000000 RELIANCE INSURANCE CHASE 3/1/99 2.250% $1,100,000.00 P271803 COLLATERALIZES WORKERS COMP
LOSSES 1991
(0) 0000000 NATIONAL UNION (AIG) CHASE 3/1/99 2.250% $4,221,500.00 P271801 COLLATERALIZES WORKERS COMP
LOSSES 1993-1994
(0) 0000000 CIGNA INSURANCE CHASE 8/1/99 2.250% $7,700,269.00 P271880 COLLATERALIZES WORKERS COMP
LOSSES
(0) 0000000 INTERNATIONAL GOLD CHASE 8/1/99 2.250% $2,500,000.00 P271889 SECURES GOLD SHIPMENT FROM
INTERNATIONAL VENDOR
(0) 0000000 ST. XXXX SURETY GROUP CHASE 11/30/99 2.250% $4,078,000.00 P284133 COLLATERALIZES SURETY BONDS
(0) 0000000 WASHINGTON CHASE 12/30/99 2.250% $1,500,000.00 COLLATERALIZES BONDS
INTERNATIONAL INS. CO.
(10) TOTAL FACILITY LETTERS OF $23,771,179.00
CREDIT
NON-FACILITY LETTERS OF CREDIT
OUTSTANDING:
INDUSTRIAL REVENUE BONDS
(11) 139 THORTNON CO. CIBC 12/31/99 2.150% $1,348,801.37 SYN9410017 BACKS INDUSTRIAL REVENUE BOND
(12) 147 LANSING, MI CIBC 12/31/99 2.150% $1,452,363.02 SYN9410015 BACKS INDUSTRIAL BOND
(13) 174 KNOXVILLE, TN CIBC 12/31/99 2.150% $2,697,682,74 SYN9410013 BACKS INDUSTRIAL BOND
(14) 135 NAPERVILLE, IL CIBC 12/31/99 2.150% $3,632,160.00 SYN9510013 BACKS INDUSTRIAL BOND
(15) 191 BURBANK, IL CIBC 12/31/99 2.150% $5,695,890.00 SYN9410011 BACKS INDUSTRIAL BOND
(16) 967 XXXXXXXXXX, NY CIBC 12/31/99 2.150% $10,381,164.38 SYN9410016 BACKS INDUSTRIAL BOND
(17) TOTAL NON-FACILITY LETTERS OF $25,207,981.51
CREDIT
(18) TOTAL STANDBY LETTERS OF $48,379,168.51
CREDIT
248
Schedule 8.8
TO CREDIT AGREEMENT
INVESTMENTS
Overnight money market accounts valued as of January 12, 1999 at
$51,600.00.
See attached Chart "A" following, incorporated herein by reference.
249
Schedule 8.8
TO CREDIT AGREEMENT
CHART A
SERVICE MERCHANDISE INVESTMENT PORTFOLIO
250
SERVICE MERCHANDISE INVESTMENT PORTFOLIO
CREDIT MONEY MKT INVEST MATURE INVESTMENT AVG DAILY
RATING MUTUAL FUNDS BROKER DATE DATE NO DAY PRINCIPAL INT RATE INTEREST INTEREST
------------------------------------------------------------------------------------------------------------------------------------
NR PRIME OBLIGATIONS GOLDMAN 01/13 01/14 1 27,300,000.00 5.130% 3,836.96 3,836.96
SACHS
AAA/aaa PRIME OBLIGATIONS FEDERATED 01/13 01/14 1 24,300,000.00 5.120% 3,408.86 3,408.66
TOTAL MONEY MARKET 51,600,000.00 5.125% 7,245.62 7,245.62
CREDIT COMMERCIAL INVEST MATURE INVESTMENT AVG DAILY
RATING PAPER BROKER DATE DATE NO DAY PRINCIPAL INT RATE INTEREST INTEREST
------------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER 0.00 0.0000% 0.00 0.00
CREDIT TAX-EXEMPT INVEST MATURE INVESTMENT TAX-EXEMPT AVG DAILY
RATING SECURITIES BROKER DATE DATE NO DAY PRINCIPAL YIELD INTEREST INTEREST
------------------------------------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPTS 0.00 0.000% 0.00 0.00
TOTAL SMC MANAGED 51,600,000.00 5.125% 7,245.62 7,245.62
PORTFOLIO
251
Schedule 8.10
TO CREDIT AGREEMENT
TRANSACTIONS WITH AFFILIATES
1. The Borrower is involved in a joint venture with Xxxxxxx Xxxxxxxxx
whereby it shares rent with regard to property located on Broadway in
Nashville, Tennessee. The Borrower pays such Affiliate approximately
$11,437.50 per month.
2. The Borrower is involved in a venture whereby it leases property from
Xxxxxxx Xxxxxxxxx located on Nolensville Road in Nashville, Tennessee,
for approximately $6,750.00 per month.
3. See Schedule 8.2(b), Existing Guarantee Obligations, which is hereby
incorporated by reference relating, to the Borrower's Credit Card
Program.
252
Schedule 11.2
TO CREDIT AGREEMENT
ADDRESS OF OTHER PARTIES
======================================================================================================================
Name of Lender Address for Notices Contact
======================================================================================================================
Xxxxxx Financial, Inc. 000 Xxxx 00xx Xxxxxx Attn: Xxx Xxxxxxxx
Xxx Xxxx, XX 00000 Fax: (000) 000-0000
----------------------------------------------------------------------------------------------------------------------
National City Commercial Finance, Inc. 0000 Xxxx 0xx Xxxxxx Attn: Xxxxx Grogelny
Suite 400 Fax: (000) 000-0000
Xxxxxxxxx, Xxxx 00000
----------------------------------------------------------------------------------------------------------------------
Foothill Income Trust, L.P. 00000 Xxxxx Xxxxxx Xxxx Attn: Xxxx Xxxxxxxx
Suite 1500 Fax: (000) 000-0000
Xxx Xxxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------
Foothill Capital Corporation 11111 Santa Xxxxxx Blvd Attn: Xxxx Xxxxxxxxxx
Suite 1500 Fax: (000) 000-0000
Xxx Xxxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------
Xxxxxxx National Life Insurance 000 Xxxx Xxxxxx Xxxxx Attn: Xxxxxxx X. Xxxxxxx
Company Suite 1100 Fax: (000) 000-0000
c/o PPM Finance, Inc. Xxxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------
======================================================================================================================
