CATHERINES, INC.
CATHERINES STORES CORPORATION
CATHERINES OF PENNSYLVANIA, INC.
CATHERINES OF CALIFORNIA, INC.
CATHERINES PARTNERS, L.P.
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 27, 1998
FIRST AMERICAN NATIONAL BANK, individually and
in its capacity as Agent
HIBERNIA NATIONAL BANK
BANK ONE, N.A.
- 1 -
Page
TABLE OF CONTENTS
This Table of Contents is not a part of the Amended and Restated Credit
Agreement and is only for convenience of reference.)
Page
SECTION 1. DEFINITIONS.............................................. ...3
1.1 Defined Terms....................................................3
1.2 Accounting Terms................................................23
1.3 Other Definitional Provisions...................................23
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS............................24
2.1 Working Capital Commitments and Working Capital
Loans.......................................................24
2.2 Working Capital Note............................................24
2.3 Optional Prepayments............................................24
2.4 Requirements of Law.............................................25
2.5 Use of Proceeds.................................................27
2.6 Swingline Loan Subfacility......................................27
SECTION 3. LETTERS OF CREDIT...........................................28
3.1 Issuance of Letters of Credit...................................28
3.2 Participating Interests.........................................28
3.3 Procedure for Opening Letters of Credit.........................28
3.4 Payments in Respect of Letters of Credit........................28
3.5 Letter of Credit Fees...........................................29
3.6 Letter of Credit Reserves.......................................30
3.7 Further Assurances..............................................31
3.8 Obligations Absolute............................................31
3.9 Assignments.....................................................32
3.10 Participations .................................................32
3.11 Certification as to L/C Exposure on Closing Da..................32
SECTION 4. INTEREST RATE PROVISIONS; FEES; PAYMENTS....................32
4.1 Procedure for Borrowing.........................................32
4.2 Interest Rates and Payment Dates................................34
4.3 Computation of Interest and Fees................................34
i
Page
4.4 Conversion Options..............................................35
4.5 Pro Rata Treatment and Payments.................................35
4.6 Fees............................................................36
4.7 Changes of Commitment Amounts...................................36
4.8 Inability to Determine Interest Rate............................37
4.9 Illegality......................................................38
4.10 Indemnity.......................................................38
SECTION 5. CONDITIONS PRECEDENT........................................39
5.1 Conditions Precedent to this Amended and
Restated Credit Agreement .....................................39
5.2 Conditions to Each Loan and Each Letter of Credit...............43
SECTION 6. REPRESENTATIONS AND WARRANTIES..............................44
6.1 Financial Condition.............................................44
6.2 Entity Existence; Compliance with Law...........................44
6.3 Entity Power; Authorization; Enforceable
Obligations.................................................45
6.4 No Legal Bar....................................................46
6.5 No Material Litigation..........................................46
6.6 No Default......................................................46
6.7 Ownership of Property; Liens....................................46
6.8 Patents, Copyrights, Permits and Trademarks.....................46
6.9 No Burdensome Restrictions......................................46
6.10 Margin Regulations..............................................46
6.11 Investment Company Act..........................................47
6.12 Disclosure......................................................47
6.13 The Security Documents..........................................47
6.14 ERISA...........................................................47
6.15 Subsidiaries....................................................48
SECTION 7. AFFIRMATIVE COVENANTS.......................................48
7.1 Financial Statements............................................48
7.2 Certificates; Reports and Other Information.....................49
7.3 Payment of Obligations..........................................51
7.4 Conduct of Business and Maintenance of Existence................51
7.5 Maintenance of Property.........................................51
7.6 Insurance.......................................................51
ii
Page
7.7 Inspection of Property; Books and Records;
Discussions.................................................52
7.8 Notices.........................................................52
7.9 Maintenance of Liens of the Security Documents..................53
7.10 Security Documents..............................................53
7.11 Termination of Merchant Services Agreements.....................54
7.12 Annual Inventory Valuation......................................54
7.13 Further Assurances..............................................54
SECTION 8. FORMATION OF NEW SUBSIDIARIES.....................................54
SECTION 9. NEGATIVE COVENANTS..........................................55
9.1 Indebtedness....................................................55
9.2 Limitation on Liens.............................................56
9.3 Limitation on Contingent Obligations............................57
9.4 Prohibition on Fundamental Changes..............................57
9.5 Prohibition on Sale of Assets...................................57
9.6 Limitation on Investments, Loans and Advances...................58
9.7 Consolidated Working Capital....................................58
9.8 Consolidated Net Worth..........................................58
9.9 Capital Expenditures........................................... 58
9.10 Debt Coverage Ratio.............................................59
9.11 Entity Documents................................................59
9.12 Limitation on Dividends.........................................59
9.13 Transactions with Affiliates and among Credit Parties...........59
SECTION 10. EVENTS OF DEFAULT...........................................60
SECTION 11. MISCELLANEOUS....................................................63
11.1 Amendments and Waivers.........................................63
11.2 Notices........................................................63
11.3 No Waiver; Cumulative Remedies.................................64
11.4 Survival of Representations, Warranties and
Covenants..................................................65
11.5 Payment of Expenses and Taxes..................................65
11.6 Successors and Assigns; Participations; Purchasing
Banks......................................................65
11.7 Adjustments....................................................69
11.8 Merger.........................................................69
iii
11.9 Effectiveness..................................................69
11.10 Governing Law; No Third Party Rights...........................70
11.11 Submission to Jurisdiction: Waivers............................70
11.12 Counterparts...................................................71
11.13 Obligations of Banks Several...................................71
SCHEDULES
1.1 Store Locations
1.2 Swingline Loan Commitment Percentage
Working Capital Commitment
Working Capital Commitment Percentage
4.1(d) FANB Rate Lending Office
5.1(n) Exceptions to UCC Filings
5.1(o) List of Jurisdictions and Lien Searches 5.1(p) States Without
Good Standing Certificates 6.5 Material Litigation 6.7 Imperfect Record
Title or Leaseholds 6.13 UCC Filing List 6.15 Subsidiaries of Parent
and Company 9.1(b) Permitted Indebtedness 9.2(g) Permitted Liens 9.3
Contingent Obligations
EXHIBITS
A First Amended and Restated Assignment and Security Agreement-Intex
B First Amended and Restated Assignment and Security Agreement-PA Co
C First Amended and Restated Assignment and Security Agreement-RT Co
D First Amended and Restated Assignment and Security Agreement-The Company
E Borrowing Base Certificate
F Commitment Transfer Supplement
G First Amended & Restated Security Agreement (Company)
H HSB Purchase Agreement
I Second Amended and Restated Guaranty Agreement (Intex)
iv
J First Amended and Restated Security Agreement (Intex)
K L/C Participation Certificate
L Merchant Services Agreements
M Second Amended and Restated Guaranty Agreement (PA Co.)
N First Amended & Restated Pledge Agreement (PA Co.)
O First Amended and Restated Security Agreement (PA Co.)
P Second Amended & Restated Guaranty Agreement (Parent)
Q First Amended and Restated Pledge Agreement (Parent)
R First Amended and Restated Security Agreement (Parent)
S Second Amended and Restated Guaranty Agreement (RT Co.)
T First Amended and Restated Pledge Agreement (RT Co.)
U First Amended and Restated Security Agreement (RT Co.)
V First Amended and Restated Swingline Note
W Second Amended and Restated Working Capital Note [2.2]
X Waring Xxx Opinion Letter [5.1(b)]
v
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (the "Amended and Restated
Credit Agreement"), dated as of February 27, 1998, is made by and among
CATHERINES, INC., a Delaware corporation (the "Company"), CATHERINES STORES
CORPORATION, a Tennessee corporation (the "Parent"), CATHERINES OF PENNSYLVANIA,
INC., a Tennessee corporation ("PA Co."), CATHERINES OF CALIFORNIA, INC., a
California corporation ("RT Co."), CATHERINES PARTNERS, L.P., a Tennessee
limited partnership ("Intex"), and FIRST AMERICAN NATIONAL BANK, a national
banking association ("FANB"), individually and in its capacity as agent for the
Banks, defined below (together with any of its successors in such capacity, the
"Agent"), HIBERNIA NATIONAL BANK, a national banking association ("Hibernia")
and BANK ONE, N.A., a national banking association ("Bank One"); (together with
their successors, transferees and assigns from time to time parties hereto shall
be referred to collectively as the "Banks" and each individually shall be
referred to as a "Bank").
W I T N E S S E T H:
A. The Company, Catherines Stores Corporation, a Delaware corporation
(the "Predecessor Parent"), Virginia Specialty Stores, Inc. ("VSS"), Added
Dimensions, Inc. ("Added Dimensions"), Xxxxx Xxxxx-Large Size Factory Outlet,
Inc. ("Xxxxx Xxxxx"), The Answer-The Elegant Large Size Discounter, Inc. ("The
Answer") (Added Dimensions, Xxxxx Xxxxx and The Answer collectively called "VSS
Subsidiaries") and FANB entered into a Credit Agreement dated as of March 31,
1994 (the "Original Credit Agreement") pursuant to which FANB provided a term
loan and a working capital loan facility to the Company. In connection with the
execution of the Original Credit Agreement the Company, the Predecessor Parent,
VSS and the VSS Subsidiaries executed a number of ancillary documents
(collectively the "Original Loan Documents") including without limitation
various security agreements, pledge agreements and mortgages in favor of Agent
for the benefit of the Banks (collectively the "Original Security Documents").
B. Hibernia and The Hongkong and Shanghai Banking Corporation Limited
("Hongkong") became parties to the Original Credit Agreement by the execution of
certain Commitment Transfer Supplements dated as of March 31, 1994.
C. Subsequent to the execution of the Original Credit Agreement, PA
Co., RT Co., Intex and CSC Sub, Inc., a Tennessee corporation ("CSC Sub") were
formed, the VSS Subsidiaries merged with VSS and certain assets were transferred
from the Company to PA Co., RT Co., Intex and CSC Sub. The corporate restructure
and the transfer of assets were contemplated by the terms of the Original Credit
Agreement and were subject to the execution by the Company, the Predecessor
Parent, VSS, PA Co., RT Co., Intex and CSC Sub of a First Amendment to Credit
Agreement (the "First Amendment") dated as of January 29, 1995, whereby PA Co.,
RT Co., Intex and CSC Sub became Credit Parties and certain ancillary documents
were executed in connection therewith (collectively, the "First Amendment Loan
Documents") including but not limited to security
- 1 -
agreements and pledge agreements in favor of Agent for the benefit of FANB,
Hibernia and Hongkong (collectively, the "First Amendment Security Documents").
D. Subsequent to the execution of the First Amendment, VSS merged into
the Company and the Parent became a successor corporation by virtue of a merger
between CSC Sub and the Predecessor Parent. As of December 6, 1995, the Company,
Parent, PA Co., RT Co., Intex, FANB, Hibernia and Hongkong executed a Second
Amendment to Credit Agreement (the "Second Amendment") whereby (a) the working
capital loan facility was increased from $20,000,000.00 to $25,000,000.00; (b) a
$3,000,000.00 swingline loan subfacility was provided; (c) the term of the
working capital loan facility was extended; (d) certain collateral was released
as security for the Loans and (e) certain other amendments were made to the
credit facilities. In connection therewith the Credit Parties executed certain
ancillary documents (collectively, the "Second Amendment Loan Documents")
including, but not limited to, amendments to security agreements, amendments to
pledge agreements and amendments to deeds of trust in favor of Agent
(collectively, the "Second Amendment Security Documents").
E. As of April 26, 1996, the Credit Parties, FANB, Hibernia and
Hongkong executed a Third Amendment to Credit Agreement (the "Third Amendment")
to reflect certain changes to the financial covenants of the Credit Agreement.
F. As of September 4, 1996, the Credit Parties, FANB, Hibernia and
Hongkong executed a Fourth Amendment to Credit Agreement (the "Fourth
Amendment") (a) to extend term of the swingline loan subfacility, (b) to extend
the term of the working capital loan facility and (c) to reflect certain changes
to the financial covenants of the Credit Agreement. In connection therewith the
Credit Parties executed certain ancillary documents (collectively, the "Fourth
Amendment Loan Documents") including but not limited to the amendments to the
deeds of trust (collectively, the "Fourth Amendment Security Documents").
G. As of December 4, 1996, the Credit Parties, FANB, Hibernia and
Hongkong executed a Fifth Amendment to Credit Agreement (the "Fifth Amendment")
to reflect certain changes to the Credit Agreement.
H. The Original Credit Agreement as amended by the First Amendment,
Second Amendment, Third Amendment, Fourth Amendment and Fifth Amendment is
referred to herein as the "Prior Credit Agreement". The Original Loan Documents,
the First Amendment Loan Documents, the Second Amendment Loan Documents, the
Third Amendment Loan Documents, and the Fourth Amendment Loan Documents are
collectively referred to as the "Prior Loan Documents". The Original Security
Documents, the First Amendment Security Documents, the Second Amendment Security
Documents, and the Fourth Amendment Security Documents are collectively referred
to as the "Prior Security Documents".
- 2 -
I. Pursuant to the Prior Credit Agreement, FANB, Hibernia and Hongkong
have made Loans and issued Letters of Credit pursuant to their Commitments under
and as defined in the Prior Credit Agreement. The obligations of the Company and
the other Credit Parties pursuant to the Prior Credit Agreement are embodied
within the Prior Loan Documents and are evidenced by the Term Notes, certain
working capital promissory notes, as amended and restated (the "Prior Working
Capital Notes") and a certain swingline note, as amended (the "Prior Swingline
Note") (the Term Notes, the Prior Working Capital Notes and the Prior Swingline
Note being collectively referred to herein as the "Prior Notes") and certain
guaranties of the Parent, PA Co., RT Co. and Intex, as amended (the "Prior
Guaranties").
J. Simultaneously herewith, the Company shall pay and satisfy the
indebtedness evidenced by the Term Notes, the Term Loan Commitment shall
terminate, the liens of the Deeds of Trust shall be released, Bank One shall
acquire all of Hongkong's participating interest in the Working Capital Loan and
all of Hongkong's participating interest in the Letters of Credit pursuant to
the execution of a Commitment Transfer Supplement dated as of the date of this
Amended and Restated Credit Agreement and executed immediately prior to or
concurrently with the execution of this Amended and Restated Credit Agreement,
and Bank One shall become a Bank party to this Amended and Restated Credit
Agreement all in accordance with the terms and conditions of this Amended and
Restated Credit Agreement. In addition and among other things, the "Working
Capital Commitments" as defined in the Prior Credit Agreement shall be reduced
and restated as defined in this Amended and Restated Agreement.
K. The Credit Parties and the Banks wish to further amend the Credit
Parties' obligations pursuant to this Amended and Restated Agreement and restate
the Credit Parties' obligations to the Banks, on the terms and conditions set
forth herein. Except as set forth herein, the Credit Parties' obligations will
continue to be secured by the liens and security interests granted in the Prior
Security Documents.
NOW, THEREFORE, in consideration of the above Recitals, which are
incorporated in this Amended and Restated Agreement, in consideration of the
mutual agreements and covenants contained herein and for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used herein the following terms shall have the
following meanings:
"Accounts" shall mean all accounts receivable, book debts, notes,
drafts, instruments, documents, acceptances and other forms of obligations now
owned or hereafter received or acquired by or belonging or owing to the Credit
Parties (including, under any trade names, styles or divisions
- 3 -
thereof) whether arising out of goods sold by it or services rendered by it or
from any other transaction, whether or not the same involves the sale of goods
or performance or services by the Credit Parties (including, without limitation,
any such obligation which might be characterized as an account, general
intangible or chattel paper under the Uniform Commercial Code in effect in any
jurisdiction) and all of the Credit Parties' rights in, to and under all
purchase orders now owned or hereafter received or acquired by it for goods or
services, and all of the Credit Parties' rights to any goods represented by any
of the foregoing (including returned or repossessed goods and unpaid sellers'
rights), and all moneys due or to become due to the Credit Parties under all
contracts for the sale of goods and/or the performance of services by it
(whether or not yet earned by performance on the part of the Credit Parties) or
in connection with any other transaction, now in existence or hereafter arising,
including without limitation the right to receive the proceeds of said purchase
orders and contracts, and all collateral security and guarantees of any kind
given by any Person with respect to any of the foregoing; individually, an
"Account."
"Affiliate" of a Person (the "Primary Person") shall mean (a) any
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, the Primary Person or (b) any Person who is a
director or officer (i) of the Primary Person, (ii) of any Subsidiary of the
Primary Person or (iii) of any Person described in clause (a) above. For
purposes of this definition, control of a Person shall mean the power, directly
or indirectly, (i) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (ii) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise.
"Agent" shall mean FANB in its capacity as agent for the Banks or any
successor agent.
"Amended and Restated Credit Agreement" shall mean this Amended and
Restated Credit Agreement, as the same may from time to time be amended,
supplemented or otherwise modified. The Amended and Restated Credit Agreement
may sometimes be referred to herein as the "Agreement".
"Annual Inventory Valuation" shall mean the annual audit of the Net
Recoverable Liquidation Value of Eligible Inventory required to be furnished to
the Agent pursuant to subsection 7.12.
"Applicable Margin" shall mean 2.25% per annum.
"Asset Sale" shall mean any sale, sale-leaseback, or other disposition
by the Credit Parties or any of their Subsidiaries of any of their property or
assets, including the stock of any of their Subsidiaries (except sales and
dispositions permitted by paragraphs (a) through (h) of subsection 9.5 and by
Section 8).
- 4 -
"Assignments" shall mean the Assignment of the Company, the Assignment of
Intex, the Assignment of PA Co. and the Assignment of RT Co.
"Assignment of Intex" shall mean the amended and restated assignment
and security agreement, of even date with this Amended and Restated Credit
Agreement, substantially in the form of Exhibit "A" to this Amended and Restated
Credit Agreement, as the same may be amended, supplemented or otherwise
modified, pursuant to which Intex reassigns and regrants a security interest in
its rights to payment under the Company Merchant Services Agreement and the VSS
Merchant Services Agreement as said rights have been assigned to Intex pursuant
to that certain Assignment, Assumption and Processing Agreement I (Catherines
Cards Program) and that certain Assignment, Assumption and Processing Agreement
II (VSSI Cards Program), as collateral for the Loans.
"Assignment of PA Co." shall mean the amended and restated assignment
and security agreement, of even date with thisAmended and Restated Credit
Agreement, substantially in the form of Exhibit "B" to this Amended and Restated
Credit Agreement, as the same may be amended, supplemented or otherwise
modified, pursuant to which PA Co. reassigns and regrants a security interest in
its rights to payment under the Company Merchant Services Agreement and the VSS
Merchant Services Agreement as said rights have been assigned to PA Co. pursuant
to that certain Assignment, Assumption and Processing Agreement I (Catherines
Cards Program) and that certain Assignment, Assumption and Processing Agreement
II (VSSI Cards Program), as collateral for the Loans.
"Assignment of RT Co." shall mean the amended and restated assignment
and security agreement, of even date with this Amended and Restated Credit
Agreement, substantially in the form of Exhibit "C" to this Amended and Restated
Credit Agreement, as the same may be amended, supplemented or otherwise
modified, pursuant to which RT Co. reassigns and regrants a security interest in
its rights to payment under the Company Merchant Services Agreement and the VSS
Merchant Services Agreement as said rights have been assigned to RT Co. pursuant
to that certain Assignment, Assumption and Processing Agreement I (Catherines
Cards Program) and that certain Assignment, Assumption and Processing Agreement
II (VSSI Cards Program), as collateral for the Loans.
"Assignment of the Company" shall mean the amended and restated
assignment and security agreement, dated of even date with this Amended and
Restated Credit Agreement, substantially in the form of Exhibit "D" to this
Amended and Restated Credit Agreement, as the same may be amended, supplemented
or otherwise modified, pursuant to which the Company reassigns and regrants a
security interest in its rights to payments under the Merchant Services
Agreements, as collateral for the Loans.
- 5 -
"Available Working Capital Commitment" as to any Bank at a particular
date, shall mean an amount equal to (a) the amount of such Bank's Working
Capital Commitment at such time less (b) the sum of (i) such Bank's Working
Capital Loan Exposure and (ii) such Bank's L/C Exposure; collectively, as to all
the Banks, the "Available Working Capital Commitments."
"Base Rate" shall mean the reference or base rate established by FANB
from time to time and utilized in contracting for interest on its variable rate
loans that do not utilize an externally established reference rate. The Base
Rate is one of several interest rate indices employed by FANB. The Credit
Parties acknowledge that FANB has made, and may hereafter make, loans bearing
interest at rates which are lower and higher than the Base Rate.
"Basic Documents" shall mean, collectively, this Amended and Restated
Credit Agreement (including all schedules and exhibits hereto), the Security
Documents, the Working Capital Notes, the Swingline Note, and any other
document, instrument or agreement executed in connection with this Amended and
Restated Credit Agreement, the documents, instruments and agreements executed in
connection with the Prior Credit Agreement (unless superseded according to
Section 11.8) or hereafter executed and delivered by any Credit Party to the
Agent or the Banks and any amendments or supplements to any such documents or
agreements.
"Borrowing Base" shall mean, as of the date of any determination
thereof, an amount equal to the lesser of (a) the aggregate Commitments of all
Banks at such time or (b) the sum of (i) (A) 40% of Eligible Inventory if the
date of determination occurs during amonth, other than March, April or November
or (B) 45% of Eligible Inventory if the date of determination occurs during
March, April or November, or (C) 125% of the Net Recoverable Liquidation Value
of Eligible Inventory only if the Net Recoverable Liquidation Value of the
Eligible Inventory as determined pursuant to a Second Inventory Valuation
performed pursuant to subsection 7.12 is less than 32% of Eligible Inventory
plus (ii) 75% of the net face amount of Eligible Accounts Receivables at such
time minus (iii) 60% of the L/C Exposure at such time. "Net face amount" shall
mean the face amount of such receivables less applicable credits, offsets,
rebates and discounts. For purposes of determining the Borrowing Base, Eligible
Inventory shall be calculated utilizing the cost value, after adjustments, as
reflected on the consolidated balance sheet of the Parent and its Subsidiaries.
"Borrowing Base Certificate" shall mean a certificate substantially in
the form of Exhibit "E" to this Amended and Restated Credit Agreement.
"Borrowing Date" shall mean (a) any Business Day with respect to FANB
Rate Loans, or any Working Day with respect to Eurodollar Loans, specified in a
notice pursuant to subsection 4.1 of this Amended and Restated Credit Agreement
as a date on which the Banks and/or the Swingline Lender make Loans under this
Amended and Restated Credit Agreement, or (b) any Business Day on which the
Company, in a notice pursuant to subsection 3.1, requests the Issuing Bank to
issue a Letter of Credit under this Amended and Restated Credit Agreement.
- 6 -
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Memphis, Tennessee, and London, England are
authorized or required by law to close.
"Capital Expenditures" for any period, shall mean all amounts that
would, in accordance with GAAP, be set forth as capital expenditures (exclusive
of any amount attributable to capitalized interest) on the consolidated
statement of changes in cash flows of the Parent, its consolidated Subsidiaries
and Intex or other similar statement of the Parent, its consolidated
Subsidiaries and Intex for such period.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than one year from the
date of acquisition, (ii) certificates of deposit and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case with any Bank or with any domestic commercial bank having capital
and surplus in excess of $300,000,000 and a Thomson BankWatch Rating of C or
better, (iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (i) and (ii) entered
into with any financial institution meeting the qualifications specified in
clause (ii) above, (iv) commercial paper issued by any Bank or the parent
corporation of any Bank having a Thomson BankWatch Rating of C or better, and
commercial paper rated A-1 or the equivalent thereof by Standard & Poor's
Corporation or P-1 or the equivalent thereof by Xxxxx'x Investors Service, Inc.
and in each case maturing within nine months after the date of acquisition, (v)
tax exempt securities rated A1 or the equivalent thereof by Standard & Poor's
corporation or P-1 or the equivalent thereof by Xxxxx'x Investors Service, Inc.
and having maturities of not more than one year from the date of acquisition and
(vi) money market funds investing solely in Cash Equivalents.
"Change in Law" shall mean, with respect to any Bank, the adoption of
any law, rule, regulation, policy, guideline or directive (whether or not having
the force of law) or any change therein or in the interpretation or application
thereof by any Governmental Authority having jurisdiction over such Bank, in
each case after the date hereof.
"Change of Control" shall mean any direct or indirect acquisition by
any Person or any Person that as of the date hereof is a direct or indirect
stockholder of the Parent or any Person who is a member of the management of any
of the foregoing or any Affiliate thereof, or senior management of the Credit
Parties or any entity the majority in interest of which is owned by such senior
management), whether singly or in concert with one or more Persons, of 20% or
more, on a fully diluted basis, of the outstanding Parent Common Stock , or any
change in the ownership of the common stock of the Company, PA Co., RT Co., or
any change in the ownership of Intex.
- 7 -
"Closing Date" shall mean the date upon which all the conditions in
subsection 5.1 have been satisfied, which the parties have scheduled to occur on
February 27, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean the property, real and personal, tangible and
intangible, and the proceeds thereof, which are subject from time to time to the
Liens purported to be created by the Prior Security Documents (except for the
real property described in the Deeds of Trust) and the Security Documents.
"Commission" shall mean the Securities and Exchange Commission.
"Commitment Percentage" shall mean, with respect to any Bank, its
existing Working Capital Commitment Percentage or its Swingline Loan Commitment
Percentage, as the context may require.
"Commitments" shall be the collective reference to the Working Capital
Commitments and the Swingline Commitment; individually, a "Commitment."
"Commitment Transfer" shall mean an assignment or transfer pursuant to
paragraph (c) of subsection 11.6 hereof and evidenced by a Commitment Transfer
Supplement.
"Commitment Transfer Supplement" shall mean the supplement substantially in
the form of Exhibit "F".
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with a Credit Party within the
meaning of Section 414(b) or (c) of the Code.
"Company" shall have the meaning specified in the preamble of this
Amended and Restated Credit Agreement, its successors and assigns, as permitted
in thisAmended and Restated Credit Agreement.
"Company Security Agreement" shall mean the amended and restated
security agreement of even date entered into by the Company in favor of the
Agent for the ratable benefit of the Banks, substantially in the form of Exhibit
"G" to this Amended and Restated Credit Agreement, as the same may from time to
time be amended, supplemented or otherwise modified.
"Consolidated Adjusted Operating Profit" shall mean, for any period,
the consolidated Net Income of the Parent and its Subsidiaries for such period,
plus, without duplication and to the extent reflected as a charge in the
statement of such consolidated Net Income for such period, the sum of (i) taxes
measured by income, (ii) interest expense, (iii) depreciation and amortization
expense, (iv) any non-cash FASB 121 charges or any other charges which would
cause the acceleration of
- 8 -
depreciation expense provided that such amount does not exceed $500,000.00 per
Fiscal Year and (v) operating lease expense. The parties have agreed that the
non-cash portion of Store closing expenses shall also be added to the sum of
subparagraphs (i) through (v) for purposes of calculating the Consolidated
Adjusted Operating Profit for the Fiscal Year ending January 31, 1998, and for
each of the three (3) fiscal quarters thereafter, provided that such amount does
not exceed $1,925,000.
"Consolidated Current Assets" at a particular date, shall mean all
amounts which would, in conformity with GAAP, be included under current assets
on a consolidated balance sheet of the Parent and its Subsidiaries as at such
date.
"Consolidated Current Liabilities" at a particular date, shall mean all
amounts which would, in conformity with GAAP, be included under current
liabilities on a consolidated balance sheet of the Parent, its Subsidiaries and
Intex as at such date, but in any event including, in the case of the Parent and
its Subsidiaries, all L/C Obligations, Working Capital Loans and Swingline Loans
at such date.
"Consolidated Net Worth" at a particular date, shall mean all amounts
which would be included under shareholders' equity on a consolidated balance
sheet of the Parent and its Subsidiaries determined in accordance with GAAP as
at such date.
"Consolidated Working Capital" at a particular date, shall mean the
excess, if any, of Consolidated Current Assets over Consolidated Current
Liabilities at such date.
"Contingent Obligation" as to any Person, shall mean any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person (whether or not contingent)
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof; provided, however, that
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount (based on the maximum reasonably anticipated net liability
in respect thereof as determined by such Person in good faith) of the primary
obligation or portion thereof in respect of which such Contingent Obligation is
made or, if not stated or determinable, the maximum reasonably anticipated net
liability in respect thereof
- 9 -
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith. Notwithstanding any of the foregoing to the contrary, the
term "Contingent Obligation" shall not include any tort claims less than Five
Million Dollars ($5,000,000) in the aggregate until the earlier of (a) the
reduction of any such claim to judgment (whether or not appealed) and (b) the
recognition of any such claim as a liability pursuant to GAAP.
"Contractual Obligation" as to any Person, shall mean any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Parties" shall mean, collectively, the Company, the Parent, PA
Co., RT Co., and Intex, individually, a "Credit Party".
"Debt Coverage Ratio" shall mean as of any period of determination a
fraction (x) the numerator of which is the Consolidated Adjusted Operating
Profit for such period and (y) the denominator of which is interest expense for
such period plus current maturities of long term debt plus current maturities of
Financing Leases according to GAAP plus operating lease expense.
"Deed of Trust" shall mean that certain Tennessee Deed of Trust with
Security Agreement and Fixture Filing dated March 31, 1994, amended by First
Modification and Extension of Deed of Trust dated December 6, 1995, and by
Second Modification and Extension of Deed of Trust dated as of September 4,
1996, executed by The Industrial Development Board of the City of Memphis and
County of Shelby, Tennessee encumbering the fee title to the property located in
Memphis, Tennessee used as the Company's national headquarters and distribution
facility, which Deed of Trust shall be released as of the Closing Date subject
to the terms of paragraph (s) of subsection 5.1 hereof.
"Deeds of Trust" shall mean the Deed of Trust and the Leasehold Deed of
Trust.
"Default" shall mean any event specified in Section 10, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Direct Operating Profit Report" shall mean the report required to be
furnished to the Agent pursuant to the terms of paragraph (h) of subsection 7.2.
"Dividend Ratio" shall mean as of the end of each Fiscal Year a
fraction (a) the numerator of which is Consolidated Adjusted Operating Profit
and (b) the denominator of which is the sum of (i) interest expense, (ii) taxes
measured by income, (iii) Capital Expenditures, (iv) payments of obligations
arising with respect to Financing Leases, (v) the increase or decrease in
Consolidated Working Capital at the end of such Fiscal Year from the end of the
prior Fiscal Year (such amount may be negative) and (vi) dividends paid or
proposed to be paid during the current Fiscal Year.
- 10 -
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Eligible Account Receivables" shall mean all accounts receivable of
the Credit Parties which: (i) arose from a bona fide outright performance of
services by the Credit Parties and the services covered by such account have
been fully performed for the respective account debtor; (ii) are due and payable
not more than thirty (30) days from date of invoice and are not more than sixty
(60) days past due; (iii) are not from an employee, officer, director,
stockholder or an Affiliate; (iv) arose in the ordinary course of business; and
(v) have not otherwise been declared ineligible by Agent in the exercise of its
reasonable discretion.
The following accounts shall not be Eligible Accounts Receivable: (i)
all accounts owing by an account debtor if any account owing by such account
debtor is at that time unpaid for a period exceeding sixty (60) days after the
original due date of the original invoice related thereto; (ii) accounts which
have credit balances; (iii) accounts which are subject to any claim for credit
(other than discounts given in the ordinary course of business), rights of
setoff, allowance or adjustment by the account debtor, or any counterclaim by
the account debtor; (iv) accounts which in Agent's reasonable opinion may be
subject to liens or conflicting claims of ownership; (v) accounts which are
subject to any assignment, claim, lien or security interest of any character
except the security interest of Agent; (vi) accounts for which notice of
bankruptcy, insolvency or adverse change in the financial condition of the
account debtor has been received; and (vii) Agent has notified Credit Parties
that the account or account debtor is unsatisfactory and Agent has reasonable
grounds for such objection.
"Eligible Inventory" at a particular date, shall mean all
Inventorywhich in conformity with GAAP, is included on the consolidated balance
sheet of the Parent and its Subsidiaries as determined using the retail method
on a FIFO basis.
"Equipment" shall mean all "equipment" as said term is defined in
Section 9-109(2) of the UCC, including, without limitation, all present and
future furniture, Fixtures, office supplies, motor vehicles, equipment,
machinery and associated equipment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurodollar Lending Office" shall mean the office of each Bank, if any,
which shall be making or maintaining Eurodollar Loans as designated as such from
time to time in a notice from such Bank to the Agent and the Company.
"Eurodollar Loans" shall mean Loans at such time as they are made
and/or being maintained at a rate of interest based upon a Eurodollar Rate.
- 11 -
"Eurodollar Rate" shall mean, with respect to any Interest Period for
any Eurodollar Loan, the rate per annum equal to the applicable London interbank
offered rate for U.S. Dollar deposits appearing on Telerate Page 3750 as of
11:00 a.m. London time two Working Days prior to the first day of such Interest
Period (and if no London interbank offered rate of such maturity then appears on
Telerate Page 3750, then the Eurodollar Rate shall be equal to the London
interbank offered rate for U.S. Dollar Deposits maturing immediately before or
immediately after such maturity, whichever is higher, as determined by the Agent
from Telerate Page 3750) for the number of days comprised
- 12 -
therein and in an amount equal to the amount of the Eurodollar Loan to be
outstanding during such Interest Period divided by (b) a number equal to 1.00
minus the aggregate (without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements current on the date two Working Days prior to
the beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other Governmental Authority
having jurisdiction with respect thereto), as now and from time to time
hereafter in effect, dealing with reserve requirements prescribed for
Eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board) maintained by a member bank of such System (such
Eurodollar Rate to be rounded upwards, if necessary, to the next higher 1/100 of
one percent).
"Event of Default" shall mean any of the events specified in Section
10, provided that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
"Excluded Leases" shall mean all lease agreements to which any Credit
Party is a party.
"FANB Rate" shall mean the greater of (i) the rate of interest publicly
announced by FANB from time to time as its Base Rate and (ii) 1/2% per annum
above the rate set forth opposite the caption "Federal Funds (Effective)" in the
weekly statistical release designated by "H.15(519)", or any successor
publication, published by the Board of Governors of the Federal Reserve System.
"FANB Rate Lending Office" shall mean, initially, the office of each
Bank designated as such in Schedule 4.1(d); thereafter, such other office of
such Bank, if any, located within the United States which shall be making or
maintaining FANB Rate Loans.
"FANB Rate Loans" shall mean Loans at such time as they are made and/or
being maintained at a rate of interest based upon the FANB Rate.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"Facing Fee" shall mean an administrative fee payable in connection
with the issuance of each Standby L/C as provided in Paragraph (c) of subsection
3.5.
"Financing Lease" shall mean any lease of property, real or personal,
the obligations under which are capitalized on a consolidated balance sheet of
the Parent and its consolidated Subsidiaries.
"Fiscal Year" shall mean the fiscal year of each of the Credit Parties,
as applicable, which in each case shall end on the Saturday closest to January
31 of each year.
"Fixtures" shall mean all "fixtures" as said term is defined in Section
9-313(1)(a) of the UCC.
- 13 -
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time, provided that for purposes
of subsections 9.7, 9.8, 9.9, and 9.10 and the terms used therein which are
defined "in accordance with GAAP", "GAAP" shall mean generally accepted
accounting principles in the United States of America as in effect on the date
hereof.
"Governmental Authority" shall mean 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.
"Guaranties" shall mean the Parent Guaranty, the Intex Guaranty, the PA Co.
Guaranty, and the RT Co. Guaranty.
"HSB" shall mean The Xxxxxx State Bank.
"HSB Purchase Agreement" shall mean the Purchase Agreement between the
Company and HSB dated as of October 1, 1992, a copy of which is attached hereto
as Exhibit "H".
"Indebtedness" of a Person, at a particular date, shall mean, without
duplication, (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property, (b) the face amount of all letters of
credit issued for the account of such Person and, without duplication, all
outstanding drafts drawn thereunder and any unpaid reimbursement obligation or
indemnity with respect thereto, (c) all liabilities secured by any Lien on any
property owned by such Person, to the extent attributable to such Person's
interest in such property, even though such Person has not assumed or become
liable for the payment thereof, (d) all liabilities of such Person under
Financing Leases and (e) all indebtedness of such Person arising under
acceptance facilities; but excluding trade and other accounts and accrued
expenses payable in the ordinary course of business and accrued reserves with
respect to expenses arising in the ordinary course of business.
"Insolvency" as to any Multiemployer Plan, shall be in the condition
such that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"Insolvent" shall mean pertaining to a condition of Insolvency.
"Inter-Company Indebtedness" shall mean Indebtedness of one or more of
the Credit Parties owed solely to one or more other Credit Parties.
"Interest Payment Date" shall mean (a) in the case of the FANB Rate
Loans (other than Swingline Loans), the fifteenth day of each February, May,
August and November, commencing on May 15, 1998, and the date of payment
(including prepayment) in full of the Working Capital Loans, (b) in the case of
the Eurodollar Loans, the last day of each Interest Period and (c) in the case
of the
- 14 -
Swingline Loans, the fifteenth day of each February, May, August and November,
commencing on May 15, 1998, and on the date of payment (including prepayment) in
full of the Swingline Loans.
"Interest Period" shall mean with respect to any Eurodollar Loan:
(a) initially, the period commencing on, as the case may be, the
Borrowing Date or conversion date with respect to such Eurodollar Loan and
ending one, two or three months thereafter as selected by the Company in its
notice of borrowing as provided in subsection 4.1 or its notice of conversion as
provided in subsection 4.4; 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
or three months thereafter as selected by the Company by irrevocable notice to
the Agent not less than three Working Days prior to the last day of the then
current Interest Period with respect to such Eurodollar Loan:
provided that the foregoing provisions relating to Interest Periods are
subject to the following:
(A) if any Interest Period would otherwise end on a day which
is not a Working Day, that Interest Period shall be extended to the
next succeeding Working 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
Working Day;
(B) in the case of any Interest Period for a Working Capital
Loan, any Interest Period that would otherwise extend beyond the
Working Capital Termination Date, shall end on such Working Capital
Termination Date, or if such Working Capital Termination Date shall not
be a Working Day, on the immediately preceding Working Day;
(C) if the Company shall fail to give notice as provided above
in clause (b), it shall be deemed to have selected a conversion of a
Eurodollar Loan into an FANB Rate Loan (which conversion shall occur
automatically and without need for compliance with the conditions for
conversion set forth in subsection 4.4);
(D) any Interest Period that begins on the last 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 Working Day of a calendar month; and
(E) the Company shall select Interest Periods so as not to
require a prepayment (to the extent practicable) or a scheduled payment
of a Eurodollar Loan during an Interest Period for such Eurodollar
Loan.
- 15 -
"Intex Guaranty" shall mean the amended and restated guaranty agreement
of even date in favor of the Banks, substantially in the form of Exhibit "I" to
this Amended and Restated Credit Agreement, as the same may be amended,
supplemented or otherwise modified.
"Intex Security Agreement" shall mean the amended and restated security
agreement of even date executed and delivered by Intex in favor of the Agent for
the ratable benefit of the Banks, substantially in the form of Exhibit "J" to
this Amended and Restated Credit Agreement, as the same may from time to time be
amended, supplemented or otherwise modified.
"Inventory" shall mean all inventory, wherever located, now owned or
hereafter acquired by any Credit Party or in which any Credit Party now has or
hereafter may acquire any right, title or interest, including, without
limitation, all goods and other personal property now or hereafter owned by any
Credit Party which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in any Credit
Party's business, or in the processing, packaging or shipping of the same, and
all finished goods, including, but not limited to, all inventory as defined in
Section 9-109(4) of the UCC.
"Issuing Bank" shall mean FANB.
"L/C Application" shall mean a Trade L/C Application or a Standby L/C
Application.
"L/C Exposure" at a particular date, shall mean the sum of (a) the
aggregate maximum amount available to be drawn under all issued and outstanding
Letters of Credit at such date and (b) the aggregate unreimbursed amounts drawn
under Letters of Credit at such date.
"L/C Obligations" shall mean the obligations of the Company to
reimburse the Issuing Bank for any payments made by the Issuing Bank under any
Letter of Credit that have not been reimbursed by the Company pursuant to
paragraph (a) of subsection 3.4.
"L/C Participating Interest" shall mean an undivided participating
interest in the face amount of each issued and outstanding Letter of Credit and
the L/C Application relating thereto.
"L/C Participation Certificate" shall mean a certificate substantially
in the form of Exhibit "K" to this Amended and Restated Credit Agreement.
"Lease Obligations" shall mean, as of the date of any determination
thereof, the rental commitments of the Credit Parties, if any, under leases for
real and/or personal property (net of income from assignments or subleases
thereof), excluding, however, Financing Leases.
"Leasehold Deed of Trust" shall mean the Tennessee Leasehold Deed of Trust
with Security Agreement, Fixture Filing and Assignment of Rents and Leases dated
March 31, 1994, as amended
- 16 -
by First Modification and Extension of Deed of Trust dated as of December 6,
1995, and by Second Modification and Extension of Deed of Trust dated as of
September 4, 1996, executed by the Company on the Company's leasehold interest
in the Scheduled Leases, which Leasehold Deed of Trust is being released as of
the Closing Date pursuant to the terms of paragraph (s) of subsection 5.1
hereof.
"Letter of Credit" shall mean a Trade L/C or a Standby L/C.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien, charge or encumbrance, or preference,
priority or other security agreement or preferential arrangement in respect of
any asset of the Credit Parties of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
Financing Lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the Commercial Code or comparable law of any jurisdiction).
"Loan Exposure" at a particular date, shall mean the aggregate
principal amount of Working Capital Loans and Swingline Loans outstanding at
such date.
"Loans" shall mean, collectively, the Working Capital Loans and the
Swingline Loans.
"Merchant Services Agreements" shall mean (i) that certain Merchant
Services Agreement between the Company and HSB dated as of October 1, 1992, as
amended by that certain Amendment thereto effective October 1, 1994, as further
amended and restated in that certain First Amended and Restated Merchant
Services Agreement dated as of October 1, 1992, a copy of which is attached as
Exhibit "L-1", and (ii) that certain First Amended and Restated Merchant
Services Agreement between VSS and HSB dated November 2, 1992, as amended by
that certain Amendment thereto effective October 1, 1994, and as further amended
and restated in that certain Amended and Restated Merchant Services Agreement
dated as of November 2, 1992, between HSB and the Company (as
successor-in-interest of VSS by merger), a copy of which is attached hereto as
Exhibit "L-2", as further modified or amended from time to time.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Income" for any period, shall mean the consolidated net income of
the Parent and its Subsidiaries for such period, determined in accordance with
GAAP (but excluding any extraordinary gains and extraordinary losses
attributable to such period).
"Net Loss" for any Fiscal Year, shall mean the consolidated negative
net income of the Parent and its Subsidiaries for such period, determined in
accordance with GAAP (but excluding any extraordinary gains and extraordinary
losses attributable to such period).
- 17 -
"Net Proceeds" shall mean (1) with respect to the sale of any asset by
the Credit Parties or any of their Subsidiaries (other than Inventory sold in
the ordinary course of business) the excess, if any, of (a) the sum received in
connection with such sale, whether or not such sum is in whole or in part cash,
less (b) the sum of (i) the principal amount of any Indebtedness which is
secured by any such asset and which is required to be repaid in connection with
the sale thereof (other than Indebtedness hereunder), (ii) the out-of-pocket
expenses incurred by the Credit Parties or any of their Subsidiaries in
connection with such sale and (iii) provision for taxes attributable to such
sale (as estimated by the Credit Parties or any of their Subsidiaries in good
faith); and (2) with respect to the sale of any capital stock by the Parent, the
excess of (a) the sum received in connection with such sale, whether or not such
sum is in whole or in part cash, over (b) the underwriting discounts and
commissions (if any), and out-of-pocket expenses up to $400,000, incurred by the
Parent in connection with such sale.
"Net Recoverable Liquidation Value" shall mean the net recoverable
liquidation value of the Eligible Inventory as determined by the Annual
Inventory Valuation required to be performed pursuant to Section 7.12.
"Notes" shall mean, collectively, the Working Capital Notes and the
Swingline Note.
"Operating Account" shall mean the Company's checking and depository
account established with the Swingline Lender which is used by the Company for
working capital purposes.
"PA Co. Guaranty" shall mean the amended and restated guaranty
agreement of even date entered into by PA Co. in favor of the Banks,
substantially in the form of Exhibit "M" to this Amended and Restated Credit
Agreement, as the same may be amended, supplemented or otherwise modified.
"PA Co. Pledge Agreement" shall mean the amended and restated pledge
agreement of even date entered into by the Company in favor of the Agent for the
ratable benefit of the Banks, pursuant to which the Company ratifies, affirms
and repledges the stock of PA Co. as security for the Loans, substantially in
the form of Exhibit "N" to thisAmended and Restated Credit Agreement, as the
same may be amended, supplemented or otherwise modified.
"PA Co. Security Agreement" shall mean the amended and restated
security agreement of even date executed and delivered by PA Co. in favor of the
Agent for the ratable benefit of the Banks, substantially in the form of Exhibit
"O" to this Amended and Restated Credit Agreement, as the same may from time to
time be amended, supplemented or otherwise modified.
"Parent" shall have the meaning specified in the preamble of this
Amended and Restated Credit Agreement, its successors and assigns, as permitted
in this Amended and Restated Credit Agreement.
- 18 -
"Parent Common Stock" shall mean, collectively, the Common Stock, $.01
par value, of the Parent, as amended, supplemented or otherwise modified from
time to time.
"Parent Guaranty" shall mean the amended and restated guaranty
agreement of even date entered into by the Parent in favor of the Banks,
substantially in the form of Exhibit "P", to this Amended and Restated Credit
Agreement, as the same may be amended, supplemented or otherwise modified.
"Parent Pledge Agreement" shall mean the amended and restated pledge
agreement of even date entered into by the Parent in favor of the Agent for the
benefit of the Banks, pursuant to which the Parent ratifies, afrirms and
repledges the stock of the Company as security for the Loans, substantially in
the form of Exhibit "Q" to this Amended and Restated Credit Agreement, as the
same may from time to time be amended, supplemented or otherwise modified.
"Parent Security Agreement" shall mean the amended and restated
security agreement of even date executed and delivered by Parent in favor of the
Agent for the ratable benefit of the Banks, substantially in the form of Exhibit
"R" to this Amended and Restated Credit Agreement, as the same may be from time
to time amended, supplemented or otherwise modified.
"Participants" shall have the meaning specified in paragraph (b) of
subsection 11.6 of this Amended and Restated Credit Agreement.
"Participating Bank" shall mean any Bank (other than FANB) with respect
to its L/C Participating Interest in each Letter of Credit.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title I. of ERISA.
"Permitted Liens" shall mean, collectively, the Liens described in
subsection 9.2.
"Person" shall mean and include an individual, a partnership, a
corporation, a business trust, a joint stock company, a trust, an unincorporated
association, a joint venture or other entity or a Governmental Authority.
"Plan" at any particular time, shall mean any employee benefit plan
which is covered by ERISA and in respect of which a Credit Party 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.
"Pledge Agreements" shall mean the Parent Pledge Agreement, the PA Co.
Pledge Agreement and the RT Co. Pledge Agreement.
- 19 -
"Prior Credit Agreement" shall have the meaning specified in paragraph
H of the Recitals to this Amended and Restated Credit Agreement.
"Prior Loan Documents" shall have the meaning specified in paragraph H
of the Recitals to this Amended and Restated Credit Agreement.
"Prior Notes" shall have the meaning specified in paragraph I of the
Recitals to this Amended and Restated Credit Agreement.
"Prior Security Documents" shall have the meaning specified in
paragraph H of the Recitals to this Amended and Restated Credit Agreement.
"Prior Working Capital Notes" shall have the meaning specified in
paragraph I of the Recitals to this Amended and Restated Credit Agreement.
"Proceeds" shall have the meaning specified in the UCC and, in any
event, shall include, but not be limited to, (a) any and all proceeds of the
insurance, indemnity, warranty or guaranty payable to the Credit Parties from
time to time with respect to any of the Collateral, (b) any and all payments (in
any form whatsoever) made or due and payable to the Credit Parties from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any Person acting under color of Governmental
Authority) and (c) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Purchasing Banks" shall have the meaning specified in paragraph (c) of
subsection 11.6 of this Amended and Restated Credit Agreement.
"Register" shall have the meaning specified in paragraph (d) of
subsection 11.6 of this Amended and Restated Credit Agreement.
"Reimbursement Obligation" shall mean the obligation of the Company to
reimburse the Issuing Bank for any amounts described in subsection 3.4.
"Related Document" shall mean any agreement, certificate, document or
instrument relating to a Letter of Credit.
"Reorganization" as to any Multiemployer Plan, shall mean the condition
that such Plan is in reorganization as such term is used in Section 4241 of
ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043 (b) of ERISA, other than those events as to which the thirty-day period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. 2615.
- 20 -
"Reporting Accountants" shall have the meaning specified in paragraph (a)
of subsection 7.1.
"Required Banks" at a particular time, the holders of at least 51% of
the aggregate principal amount of the Notes, or, if no amounts are outstanding
under the Notes, Banks having at least 51% of the aggregate amount of the
Commitments.
"Requirement of Law" as to any Person, shall mean the Certificate of
Incorporation and Bylaws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or final 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.
"Responsible Officer" shall mean, as to the Parent, the Company, PA Co.
or RT Co., any of their respective Presidents and Chief Executive Officers,
Executive Vice Presidents and Chief Financial Officers or Executive Vice
Presidents and Secretaries or Vice Presidents and Treasurers, and as to Intex,
the President and Chief Executive Officer, Executive Vice President and Chief
Financial Officer or Executive Vice President and Secretary or Vice President
and Treasurers of its corporate general partner.
"RT Co. Guaranty" shall mean the amended and restated guaranty
agreement of even date entered into by RT Co. in favor of the Banks,
substantially in the form of Exhibit "S" to this Amended and Restated Credit
Agreement, as the same may from time to time be amended, supplemented or
otherwise modified.
"RT Co. Pledge Agreement" shall mean the amended and restated pledge
agreementof even date entered into by the Company in favor of the Agent for the
ratable benefit of the Banks, pursuant to which the Company ratifies, affirms
and repledges the stock of RT Co. as security for the Loans, substantially in
the form of Exhibit "T" to this Amended and Restated Credit Agreement, as the
same may be from time to time amended, supplemented or otherwise modified.
"RT Co. Security Agreement" shall mean the amended and restated
security agreement of even date entered into by RT Co. in favor of the Agent for
the ratable benefit of the Banks, substantially in the form of Exhibit "U" to
this Amended and Restated Credit Agreement, as the same may from time to time be
amended, supplemented or otherwise modified.
"Sale and Leaseback" shall mean any arrangement with any Person whereby
a Credit Party shall sell or transfer any property, real or personal, whether
now owned or hereafter acquired and thereafter rent or lease such property or
other property.
"Second Inventory Valuation" shall mean the audit of the Net
Recoverable LiquidationValue of Eligible Inventory required to be furnished to
the Agent pursuant to subsection 7.12.
- 21 -
"Security Agreements" shall mean the Company Security Agreement, the Intex
Security Agreement, the PA Co. Security Agreement, the RT Co. Security Agreement
and the Parent Security Agreement.
"Security Documents" shall mean the Assignments, Security Agreements,
the Guaranties, the Pledge Agreements and any other collateral security
documents from time to time executed and delivered in connection herewith or
therewith.
"Single Employer Plan" shall mean any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Standby L/C" shall mean an irrevocable letter of credit under which
the Issuing Bank agrees to make payments in Dollars for the account of the
Company, on behalf of the Company in respect of obligations of the Company or
such Subsidiary incurred pursuant to contracts made or performances undertaken
or to be undertaken or matters relating to which the Company is or proposes to
become a party in the ordinary course of the Company's business, including,
without limiting the foregoing, for insurance purposes or in respect of advance
payments or bid or performance bonds.
"Standby L/C Application" shall be as defined in subsection 3.1.
"Store Locations" shall mean the store locations listed on Schedule
1.1, individually, a "Store Location" or a "Store".
"Store Closing Report" shall mean the report required to be furnished
to the Agent pursuant to paragraph (h) of subsection 7.2.
"Subsidiary" of a Person shall mean (a) a corporation of which shares
of stock of each class having ordinary voting power (other than stock 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 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 or by
one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person or (b) a partnership, the general partnership of
which is owned by such Person or by one or more subsidiaries of such Person or
by such Person and one or more subsidiaries of such Person.
"Swingline Commitment" means the obligation of the Swingline Lender to
make Swingline Loans to the Company pursuant to subsection 2.6 of this Amended
and Restated Credit Agreement in an aggregate principal amount at any time
outstanding up to the Swingline Committed Amount, as such amounts may be reduced
from time to time in accordance with the provisions hereof.
- 22 -
"Swingline Committed Amount" means the amount of the Swingline Lender's
Swingline Commitment as specified in subsection 2.6 of this Amended and Restated
Credit Agreement.
"Swingline Lender" means FANB, in its capacity as such, together with
its successors and assigns.
"Swingline Loans" means swingline revolving loans made by the Swingline
Lender pursuant to the provisions of subsection 2.6 of this Amended and Restated
Credit Agreement, individually, a "Swingline Loan".
"Swingline Loan Commitment Percentage" shall mean, as to any Bank, the
percentage set forth opposite such Bank's name under such heading on Schedule
1.2 hereof.
"Swingline Loan Termination Date" shall mean the earlier of (i) June
15, 2001 or (ii) such date as the Swingline Commitment shall terminate
hereunder.
"Swingline Note" means the amended and restated promissory note to be
entered into by the Company in favor of the Swingline Lender substantially in
the form of Exhibit "V" to this Amended and Restated Credit Agreement evidencing
the Swingline Loans provided pursuant to subsection 2.6 of the Amended and
Restated Credit Agreement as such promissory note may be amended, modified,
supplemented, extended, renewed or replaced from time to time.
"Syndicate Purchasing Banks" shall be as defined in paragraph (c) of
subsection 11.6.
"Term Loan Commitment" shall mean the obligations of the Banks to make
term loans to the Company pursuant to the terms of the Prior Credit Agreement.
"Term Notes" shall mean the following notes, each dated March 31, 1994,
executed by the Company: (i) Term Note in the original principal sum of
$2,000,000.00 in favor of FANB; (ii) Term Note in the original principal sum of
$1,500,000.00 in favor of Hibernia; and (iii) Term Note in the original
principal sum of $1,500,000.00 in favor of Bank One.
"Total Exposure" at a particular date, shall mean the sum of the Loan
Exposure at such date and the L/C Exposure at such date (computed after giving
effect to any borrowing and any application of proceeds of any borrowing
pursuant to this Amended and Restated Credit Agreement and/or the issuance of
any Letter of Credit on such date).
"Trade L/C" shall mean a commercial documentary letter of credit,
payable in Dollars and issued by the Issuing Bank for the account of the Company
for the purchase of materials, goods or services in the ordinary course of
business.
"Trade L/C Application" shall be as defined in subsection 3.1.
- 23 -
"Transferee" shall have the meaning specified in paragraph (f) of
subsection 11.6.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Tennessee.
"Working Capital Commitment" shall mean, as to any Bank, its obligation
to make Working Capital Loans to the Company pursuant to subsection 2.1 in the
amount not to exceed the amount set forth opposite such Bank's name in Schedule
1.2 hereto and to purchase its L/C Participating Interest in any Letters of
Credit, as the same may be reduced from time to time pursuant to subsections 2.1
and 4.7, collectively, as to all the Banks, the "Working Capital Commitments."
"Working Capital Commitment Percentage" shall mean, as to any Bank, the
percentage set forth opposite such Bank's name under such heading on Schedule
1.2.
"Working Capital Commitment Period" shall mean the period from and
including the Closing Date to but not including the Working Capital Termination
Date.
"Working Capital Loan" and "Working Capital Loans" shall have the
respective meanings specified in subsection 2.1.
"Working Capital Loan Exposure" at a particular date, shall mean the
aggregate principal amount of Working Capital Loans outstanding at such date.
"Working Capital Note" and "Working Capital Notes" shall have the
respective meanings specified in subsection 2.2.
"Working Capital Termination Date" shall mean the earlier of (i) June
15, 2001 or (ii) such date as the Working Capital Commitment shall terminate
hereunder.
"Working Day" shall mean any day on which dealings in foreign
currencies and exchange between banks may be carried on in Memphis, Tennessee
and London, England.
1.2 Accounting Terms. As used in this Amended and Restated Credit
Agreement, the Working Capital Notes, the Swingline Note, or any certificate,
report or other document made or delivered pursuant to this Amended and Restated
Credit Agreement, accounting terms not defined in subsection 1.1 and accounting
terms partly defined in said subsection 1.1 to the extent not defined, shall
have the respective meanings given to them under GAAP.
1.3 Other Definitional Provisions. (a) Unless otherwise defined
therein, all terms defined in this Amended and Restated Credit Agreement shall
have the defined meanings when used in the Working Capital Notes, the Swingline
Note or any certificate, report or other document made or delivered pursuant to
this Amended and Restated Credit Agreement.
- 24 -
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Amended and Restated Credit Agreement shall refer to
this Amended and Restated Credit Agreement as a whole and not to any particular
provision of this Amended and Restated Credit Agreement, and Section,
subsection, Schedule and Exhibit references are to this Amended and Restated
Credit Agreement, unless otherwise specified. Defined terms used in the singular
may also refer to the plural of such term when used in this Amended and Restated
Credit Agreement, and the use of defined terms in the plural form may also refer
to the singular use of such term.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS
2.1 Working Capital Commitments and Working Capital Loans. Subject to
the terms and conditions hereof, each Bank severally, and not jointly, agrees to
make working capital loans hereunder (individually, a "Working Capital Loan";
collectively, as to the Banks, the "Working Capital Loans") to the Company from
time to time during the Working Capital Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed the Working Capital
Commitments, as such amount may be reduced as provided herein, provided that no
Working Capital Loans shall be made if, after giving effect thereto the Total
Exposure would exceed the Borrowing Base. During the Working Capital Commitment
Period the Company may use the Working Capital Commitments by borrowing,
prepaying the Working Capital Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof. The outstanding principal
balances of the Working Capital Loans on the Closing Date are set forth in the
certificate described in paragraph (v) of subsection 5.1. The Company represents
and warrants to the Banks that the aggregate of such outstanding principal
amounts do not exceed the lesser of the Working Capital Commitment as defined in
the Amended and Restated Credit Agreement or the Borrowing Base as of such date.
2.2 Working Capital Notes. The Working Capital Loans made by each Bank
pursuant hereto shall be evidenced by an amended and restated promissory note of
the Company, substantially in the form of Exhibit "W" with appropriate
insertions as to payee, date and principal amount (individually, a "Working
Capital Note"; collectively, the "Working Capital Notes"), payable to the order
of such Bank and representing the obligation of the Company to pay the lesser of
(a) the amount of the initial Working Capital Commitment of such Bank and (b)
the aggregate unpaid principal amount of all Working Capital Loans made by such
Bank, with interest thereon as prescribed in subsection 4.2. Each Bank is hereby
authorized to record the date and amount of each Working Capital Loan made by
such Bank, and the date and amount of each payment or prepayment of principal
thereof and the date of each interest rate conversion pursuant to subsection 4.4
and the principal amount subject thereto on the schedules annexed to and
constituting a part of its Working Capital Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded.
Each Working Capital Note shall (x) be dated as of March 31, 1994, and (y) be
stated to mature on the Working Capital Termination Date.
- 25 -
2.3 Optional Prepayments. The Company may, at its option, at any one
time or from time to time, prepay the Loans in whole or in part, in the case of
FANB Rate Loans, upon at least one Business Day's prior notice to the Agent, or
in the case of Eurodollar Loans, upon at least three Working Days notice,
specifying the type of Loan to be prepaid and the date and amount of such
prepayment, provided that Eurodollar Loans may not be optionally prepaid on
other than the last day of an Interest Period with respect thereto. Such notice
shall be irrevocable, and the payment amount specified in such notice shall be
due and payable on the date specified. Upon receipt of such notice the Agent
shall promptly notify each Bank thereof. Any optional partial prepayment of the
Loans shall be in the aggregate amount of $250,000 or an integral multiple of
$50,000 in excess thereof.
2.4 Requirements of Law. (a) In the event that any Change in Law or
compliance by any Bank with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority:
(i) does or shall subject any Bank or its Eurodollar Lending
Office, if any, to any tax of any kind whatsoever with respect to this
Amended and Restated Credit Agreement, any Note or any Eurodollar Loans
made by it, or change the basis of taxation of payments to such Bank or
its Eurodollar Lending Office of principal, the commitment fee,
interest or any other amount payable hereunder (except for (x) income,
excise and franchise taxes imposed on such Bank or its Eurodollar
Lending Office, if any, by the jurisdiction under the laws of which
such Bank is organized or any political subdivision or taxing authority
thereof or therein, or by any jurisdiction in which such Bank's
Eurodollar Lending Office, if any, is located or any political
subdivision or taxing authority thereof or therein, including changes
in the rate of tax on or based on the overall net income of such Bank
or such Eurodollar Lending Office, and (y) taxes resulting from the
substitution of any such system by another system of taxation, provided
that the taxes payable by Banks subject to such other system of
taxation are not generally charged to borrowers from such Banks having
loans or advances bearing interest at a rate similar to the Eurodollar
Rate);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Bank which are not
otherwise included in the determination of the Eurodollar Rate; or
(iii) does or shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank or
its Eurodollar Lending Office, if any, of making, converting, renewing or
maintaining advances or extensions of credit or to reduce any amount receivable
hereunder, in each case, in respect of its Eurodollar Loans, then, in any such
case, the Company shall promptly pay such Bank, upon its demand, any additional
amounts necessary to compensate such Bank for such additional cost or reduced
amount receivable
- 26 -
which such Bank deems to be material as determined by such Bank with respect to
such Eurodollar Loans, together with interest on each such amount from the date
demanded until payment in full thereof at a rate per annum equal to the FANB
Rate.
(b) In the event that any Change in Law with respect to any Bank shall,
in the opinion of such Bank, require that any Commitment of such Bank be treated
as an asset or otherwise be included for purposes of calculating the appropriate
amount of capital to be maintained by such Bank or any corporation controlling
such Bank, and such Change in Law shall have the effect of reducing the rate of
return on such Bank's or such corporation's capital, as the case may be, as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank or such corporation, as the case may be, could have achieved but for
such Change in Law (taking into account such Bank's or such corporation's
policies, as the case may be, with respect to capital adequacy) by an amount
reasonably deemed by such Bank to be material, then from time to time following
notice by such Bank to the Company of such Change in Law as provided in
paragraph (c) of this subsection 2.4, within 15 days after demand by such Bank,
the Company shall pay to such Bank such additional amount or amounts as will
compensate such Bank or such corporation, as the case may be, for such
reduction.
(c) If any Bank becomes entitled to claim any additional amounts
pursuant to this subsection 2.4, it shall promptly notify the Company through
the Agent of the event by reason of which it has become so entitled. If any Bank
has notified the Company through the Agent of any increased costs pursuant to
paragraphs (a) or (b) of this subsection 2.4, the Company at any time thereafter
may, upon at least three Business Days' notice to the Agent which shall promptly
notify the Banks thereof), and subject to subsection 4.10, prepay (or convert
into FANB Rate Loans) all (but not a part) of the Eurodollar Loans then
outstanding of such Bank. Each Bank agrees that, upon the occurrence of any
event giving rise to the operation of paragraphs (a) or (b) of this subsection
2.4 with respect to such Bank, it will, if requested by the Company and to the
extent permitted by law or by the relevant Governmental Authority, endeavor in
good faith to avoid or minimize the increase in costs or reduction in payments
resulting from such event (including, without limitation, endeavoring to change
its Eurodollar Lending Office); provided, however, that such avoidance or
minimization can be made in such a manner that such Bank, in its sole
determination, suffers no economic, legal or regulatory disadvantage. If any
Bank has notified the Company through the Agent of any increased costs pursuant
to paragraphs (a) or (b) of this subsection 2.4, the Company at any time
thereafter may, upon at least five Business Days' notice to the Agent which
shall promptly notify the Banks thereof, and subject to subsection 4.10, reduce
or terminate such Bank's Working Capital Commitment in accordance with
subsection 4.7.
(d) Each Bank (i) represents to the Company (for the benefit of the
Company and the Agent) that under applicable law and treaties no taxes are
required to be withheld by the Company, the Agent or such Bank with respect to
any payments to be made to such Bank in respect of the Loans or the L/C
Participating Interests, (ii) agrees to furnish to the Company (with a copy to
the Agent) either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001
- 27 -
(wherein such Bank claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) agrees (for the
benefit of the Company and the Agent) to provide the Company (with a copy to the
Agent) a new Form 4224 or Form 1001 upon the expiration or obsolescence of any
previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such Bank, and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption. Notwithstanding any
provision of subsection 2.4 to the contrary, the Company shall have no
obligation to pay any amount to or for the account of any Bank (or the
Eurodollar Lending Office of any Bank) on account of any taxes pursuant to this
subsection 2.4 to the extent that such amount results from (i) the failure of
any Bank to comply with its obligations pursuant to this subsection 2.4 or (ii)
any representation or warranty made or deemed to be made by any Bank pursuant to
this subsection 2.4(d) proving to have been incorrect, false or misleading in
any material respect when so made or deemed to be made.
(e) A certificate in reasonable detail as to any amounts submitted by
such Bank through the Agent to the Company shall be conclusive in the absence of
manifest error. The covenants contained in this subsection 2.4 shall survive the
termination of this Amended and Restated Credit Agreement and payment of the
outstanding Notes.
2.5 Use of Proceeds. The Company shall use all the proceeds of the
Working Capital Loans (i) for the working capital requirements of the Company
arising in the ordinary course of business and (ii) for general corporate
purposes. The Company shall use all the proceeds of the Swingline Loans for the
short term working capital requirements of the Company arising in the ordinary
course of business.
2.6 Swingline Loan Subfacility.
(a) Swingline Commitment. Subject to the terms and conditions of this
subsection 2.6 and in reliance upon the representations and warranties set forth
herein, the Swingline Lender, in its individual capacity, agrees to make
revolving credit loans (each a "Swingline Loan" and, collectively, the
"Swingline Loans") to the Company from time to time from the date of this
Amended and Restated Credit Agreement until the Swingline Loan Termination Date,
provided that the aggregate principal amount of Swingline Loans outstanding at
any one time shall not exceed Three Million Dollars ($3,000,000.00) (the
"Swingline Committed Amount"); provided, that no Swingline Loan shall be made
if, after given effect thereto the Total Exposure would exceed the Borrowing
Base. During such period, Swingline Loans may be prepaid or repaid and
reborrowed in accordance with the provisions hereof. The aggregate outstanding
principal balances of the Swingline Loans on the Closing Date is set forth in
the Certificate described in paragraph (v) of subsection 5.1. The Company
represents and warrants to the Banks that the aggregate of the outstanding
principal amounts does not exceed the Swingline Commitment as of such date.
- 28 -
(b) Swingline Note. The Swingline Loans made by the Swingline Lender
shall be evidenced by an amended and restated promissory note of the Company in
the original amount of the Swingline Committed Amount and substantially in the
form of Exhibit "V". The Swingline Lender is hereby authorized to record the
date and amount of each Swingline Loan made by the Swingline Lender, and the
date and amount of each payment or prepayment of principal thereof and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. The Swingline Note shall be dated the date of the
Second Amendment and be stated to mature on the Swingline Loan Termination Date.
SECTION 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit. (a) Subject to the terms and
conditions hereof, the Issuing Bank, on behalf of the Banks, and in reliance on
the agreement of the Banks set forth in subsection 3.10, agrees to issue for the
account of the Company, from time to time during the Working Capital Commitment
Period, Letters of Credit. The Company may from time to time request the Issuing
Bank to issue a Trade L/C or a Standby L/C by delivering to the Issuing Bank at
its address specified in subsection 11.2, a letter of credit application in the
Issuing Bank's then customary form for Trade L/Cs (a "Trade L/C Application") or
an application in the Issuing Bank's customary form for Standby L/Cs (a "Standby
L/C Application") completed to the satisfaction of the Issuing Bank, together
with such other certificates, documents and other papers and information as the
Issuing Bank may reasonably request.
(b) Each Letter of Credit issued hereunder shall, among other things,
(i) be in such form requested by the Company as shall be acceptable to the
Issuing Bank in its reasonable discretion, (ii) as to Trade L/C's, have an
expiry date not later than 120 days after the date of issuance of such Trade L/C
and as to both Trade L/C's and Standby L/C's have an expiry date not later than
the Working Capital Termination Date. Each L/C Application and each Letter of
Credit shall be subject to the Uniform Customs and Practice for Documentary
Credit (1983 Revisions), International Chamber of Commerce Publication No. 400
and subsequent revisions thereof approved by a Congress of such Chamber, and if
requested by the Issuing Bank, Article V of the UCC and, to the extent not
inconsistent therewith, the laws of the State of Tennessee.
3.2 Participating Interests. Effective in the case of each Letter of
Credit as of the date of the opening thereof, the Issuing Bank agrees to allot
and does allot, to itself and each other Bank, and each Bank severally and
irrevocably agrees to take and does take in such Letter of Credit and the
related L/C Application, an L/C Participating Interest in a percentage equal to
such Bank's Working Capital Commitment Percentage.
3.3 Procedure for Opening Letters of Credit. The Issuing Bank will
notify each Bank after the end of each calendar month of any L/C Applications
received by the Issuing Bank from the Company during such month. Upon receipt of
any L/C Application from the Company, the Issuing
- 29 -
Bank will process such L/C Application, and the other certificates, documents
and other papers delivered to the Issuing Bank in connection therewith, in
accordance with its customary procedures and, subject to the terms and
conditions hereof, shall promptly open such Letter of Credit by issuing the
original of such Letter of Credit to the beneficiary thereof and by furnishing a
copy thereof to the Company and, after the end of the calendar month in which
such Letter of Credit was opened, to the other Banks, provided that no such
Letter of Credit shall be issued if, after given effect thereto, the Total
Exposure would exceed the Borrowing Base.
3.4 Payments in Respect of Letters of Credit. (a) The Company agrees
forthwith upon demand by the Issuing Bank and otherwise in accordance with the
terms of the L/C Application relating thereto, (i) to reimburse the Issuing Bank
for any payment made by the Issuing Bank under any Letter of Credit and (ii) to
pay interest on any unreimbursed portion of any such payment from the date of
such payment until reimbursement in full thereof at a rate per annum equal to
(A) prior to the date which is one Business Day after the day on which the
Issuing Bank demands reimbursement from the Company for such payment, at the
current rate for FANB Rate Loans and (B) on such date and thereafter, three
(3.0%) above the FANB Rate.
(b) In the event that the Issuing Bank makes a payment under any Letter
of Credit and is not reimbursed in full therefor forthwith upon demand of the
Issuing Bank, and otherwise in accordance with the terms of the L/C Application
relating to such Letter of Credit, the Issuing Bank will promptly notify each
other Bank. Forthwith upon its receipt of any such notice, each other Bank will
transfer to the Issuing Bank, in immediately available funds, an amount equal to
such other Bank's pro rata share of the L/C Obligation arising from such
unreimbursed payment. Upon its receipt from such other Bank of such amount, the
Issuing Bank will complete, execute and deliver to such other Bank an L/C
Participation Certificate dated the date of such receipt and in such amount.
(c) Whenever, at any time after the Issuing Bank has made a payment
under any Letter of Credit and has received from any other Bank such other
Bank's pro rata share of the L/C Obligation arising therefrom, the Issuing Bank
receives any reimbursement on account of such L/C Obligation or any payment of
interest on account thereof, the Issuing Bank will distribute to such other Bank
its pro rata share thereof in like funds as received; provided however, that in
the event that the receipt by the Issuing Bank of such reimbursement or such
payment of interest (as the case may be) is required to be returned, such other
Bank will return to the Issuing Bank any portion thereof previously distributed
by the Issuing Bank to it in like funds as such reimbursement or payment is
required to be returned by the Issuing Bank.
3.5 Letter of Credit Fees. (a) In lieu of any Letter of Credit
commissions and fees provided for in any L/C Application relating to Standby
L/Cs (other than standard issuance, amendment and negotiation fees customarily
charged by FANB), the Company agrees to pay the Agent for the account of the
Issuing Bank and the Participating Banks, with respect to each Standby L/C, a
Standby L/C fee of one percent (1%) per annum on the amount available to be
drawn under each
- 30 -
Standby L/C payable, in arrears, on the last day of each fiscal quarter of the
Company and calculated on the basis of a 360-day year for actual days elapsed
from such date of issuance to the expiration date of such Standby L/C.
(b) In lieu of any Letter of Credit commissions and fees provided for
in any L/C Application relating to Trade L/Cs (other than standard issuance,
amendment and negotiation fees customarily charged by FANB), the Company agrees
to pay the Agent for the account of the Issuing Bank and the Participating
Banks, with respect to each Trade L/C, a Trade L/C fee of one quarter of one
percent (.25%) of the face amount of each Trade L/C, payable in advance on the
issuance date of each Trade L/C. After Default, the Agent will disburse any
Trade L/C fees received pursuant to this subsection 3.5 to the respective Banks
promptly following the end of the calendar month in which such Trade L/C fees
were received.
(c) In lieu of any Letter of Credit commissions and fees provided for
in any L/C Application relating to Standby L/Cs (other than standard issuance,
amendment and negotiation fees customarily charged by FANB), the Company agrees
to pay FANB, for its own separate account, with respect to each Standby L/C, a
Facing Fee of one-quarter of one percent (.25%) per annum on the amount
available to be drawn under each Standby L/C payable, in arrears, on the last
day of each fiscal quarter of the Company and calculated on the basis of a
360-day year or actual days elapsed from such date of issuance to the expiration
date of such Standby L/C.
(d) For purposes of any payment of fees required pursuant to this
subsection 3.5, the Agent agrees to provide to the Company a statement of any
such fees to be so paid; provided that the failure by the Agent to provide the
Company with any such invoice shall not relieve the Company of its obligation to
pay such fees.
3.6 Letter of Credit Reserves. (a) If any Change in Law shall either
(i) impose, modify, deem or make applicable any reserve, special deposit,
assessment or similar requirement against letters of credit issued by the
Issuing Bank or (ii) impose on the Issuing Bank any other condition regarding
this Amended and Restated Credit Agreement or any Letter of Credit, and the
result of any event referred to in clause (i) or (ii) above shall be to increase
the cost of the Issuing Bank issuing or maintaining any Letter of Credit (which
increase in cost shall be the result of the Issuing Bank's reasonable allocation
of the aggregate of such cost increases resulting from such events), then, upon
demand by the Issuing Bank, the Company shall immediately pay to the Issuing
Bank, from time to time as specified by the Issuing Bank, additional amounts
which shall be sufficient to compensate the Issuing Bank for such increased
cost, together with interest on each such amount from the date demanded until
payment in full thereof at a rate per annum equal to the FANB Rate for FANB Rate
Loans. A certificate, setting forth in reasonable detail the calculation of the
amounts involved, submitted by the Issuing Bank to the Company concurrently with
any such demand by the Issuing Bank, shall be conclusive, absent manifest error,
as to the amount thereof.
- 31 -
(b) In the event that any Change in Law with respect to the Issuing
Bank shall, in the opinion of the Issuing Bank, require that any obligation
under any Letter of Credit be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
the Issuing Bank or any corporation controlling the Issuing Bank, and such
Change in Law shall have the effect of reducing the rate of return on the
Issuing Bank's or such corporation's capital, as the case may be, as a
consequence of the Issuing Bank's obligations under such Letter of Credit to a
level below that which the Issuing Bank or such corporation, as the case may be,
could have achieved but for such Change in Law (taking into account the Issuing
Bank's or such corporation's policies, as the case may be, with respect to
capital adequacy) by an amount deemed by the Issuing Bank to be material, then
from time to time following notice by the Issuing Bank to the Company of such
Change in Law, within 15 days after demand by the Issuing Bank, the Company
shall pay to the Issuing Bank such additional amount or amounts as will
compensate the Issuing Bank or such corporation, as the case may be, for such
reduction. The Issuing Bank agrees that, upon the occurrence of any event giving
rise to the operation of paragraph (a) or (b) of this subsection 3.6 with
respect to such Issuing Bank, it will, if requested by the Company and to the
extent permitted by law or by the relevant Governmental Authority, endeavor in
good faith to avoid or minimize the increase in costs or reduction in payments
resulting from such event; provided, however, that such avoidance or
minimization can be made in such a manner that such Issuing Bank, in its sole
determination, suffers no economic, legal or regulatory disadvantage. If the
Issuing Bank becomes entitled to claim any additional amounts pursuant to this
subsection 3.6(b), it shall promptly notify the Company of the event by reason
of which it has become so entitled. A certificate, in reasonable detail setting
forth the calculation of the amounts involved, submitted by the Issuing Bank to
the Company concurrently with any such demand by the Issuing Bank, shall be
conclusive, absent manifest error, as to the amount thereof.
(c) The Company and each Participating Bank agrees that (i) the
provisions of the foregoing paragraphs (a) and (b) and (ii) the provisions of
each L/C Application providing for reimbursement or payment to the Issuing Bank
in the event of the imposition or implementation of, or increase in, any
reserve, special deposit, capital adequacy or similar requirement in respect of
the Letter of Credit relating thereto, shall apply equally to each Participating
Bank in respect of its L/C Participating Interest in such Letter of Credit, as
if the references in such paragraphs and provisions referred to, where
applicable, such Participating Bank or any corporation controlling such
Participating Bank.
3.7 Further Assurances. The Company hereby agrees, from time to time,
to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Bank more fully to effect the
purposes of this Amended and Restated CRedit Agreement and the issuance of
Letters of Credit hereunder.
3.8 Obligations Absolute. The payment obligations of the Company under
this Amended and Restated Credit Agreement with respect to the Letters of Credit
shall be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Amended and Restated
- 32 -
Credit Agreement under all circumstances, including, without limitation, the
following circumstances:
(a) the existence of any claim, set-off, defense or other right which
the Company or any of its Subsidiaries may have at any time against any
beneficiary, or any transferee, of any Letter of Credit (or any Persons for whom
any such beneficiary or any such transferee may be acting), the Issuing Bank,
the Agent or any Bank, or any other Person, whether in connection with this
Amended and Restated Credit Agreement, the Related Documents, any Basic
Documents, the transactions contemplated herein, or any unrelated transaction;
(b) any statement or any other document presented under any Letter of
Credit proving to be forged, fraudulent or invalid or any statement therein
being untrue or inaccurate in any respect, except for any such circumstances or
happening constituting gross negligence or willful misconduct on the part of the
Issuing Bank;
(c) payment by the Issuing Bank under any Letter of Credit against
presentation of a draft or certificate which does not comply with the terms of
such Letter of Credit or is insufficient in any respect, except where such
payment constitutes gross negligence or wilful misconduct on the part of the
Issuing Bank; or
(d) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing, except for any such circumstances or happening
constituting gross negligence or wilful misconduct on the part of the Issuing
Bank.
3.9 Assignments. No Participating Bank's participation in any Letter of
Credit or any of its rights or duties hereunder shall be subdivided, assigned or
transferred (other than in connection with a transfer of part or all of such
Participating Bank's Working Capital Commitment in accordance with subsection
11.6) without the prior written consent of the Issuing Bank, which consent will
not be unreasonably withheld. Such consent may be given or withheld without the
consent or agreement of any other Participating Bank. Notwithstanding the
foregoing, a Participating Bank may pursuant to subsection 11.6(b)
subparticipate its L/C Participating Interest without obtaining the prior
written consent of the Issuing Bank.
3.10 Participations. Each Bank's obligation to purchase participating
interests pursuant to subsection 3.2 shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any set-off, counterclaim, recoupment, defense or other right which such Bank
may have against the Issuing Bank, the Credit Parties or any other Person for
any reason whatsoever; (ii) the occurrence or continuance of an Event of
Default; (iii) any adverse change in the condition (financial or otherwise) of
the Credit Parties; (iv) any breach of this Amended and Restated Credit
Agreement by the Credit Parties or any other Bank; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
- 33 -
3.11 Certification as to L/C Exposure on Closing Date. The L/C Exposure
as of the Closing Date is set forth in the certificate described in paragraph
(v) of subsection 5.1. The Company represents and warrants to the Banks that the
L/C Exposure does not exceed the Available Working Capital Commitment as of such
date.
SECTION 4. INTEREST RATE PROVISIONS; FEES; PAYMENTS
4.1 Procedure for Borrowing. (a) The Company may borrow under the
Working Capital Commitment on any Working Day, if the borrowing is of Eurodollar
Loans, or on any Business Day, if the borrowing is of FANB Rate Loans, provided
that, with respect to any borrowings, the Company shall give the Agent
irrevocable notice (which notice must be received by the Agent prior to 10:00
a.m., Memphis, Tennessee time, (i) three Working Days prior to the requested
Borrowing Date if all or any part of the Loans are to be Eurodollar Loans and
(ii) one Business Day prior to the request or Closing Date if the borrowing is
to be solely of FANB Rate Loans) and specifying (A) the amount of the borrowing,
(B) whether such Loans are initially to be Eurodollar Loans or FANB Rate Loans
or a combination thereof and (C) if the borrowing is to be entirely or partly
Eurodollar Loans, the length of the Interest Period for such Eurodollar Loans.
Upon receipt of such notice the Agent shall promptly notify each Bank. Not later
than 12:00 noon, Memphis, Tennessee on the Borrowing Date specified in such
notice, each Bank shall make available to the Agent at the office of the Agent
specified in subsection 11.2 (or at such other location as the Agent may direct)
an amount in immediately available funds equal to the amount of the Loan to be
made by such Bank. Loan proceeds received by the Agent hereunder shall promptly
be made available to the Company, at the office of the Agent specified in
Subsection 11.2 with the aggregate amount actually received by the Agent from
the Banks and in like funds as received by the Agent.
(b) Any borrowing or continuation of, or conversion to or from,
Eurodollar Loans hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, (i) the aggregate principal
amount of all Eurodollar Loans having the same Interest Period shall not be less
than $1,000,000 or a whole multiple of $250,000 in excess thereof and (ii) no
more than three Interest Periods shall be in effect at any one time.
(c) All or any part of the outstanding Working Capital Loans may be
converted in accordance with subsection 4.4, provided that partial conversions
of FANB Rate Loans shall be in the aggregate principal amount of $250,000 or a
whole multiple of $50,000 in excess thereof and the aggregate principal amount
of the resulting Eurodollar Loans outstanding in respect of any one Interest
Period shall be at least $1,000,000 or a whole multiple of $250,000 in excess
thereof.
(d) Eurodollar Loans shall be made by each Bank at its Eurodollar
Lending Office as designated from time to time by each Bank and FANB Rate Loans
shall be made by each Bank at its FANB Rate Lending Office as designated in
Schedule 4.1(d).
- 34 -
(e) Swingline Loans shall be made available to the Company by the
Swingline Lender's crediting the Operating Account of the Company. Said
crediting shall be made automatically as the Company's Operating Account falls
below a zero balance (the "Zero Account Balance"). Any funds in the Operating
Account in excess of the Zero Account Balance shall be applied first, to repay
any outstanding principal on the Swingline Loans and second, to prepay any
outstanding interest under the Swingline Loans. Notwithstanding the foregoing,
Swingline Lender shall have the right, in its reasonable discretion and upon
written notice to the Company, to terminate the automatic feature of the
borrowings under the Swingline Loans and to require the Company to thereafter
provide notice to Swingline Lender prior to such borrowings, such notice to be
made in accordance with Swingline Lender's instructions.
(f) Swingline Loans shall bear interest on the unpaid principal amount
thereof at a variable rate per annum equal to the FANB Rate. Accrued interest on
such principal as shall be outstanding from time to time shall be due and
payable on a quarterly basis on each Interest Payment Date and the entire
outstanding principal shall be due and payable on the Swingline Loan Termination
Date. Additional payments of principal and interest shall be made pursuant to
the terms of subsection 4.1(e) hereof. The Company shall not have the right to
convert the interest payable under the Swingline Loans from an FANB Rate to a
Eurodollar Rate.
4.2 Interest Rates and Payment Dates. (a) Eurodollar Loans shall bear
interest for each Interest Period applicable thereto, commencing on the first
day of such Interest Period to, but excluding, the last day of such Interest
Period, on the unpaid principal amount thereof at a rate per annum equal to the
Eurodollar Rate determined for such Interest Period plus the Applicable Margin.
(b) FANB Rate Loans shall bear interest for the period from and
including the date such Loans are made to, but excluding, the maturity date
thereof, or to, but excluding, the conversion date if such Loans are earlier
converted into Eurodollar Loans, on the unpaid principal amount thereof at a
rate per annum equal to the FANB Rate.
(c) If all or a portion of the principal amount of any of the Loans
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise) such Loan, if a Eurodollar Loan, shall be converted into an FANB Rate
Loan at the end of the then-current Interest Period for said Eurodollar Loan
(which conversion shall occur automatically and without need for compliance with
the conditions for conversion set forth in subsection 4.4), and any such overdue
principal amount shall, without limiting the rights of the Banks under Section
10, bear interest at a rate per annum which is 3.5% above the FANB Rate from the
date of such non-payment until paid in full (including interest after judgment
as well as before judgment).
(d) If at any time the Net Recoverable Liquidation Value of Eligible
Inventory as determined by the Annual Inventory Valuation required to be
furnished to the Agent pursuant to subsection 7.12, is less than 32% of Eligible
Inventory, all the outstanding Eurodollar Loans and all Eurodollar Loans made
after the date of said report shall bear interest at a rate per annum equal to
- 35 -
the Eurodollar Rate plus the Applicable Margin plus 2.00% and all then
outstanding FANB Rate Loans and all FANB Rate Loans made thereafter shall bear
interest at a rate per annum equal to the FANB Rate plus 2.00%. The 2.00%
increase in the interest rate shall continue until, and shall be eliminated
when, the Net Recoverable Liquidation Value of Eligible Inventory as verified by
a report performed pursuant to subsection 7.12, exceeds 32% of the cost value of
the Eligible Inventory.
(e) Interest shall be payable in arrears on each Interest Payment Date.
4.3 Computation of Interest and Fees. (a) Interest and fees (except
fees pursuant to subsections 3.5(b) and 4.6(b) or as otherwise set forth herein)
shall be calculated on the basis of a 360 day year, as applicable for the actual
days elapsed. The Agent shall as soon as practicable notify the Company and the
Banks of each determination of a Eurodollar Rate. Any change in the interest
rate on the Loans resulting from a change in the FANB Rate shall become
effective, without notice, as of the opening of business on the day on which
such change in the FANB Rate shall become effective.
(b) Each determination of an interest rate by the Banks pursuant to any
provision of this Amended and Restated Credit Agreement shall be conclusive and
binding on the Company and the Banks in the absence of manifest error. The Agent
shall, at the request of the Company, deliver to the Company a statement showing
the quotations used by the Agent in determining the Eurodollar Rate.
4.4 Conversion Options. The Company may elect from time to time to
convert Eurodollar Loans into FANB Rate Loans by giving the Agent irrevocable
notice of such election, to be received by the Agent prior to 10:00 a.m.,
Memphis, Tennessee time, at least three Working Days prior to the proposed
conversion date, provided that any such conversion of Eurodollar Loans shall
only be made on the last day of an Interest Period with respect thereto. The
Company may elect from time to time to convert all or a portion of the FANB Rate
Loans then outstanding (other than Swingline Loans) to Eurodollar Loans by
giving the Agent irrevocable notice of such election, to be received by the
Agent prior to 10:00 a.m., Memphis, Tennessee time, at least three Working Days
prior to the proposed conversion date, specifying the Interest Period selected
therefor, and, if no Default or Event of Default has occurred and is continuing,
such conversion shall be made on the requested conversion date or, if such
requested conversion date is not a Working Day, on the next succeeding Working
Day. Upon receipt of any notice pursuant to this subsection 4.4, the Agent shall
promptly notify each Bank thereof.
4.5 Pro Rata Treatment and Payments. (a) Each borrowing of Loans by the
Company from the Banks and any reduction of the Commitments of the Banks
hereunder shall be made pro rata according to the relevant Commitment
Percentages of the Banks.
- 36 -
(b)(i) Except for payments (including prepayments) to be made by the
Company to the Swingline Lender on account of principal, interest and fees due
under the Swingline Loans, all payments (including prepayments) to be made by
the Company on account of principal, interest and fees shall be made to the
Agent for the account of the Banks at the Agent's office located at 0000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000, in lawful money of the United
States of America and in immediately available funds. The Agent shall promptly
distribute such payments upon receipt in like funds as received (except fees
payable pursuant to subsection 4.6(b)); (ii) all payments (including
prepayments) to be made by the Company to the Swingline Lender on account of
principal, interest and fees due under the Swingline Loans shall be made to the
Swingline Lender for the individual benefit of the Swingline Lender at the
Swingline Lender's office located at 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxx 00000, in lawful money of the United States of America and in
immediately available funds.
(c) Unless the Agent shall have been notified in writing by any Bank
prior to a Borrowing Date that such Bank will not make the amount which would
constitute its Commitment Percentage of the borrowing on such date available to
the Agent, the Agent may assume that such Bank has made such amount available to
the Agent on such Borrowing Date in accordance with subsection 4.1 and the Agent
may, in reliance upon such assumption, make a corresponding amount available to
the Company. If such amount is made available to the Agent by such Bank on a
date after such Borrowing Date, such Bank shall pay to the Agent on demand an
amount equal to the product of (i) the daily average Federal funds rate during
such period as quoted by the Agent, times (ii) the amount of such Bank's
Commitment Percentage of such borrowing, times (iii) a fraction the numerator of
which is the number of days that elapse from and including such Borrowing Date
to the date on which such Bank's Commitment Percentage of such borrowing shall
have become immediately available to the Agent and the denominator of which is
360, as applicable. A certificate of the Agent submitted to any Bank with
respect to any amounts owing under this subsection 4.5(c) shall be conclusive,
absent manifest error. If such Bank's Commitment Percentage of such borrowing is
not in fact made available to the Agent by such Bank within three Business Days
after such Borrowing Date, the Agent shall be entitled to recover such amount
with interest thereon at the rate per annum applicable to FANB Rate Loans
hereunder, on demand, from the Company, without prejudice to any rights which
the Company or the Agent may have against such Bank hereunder. Nothing contained
in this subsection 4.5(c) shall relieve any Bank which has failed to make
available its ratable portion of any borrowing hereunder from its obligation to
do so in accordance with the terms hereof.
(d) The failure of any Bank to make the Loan to be made by it on any
Borrowing Date shall not relieve any other Bank of its obligation, if any,
hereunder to make its Loan on such Borrowing Date, but no Bank shall be
responsible for the failure of any other Bank to make the Loan to be made by
such other Bank on such Borrowing Date.
4.6 Fees. (a) Commitment Fee. The Company agrees to pay to the Agent for
the account of each Bank a commitment fee from and including the Closing Date to
but not including the
- 37 -
Working Capital Termination Date, computed at the rate of 1/4 of 1% per annum on
the average daily amount of the Available Working Capital Commitment of such
Bank, such fee to be payable quarterly in arrears and on the Working Capital
Termination Date, or such earlier date as the Working Capital Commitments shall
terminate as provided herein, and the accrual of such fee shall commence on the
Closing Date.
(b) Agent's Fee. The Company shall pay to the Agent for its own benefit
an annual agent's fee in an amount and upon terms set forth in the Agent's fee
letter dated March 31, 1994, between the Company and FANB.
(c) Bank One's Fee. On the Closing Date, the Company shall pay to Bank
One for its own benefit a commitment fee of .15% of Bank One's Working Capital
Commitment.
4.7 Changes of Commitment Amounts. (a) The Company shall have the
right, upon not less than three Business Days' notice to the Agent, to terminate
or, from time to time, reduce the unused portions of Working Capital
Commitments. To the extent, if any, that the sum of the Working Capital Loan
Exposure and L/C Exposure exceeds the amount of the Working Capital Commitments
as then reduced, the Company shall be required to make a prepayment equal to the
excess amount, the proceeds of which shall be applied first, to payments of the
Working Capital Loans then outstanding, second, to payment of L/C Obligations,
and last, to cash collateralize any outstanding Letters of Credit on terms
reasonably satisfactory to the Required Banks. Any complete termination of the
Working Capital Commitment shall be accompanied by prepayment in full of the
Working Capital Loans and L/C Obligations and by cash collateralization of any
outstanding Letters of Credit on terms reasonably satisfactory to the Agent.
Upon the complete termination of the Working Capital Commitments, any Letter of
Credit then outstanding which has been so fully cash collateralized shall no
longer be considered a "Letter of Credit" as defined in subsection 1.1 and (i)
if such Letter of Credit is a Standby L/C, then fees will be due in an amount
equal to one percent (1%) per annum on the amount available to be drawn under
each such Standby L/C and (ii) any L/C Participating Interests heretofore
granted by the Issuing Bank to the Banks in such Letter of Credit shall be
deemed terminated. With respect to Letters of Credit, "fully cash
collateralized" shall mean that the contingent obligation of the Company to
reimburse the Issuing Bank for any subsequent drawings thereafter made shall be
fully secured beforehand by cash collateral specifically held by the Agent for
such purposes in an amount equal to the undrawn amount of such Letter of Credit
or otherwise be secured in a manner acceptable to the Issuing Bank. Any partial
reduction of the Working Capital Commitments shall be in an amount of $250,000
or a whole multiple of $50,000 in excess thereof and shall in each case reduce
permanently the Working Capital Commitments then in effect.
(b) Once terminated or reduced the Working Capital Commitment may not
be reinstated.
4.8 Inability to Determine Interest Rate. In the event that the Agent
shall have determined (which determination shall be conclusive and binding upon
the Company) that (a) by reason of
- 38 -
circumstances affecting the interbank eurodollar market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for any Interest Period
with respect to (i) proposed Loans that the Company has requested be made as
Eurodollar Loans, (ii) any Eurodollar Loans that will result from the requested
conversion of all or part of the FANB Rate Loans into Eurodollar Loans or (iii)
the continuation of any Eurodollar Loan as such for an additional Interest
Period, or (b) dollar deposits in the relevant amount and for the relevant
period with respect to any such Eurodollar Loan are not generally available to
the Banks in their respective Eurodollar Lending Offices' interbank eurodollar
markets, the Agent shall forthwith give telex or telecopy notice of such
determination, confirmed in writing, to the Company and to the Banks at least
one Working day prior to, as the case may be, the requested Borrowing Date, the
conversion date or the last day of such Interest Period. If such notice is given
(i) any requested Eurodollar Loans shall be made as FANB Rate Loans, (ii) any
FANB Rate Loans that were to have been converted to Eurodollar Loans shall be
continued as FANB Rate Loans, and (iii) any outstanding Eurodollar Loans shall
be converted, on the last day of the then current Interest Period applicable
thereto, into FANB Rate Loans. Until such notice has been withdrawn by the
Agent, no further Eurodollar Loans shall be made.
4.9 Illegality. Notwithstanding any other provisions herein, if any
Change in Law occurring after the date that any lender becomes a Bank party to
this Amended and Restated Credit Agreement, shall make it unlawful for such Bank
to make or maintain Eurodollar Loans as contemplated by this Amended and
Restated Credit Agreement, the commitment of such Bank hereunder to make
Eurodollar Loans or to convert all or a portion of FANB Rate Loans into
Eurodollar Loans shall forthwith be canceled and such Bank's Loans then
outstanding as Eurodollar Loans, if any, shall, if required by law and if such
Bank so requests, be converted automatically to FANB Rate Loans on the date
specified by such Bank in such request. To the extent that such affected
Eurodollar Loans are converted into FANB Rate Loans, all payments of principal
which would otherwise be applied to such Eurodollar Loans shall be applied
instead to such Bank's FANB Rate Loans other than Swingline Loans. The Company
hereby agrees promptly to pay any Bank, upon its demand, any additional amounts
necessary to compensate such Bank for any costs incurred by such Bank in making
any conversion in accordance with this subsection 4.9 including, but not limited
to, any interest or fees payable by such Bank to lenders of funds obtained by it
in order to maintain its Eurodollar Loans hereunder (such Bank's notice of such
costs, as certified in reasonable detail as to such amounts to the Company
through the Agent, to be conclusive absent manifest error).
4.10 Indemnity. The Company agrees to indemnify each Bank and to hold
such Bank harmless from any loss or expense which such Bank may sustain or incur
as a consequence of (a) default by the Company in payment of the principal
amount of or interest on any Eurodollar Loans of such Bank, including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Bank to lenders of funds obtained by it in order to make or maintain its
Eurodollar Loans hereunder, (b) default by the Company in making a borrowing
after the Company has given a notice in accordance with subsection 4.1 or in
making a conversion of FANB Rate Loans to Eurodollar Loans after the Company has
given notice in accordance with subsection 4.4, or (c) a payment or prepayment
of a Eurodollar Loan or conversion of any Eurodollar Loan into an FANB
- 39 -
Rate Loan, in either case on a day which is not the last day of an Interest
Period with respect thereto, including, but not limited to, any such loss or
expense arising from interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain its Eurodollar Loans hereunder. The Company
further agrees to pay to each such Bank an amount equal to the excess, if any,
of (i) the amount of interest which otherwise would have accrued on the
principal amount paid, prepaid, converted or not borrowed for (A) the period
from the date of such payment or prepayment to the last day of the Interest
Period applicable to such Loan or (B) in the case of a failure to borrow or to
convert to a Eurodollar Loan, the Interest Period applicable to such Loan which
would have commenced on the date specified for such borrowing or conversion, at
the applicable rate of interest for such Loan provided for herein exclusive of
any margin applicable thereto minus (ii) the interest component of the amount
such Bank would have bid in the London interbank market. This covenant shall
survive termination of this Amended and Restated Credit Agreement and payment of
the outstanding Notes.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions Precedent to this Amended and Restated Credit Agreement.
The terms and provisions of this Amended and Restated Credit Agreement shall not
become effective or supersede the Prior Credit Agreement until the Closing Date.
Accordingly, until the Closing Date, the Commitments, as defined in this Amended
and Restated Credit Agreement, shall not be in effect and the Banks shall not be
obligated to make any Loans or issue any Letters of Credit hereunder until the
Closing Date occurs. The parties acknowledge that to the extent any Loans are
made to the Company or any Letters of Credit are issued prior to the Closing
Date, they are made pursuant to the Prior Credit Agreement. From and after the
Closing Date, the interest rates set forth in this Amended and Restated Credit
Agreement shall be deemed to apply to all outstanding Loans to the Company and
outstanding Letters of Credit issued pursuant to the Prior Credit Agreement. The
obligation of the Banks to make the Loans or issue Letters of Credit pursuant to
the terms and conditions of this Amended and Restated Credit Agreement shall be
subject to the fulfillment of the following conditions to the satisfaction of
the Agent:
(a) Amended and Restated Credit Agreement and Notes. Each Bank shall
have received an original of this Amended and Restated Credit Agreement duly
executed by a duly authorized officer of each of the Credit Parties and a
Working Capital Note, duly executed by a duly authorized officer of Company,
each conforming to the requirements hereof. FANB shall have received an original
of the Swingline Note, duly executed by a duly authorized officer of Company.
(b) Legal Opinions of Counsel to the Credit Parties . Each Bank shall
have received a counterpart of an opinion, dated the Closing Date, of Waring
Xxx, PLC, counsel to the Credit Parties, in substantially the form of Exhibit
"X".
- 40 -
(c) Corporate Proceedings. Each Bank shall have received a copy of the
resolutions of the Boards of Directors of the corporate Credit Parties
authorizing (i) the execution, delivery and performance of each of the Basic
Documents to which it is a party, (ii) the borrowings and applications for
Letters of Credit provided for herein and (iii) the granting by Credit Parties
of the pledges, security interests and assignments granted by them pursuant to
the Security Documents, all as certified by the Secretary or Assistant Secretary
of the relevant Credit Parties as of the Closing Date, which certificate shall
state that the resolutions thereby certified have not been amended, modified,
revoked or rescinded as of the Closing Date.
(d) Incumbency Certificates. Each Bank shall have received a
counterpart of a certificate of the Secretary or an Assistant Secretary of the
relevant Credit Parties dated the Closing Date, as to the incumbency and
signature of the officer or officers signing each of the Basic Documents to
which it is a party and any other certificate or other document to be delivered
pursuant thereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(e) Corporate Documents. Each Bank shall have received (i) a copy of
the Certificate of Incorporation of each of the corporate Credit Parties
certified by the Secretary of State of the state of its incorporation and (ii) a
copy of the Bylaws (as amended through the Closing Date) of each of the
corporate Credit Parties, certified by a respective Secretary or Assistant
Secretary of the each of the corporate Credit Parties.
(f) Partnership Documents. Each Bank shall have received (i) a copy of
the Certificate of Limited Partnership of Intex certified by the Secretary of
State of Tennessee, (ii) a copy of the Certificate of Limited Partnership of
Intex duly filed in the Register's Office of Shelby County, Tennessee, and (iii)
a copy of the Agreement of Limited Partnership of Intex, certified by an officer
of its general partner.
(g) Collateral Security. Each Bank shall have received a counterpart of
each of the following documents, each duly executed and delivered by the
applicable Credit Party thereto and each of which shall be in full force and
effect:
(i) the Security Documents;
(ii) the Pledge Agreements;
(iii) the Guaranties;
(iv) the Assignments.
(h) Consents, Licenses, Approvals, etc. Each Bank shall have received,
together with executed certificates, true copies (in each case certified as to
authenticity on such date by a duly
- 41 -
authorized officer of the applicable Credit Parties of all documents and
instruments, including, in the reasonable judgment of the Company and the Agent,
all material consents (including, without limitation, all material landlord
consents), authorizations and filings licenses and approvals, if any, required
in connection with the execution, delivery and performance by the applicable
Credit Parties and the validity and enforceability of, this Amended and Restated
Credit Agreement, the Notes and the other Basic Documents, and such licenses and
approvals shall be in full force and effect.
(i) No Legal Restraints. There shall be no litigation, inquiry,
injunction, restraining order, investigation or proceeding of or before any
Governmental Authority (including any proposed statute, rule or regulation)
pending or, to the best knowledge of the Credit Parties threatened against any
Credit Party or any of their respective properties or revenues with respect to
the Basic Documents or any of the transactions contemplated hereby or thereby.
There shall be no injunction, writ, preliminary restraining order or any order
of any nature issued by any Governmental Authority directing that any of the
transactions provided for herein, in the Notes, in any of the other Basic
Documents not be consummated as herein or therein provided which, if adversely
determined, would have a material adverse effect on the business, operations,
property, assets or financial condition of the Credit Parties as a whole.
(j) Fees. All fees required to be paid on or prior to the Closing Date
shall have been paid.
(k) Representations and Warranties. The representations, warranties and
disclosure made by the Credit Parties in this Amended and Restated Credit
Agreement or in any Basic Document or made by any of the Credit Parties in any
certificate, document or financial or other statement furnished in connection
herewith or therewith, shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on such date.
(l) Borrowing Base Certificate. The Agent shall have received a
Borrowing Base Certificate, dated the Closing Date, computed for the immediately
preceding period, prepared in accordance with the terms of paragraph (i) of
subsection 7.2 hereof.
(m) Evidence of Insurance. The Agent shall have received evidence
satisfactory to it that the Credit Parties have obtained all policies of
insurance required pursuant to subsection 7.6 and pursuant to any of the
Security Documents.
(n) UCC Filings. Except as set forth on Schedule 5.1(n), documents
(including, without limitation, financing statements) required under any of the
Security Documents in order to create in favor of Agent, a perfected security
interest in the Collateral with respect to which a security interest may be
perfected by a filing under the UCC shall have been executed and delivered to
the Agent. Except as set forth on Schedule 5.1(n), as to the UCC filings against
the Accounts, the Agent shall have received acknowledgment copies of all such
filings (or, in lieu thereof, the Agent shall have received other evidence
satisfactory to the Banks that all such filings have been made);
- 42 -
and the Agent shall have received evidence that all necessary filing fees and
all taxes or other expenses related to such filings have been paid in full.
(o) Lien Search. The Agent shall have received the results of recent
lien searches in the jurisdictions listed on Schedule 5.1(o) and the results of
such search shall reveal no Liens on any assets of the Credit Parties, except
for Permitted Liens, and other Liens approved by the Banks.
(p) Good Standing Certificates. Except as set forth on Schedule 5.1(p)
hereto, the Agent shall have received, with a counterpart for each Bank, copies
of certificates dated as of a recent date from the Secretary of State or other
appropriate authority of such jurisdiction, evidencing the good standing of the
Credit Parties in each state where the ownership, lease or operation of property
or the conduct of business requires it to qualify as a foreign corporation
except where the failure to so qualify would not have a material adverse effect
on the business, operations, properties, assets or financial condition of the
Credit Parties taken as a whole.
(q) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on the Closing Date or after giving effect
to the Loans to be made on such date. No event of default (or condition which
would constitute an event of default with the giving of notice, the lapse of
time, or both) under material (in the reasonable opinion of the Company and the
Agent) contracts of the Credit Parties such as, but not limited to, agreements
with respect to capital stock, financing documents and lease agreements shall
have occurred and be continuing on the Closing Date.
(r) Material Adverse Change. For the period from the date of execution
of this Amended and Restated Credit Agreement to the Closing Date, there shall
have been (i) no material adverse change in the business, operations,
properties, assets or financial condition of the Credit Parties taken as a whole
and (ii) no occurrence or event which shall have a material adverse effect on
the rights and remedies of the Banks or on the ability of the Credit Parties to
perform their respective obligations to the Banks. The Banks shall not have
become aware of any undisclosed materially adverse information with respect to
(i) the business, operations, properties, assets or financial condition of the
Credit Parties taken as a whole, (ii) the ability of the Credit Parties to
perform their respective obligations under the Basic Documents or (iii) the
rights and remedies of the Banks under the Basic Documents.
(s) Payment in Full of Term Notes. The Agent shall have received, for
the benefit of the Banks, payment in full in immediately available funds of all
indebtedness due the Banks under the Term Notes, including the outstanding
principal as of the Closing Date, any unpaid accrued interest as of the Closing
Date, and any other fees or charges due the Agent or Banks under the Term Notes.
Upon receipt of payment in full of the Term Notes, the Term Loan Commitment
shall terminate and the Agent shall execute and deliver to the Credit Parties,
releases of the Deeds of Trust to evidence the release of its liens on the real
property described in said Deeds of Trust.
- 43 -
(t) Mandatory Prepayment. To the extent, if any, that the sum of the
Working Capital Loan Exposure and L/C Exposure as of the Closing Date exceeds
the amount of the Working Capital Commitment, as defined in this Amended and
Restated Credit Agreement, the Company shall make a prepayment on the Closing
Date equal to the excess amount. To the extent, if any, that the aggregate
outstanding principal under the Swingline Loans as of the Closing Date exceeds
the Swingline Commitment, as defined in this Amended and Restated Credit
Agreement, the Company shall make a prepayment on the Closing Date equal to the
excess amount. To the extent, if any, that the Total Exposure as of the Closing
Date exceeds the Borrowing Base, as defined in this Amended and Restated Credit
Agreement, the Company shall make a prepayment on the Closing Date equal to the
excess. All such prepayments shall be made to the Agent for the account of the
Banks, in lawful money of the United States of America in immediately available
funds and the Agent shall promptly distribute such payments to the Banks on a
ratable basis.
(u) Inventory Valuation. The Agent shall have received (i) an audit
performed by independent auditors selected by the Agent which verifies the Net
Recoverable Liquidation Value of the Eligible Inventory or (ii) a written
agreement executed by the Company and the Agent which specifies the date by
which such audit will be performed, such agreement to be satisfactory in form
and substance to Agent. The Company shall pay up to $20,000 of the expense of
the audit and FANB shall pay any expense of the audit which exceeds $20,000.
(v) Certificate of Outstanding Balance Under Prior Notes and L/C
Exposure. The Banks shall have received a certificate setting forth (i) the
amounts under the Prior Notes outstanding as of the Closing Date and (ii) the
L/C Exposure as of the Closing Date.
(w) Additional Matters. All corporate and other proceedings and all
other documents (including, without limitation, any tax sharing agreement,
employment agreement, management compensation arrangement or other financing
arrangement of the Credit Parties and all documents referred to herein and not
appearing as exhibits hereto) and legal matters in connection with the
transactions contemplated by this Amended and Restated Credit Agreement, the
Working Capital Notes, the Swingline Note and the other Basic Documents shall be
reasonably satisfactory in form and substance to the Banks and their respective
counsel.
5.2 Conditions to Each Loan and Each Letter of Credit. The obligation
of the Banks to make any Loans requested to be made by them on any date in
accordance with and pursuant to the terms and conditions of this Amended and
Restated Credit Agreement, and the obligation of the Issuing Bank to issue any
Letter of Credit requested to be opened on any date in accordance with and
pursuant to the terms and conditions of this Amended and Restated Credit
Agreement, is subject to the satisfaction of the following conditions as of the
date such Loan or Letter of Credit is requested to be made or issued, as the
case may be:
(a) Representations and Warranties. Each of the representations and
warranties (other than the representations and warranties in subsections 6.1(b)
and 6.16) made by the Credit Parties, in or
- 44 -
pursuant to the Basic Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Loans or the Letters of
Credit requested to be made or issued, as the case may be, on such date.
(c) Borrowing Base. After giving effect to the Loan to be made at such
time or the Letter of Credit to be issued, neither the Swingline Loan Commitment
nor the Working Capital Commitment shall be exceeded, and provided further, that
no Loans shall be made or Letters of Credit issued if, after giving effect
thereto the Total Exposure would exceed the Borrowing Base.
(d) Additional Matters. Each borrowing and each L/C Application by the
Company hereunder shall constitute a representation and warranty by the Credit
Parties as of the date of such borrowing or issuance of such Letter of Credit
that the conditions contained in this subsection 5.2 have been satisfied.
SECTION 6. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Amended and Restated
Credit Agreement and to make the Loans and issue the Letters of Credit, the
Credit Parties hereby represent and warrant to each Bank that:
6.1 Financial Condition. (a) The audited consolidated balance sheet of
the Parent and its Subsidiaries as of February 1, 1997, and the related
consolidated statements of common stockholders' equity and cash flows and the
consolidated statement of income and retained earnings of the Parent and its
Subsidiaries, and the unaudited consolidated balance sheet of the Parent and its
Subsidiaries as of January 3, 1998, and the related consolidated statements of
stockholders' equity and cash flows and the consolidated statement of income and
retained earnings of the Parent and its Subsidiaries, together with the notes to
such financial statements, copies of each of which have heretofore been
furnished to each Bank, have been prepared in conformity with GAAP consistently
applied (except in each case as described in the notes thereto) and on that
basis fairly present the financial condition and results of operations of the
Parent and its Subsidiaries as of and for the periods indicated.
(b) Since January 3, 1998, there has been no material adverse change in
the business, operations, property, assets or financial condition of the Credit
Parties taken as a whole, and none of the Credit Parties has, since January 3,
1998, incurred any material obligation, contingent or otherwise, which has a
material adverse impact on the business, operations, properties or financial or
other condition of such Credit Parties taken as a whole.
- 45 -
6.2 Entity Existence; Compliance with Law.
(a) Each of the corporate Credit Parties (i) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has the corporate power and authority
and the legal right to own or lease and operate its property, and to conduct the
business in which it is currently engaged, (iii) except as described in Schedule
5.1(p), is duly qualified as a foreign corporation and in good standing under
the laws of each jurisdiction where failure to so qualify and remain in good
standing would materially and adversely affect its ability to own or lease and
operate its property or to conduct the business in which it is currently engaged
or intends to engage in the future and (iv) is in compliance with all
Requirements of Law, except where noncompliance would not have a material
adverse effect on the business, operations, assets or financial condition of
each such Credit Party.
(b) Intex (i) is duly organized, validly existing and in good
standing under the laws of Tennessee, (ii) has the partnership power and
authority and the legal right to own or lease and operate its property, and to
conduct the business in which it is currently engaged, (iii) is duly qualified
as a foreign limited partnership and in good standing under the laws of each
jurisdiction where failure so to qualify and remain in good standing would
materially and adversely affect its ability to own or lease and operate its
property or to conduct the business in which it is currently engaged or intends
to engage in the future and (iv) is in compliance with all Requirements of Law,
except where non-compliance would not have material adverse effect on the
business, operations, assets or financial conditions of Intex.
6.3 Entity Power; Authorization; Enforceable Obligations.
(a) Each of the corporate Credit Parties has the corporate
power and authority and Intex has the partnership power and authority, to make,
deliver and perform all of its obligations in connection with this Amended and
Restated Credit Agreement, the Notes and the other Basic Documents to which it
is a party, and the Company has the corporate power and authority to borrow
hereunder and to request the issuance of Letters of Credit hereunder; the
Company has taken all necessary corporate action to authorize the borrowings and
the issuance of Letters of Credit on the terms and conditions of this Amended
and Restated Credit Agreement and the Notes, and to authorize the execution,
delivery and performance by it of this Amended and Restated Credit Agreement,
the Notes and the other Basic Documents to which it is a party; and each of the
other corporate Credit Parties has taken all necessary corporate action and
Intex has taken all necessary partnership action, to authorize the execution,
delivery and performance of each Basic Document to which it is a party. No
consent or authorization of, filing with, or other act by or in respect of, any
other Person is required in connection with the borrowings hereunder, the
issuance of Letters of Credit or with the execution, delivery or performance by
the Credit Parties or the validity of or enforceability against the Credit
Parties, of this Amended and Restated Credit Agreement or the other Basic
Documents to which each is a party (except such filings as are necessary in
connection with the perfection of the Liens created by such documents, which
filings have been duly made
- 46 -
and/or obtained and are in full force and effect). Each of this Amended and
Restated Credit Agreement, each Note and each Basic Document to which each
Credit Party is a party has been duly executed and delivered on behalf of each
such Credit Party. Each of this Amended and Restated Credit Agreement, each Note
and each other Basic Document to which each Credit Party is a party constitutes
a legal, valid and binding obligation of each such Credit Party, enforceable
against the Credit Parties in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting creditors' rights generally, and except as
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
6.4 No Legal Bar. The execution, delivery and performance by each of
the Credit Parties, of this Amended and Restated Credit Agreement, the Notes and
each other Basic Document to which it is a party and the borrowing contemplated
by this Amended and Restated Credit Agreement and the Notes do not and will not
violate any Requirement of Law or any Contractual Obligation applicable to or
binding upon the applicable Credit Party or any of their properties or assets,
except where noncompliance would not have a material adverse effect on the
business, operations, property, assets or financial condition of the Credit
Parties taken as a whole and will not result in the creation or imposition of
any Lien on any such properties or assets pursuant to the provisions of any
Requirement of Law or any Contractual Obligations other than the Lien of the
Security Documents.
6.5 No Material Litigation. Except as set forth in Schedule 6.5 hereto,
no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Credit Parties,
threatened by or against any of the Credit Parties or against any of their
properties or revenues (a) with respect to this Amended and Restated Credit
Agreement or any other Basic Document or any of the transactions contemplated
hereby or (b) which, if adversely determined, would have a material adverse
effect on the business, operations, property, assets or financial condition of
the Credit Parties taken as a whole.
6.6 No Default. None of the Credit Parties are in default in the
payment or performance of any of their Contractual Obligations in any respect
that is material to the Credit Parties, and no Default or Event of Default has
occurred and is continuing. None of the Credit Parties are in default in any
respect that is material to them under any order, award or decree of any
Governmental Authority or arbitrator binding upon or affecting them or by which
any of their properties or assets may be bound or affected.
6.7 Ownership of Property; Liens. On the date hereof, each of the
Credit Parties has good record title in fee simple to, or valid and subsisting
leasehold interests in, all its real property, except as set forth on Schedule
6.7 hereto, and good title to or valid and subsisting leasehold interests in all
its other property, and none of such property is subject to any Lien, except for
Permitted Liens and other Liens approved by the Banks.
- 47 -
6.8 Patents, Copyrights, Permits and Trademarks. Each of the Credit
Parties owns, or has a valid license in, all material domestic and foreign
letters patent, patents, patent applications, patent and know-how licenses,
inventions, technology, permits, trademark registrations and applications,
trademarks, trade names, trade secrets, service marks, copyrights, product
designs, applications, formulae, processes and the industrial property rights
("proprietary rights") used in the operation of its businesses in the manner in
which they are currently being conducted and planned to be conducted. None of
the Credit Parties is aware of any material existing or threatened infringement
or misappropriation of any proprietary rights of others by the Credit Parties or
of any proprietary rights of the Credit Parties by others.
6.9 No Burdensome Restrictions. No Contractual Obligation of any of the
Credit Parties, materially adversely affects the business, operations, property,
assets or financial condition of the Credit Parties, taken as a whole.
6.10 Margin Regulations. None of the Credit Parties are engaged, nor
will they engage, principally or as one of their important activities, in the
business of extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" within the respective meanings of each of the quoted terms under
Regulation U or Regulation G of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. No part of the proceeds
of any Loan will be used for "purchasing" or "carrying" "margin stock" as
defined in Regulation U of such Board of Governors.
6.11 Investment Company Act. None of the Credit Parties is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, nor is it controlled by such a
company.
6.12 Disclosure. No statement or other form of disclosure or
representation and warranty made by the any of the Credit Parties in this
Amended and Restated Credit Agreement or in any other Basic Document to which it
is a party, or in any financial statement, report, certificate or any other
document furnished in connection herewith or therewith contains any materially
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading. There is no
fact known to any of the Credit Parties that has not been disclosed to each Bank
in writing prior to the date of this Amended and Restated Credit Agreement with
respect to the transactions contemplated by this Amended and Restated Credit
Agreement and the other Basic Documents which materially and adversely affects
the business, operations, property, assets or financial condition of the Credit
Parties taken as a whole.
6.13 The Security Documents. (a) The provisions of the Security
Agreements are effective to create in favor of the Agent for the benefit of the
Banks, a legal, valid and enforceable security interest in all rights, title and
interests of the Credit Parties in the collateral described therein; when
financing statements have been filed in the offices in the jurisdictions listed
in Schedule 6.13 hereto and when the Security Agreement has been filed in the
United States Patent and Trademark Office,
- 48 -
the Security Agreement shall constitute a fully perfected first Lien on, and
security interest in, all rights, title and interests of the Credit Parties in
the Collateral described therein to the extent the filing of financing
statements under the Uniform Commercial Code and the filing of the Security
Agreement in the United States Patent and Trademark Office are permissible
methods of perfection of security interests in the collateral described therein
in each such jurisdiction, subject to no prior Liens, except for Permitted Liens
and other Liens approved by the Banks.
(b) The property which is subject to the Lien of the Security Documents
constitutes substantially all the property of any nature of the Credit Parties
(other than the real property described in the Deeds of Trust, Inventory,
Excluded Leases, Equipment, Fixtures, and "Assets to be Sold", as defined in the
HSB Purchase Agreement and rights under the Merchant Services Agreements and HSB
Purchase Agreement).
6.14 ERISA. No Reportable Event that may result in a liability that
would have a material adverse effect on the business, operations, property,
assets or financial condition of the Credit Parties has occurred since December
10, 1987 with respect to any Plan, and each Plan has complied and has been
administered in all material respects, in accordance with applicable provisions
of ERISA and the Code; provided, however, for the period preceding December 10,
1987, to the best knowledge of the Company no Reportable Event that may result
in a liability that would have a material adverse effect on the business,
operations, property, assets or financial condition of the Parent, the Company
and the other Subsidiaries has occurred with respect to any Plan, and each Plan
has complied and been administered in all material respects, in accordance with
the applicable provisions of ERISA and the Code. The present value of all
accrued benefits under each Single Employer Plan maintained by the Company or
any Commonly Controlled Entity (based on those assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such accrued benefits by more
than $100,000. Neither the Company nor any Commonly Controlled Entity has during
the immediately preceding six-year period had a complete or partial withdrawal
from any Multiemployer Plan that has resulted or could result in any material
adverse effect to the business, operations, property, assets or financial
condition of the Company or any Commonly Controlled Entity, and the liability to
which the Company or any Commonly Controlled Entity would become subject under
ERISA if the Company or any Commonly Controlled Entity were to withdraw
completely from all Multiemployer Plans as of the most recent valuation date
applicable thereto is not in excess of $100,000. Neither the Company nor any
Commonly Controlled Entity has received notice that any Multiemployer Plan is in
Reorganization or is Insolvent nor, to the best knowledge of the Company, is any
such Multiemployer Plan in Reorganization or Insolvent nor, to the best
knowledge of the Company, is any such Reorganization or Insolvency reasonably
likely to occur. The present value (determined using actuarial and other
assumptions which are reasonable in respect of the benefits provided and the
employees participating) of the liability of the Company for post-retirement
benefits to be provided to its current and former employees under Plans which
are welfare benefit plans (as defined in Section 3(1) of ERISA) does not, in the
aggregate, exceed the assets under all such Plans allocable to such benefits by
an amount in excess of $1,000,000.
- 49 -
6.15 Subsidiaries. The only Subsidiaries of the Parent and the Company
are the Persons set forth on Schedule 6.15 hereto.
SECTION 7. AFFIRMATIVE COVENANTS
Each of the Credit Parties hereby agrees that, so long as the
Commitments remain in effect, any Note remains outstanding and unpaid, any
Letter of Credit remains issued and outstanding or any other amount is owing to
any Bank or the Agent hereunder or under any other Basic Document, it shall:
7.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within 90 days after the end
of each Fiscal Year of the Parent, a copy of the audited consolidated balance
sheets of the Parent and its Subsidiaries as at the end of such Fiscal Year, and
the related consolidated statements of common stockholders' equity and cash
flows and the consolidated statement of income and retained earnings of the
Parent and its Subsidiaries for such Fiscal Year, setting forth in each case, in
comparative form the corresponding figures for the previous year or portion
thereof, all in reasonable detail, certified for all Fiscal Years commencing
with the Fiscal Year ending January 29, 1994 without a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit, by independent certified public accountants of nationally recognized
standing acceptable to the Banks (such accountants being called herein, the
"Reporting Accountants");
(b) as soon as available, but in any event within 45 days after the end
of each of the first three quarterly periods of each Fiscal Year of the Parent,
or if an extension has been granted by the Commission for the filing by the
Parent of its quarterly report on Form 10-Q, then by the earlier of the date
such Form 10-Q is actually filed and the last day of such extended time period,
a copy of
the unaudited consolidated balance sheets of the Parent and its Subsidiaries as
at the end of each such quarter and the related unaudited consolidated
statements of stockholders' equity and cash flows and the consolidated statement
of operations and retained earnings of the Parent and its Subsidiaries for such
quarterly period and the portion of the Fiscal Year through such date, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible Officer of the Parent and its Subsidiaries (subject
to normal year-end audit adjustments); and
(c) as soon as practicable, and in any event within 30 days after the
end of each fiscal month (other than any fiscal month ending on the last day of
any fiscal quarter) of each year, a copy of the unaudited consolidated balance
sheets of the Parent and its Subsidiaries as at the end of such month and the
related unaudited consolidated statements of stockholders' equity and cash flows
and the consolidated statement of income and retained earnings of the Parent and
its Subsidiaries for such month and the portion of the Fiscal Year of the
Company and the Parent through the end of such month, such financial statements
to be certified by a Responsible Officer of the Parent.
- 50 -
All such financial statements shall be complete and correct in all
material respects (subject, in the case of interim statements, to normal
year-end audit adjustments) and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein (except as concurred in by such Reporting Accountants or Responsible
Officer, as the case may be, and disclosed therein).
7.2 Certificates; Reports and Other Information. Furnish to each Bank:
(a) concurrently with the delivery of the financial statements referred
to in subsection 7.1(a) a letter from the Reporting Accountants stating that, in
making the examination necessary to express their opinion on such financial
statements, no knowledge was obtained of any Default or Event of Default under
subsections 9.7 through 9.10, except as specified in such letter;
(b) concurrently with the delivery of the financial statements referred
to in subsections 7.1(a) through (c), a certificate of the chief financial
officer of the Parent (i) stating that, to the best of such officer's knowledge,
each Credit Party as the case may be, during such period has observed or
performed all its covenants and other agreements contained in this Amended and
Restated Credit Agreement and the Security Documents to be observed or performed
by it, and that such officer has obtained no knowledge of any Default or Event
of Default (not theretofore reported and cured or duly waived), except as
specified in such certificate, (ii) stating, to the best of such officer's
knowledge, that all such financial statements are complete and correct in all
material respects and have been prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein (except
as disclosed therein) and (iii) in the case of the consolidated financial
statements of the Parent and its Subsidiaries referred to in subsections 7.1(a)
and (b), showing in detail the calculations supporting such statements in clause
(i) in this subsection 7.2(b) in respect of subsections 9.7 through 9.10;
(c) promptly upon receipt thereof, copies of all final reports
submitted to the Parent by Reporting Accountants or other independent certified
public accountants in connection with each annual, interim or special financial
audit of the books of the Parent and its Subsidiaries made by such accountants,
including, without limitation, any final comment letter submitted by such
accountants to management in connection with their annual audit;
(d) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by the Parent to its
security holders (or, if made available generally by the Parent to their
security holders, shall make such statements, reports and notices available to
each Bank on the same basis) and shall furnish to each Bank copies of all
regular and periodic reports and all final registration statements and final
prospectuses, if any, filed by the Parent with any securities exchange or with
the Commission or any Governmental Authority succeeding to any of its functions;
- 51 -
(e) not more than 60 days before the beginning of each Fiscal Year of
the Parent, a copy of the projections by the Parent of the consolidated
operating budget and cash flow of the Parent and its Subsidiaries for such
Fiscal Year and a consolidated profit and loss statement and balance sheet for
each month of such Fiscal Year, such projections to be in form reasonably
satisfactory to the Banks and accompanied by a certificate of the chief
financial officer of the Parent to the effect that such projections have been
prepared on the basis of sound financial planning practice and that such officer
has no reason to question the reasonableness of any material assumptions on
which such projections were prepared;
(f) concurrently with the delivery of the financial statements of the
Parent and its Subsidiaries referred to in subsections 7.1(a) through (c) a
monthly financial report in form and content satisfactory to Agent;
(g) information which identifies any and all charges which comprise
FASB 121 charges or other charges specified in subparagraph (iv) of the
definition of Consolidated Adjusted Operating Profit as set forth in subsection
1.1 hereof;
(h) as soon as practicable and in any event, within 45 days following
the end of each fiscal quarter (i) a report which details the status of Store
closings, including a comparison of actual and projected Store closing expenses
(a "Store Closing Report") and (ii) a direct operating profit report as detailed
for each Store Location; both in form and content satisfactory to Agent;
(i) On the Closing Date and no later than the 15th day of each month
thereafter, a Borrowing Base Certificate pursuant to which a Responsible Officer
shall certify the Borrowing Base as of the date of report submission, with such
details concerning the manner and method of the calculation of the components
thereof as the Agent may reasonably request for verification purposes from time
to time, which Borrowing Base Certificate shall determine the effective
Borrowing Base until submission of the next succeeding such certificate; and
(j) promptly, such additional financial and other information
(including, without limitation, more frequent cash flow projections) as any Bank
may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods) all its
obligations, including taxes, and liabilities of whatever nature, except when
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings.
7.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it, and
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 in the normal conduct of its business, except as otherwise permitted
by subsection 9.4; and comply with all applicable Requirements of Law, except to
the extent that the failure to comply
- 52 -
therewith would not have a material adverse effect on the business, operations,
property, assets or financial condition of the Credit Parties taken as a whole.
7.5 Maintenance of Property. Keep all property which is useful and
necessary in its business in good working order and condition (ordinary wear and
tear excepted).
7.6 Insurance. (a) Maintain with financially sound and reputable
insurance companies (i) insurance on all its material property in such amounts
and against such risks as are reasonably satisfactory to the Banks (including,
without limitation, business interruption insurance in the amount of
$1,500,000), and (ii) "all-risk" insurance against loss or damage to all its
assets, in such form and with such insurance companies as shall reasonably be
satisfactory to the Banks; provided that the amount of such insurance in effect
from time to time shall in no event be less than the replacement value of its
assets.
(b) Maintain general public liability insurance in such amounts, in
such form and with such insurance companies as shall reasonably be satisfactory
to the Banks.
(c) Cause (i) all liability insurance policies to name the Agent as an
additional insured, (ii) all property loss or damage insurance policies with
respect to any assets to contain a loss payable clause in favor of the Agent
providing that any payment with respect to a loss (other than a loss covered by
subsection 7.6(d) below) in excess of $500,000 shall be paid solely to the Agent
and, unless a Default or an Event of Default shall have occurred and be
continuing, any payment with respect to a loss of $500,000 or less shall be paid
to the applicable Credit Party, (iii) all insurance policies to provide that no
cancellation, reduction in amount or material change in coverage thereof shall
be effective until at least 30 days after receipt by the Agent of written notice
thereof, (iv) all insurance policies to insure the interests of the Banks
regardless of any breach of or violation by any Credit Party or any other Person
of any warranties, declarations or conditions contained therein, (v) all
insurance policies to provide that the Banks shall have no obligation or
liability for premiums, commissions, assessments or calls in connection with
such insurance or in connection with any representation or warranty made by any
Credit Party or any other Person in connection with obtaining of such insurance,
(vi) all business interruption insurance to name the Agent as an additional
insured and (vii) all applicable insurance policies to contain such other
provisions as are set forth in the relevant Security Documents.
(d) Thirty days prior to the expiration date of each policy maintained
hereunder, the Credit Parties shall either (i) deliver to each Bank copies of
the renewals of the insurance policies (in each case, with a certified true and
correct copy of such policy by the insurer named therein) maintained by the
Credit Parties as required by this subsection 7.6 or (ii) notify each Bank of
the policies which have not been renewed.
7.7 Inspection of Property; Books and Records; Discussions. Keep proper
books of record and account in which entries in conformity with GAAP and all
Requirements of Law shall be made
- 53 -
of all dealings and transactions in relation to its business and activities; and
permit representatives of any Bank to visit and inspect any of its properties
during normal business hours with reasonable notice and examine and make
abstracts from any of its books and records at any reasonable time and as often
as may reasonably be desired, and to discuss its business, operations,
properties, assets and financial and other condition with its officers and
employees and with its Reporting Accountants and other independent certified
public accountants; provided, that, information obtained pursuant to the above
shall be subject to the confidentiality provisions of subsection 11.6(f) hereof.
7.8 Notices. Promptly give notice to the Agent and each Bank:
(a) of the occurrence of any Default or Event of Default:
(b) of any (i) default or event of default under any instrument or
other material agreement, or (ii) litigation, investigation or proceeding which
may exist at any time with any Governmental Authority, which in any such case,
if adversely determined, would have a material adverse effect on the business,
operations, property, assets or financial condition of the Credit Parties, taken
as a whole;
(c) of all litigation or proceedings (i) which involve uninsured
liability in excess of $250,000 (in the aggregate), (ii) in which injunctive or
similar relief is sought which if obtained could have a material adverse effect
on its business, operations, property, assets or financial or other condition,
or (iii) which questions the validity or enforceability of any Basic Document
which in any such case, if adversely determined, would have a material adverse
effect on the business operations, property, assets or financial condition of
the Credit Parties, taken as a whole;
(d) of the following events, as soon as practicable, and in any event
within 30 days, after it knows or has reason to know of the following events:
(i) the occurrence or expected occurrence of any Reportable Event with respect
to any Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC, any Credit Party or any Commonly
Controlled Entity, or any Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Single Employer
Plan or Multiemployer Plan, and in addition to such notice, shall deliver to the
Agent and each Bank a certificate of its chief financial officer setting forth
the details thereof and the action that the Credit Party or the Commonly
Controlled Entity proposes to take with respect thereto;
(e) as soon as practicable, and in any event within ten Business Days
after its occurrence, of the entering into, or the amendment, supplement or
other modification of, any agreement, whether or not in existence on the date
hereof, for the lease, hire or use of all real property and personal property
with a dollar value in excess of $250,000 (other than a Financing Lease or the
lease by a Credit Party of a new store location), together with a copy of such
agreement, amendment, supplement or modification.
- 54 -
Each notice pursuant to this subsection shall be accompanied by a
statement of the chief executive officer or chief financial officer of the
Credit Party setting forth details of the occurrence referred to therein and
stating what action the Credit Party proposes to take with respect thereto.
7.9 Maintenance of Liens of the Security Documents. (a) Promptly upon
the reasonable request of any Bank at the Company's expense, execute,
acknowledge and deliver, or cause the execution, acknowledgment and delivery of,
and thereafter register, file or record, or cause to be registered, filed or
recorded, in an appropriate governmental office, any document or instrument
supplemental to or confirmatory of the Security Documents or otherwise necessary
or desirable for the creation and/or perfection of the Liens on all assets
(other than real property assets) now owned or hereafter acquired, of the Credit
Parties.
(b) Maintain, install, locate and use the equipment (other than an
amount for any 12-month period with an aggregate fair market value of $25,000 or
less) included within the Collateral in a manner and in jurisdictions which are
consistent with the continued effectiveness and validity of the filing and
recordings made in respect thereof under the Security Documents.
7.10 Security Documents. Upon the creation or acquisition of any
Subsidiary of the Credit Parties after the date hereof (i) such Credit Party
immediately shall cause each such Subsidiary to execute and deliver a subsidiary
guarantee and such other Security Documents as the Agent may require and (ii)
such Credit Party immediately shall pledge all of the issued and outstanding
capital stock of such Subsidiary pursuant to a pledge agreement.
7.11 Termination of Merchant Services Agreements. Following notice from
HSB or the Company that either is terminating either or both of the Merchant
Services Agreements, the Company shall and the Parent shall cause the Company,
after such termination, (i) if there is no successor to HSB, to execute and
deliver a security agreement and financing statements conveying a first priority
security interest to Agent on all of the Company's accounts pledged and/or sold
to HSB and (ii) if there is a successor to HSB (which successor shall be subject
to the approval of the Banks), to execute and deliver (A) a merchant services
agreement (or similar documents) with such successor to HSB and (B) an
assignment in the form of the Assignment of the Company;
7.12 Annual Inventory Valuation. As soon as practicable but in any
event within 90 days following the end of each Fiscal Year, the Company shall
obtain and deliver to Agent an audit of the Net Recoverable Liquidation Value of
Eligible Inventory performed by independent auditors selected by the Agent (the
"Annual Inventory Valuation"). The Company shall bear the costs and expenses of
the Annual Inventory Valuation up to a maximum of $20,000. If the costs and
expenses of the Annual Inventory Valuation exceed $20,000, the excess shall be
paid by FANB. In the event the Annual Inventory Valuation reflects a Net
Recoverable Liquidation Value which is less than 32% of the cost value of
Eligible Inventory no later than six (6) months following the date of such
Annual Inventory Valuation, the Company shall obtain and deliver to the Agent,
at the Company's
- 55 -
sole cost and expense, an updated audit of the Net Recoverable Liquidation Value
performed by auditors selected by the Agent (the "Second Inventory Valuation");
and
7.13 Further Assurances. At any time and from time to time, upon the
Agent's request and at the expense of the Company, the Credit Parties will
promptly and duly execute and deliver or cause to be executed and delivered any
and all further instruments and documents and take such further action as the
Agent may reasonably request to effect the purpose of the Security Documents,
including (without limitation) the filing of any financing or continuation
statements under the Uniform Commercial Code in effect in any jurisdiction in
order to place on the public records notice of the effect of the Security
Documents;
SECTION 8. FORMATION OF NEW SUBSIDIARIES.
Each Bank and the Agent hereby agree to the following notwithstanding
anything in the Amended and Restated Credit Agreement or other Basic Documents
to the contrary: the Credit Parties may form one or more new Subsidiaries (a
"New Subsidiary") and transfer, assign and convey assets into such New
Subsidiary; provided, that (i) Agent shall have received a copy of the proposed
plan at least thirty (30) business days prior to the effective date of the
transactions and has approved same; (ii) the Parent has furnished to the Agent,
and the Agent has approved, a pro forma consolidated balance sheet and income
statement of the Parent and its Subsidiaries which reflects no adverse financial
impact resulting from the transaction, (iii) such New Subsidiary becomes a party
to the Amended and Restated Credit Agreement, has executed a guaranty of the
Loans, and has executed such documents (including, without limitation, security
agreements and financing statements) in order to create in favor of the Agent
for the ratable benefit of the Banks, a perfected security interest in the
Collateral transferred to such New Subsidiary, (iv) each Bank and Agent shall
have received a counterpart of an opinion of counsel to the Company (or the New
Subsidiary) in form reasonably satisfactory to Agent and its counsel, (v) such
other requirements reasonably requested by the Agent and the Banks, and (vi) the
Company has reimbursed the Agent and the Banks for all reasonable expenses
incurred by the Agent and the Banks in connection with the foregoing, including
reasonable attorneys' fees and expenses.
SECTION 9. NEGATIVE COVENANTS
Each of the Credit Parties hereby agrees that, so long as the
Commitments remain in effect, any Notes remain outstanding and unpaid, any
Letter of Credit remains issued and outstanding or any other amount is owing to
the Agent or any Bank hereunder or under any other Basic Document, it shall not,
directly or indirectly, and shall not permit any of its Subsidiaries to:
9.1 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes, the Letters of
Credit and all other obligations of the Credit Parties under this Amended and
Restated Credit Agreement;
- 56 -
(b) Indebtedness in favor of National Bank of Commerce more
particularly described on Schedule 9.1(b) (the "NBC Indebtedness") and certain
other Indebtedness outstanding on the Closing Date as listed on Schedule 9.1(b);
(c) Indebtedness in an aggregate amount equal to the amount by which
the Commitments have been permanently reduced pursuant to Section 4.7 of this
Amended and Restated Credit Agreement, provided that such Indebtedness shall
contain provisions in respect of subordination, amortization, rate of interest
and acceleration of the due date of such Indebtedness prior to its stated
maturity which, in the sole discretion of the Agent and the Banks, are
acceptable in form and substance to the Agent and the Banks;
(d) Indebtedness as incurred or assumed by the Company (i) in
connection with any Financing Lease entered into after the Closing Date, (ii) in
connection with any Sale and Leaseback transaction and (iii) as to the Company
only, to pay all or any part of the purchase price of property acquired after
the Closing Date, not to exceed the purchase price of the property so acquired;
provided that the aggregate amount of all such Indebtedness at any one time
outstanding as to the Credit Parties (excluding the NBC Indebtedness) shall not
exceed (x) $10,000,000 less (y) Indebtedness (excluding the NBC Indebtedness)
permitted by subsections 9.1(b) and 9.1(e);
(e) Indebtedness incurred by the Parent and its Subsidiaries after the
Closing Date (i) under unsecured lines of credit with any Person, (ii) under
demand and other short-term promissory notes payable to or to the order of any
Person and (iii) in connection with any Sale and Leaseback transactions,
provided that, except in the case of Inter-Company Indebtedness, the aggregate
principal amount (excluding the NBC Indebtedness) shall not exceed (x)
$10,000,000 less (y) Indebtedness (excluding the NBC Indebtedness) permitted by
subsections 9.1(b) and 9.1(d) hereof, provided further that any Indebtedness
incurred pursuant to this Section 9.1(e) after September 25, 1992 may only be
incurred by the Company and the Parent; and
(f) Inter-Company Indebtedness, including without limitation, (i)
Indebtedness incurred by any Credit Party (each, a "borrowing Credit Party")
under an unsecured loan or advance from any other Credit Party which loan or
advance is used by the borrowing Credit party (other than the Parent) to
purchase Inventory from the Parent or is used by the Parent to purchase
Inventory from any Person and (ii) Indebtedness created by the purchase, sale,
lease, license or exchange of property or the rendering of any service by a
Credit Party to any other Credit Party, provided such transactions are not
otherwise prohibited under the Amended and Restated Credit Agreement and are, in
the reasonable judgment of the Board of Directors of the Credit Parties in the
ordinary course of business and are upon fair and reasonable terms no less
favorable to the Credit Parties than it would obtain in a comparable arms length
transaction with a Person not an Affiliate.
9.2 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets, income or profits, whether now owned or
hereafter acquired, except:
(a) Liens for taxes, assessments, charges or other governmental levies
not yet due or as to which the period of grace (not to exceed 60 days), if any,
related thereto has not expired or which
- 57 -
are being contested in good faith and by appropriate proceedings, if adequate
reserves with respect thereto are maintained on the books of the Parent and its
Subsidiaries, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business (i)
which are not overdue for a period of more than 60 days or (ii) which are being
contested in good faith and by appropriate proceedings;
(c) pledges or deposits in connection with workmen's compensation,
unemployment insurance and other social security legislation, or to secure the
performance of statutory obligations, appeal or similar bonds, leases and trade
contracts (exclusive of obligations for the payment of borrowed money);
(d) Liens in favor of the Banks pursuant to the Security Documents;
(e) Liens securing Indebtedness permitted by subsection 9.1(d),
provided that any such Lien shall be confined solely to the item or items of
property acquired with the proceeds of such Indebtedness or which is or are the
subject of a Financing Lease permitted by said subsection;
(f) Liens on property of any Credit Party created solely for the
purpose of securing Indebtedness permitted by subsection 9.1(d), incurred to
finance or refinance the purchase price of property; provided that no such Lien
shall extend to or cover other property of any Credit Party other than the
respective property so acquired, and the principal amount of Indebtedness
secured by any such Lien shall at no time exceed the original purchase price of
such property;
(g) Liens in existence on the Closing Date, which Liens are listed on
Schedule 9.2(g);
(h) rights of setoff in favor of banks arising in the ordinary course
of business of the Credit Parties;
(i) any Lien constituting a renewal or continuation of any Lien
permitted by this subsection 9.2, but only, in the case of each such renewal or
continuation, to the extent that the principal amount of Indebtedness secured by
such Lien does not exceed the principal amount of such Indebtedness so secured
at the time of the renewal or continuation, and that such Lien is limited to all
or a part of the property that secured the Lien renewed or continued; and
(j) other Liens incidental to the conduct of its business or the
ownership of the property which are not incurred in connection with borrowed
money and which do not in the aggregate materially detract from the value of its
property or materially impair the use thereof in the operation of its business
and which, in any event, do not secure obligations in excess of $75,000.
9.3 Limitation on Contingent Obligations. Create, incur, assume or
suffer to exist any Contingent Obligation, except Contingent Obligations in
existence on the Closing Date and listed on Schedule 9.3, but in no event to
include any extensions or renewals thereof.
- 58 -
9.4 Prohibition on Fundamental Changes. Except for mergers or
consolidations of Subsidiaries with other Subsidiaries, enter into any
transaction of acquisition or merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or make any material change in the present method of conducting
business or engage in any type of business other than of the same general type
now conducted by the Credit Parties.
9.5 Prohibition on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, tax benefits, receivables and leasehold
interests), whether now owned or hereafter acquired, except (a) the sale or
other disposition of any tangible property that, in its reasonable judgment, has
become uneconomic, obsolete or worn out, and which is disposed of in the
ordinary course of business, (b) the sale of inventory in the ordinary course of
business, (c) the sale or other disposition of any property in connection with
the permanent closing of any Store, (d) the sale or other disposition of assets
in one or a series of related transactions, other than Inventory , sold in arms
length transactions for a fair market price, provided that any Net Proceeds of
each such sale or related sales described in this paragraph which exceed
$250,000 and any Net Proceeds of the aggregate of such transactions in any
twelve month period which exceed $250,000 shall be utilized (excluding any
duplication of any such excess) to prepay any outstanding principal and interest
under the Working Capital Loans, on a ratable basis, (e) other sales and
dispositions which are approved in writing by the Required Banks, (f)
transactions described in Section 8 and (g) transactions with Affiliates or
among Credit Parties permitted under subsection 9.13.
9.6 Limitation on Investments, Loans and Advances. Make or suffer to
exist any advances or loans to, or investments (by way of transfers of property,
contributions to capital, acquisitions of stock, securities or evidences of
indebtedness or otherwise) in, any other Person, except that:
(a) the Credit Parties may acquire and hold Cash Equivalents:
(b) the Company and its Subsidiaries may make advances to its employees
for travel, relocation or other purposes or loans to its employees to purchase
or carry Parent Common Stock, provided that all such advances or loans are in
the ordinary course of business, and further provided that the aggregate
outstanding amount of all such advances shall at no time exceed $100,000 and the
amount of all of such loans shall at no time exceed $300,000;
(c) Any Credit Party may make loans and advances to any other Credit
Party in amounts necessary for such Credit Party's reasonable operating expenses
incurred in the ordinary course of business;
(d) the Company and the Parent may make investments, provided that,
either (i) the aggregate expenditure by the Company and the Parent with respect
to all such transactions shall not exceed $2,000,000, or (ii) any such
investment shall be made in any Credit Party; and
(e) the Company may make payments to the Parent with respect to any
Fiscal Year pursuant to any tax sharing agreement in a dollar amount equivalent
to the tax the Company would pay for
- 59 -
such Fiscal Year if it paid tax on a stand-alone basis; provided, however, that
no such payments may be made by the Company if (i) the Parent, on a consolidated
basis, has no tax liability for such year, or (ii) if a Default or Event of
Default occurs under Section 10(a), Section 10(h) or as a result of failure to
comply with subsections 9.7 through 9.10.
9.7 Consolidated Working Capital. Permit Consolidated Working Capital, at
any time, to be less than $8,000,000.
9.8 Consolidated Net Worth. Permit Consolidated Net Worth on the last
day of any month to be less than $69,785,974 (the "Minimum Consolidated Net
Worth Requirement") through January 31, 1998. Commencing with the 1998 Fiscal
Year the Minimum Consolidated Net Worth Requirement shall be adjusted to
$69,000,000. Such Minimum Consolidated Net Worth Requirement shall be increased
at the end of the 1998 Fiscal Year and at the end of each Fiscal Year thereafter
by adding (if applicable) to the preceding Fiscal Year's Minimum Consolidated
Net Worth Requirement fifty percent (50%) of Net Income for the preceding Fiscal
Year.
9.9 Capital Expenditures. Permit Capital Expenditures to exceed an
aggregate of $5,000,000 (the "Minimum Capital Expenditures Requirement") in the
Fiscal Year ending January 31, 1998. The Minimum Capital Expenditures
Requirement shall be increased to $8,000,000.00 in the Fiscal Year ending
January 30, 1999. The Minimum Capital Expenditures Requirement shall be
increased at the end of each Fiscal Year thereafter by adding to the previous
Fiscal Year's Minimum Capital Expenditures Requirement an amount equal to a
fifty percent (50%) of Net Income for the preceding Fiscal Year.
9.10 Debt Coverage Ratio. Permit the Debt Coverage Ratio, in each case
for the period of four (4) consecutive fiscal quarters ending on the last day of
each fiscal quarter (a) commencing with the fiscal quarter ending January 31,
1998, through the fiscal quarter ending October 31, 1998, to be less than 1.20
to 1.0, (b) commencing with the fiscal quarter ending January 30, 1999, through
the fiscal quarter ending October 30, 1999, to be less than 1.25 to 1.0 and
commencing with the fiscal quarter ending January 29, 2000, and continuing on
each fiscal quarter thereafter to be less than 1.30 to 1.0.
9.11 Entity Documents. Amend its Certificate of Incorporation or its
partnership agreement, as in effect on the Closing Date, in any respect without
the prior written consent of the Agent and the Banks.
9.12 Limitation on Dividends. Declare any cash dividends on any shares
of any class of stock of the Credit Parties or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, retirement or other acquisition of any shares of any class of stock
of the Credit Parties, 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 Credit Parties; except that the Company or
the Parent may declare dividends on any class or series of stock of the Company
or the Parent, provided that, (i) (A) no Default or Event of Default exists and
(B) the Dividend Ratio for such Fiscal Year exceeds 1.05 to 1.0 or
- 60 -
(ii) dividends paid by the Company to the Parent are used by the Parent to
satisfy obligations of the Parent and the Company under the Consulting Agreement
and the Noncompetition Agreement.
9.13 Transactions with Affiliates or Among Credit Parties. 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
(a) such transactions (i) are not otherwise prohibited under this Amended and
Restated Credit Agreement and (ii) are, in the reasonable judgment of the Board
of Directors of the Credit Parties in the ordinary course of business and are
upon fair and reasonable terms no less favorable to the Credit Parties than it
would obtain in a comparable arm's length transaction with a Person not an
Affiliate, (b) such transactions, including without limitation any purchase,
sale, lease, license or exchange of property are between or among Credit Parties
in the ordinary course of business, or if such transactions are not in the
ordinary course of business, Agent has received ten (10) days' prior written
notice and receipt of copies of all of the proposed instruments for the transfer
and/or relocation of said assets and has approved such transaction, or (c) any
such transaction is a loan to an employee permitted under Section 9.6(b).
SECTION 10. EVENTS OF DEFAULT
Upon the occurrence and continuance of any of the following events:
(a) The Company shall fail to pay (i) any principal of any
Loan, when due in accordance with the terms hereof or of the respective
Note or (ii) any interest on any Note or any fee or other amount
payable hereunder within five days after any such interest, fee or
other amount becomes due; or
(b) Any representation or warranty or statement that is
material in the reasonable judgment of the Agent and made or deemed
made by the Credit Parties in this Amended and Restated Credit
Agreement or in any other Basic Document to which it is a party or
which is contained in any certificate, document or financial or other
statement furnished at any time under or in connection herewith or
therewith shall prove to have been incorrect in any material respect on
or as of the date made or deemed made; or
(c) The Credit Parties, as applicable, shall default in the
observance or performance of any covenant or agreement contained in
Section 9 or subsections 7.9, 7.10 or 7.11; or
(d) The Credit Parties, as applicable, shall default in the
observance or performance of any other covenant or agreement contained
in this Amended and Restated Credit Agreement or any other Basic
Document which is not specified in clauses (a) through (c) above or in
clause (e) below, and such default shall continue unremedied for a
period of 30 days after the Credit Party, as applicable, becomes aware,
or should reasonably have become aware, of such default; provided,
that, a Credit Party's failure to deliver to the Banks the financial
information enumerated in paragraphs (f), (g) or (h) of subsection 7.2
hereof
- 61 -
shall not be deemed an Event of Default until 15 days have elapsed from
the receipt of a notice of nondelivery from the Agent or any Bank; or
(e) Any Security Document shall cease, for any reason, to be
in full force and effect or the Credit Parties shall so assert in
writing; or any Security Document shall cease to be effective to xxxxx
x Xxxx on the collateral described therein with the priority purported
to be created thereby, except in each case as a result of the Agent's
gross negligence in failing to retain possession of any Collateral or
failure to file any continuation statement with respect to the
Collateral; or
(f) (i) The Parent shall fail to own and control, of record
and beneficially, with power to vote, 100% of the issued and
outstanding shares of stock of the Company, RT Co. and PA Co. or (ii) a
Change of Control shall occur; or (iii) the Parent and the Company
collectively shall fail to own all of the Partnership interests in
Intex; or
(g) Any Credit Party shall (i) default in any payment of
principal of or interest on any Indebtedness (other than Indebtedness
hereunder), or in the payment of any matured Contingent Obligation
beyond the period of grace (not to exceed 60 days), if any, provided in
the instrument or agreement under which such Indebtedness or Contingent
Obligation was created, and the aggregate amount of all such payment
defaults at any one time outstanding is equal to or in excess of
$250,000; or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or Contingent
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 Contingent
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, any such Indebtedness to become due prior to its stated
maturity (any applicable grace period having expired); or
(h) (i) Any Credit Party 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 or other similar official for it or for
all or any substantial part of its assets, or any Credit Party shall
make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against any Credit Party 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 of any adjudication or
appointment or (B) remains undismissed, undischarged, unstayed or
unbonded for a period of 45 days; or (iii) there shall be commenced
against any Credit Party 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, stayed
- 62 -
or bonded pending appeal within 60 days from entry thereof; or (iv) any
Credit Party 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) any Credit Party shall
generally not pay its debts as they become due; or
(i) (A) Any Person shall engage in any nonexempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (B) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (C) 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 Banks, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (D) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (E) any Credit Party or
any Commonly Controlled Entity shall, or is, in the reasonable opinion
of the Banks, likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (F) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (A) through
(F) above, such event or condition, together with all other such events
or conditions, if any, could in the reasonable judgment of the Agent
subject any Credit Party to any tax, penalty or other liabilities in
the aggregate material in relation to the business, operations,
property, assets or financial or other condition of any Credit Party
and their Subsidiaries taken as a whole; or
(j) One or more judgments or decrees shall be entered against
any Credit Party involving in the aggregate a liability (to the extent
not paid or covered by insurance) of more than $250,000 and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof;
then, and in any such event, (a) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (h) above with respect to any Credit Party,
automatically the Commitments shall terminate and the Loans and the
Reimbursement Obligations (with accrued interest thereon) and all other amounts
owing under this Amended and Restated Credit Agreement and the Notes 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 Required Banks, the Agent may, or upon the request of the
Required Banks, the Agent shall, by notice to the Company declare the
Commitments and the Issuing Bank's obligation to open Letters of Credit to be
terminated forthwith, whereupon the Commitments and such obligations shall
immediately terminate (and the Issuing Bank shall issue no further Letters of
Credit hereunder); and (ii) with the consent of the Required Banks, the Agent
may, or upon the request of the Required Banks, the Agent shall, by notice of
default to the Company, declare the Loans and the Reimbursement Obligations
(with accrued interest thereon) and all other amounts owing under this Amended
and Restated Credit Agreement and the Notes to be due and payable forthwith,
whereupon the same shall immediately become due and payable. If all
Reimbursement Obligations have become due and payable the
- 63 -
Company shall immediately deposit with the Issuing Bank on behalf of the Banks
an amount equal to the aggregate maximum potential Reimbursement Obligations
under all issued and unexpired Letters of Credit. The Issuing Bank shall apply
such amount to that portion of the Reimbursement Obligations which have become
fixed under such Letters of Credit and shall return any remaining balance of
such amount to the Company upon the expiration of all such Letters of Credit.
All payments made by the Company under this Section 10 shall be applied in
accordance with subsection 4.5. Without limiting the effect of any of the
foregoing, upon the occurrence of any Event of Default, the Agent and/or the
Banks may exercise any and all remedies and other rights provided pursuant to
this Amended and Restated Credit Agreement and the Security Documents. Except as
expressly provided above in this Section 10, presentment, demand, protest and
all other notices of any kind whatsoever (including, without limitation, notice
of intent to accelerate the maturity of any obligations of the Credit Parties
hereunder or notice of acceleration of any such obligations) are hereby
expressly waived by the Credit Parties.
SECTION 11 MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Amended and Restated Credit
Agreement, the Notes, any other Basic Document nor any terms hereof or thereof
may be amended, waived, discharged or terminated unless such amendment, waiver,
discharge or termination is in writing signed by the Credit Parties and the
Required Banks; provided, however, that no such waiver and no such amendment,
supplement or modification shall (a) reduce the amount or extend the maturity of
any Note, or reduce the rate or extend the time of payment of interest thereon,
or reduce any fee payable to any Bank hereunder, or change the amount of any
Bank's Commitment, in each case without the consent of the Bank affected
thereby, or (b) amend, modify or waive any provision of this subsection or
reduce the percentage specified in the definition of Required Banks, or consent
to the assignment or transfer by the Credit Parties of any of its rights and
obligations under the Basic Documents or expressly release all or any portion of
the Collateral, or increase the aggregate amount of the Commitments, in each
case without the written consent of all of the Banks. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
Banks and shall be binding upon the Credit Parties, the Banks and all future
holders of the Notes. In the case of any waiver, the Credit Parties and the
Banks shall be restored to their former positions and rights hereunder and under
the outstanding Notes and the other Basic Documents, and any Default or Event of
Default waived shall be deemed to be cured; but no such waiver shall extend to
any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telegraph, telex or facsimile transmission) and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand, or three Business Days after being deposited in the mail, postage
prepaid or, in the case of telegraphic notice, when delivered to the telegraph
company or, in the case of telex notice, when sent, answer back received, or, in
the case of facsimile transmission, when transmission is completed, addressed as
follows, or to such other address as may be hereafter notified by the respective
parties hereto and any future holder of a Note:
- 64 -
The Credit Parties: Catherines, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
with a copy to: Waring Xxx, PLC
Xxxxxx Xxxxxx Tower
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxx Xxxxxxx
FANB, Agent or First American National Bank
The Issuing Bank: 0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx
with a copy to: Xxxxxxxx Xxxxx, PLLC
0000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx or
J. Xxxxxxx Xxxxxx, Xx.
Hibernia: Hibernia National Bank
National Accounts Department
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, V.P.
Bank One: Bank One, N.A.
00 Xxxxx Xxxx Xxxxxxxxx
Xxxxx, Xxxxx Xxxxx Xxxxxx,
XX 00000 Attention: Xxxxx
X. Xxxxxxxx, V.P.
provided that any notice, request or demand to or upon any Bank pursuant to
subsections 2.3, 2.4(c), 4.1, 4.4, 4.7, and 4.11 shall not be effective until
received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Bank, any right, remedy, power or
privilege hereunder, or under any other Basic Document 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
- 65 -
provided and provided in the other Basic Documents are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations, Warranties and Covenants. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
until the payment in full of all amounts due under or in connection with the
Basic Documents.
11.5 Payment of Expenses and Taxes. The Credit Parties agree (a) to pay
or reimburse the Agent for reasonable out-of-pocket costs and expenses incurred
by any Bank in connection with the development, preparation and execution of,
and any amendment, supplement or modification to, or extension or waiver of this
Amended and Restated Credit Agreement, the Basic Documents and any other
documents prepared in connection therewith, and the consummation of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel (including local counsel and patent
and trademark counsel) to the Agent incurred in connection with the foregoing
and in connection with legal advice rendered with respect to this Amended and
Restated Credit Agreement, and the Basic Documents, (b) to pay or reimburse the
Agent and each Bank for all their respective costs and expenses incurred in
connection with, and to pay, indemnify, and hold the Agent, each Bank and their
respective officers, directors, employees, agents, Affiliates, attorneys-in-fact
and attorneys harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever arising out of or in
connection with, the enforcement or preservation of any rights under the Basic
Documents and any such other documents, including, without limitation,
reasonable fees and disbursements of counsel to the Agent and of counsel to each
of the Banks, (c) to pay, indemnify, and to hold the Agent and each Bank
harmless from, any and all broker's fees, recording and filing fees and any and
all liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation 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 Amended and Restated
Credit Agreement, the Notes, the other Basic Documents and any such other
documents, and (d) to pay, indemnify, and hold the Agent, each Bank and their
respective officers, directors, employees, agents, attorneys-in-fact, Affiliates
and attorneys harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever arising out of or in
connection with the making of the Loans, the taking of security interests under
the Security Documents or the use of the proceeds of the Loans (all the
foregoing, collectively, the "indemnified liabilities"), provided that the
Credit Parties shall have no obligation hereunder with respect to indemnified
liabilities arising from (i) the gross negligence or wilful misconduct of the
Agent or any Bank, or (ii) legal proceedings commenced against the Agent or any
Bank by any security holder or creditor of the Agent or any Bank arising out of
and based upon rights afforded any such security holder or creditor solely in
its capacity as such, or (iii) legal proceedings commenced against the Agent or
any Bank by any other Bank or by any Transferee. The Amended and Restated Credit
Agreements in this subsection shall survive repayment of the Notes and all other
amounts payable hereunder.
- 66 -
11.6 Successors and Assigns; Participations; Purchasing Banks. (a) This
Amended and Restated Credit Agreement shall be binding upon and inure to the
benefit of the Credit Parties, the Parent, the Banks and the Agent, all future
holders of the Notes and their respective successors and assigns, except that
the Credit Parties may not assign or transfer any of their rights or obligations
under this Amended and Restated Credit Agreement without the prior written
consent of each Bank.
(b) Any Bank may, in the ordinary course of its commercial banking or
lending 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 Bank, any participating interest in the Letters of Credit of
such Bank, any Note held by such Bank, any Commitment of such Bank or any other
interest of such Bank hereunder. In the event of any such sale by a Bank of
participating interests to a Participant, such Bank's obligations under this
Amended and Restated Credit Agreement to the other parties to this Amended and
Restated Credit Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
any such Note for all purposes under this Amended and Restated Credit Agreement
and the Credit Parties and the Agent shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under this
Amended and Restated Credit Agreement. The Credit Parties agree that if amounts
outstanding under this Amended and Restated Credit Agreement and the Notes are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of setoff in respect of its participating interest in amounts
owing under this Amended and Restated Credit Agreement and any Note to the same
extent as if the amount of its participating interest were owing directly to it
as a Bank under this Amended and Restated Credit Agreement or any Note;
provided, that such right of setoff shall be subject to the obligation of such
Participant to share with the Banks, and the Banks agree to share with such
Participant. The Company also agrees that each Participant shall be entitled to
the benefits of subsections 2.4 (subject to the limitations set forth in the
ultimate sentence of paragraph (d) of subsection 2.4), 3.6 and 4.10 with respect
to its participation in the Letters of Credit and in the Commitments and the
Loans outstanding from time to time; provided, that no Participant shall be
entitled to receive any greater amount pursuant to such subsections than the
transferor Bank would have been entitled to receive in respect of the amount of
the participation transferred by such transferor Bank to such Participant had no
such transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial banking or
lending business and in accordance with applicable law, (i) at any time sell all
or any part of its rights and obligations under this Amended and Restated Credit
Agreement and the Notes to any Bank or any Affiliate thereof (the "Syndicate
Purchasing Banks"), provided that, in the event of a sale of less than all of
such rights and obligations, such assigning Bank after any such sale to any
other Bank or any Affiliate of such Bank shall retain Commitments and/or Loans
and L/C Participating Interests aggregating at least $2,000,000 of the aggregate
Commitments (or such lesser amount as the Agent may determine), and, (ii) with
the consent of the Company and the Agent (which in each case shall not be
unreasonably withheld) sell to one or more additional banks or financial
institutions (together with Syndicate Purchasing-Banks, the "Purchasing Banks"),
all or any part of its rights and obligations under this Amended and Restated
Credit Agreement and the Notes, pursuant to a
- 67 -
Commitment Transfer Supplement, executed by such Purchasing Bank, such
transferor Bank (and, in the case of a Purchasing Bank that is not then a Bank
or an Affiliate thereof, by the Company and the Agent), and delivered to the
Agent for its acceptance and recording in the Register (as defined below);
provided that (A) each such sale pursuant to clause (ii) of this subsection
11.6(c) shall be in an amount of $2,000,000 of the aggregate Commitments or more
and (B) in the event of a sale of less than all of such rights and obligations,
such Bank after any such sale shall retain a Commitment and/or Loans aggregating
at least $2,000,000 of the aggregate Commitments. Upon such execution, delivery,
acceptance and recording, from and after the Transfer Effective Date as defined
in the Commitment Transfer Supplement determined pursuant to such Commitment
Transfer Supplement, (x) the Purchasing Bank thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Bank hereunder with a Commitment as set forth
therein, and (y) the transferor Bank thereunder shall, to the extent of the
interest transferred, as reflected in such Commitment Transfer Supplement, be
released from its obligations under this Amended and Restated Credit Agreement
(and, in the case of a Commitment Transfer Supplement covering all or the
remaining portion of a transferor Bank's rights and obligations under this
Amended and Restated Credit Agreement, such transferor Bank shall cease to be a
party hereto). Such Commitment Transfer Supplement shall be deemed to amend this
Amended and Restated Credit Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Bank and the resulting
adjustment of Commitment Percentages arising from the purchase by such
Purchasing Bank of all or a portion of the rights and obligations of such
transferor Bank under this Amended and Restated Credit Agreement and the Notes.
On or prior to the Transfer Effective Date determined pursuant to such
Commitment Transfer Supplement, the Company, at its own expense, shall execute
and deliver to the Agent in exchange for the surrendered Notes amended and
restated Notes to the order of such Purchasing Bank in an amount equal to the
Commitments assumed by it pursuant to such Commitment Transfer Supplement and,
if the transferor Bank has retained any Commitments hereunder, amended and
restated Notes to the order of the transferor Bank in an amount equal to the
Commitments retained by it hereunder. Such amended and restated Notes shall be
dated the Closing Date and shall otherwise be in the form of the Notes replaced
thereby. The Notes surrendered by the transferor Bank for transfer and
replacement shall be returned by the Agent to the Company marked "replaced and
cancelable."
(d) The Agent shall maintain at its address referred to in subsection
11.2 a copy of each Commitment Transfer Supplement delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Banks and the Commitment of, the principal amount of any Working Capital Loans
and Swingline Loans owing to, and, if such Bank has any Working Capital
Commitment, the L/C Participating Interests of, each Bank from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Company, the Agent and the Banks may treat each Person whose name is
recorded in the Register as the owner of the Loan or L/C participating Interest
recorded therein for all purposes of this Amended and Restated Credit Agreement.
The Register shall be available for inspection by the Company or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by a
transferor Bank and a Purchasing Bank (and, in the case of a Purchasing Bank
that is not then a Bank or an Affiliate
- 68 -
thereof, by the Company and the Agent), together with payment to the Agent of a
registration and processing fee of $1,000 if the Purchasing Bank is not a Bank
prior to the execution of such supplement and $1,000 otherwise, the Agent shall
(i) promptly accept such Commitment Transfer Supplement and (ii) on the Transfer
Effective Date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Banks and the Company.
(f) The Banks agree that they will use reasonable efforts to protect
the confidentiality of any confidential information concerning the Credit
Parties and their Affiliates. Notwithstanding the foregoing, the Credit Parties
authorize each Bank to disclose to any Participant or Purchasing Bank (each, a
"Transferee") and any prospective Transferee any and all financial information
in such Bank's possession concerning the Credit Parties and their Affiliates
which has been delivered to such Bank by or on behalf of the Credit Parties
pursuant to this Amended and Restated Credit Agreement or which has been
delivered to such Bank by or on behalf of the Credit Parties in connection with
such Bank's credit evaluation of the Credit Parties and their Affiliates prior
to becoming a party to this Amended and Restated Credit Agreement, provided,
that any such Transferee or prospective Transferee agrees for itself and its
Affiliates to use reasonable efforts to protect the confidentiality of any
confidential information supplied by a Bank or the Credit Parties concerning the
Credit Parties and their Affiliates.
(g) If, pursuant to this subsection 11.6, any interest in this Amended
and Restated Credit Agreement or any Note is transferred to any Transferee which
is organized under the laws of any jurisdiction other than the United States or
any State thereof, the transferor Bank shall cause such Transferee, concurrently
with the effectiveness of such transfer, (i) to represent to the transferor Bank
(for the benefit of the transferor Bank, the Agent and the Company) that under
applicable law and treaties no taxes will be required to be withheld by the
Agent, the Company or the transferor Bank with respect to any payments to be
made to such Transferee in respect of the Loans or L/C Participating Interests,
(ii) to furnish to the transferor Bank (and, in the case of any Purchasing Bank
registered in the Register, the Agent and the Company) either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein
such Transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) to agree (for the
benefit of the transferor Bank, the Agent and the Company) to provide the
transferor Bank (and, in the case of any Purchasing Bank registered in the
Register, the Agent and the Company) a new Form 4224 or Form 1001 upon the
expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee, and to comply from
time to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
(h) The Credit Parties agree to assist the Agent in locating
replacement lenders for any Bank that advises the Agent it seeks to sell all or
a portion of its Loans and will prepare an information package for delivery to
potential replacement lenders. The Credit Parties agree they will be responsible
for the contents of the information package and prior to dissemination by the
Agent of the information package, the Credit Parties agree to enter into a
letter agreement with the Agent
- 69 -
whereby (i) the Credit Parties will give negative assurances that the
information package (other than portions thereof provided by the Agent) contains
no material untrue statement or omission (other than any such untrue statement
or omission subsequently corrected prior to the date of any reliance thereon),
(ii) the Credit Parties will agree to supplement the information package from
time to time as necessary until completion of the replacement so that the
representation and warranty described in the foregoing clause (i) remains
correct and (iii) the Credit Parties will agree to indemnify the Agent in the
event it incurs any liability or expense because the representation and warranty
described in the foregoing clause (i) is untrue or alleged to be untrue. The
Credit Parties will (or, prior to the Closing Date, use their best efforts to)
make appropriate officers and representatives of the Credit Parties available to
participate in one or more information meetings for potential replacement
lenders at such times and places as the Agent shall reasonably request.
(i) Nothing herein shall prohibit any Bank from pledging or assigning
any Note to any Federal Reserve Bank in accordance with applicable law.
11.7 Adjustments. If any Bank (a "benefitted Bank") shall at any time
receive any payment of all or part of its Loans, 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 clause
(h) of Section 10, or otherwise) in a greater proportion than any such payment
to and collateral received by any other Bank, if any, in respect of such other
Bank's Loans, or interest thereon, and such greater proportionate payment or
receipt of collateral is not expressly permitted hereunder, such benefitted Bank
shall purchase for cash from the other Banks such portion of each such other
Bank's Loans, or shall provide such other Bank with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Bank to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Banks; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Bank, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Company agrees that each Bank so purchasing a portion of another Bank's Loans
may exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Bank were the direct
holder of such portion.
11.8 Merger. This Amended and Restated Credit Agreement with Schedules
and Exhibits, and with the documents, instruments and agreements referred to
herein or therein embodies the entire understanding and agreement among the
parties hereto and supersedes all prior negotiations, agreements and
understandings relating to the subject matter hereof. There exist no other
agreements or understandings among the Banks and the Credit Parties or other
party, explicit or implied, with respect to the subject matter hereof. Each
party acknowledges and agrees that this Amended and Restated Credit Agreement is
fully integrated and not in need of parol evidence in order to reflect the
intentions of the parties, and that the parties intend the literal words of this
Amended and Restated Credit Agreement to govern the transactions described
herein, and for all prior negotiations, drafts and other extraneous
communications to have no significance or evidenciary effect whatsoever.
- 70 -
11.9 Effectiveness. The Amended and Restated Credit Agreement shall
become effective upon the satisfaction of the conditions precedent enumerated in
subsection 5.1 hereof. The parties hereto intend that this Amended and Restated
Credit Agreement from and after the Closing Date shall supercede the Prior
Credit Agreement and that the relationship of the parties hereto from and after
the Closing Date shall be governed by the terms of this Amended and Restaed
Credit Agreement. The Notes, from and after the Closing Date, shall evidence all
obligations under this Amended and Restated Credit Agreement including without
limitation the outstanding balances of the Prior Swingline Note and the Prior
Working Capital Notes. The parties hereto expressly agree that the execution,
delivery and acceptance by the parties of this Amended and Restated Credit
Agreement (and the documents, instruments and certificates referred to herein)
are not intended to, do not, and shall not be deemed to constitute a payment,
cancellation, satisfaction, discharge, extinguishment, or novation of the
indebtedness and obligations evidenced by the Prior Swingline Notes and the
Prior Working Capital Notes. Except for the Deeds of Trust which shall have been
released by the Banks, the Prior Security Documents shall continue to secure the
Loans as set forth in the Security Documents, but the terms of the Security
Documents shall govern the rights and obligations of the parties from and after
the Closing Date and shall reconfirm and ratify the provisions of the Prior
Security Documents relating to such rights and obligations.
11.10 Governing Law; No Third Party Rights. THIS AMENDED AND RESTATED
CREDIT AGREEMENT, THE NOTES IN FAVOR OF THE BANKS AND THE RIGHTS AND DUTIES OF
THE PARTIES UNDER THIS AMENDED AND RESTATED CREDIT AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TENNESSEE.
11.11 Submission to Jurisdiction: Waivers. Each of the Credit Parties
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Amended and Restated Credit Agreement and
the other Basic 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
Tennessee, the courts of the United States of America for the Western
District of Tennessee, and appellate courts from any thereof;
(ii) 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;
(iii) 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 Credit Party;
- 71 -
(iv) 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 jurisdiction: and
(v) agrees that a final judgment in such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any manner provided by law.
(b) The Credit Parties, the Agent and the Banks hereby irrevocably and
unconditionally waive trial by jury in any legal action or proceeding relating
to this Amended and Restated Credit Agreement or any other Basic Document to
which it is a party and for any counterclaim herein or therein.
11.12 Counterparts. This Amended and Restated Credit Agreement may be
executed by one or more of the parties to this Amended and Restated Credit
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
11.13 Obligations of Banks Several. No Bank shall be obligated to make
the Loans of any other Bank hereunder. The obligation of each Bank to make its
Loans hereunder shall be subject to the condition that each other Bank shall
have made the Loans to be made by it on such date.
IN WITNESS WHEREOF, the parties hereto have caused this 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.
CATHERINES, INC.
By:/s/Xxxxx X. Xxxxxx
------------------
Xxxxx X. Xxxxxx
Executive Vice President
CATHERINES STORES CORPORATION CATHERINES PARTNERS, L.P.
By: CATHERINES, INC.,
its general partner
By:/s/Xxxxx X. Xxxxxx By:/s/Xxxxx X. Xxxxxx
------------------ ------------------
Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx
Executive Vice President Executive Vice President
- 72 -
CATHERINES OF CALIFORNIA, INC. CATHERINES OF PENNSYLVANIA, INC.
By:/s/Xxxxx X. Xxxxxx By:/s/Xxxxx X. Xxxxxx
------------------ ------------------
Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx
Executive Vice President Executive Vice President
FIRST AMERICAN NATIONAL BANK
By:/s/Xxxxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxxxx X. Xxxxx
Xxxxx:Vice President
HIBERNIA NATIONAL BANK
By:/s/Xxxxxxxxxxx X. Xxxxx
-----------------------
Name:Xxxxxxxxxxx X. Xxxxx
Title:Assistant Vice President
BANK ONE, N.A.
By:/s/Xxxxx Xxxxxxxx
-----------------
Name:Xxxxx Xxxxxxxx
Title:Vice President
- 73 -
The following exhibits and schedules to the Amended and Restated Credit
Agreement have been omitted, and Catherines Stores Corporation will file
supplementally any such exhibits or schedules to the Commission upon request:
SCHEDULES
1.1 Store Locations
1.2 Swingline Loan Commitment Percentage
Working Capital Commitment
Working Capital Commitment Percentage
4.1(d) FANB Rate Lending Office
5.1(n) Exceptions to UCC Filings
5.1(o) List of Jurisdictions and Lien Searches 5.1(p) States Without
Good Standing Certificates 6.5 Material Litigation 6.7 Imperfect Record
Title or Leaseholds 6.13 UCC Filing List 6.15 Subsidiaries of Parent
and Company 9.1(b) Permitted Indebtedness 9.2(g) Permitted Liens 9.3
Contingent Obligations
EXHIBITS
A First Amended and Restated Assignment and Security Agreement-Intex
B First Amended and Restated Assignment and Security Agreement-PA Co
C First Amended and Restated Assignment and Security Agreement-RT Co
D First Amended and Restated Assignment and Security Agreement-The Company
E Borrowing Base Certificate
F Commitment Transfer Supplement
G First Amended & Restated Security Agreement (Company)
H HSB Purchase Agreement
I Second Amended and Restated Guaranty Agreement (Intex)
J First Amended and Restated Security Agreement (Intex)
K L/C Participation Certificate
L Merchant Services Agreements
M Second Amended and Restated Guaranty Agreement (PA Co.)
N First Amended & Restated Pledge Agreement (PA Co.)
O First Amended and Restated Security Agreement (PA Co.)
P Second Amended & Restated Guaranty Agreement (Parent)
Q First Amended and Restated Pledge Agreement (Parent)
R First Amended and Restated Security Agreement (Parent)
S Second Amended and Restated Guaranty Agreement (RT Co.)
T First Amended and Restated Pledge Agreement (RT Co.)
U First Amended and Restated Security Agreement (RT Co.)
V First Amended and Restated Swingline Note
W Second Amended and Restated Working Capital Note [2.2]
X Waring Xxx Opinion Letter [5.1(b)]
