Exhibit 10.1
LOAN AND SECURITY AGREEMENT
by and among
XXXXX MART, INC.
and
XXXXX MART BUYING CORP.
as Borrowers
WACHOVIA BANK, NATIONAL ASSOCIATION
and
FLEET RETAIL FINANCE, INC.
as Co-Arrangers
CONGRESS FINANCIAL CORPORATION (FLORIDA)
as Administrative and Collateral Agent
GENERAL ELECTRIC CAPITAL CORPORATION
As Documentation Agent
and
THE LENDERS FROM TIME TO TIME PARTY HERETO
as Lenders
Dated: July 18, 2003
225156-14
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS........................................................1
SECTION 2. CREDIT FACILITIES.................................................19
2.1 Loans.............................................................19
2.2 Letter of Credit Accommodations...................................20
2.3 Commitments.......................................................24
SECTION 3. INTEREST AND FEES.................................................24
3.1 Interest..........................................................24
3.2 Fees..............................................................25
3.3 Changes in Laws and Increased Costs of Loans......................26
SECTION 4. CONDITIONS PRECEDENT..............................................28
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations....................................................28
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations....................................................30
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST.........................31
SECTION 6. COLLECTION AND ADMINISTRATION.....................................36
6.1 Borrowers' Loan Accounts..........................................36
6.2 Statements........................................................36
6.3 Collection of Accounts............................................36
6.4 Payments..........................................................38
6.5 Authorization to Make Loans.......................................39
6.6 Use of Proceeds...................................................39
6.7 Appointment of Administrative Borrower as Agent for
Requesting Loans and Receipts of Loans and Statements.............40
6.8 Pro Rata Treatment................................................40
6.9 Sharing of Payments, Etc..........................................41
6.10 Settlement Procedures.............................................42
6.11 Obligations Several; Independent Nature of Lenders' Rights........44
SECTION 7. COLLATERAL REPORTING AND COVENANTS................................44
7.1 Collateral Reporting..............................................44
7.2 Accounts Covenants................................................46
7.3 Inventory Covenants...............................................47
7.4 [Reserved]........................................................48
7.5 Power of Attorney.................................................48
7.6 Right to Cure.....................................................49
7.7 Access to Premises................................................49
225156-14 (i)
SECTION 8. REPRESENTATIONS AND WARRANTIES....................................49
8.1 Corporate Existence, Power and Authority..........................49
8.2 Name; State of Organization; Chief Executive Office;
Collateral Locations..............................................50
8.3 Financial Statements; No Material Adverse Change..................50
8.4 Priority of Liens; Title to Properties............................51
8.5 Tax Returns.......................................................51
8.6 Litigation........................................................51
8.7 Compliance with Other Agreements and Applicable Laws..............51
8.8 Environmental Compliance..........................................52
8.9 Employee Benefits.................................................53
8.10 Bank Accounts.....................................................53
8.11 Intellectual Property.............................................53
8.12 Subsidiaries; Affiliates; Capitalization; Solvency................54
8.13 Labor Disputes....................................................55
8.14 Restrictions on Subsidiaries......................................55
8.15 Material Contracts................................................55
8.16 Credit Card Agreements............................................55
8.17 Payable Practices.................................................56
8.18 Accuracy and Completeness of Information..........................56
8.19 Survival of Warranties; Cumulative................................56
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS................................56
9.1 Maintenance of Existence. .......................................56
9.2 New Collateral Locations..........................................57
9.3 Compliance with Laws, Regulations, Etc............................57
9.4 Payment of Taxes and Claims.......................................58
9.5 Insurance.........................................................58
9.6 Financial Statements and Other Information........................59
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc...........60
9.8 Encumbrances......................................................62
9.9 Indebtedness......................................................64
9.10 Loans, Investments, Etc...........................................65
9.11 Dividends and Redemptions.........................................67
9.12 Transactions with Affiliates......................................67
9.13 Compliance with ERISA. ..........................................68
9.14 End of Fiscal Years; Fiscal Quarters..............................68
9.15 Change in Business................................................68
9.16 Limitation of Restrictions Affecting Subsidiaries.................68
9.17 Credit Card Agreements............................................69
9.18 License Agreements................................................69
9.19 [Reserved.].......................................................70
9.20 Costs and Expenses................................................70
9.21 Further Assurances................................................71
SECTION 10. EVENTS OF DEFAULT AND REMEDIES....................................71
10.1 Events of Default.................................................71
225156-14 (ii)
10.2 Remedies..........................................................74
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW ........................77
11.1 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver......................................................77
11.2 Waiver of Notices.................................................79
11.3 Amendments and Waivers. .........................................79
11.4 Waiver of Counterclaims...........................................81
11.5 Indemnification...................................................81
SECTION 12. THE AGENT.........................................................81
12.1 Appointment, Powers and Immunities................................81
12.2 Reliance by Agent.................................................82
12.3 Events of Default.................................................82
12.4 Congress in its Individual Capacity...............................83
12.5 Indemnification...................................................83
12.6 Non-Reliance on Agent and Other Lenders...........................83
12.7 Failure to Act....................................................84
12.8 Additional Loans..................................................84
12.9 Concerning the Collateral and the Related Financing Agreements....85
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders.............................................85
12.11 Collateral Matters................................................85
12.12 Agency for Perfection.............................................87
12.13 Successor Agent...................................................87
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS..................................88
13.1 Term..............................................................88
13.2 Interpretative Provisions.........................................89
13.3 Notices...........................................................91
13.4 Partial Invalidity................................................91
13.5 Confidentiality...................................................91
13.6 Successors........................................................93
13.7 Assignments; Participations.......................................93
13.8 Entire Agreement..................................................95
225156-14 (iii)
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Information Certificate
Exhibit C Form of Compliance Certificate
Schedule 1.43 Existing Lenders
Schedule 1.44 Existing Letters of Credit
Schedule 8.16 Credit Card Agreements
SCHEDULE I Commitments
225156-14 (i)
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated July 18, 2003 is entered into by
and among Xxxxx Mart, Inc., a Florida corporation ("Xxxxx Mart") and Xxxxx Mart
Buying Corp., a Florida corporation ("Buying Corp.", and together with Xxxxx
Mart, each individually a "Borrower" and collectively, "Borrowers"), the
financial institutions from time to time parties hereto as lenders, whether by
execution of this Agreement or an Assignment and Acceptance (each individually,
a "Lender" and collectively, "Lenders"), Wachovia Bank, National Association and
Fleet Retail Finance, Inc., each in its capacity as arranger (in such capacity,
"Arranger"), General Electric Capital Corporation, in its capacity as
Documentation Agent, and Congress Financial Corporation (Florida), a Florida
corporation, in its capacity as administrative and collateral agent for Lenders
(in such capacity, "Agent").
W I T N E S S E T H:
WHEREAS, Borrowers have requested that Agent and Lenders enter into
financing arrangements with Borrowers pursuant to which Lenders may make loans
and provide other financial accommodations to Borrowers; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrowers on a pro
rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, as to each Borrower, all present and
future rights of such Borrower to payment of a monetary obligation, whether or
not earned by performance, which is not evidenced by chattel paper or an
instrument, (a) for Inventory that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of, (b) for services rendered or to be rendered,
(c) for a secondary obligation incurred or to be incurred in connection with
Inventory that has been or is to be sold, leased, licensed, assigned or
otherwise disposed of, or (d) arising out of the use of a credit or charge card
or information contained on or for use with the card.
225156-14
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded, if
necessary, to the nearest one-one hundredth (1/100) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.
1.3 "Administrative Borrower" shall mean Xxxxx Mart, Inc., a Florida
corporation in its capacity as Administrative Borrower on behalf of itself and
the other Borrowers pursuant to Section 6.7 hereof and it successors and assigns
in such capacity.
1.4 "Affiliate" shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds ten (10%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds ten (10%) percent or more of any
class of Voting Stock or in which such Person beneficially owns or holds ten
(10%) percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
1.5 "Agent" shall mean Congress Financial Corporation (Florida), in
its capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
1.6 "Agent Payment Account" shall mean account no. 5000 0000 30334 of
Agent at Wachovia Bank, National Association, or such other account of Agent as
Agent may from time to time designate to Administrative Borrower as the Agent
Payment Account for purposes of this Agreement and the other Financing
Agreements.
1.7 "Applicable Margin" shall mean, at any time, as to the Interest
Rate for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
lower applicable percentage (on a per annum basis) set forth below opposite the
Quarterly Average Excess Availability for the immediately preceding fiscal
quarter:
225156-14 2
Applicable Applicable
Quarterly Average Prime Rate Eurodollar
Excess Availability Margin Rate Margin
--------------------- -------- -------------
(a) $60,000,000 or greater 0% 1 1/2%
(b) Greater than or equal to 1/8% 1 3/4%
$30,000,000 and less
than $60,000,000
(c) Greater than or equal to 1/8% 2%
$15,000,000 and less than
$30,000,000
(d) Less than $15,000,000 1/4% 2 1/4%
provided, that, (i) the Applicable Margin shall be calculated and established
once each fiscal quarter (commencing with the fiscal quarter ending on or about
January 31, 2004) and shall remain in effect until such date thereafter as it
may be adjusted in accordance with Sections 1.54(b) or 1.54(c) hereof, (ii)
solely for the purposes of the calculation of Quarterly Average Excess
Availability, the amount determined pursuant to clause (a) of the definition of
Excess Availability shall be based solely upon the Borrowing Base of Borrowers,
without regard to the Maximum Credit, and (iii) the Quarterly Average Excess
Availability shall be calculated based upon the average of the amounts of Excess
Availability as of the last Business Day of each of the three (3) fiscal months
during Borrowers' immediately preceding fiscal quarter.
1.8 "Assignment and Acceptance" shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.7
hereof.
1.9 "Blocked Accounts" shall have the meaning set forth in
Section 6.3 hereof.
1.10 "Borrowing Base" shall mean, at any time, the amount equal to:
(a) the lesser of: (i) seventy (70%) percent multiplied by the Value of the
Eligible Inventory of Borrowers or (ii) the aggregate amount of ninety (90%)
percent of the Net Recovery Percentage as to each category of Eligible Inventory
multiplied by the Value of such category of Eligible Inventory or (iii) the
Maximum Credit minus (b) Reserves.
1.11 "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of Florida, or the State of North Carolina, and a day on
which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall
225156-14 3
also exclude any day on which banks are closed for dealings in dollar deposits
in the London interbank market or other applicable Eurodollar Rate market.
1.12 "Capital Leases" shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP is
required to be reflected as a liability on the balance sheet of such Person.
1.13 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock or partnership, limited liability company or
other equity interests at any time outstanding, and any and all rights, warrants
or options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.14 "Cash Dominion" shall have the meaning set forth in Section
6.3(a)(ii).
1.15 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of any Borrower) organized under the laws of any State of the United
States of America or the District of Columbia and rated at least A-1 by Standard
& Poor's Ratings Service, a division of The XxXxxx-Xxxx Companies, Inc. or at
least P-1 by Xxxxx'x Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial institution having
combined capital and surplus and undivided profits of not less than
$250,000,000; (e) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States of America or issued by any governmental agency thereof and
backed by the full faith and credit of the United States of America, in each
case maturing within ninety (90) days or less from the date of acquisition;
provided, that, the terms of such agreements comply with the guidelines set
forth in the Federal Financial Agreements of Depository Institutions with
Securities Dealers and Others, as adopted by the Comptroller of the Currency on
October 31, 1985; and (f) investments in money market funds and mutual funds
which invest substantially all of their assets in securities of the types
described in clauses (a) through (e) above.
1.16 "Change of Control" shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of any Borrower to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), other than as permitted in Section 9.7 hereof;
(b) the liquidation or dissolution of any Borrower or the adoption of a plan by
the stockholders of any
225156-14 4
Borrower relating to the dissolution or liquidation of such Borrower, other than
as permitted in Section 9.7 hereof; (c) the acquisition by any Person or group
(as such term is used in Section 13(d)(3) of the Exchange Act), except for one
or more Permitted Holders, of beneficial ownership, directly or indirectly, of a
majority of the voting power of the total outstanding Voting Stock of any
Borrower or the Board of Directors of any Borrower; (d) during any period of two
(2) consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of any Borrower (together with any new
directors whose nomination for election by the stockholders of such Borrower was
approved by a vote of at least sixty-six and two-thirds (66 2/3%) percent of the
directors still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors of any
Borrower then still in office; (e) the failure of Xxx Xxxxx to own directly or
indirectly at least twenty-five (25%) percent of the voting power of the total
outstanding Voting Stock of Administrative Borrower; or (f) the failure of
Administrative Borrower to own directly or indirectly one hundred (100%) percent
of the voting power of the total outstanding Voting Stock of any other Borrower.
1.17 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.18 "Collateral" shall have the meaning set forth in Section 5
hereof.
1.19 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance reasonably satisfactory to Agent, from any lessor of
premises to any Borrower, or any other person to whom any Collateral is
consigned or who has custody, control or possession of any such Collateral or is
otherwise the owner or operator of any premises on which any of such Collateral
is located, pursuant to which such lessor, consignee or other person, inter
alia, acknowledges the first priority security interest of Agent in such
Collateral, agrees to waive any and all claims such lessor, consignee or other
person may, at any time, have against such Collateral, whether for processing,
storage or otherwise, and agrees to permit Agent access to, and the right to
remain on, the premises of such lessor, consignee or other person so as to
exercise Agent's rights and remedies and otherwise deal with such Collateral and
in the case of any consignee or other person who at any time has custody,
control or possession of any Collateral, acknowledges that it holds and will
hold possession of the Collateral for the benefit of Agent and Lenders and
agrees to follow all instructions of Agent with respect thereto.
1.20 "Commitment" shall mean, at any time, as to each Lender, the
principal amount designated as the Commitment for such Lender on Schedule I
hereto or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to
which such Lender became a Lender hereunder in accordance with the provisions of
Section 13.7 hereof, as the same may be adjusted from time to time in accordance
with the terms hereof; sometimes being collectively referred to herein as
"Commitments".
1.21 "Congress" shall mean Congress Financial Corporation (Florida), a
Florida corporation, in its individual capacity, and its successors and assigns.
225156-14 5
1.22 "Credit Card Acknowledgments" shall mean, collectively, the
agreements by Credit Card Issuers or Credit Card Processors who are parties to
Credit Card Agreements in favor of Agent acknowledging Agent's first priority
security interest, for and on behalf of Lenders, in the monies due and to become
due to a Borrower (including, without limitation, credits and reserves) under
the Credit Card Agreements, and agreeing to transfer all such amounts to the
Blocked Accounts, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, sometimes being referred
to herein individually as a "Credit Card Acknowledgment".
1.23 "Credit Card Agreements" shall mean all agreements now or
hereafter entered into by any Borrower with any Credit Card Issuer or any Credit
Card Processor, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, including, but not
limited to, the agreements set forth on Schedule 8.16 hereto.
1.24 "Credit Card Issuer" shall mean any person (other than a
Borrower) who issues or whose members issue credit cards, including, without
limitation, MasterCard or VISA bank credit or debit cards or other bank credit
or debit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc.
or Visa International and American Express, Discover, Diners Club, Xxxxx Xxxxxxx
and other non-bank credit or debit cards, including, without limitation, credit
or debit cards issued by or through American Express Travel Related Services
Company, Inc. and Novus Services, Inc..
1.25 "Credit Card Processor" shall mean any servicing or processing
agent or any factor or financial intermediary who facilitates, services,
processes or manages the credit authorization, billing transfer and/or payment
procedures with respect to any Borrower's sales transactions involving credit
card or debit card purchases by customers using credit cards or debit cards
issued by any Credit Card Issuer.
1.26 "Credit Card Receivables" shall mean, collectively, (a) all
present and future rights of any Borrower to payment from any Credit Card
Issuer, Credit Card Processor or other third party arising from sales of goods
or rendition of services to customers who have purchased such goods or services
using a credit or debit card and (b) all present and future rights of any
Borrower to payment from any Credit Card Issuer, Credit Card Processor or other
third party in connection with the sale or transfer of Accounts arising pursuant
to the sale of goods or rendition of services to customers who have purchased
such goods or services using a credit card or a debit card, including, but not
limited to, all amounts at any time due or to become due from any Credit Card
Issuer or Credit Card Processor under the Credit Card Agreements or otherwise.
1.27 "Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of any Borrower pursuant to
Sections 2.1 and 2.2 hereof.
1.28 "Default" shall mean an act, condition or event which with notice
or passage of time or both would constitute an Event of Default.
225156-14 6
1.29 "Defaulting Lender" shall have the meaning set forth in Section
6.10 hereof.
1.30 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, the
Borrower with a deposit account at any bank and the bank at which such deposit
account is at any time maintained which provides that such bank will comply with
instructions originated by Agent directing disposition of the funds in the
deposit account without further consent by such Borrower and such other terms
and conditions as Agent may require, including as to any such agreement with
respect to any Blocked Account, providing that all items received or deposited
in the Blocked Accounts are the property of Agent, that the bank has no lien
upon, or right to setoff against, the Blocked Accounts, the items received for
deposit therein, or the funds from time to time on deposit therein and that the
bank will wire, or otherwise transfer, in immediately available funds, on a
daily basis to the Agent Payment Account all funds received or deposited into
the Blocked Accounts.
1.31 "Eligible Inventory" shall mean, as to each Borrower, Inventory
consisting of finished goods held for resale in the ordinary course of the
business of such Borrower which are acceptable to Agent, in its good faith
judgment, reasonably exercised, based on the criteria set forth below. In
general, Eligible Inventory shall not include (a) work-in-process; (b) raw
materials; (c) spare parts for equipment; (d) packaging and shipping materials;
(e) supplies used or consumed in such Borrower's business; (f) Inventory at
premises other than those owned or leased and controlled by any Borrower;
provided, that, (i) as to retail store locations which are leased by a Borrower,
Agent may, at its option, establish such Reserves in respect of amounts at any
time due or to become due to the owner and lessor thereof as Agent shall
determine in its good faith judgment, reasonably exercised, (ii) as to all
locations leased by any Borrower, other than retail store locations, if Agent
shall not have received a Collateral Access Agreement from the owner and lessor
with respect to such location, duly authorized, executed and delivered by such
owner and lessor (or Agent shall determine to accept a Collateral Access
Agreement that does not include all required provisions or provisions in the
form otherwise required by Agent), Agent may, at its option, upon notice to
Administrative Borrower, establish such Reserves in respect of amounts at any
time due or to become due to the owner and lessor thereof as Agent shall
determine in its good faith judgment, reasonably exercised, and (iii) as to
locations owned and operated by a Person other than a Borrower, if Agent shall
not have received a Collateral Access Agreement from the owner and operator with
respect to such location, duly authorized, executed and delivered by such owner
and operator (or Agent shall determine to accept a Collateral Access Agreement
that does not include all required provisions or provisions in the form
otherwise required by Agent), Agent may, at its option, establish such Reserves
in respect of amounts at any time due or to become due to the owner and operator
thereof as Agent shall determine in its good faith judgment, reasonably
exercised, provided that, in addition, if required by Agent, in order for such
Inventory at locations owned and operated by a third person to be Eligible
Inventory, Agent shall have received: (A) UCC financing statements between the
owner and operator, as consignee or bailee and such Borrower, as consignor or
xxxxxx, in form and substance satisfactory to Agent, which are duly assigned to
Agent and (B) a written notice to any lender to the owner and operator of the
first priority security interest in such Inventory of Agent; (g) Inventory
subject to a security interest or lien in favor of any person other than Agent
except those permitted in this
225156-14 7
Agreement; (h) xxxx and hold goods; (i) obsolete or slow moving Inventory; (j)
Inventory which is not subject to the first priority, valid and perfected
security interest of Agent; (k) damaged and/or defective Inventory; (l) returned
inventory which is not held for sale in the ordinary course of business; (m)
Inventory purchased or sold on consignment; and (n) Inventory located outside
the United States of America. General criteria for Eligible Inventory may only
be changed and any new criteria for Eligible Inventory may only be established
by Agent in good faith, upon notice to Administrative Borrower, based on either:
(i) an event, condition or other circumstance arising after the date hereof, or
(ii) an event, condition or other circumstance existing on the date hereof to
the extent Agent has no written notice thereof from a Borrower prior to the date
hereof, in either case under clause (i) or (ii) which adversely affects or could
reasonably be expected to adversely affect the Inventory in Agent's good faith
judgment, reasonably exercised. Any Inventory which is not Eligible Inventory
shall nevertheless be part of the Collateral.
1.32 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) any other commercial
bank, financial institution or "accredited investor" (as defined in Regulation D
under the Securities Act of 1933) approved by Agent, provided, that, (i) neither
any Borrower nor any Affiliate of any Borrower shall qualify as an Eligible
Transferee and (ii) no Person to whom any Indebtedness which is in any way
subordinated in right of payment to any other Indebtedness of any Borrower shall
qualify as an Eligible Transferee, except as Agent may otherwise specifically
agree.
1.33 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste
225156-14 8
Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
and the Federal Safe Drinking Water Act of 1974, (ii) applicable state
counterparts to such laws and (iii) any common law or equitable doctrine that
may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Hazardous
Materials.
1.34 "Equipment" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter acquired equipment, wherever located,
including machinery, data processing and computer equipment (whether owned or
licensed and including embedded software), vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located.
1.35 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or
related thereto.
1.36 "ERISA Affiliate" shall mean any person required to be aggregated
with any Borrower or any of its or their respective Subsidiaries under Sections
414(b), 414(c), 414(m) or 414(o) of the Code.
1.37 "ERISA Event" shall mean (a) any "reportable event", as defined
in Section 4043(c) of ERISA or the regulations issued thereunder, with respect
to a Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which any Borrower or any of its or their
respective Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which any Borrower or any of its or
their respective Subsidiaries could otherwise be liable; (f) a complete or
partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer
Plan or a cessation of operations which is treated as such a withdrawal or
notification that a Multiemployer Plan is in reorganization; (g) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA
Affiliate in excess of $1,000,000 and (j) any other event or condition with
respect to a Plan including any Plan subject to Title IV of ERISA maintained, or
contributed to, by any ERISA Affiliate that could reasonably be expected to
result in liability of any Borrower in excess of $1,000,000.
225156-14 9
1.38 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded, if necessary, to the
nearest one-hundredth (1/100) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by a Borrower or Administrative Borrower
on behalf of such Borrower and approved by Agent) on or about 9:00 a.m. (New
York time) two (2) Business Days prior to the commencement of such Interest
Period in amounts substantially equal to the principal amount of the Eurodollar
Rate Loans requested by and available to Borrowers in accordance with this
Agreement, with a maturity of comparable duration to the Interest Period
selected by or on behalf of a Borrower.
1.39 "Eurodollar Rate Loans" shall mean any Loans or portion thereof
on which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.40 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.41 "Excess Availability" shall mean, the amount, as determined in
good faith by Agent, calculated at any date, equal to: (a) the lesser of: (i)
the Borrowing Base of Borrowers and (ii) the Maximum Credit of Borrowers (in
each case under (i) or (ii) after giving effect to any Reserves other than any
Reserves in respect of Letter of Credit Accommodations), minus (b) the sum of:
(i) the amount of all then outstanding and unpaid Obligations of Borrowers (but
not including for this purpose Obligations of Borrowers arising pursuant to any
guarantees in favor of Agent and Lenders of the Obligations of the other
Borrowers or any outstanding Letter of Credit Accommodations), plus (ii) the
amount of all Reserves then established in respect of Letter of Credit
Accommodations, plus (iii) the aggregate amount of all then outstanding and
unpaid trade payables and other obligations of Borrowers which are outstanding
more than sixty (60) days past due as of such time (other than trade payables or
other obligations being contested or disputed by Borrowers in good faith), plus
(iv) without duplication, the amount of checks issued by Borrowers to pay trade
payables and other obligations which are more than sixty (60) days past due as
of such time (other than trade payables or other obligations being contested or
disputed by Borrowers in good faith), but not yet sent.
1.42 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.43 "Existing Lenders" shall mean the lenders to Borrowers listed on
Schedule 1.43 hereto (and including SunTrust Bank, in its capacity as agent
acting for such lenders) and their respective predecessors, successors and
assigns.
1.44 "Existing Letters of Credit" shall mean, collectively, the
letters of credit issued for the account of a Borrower or for which such
Borrower is otherwise liable listed on Schedule 1.44 hereto, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
225156-14 10
1.45 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and among Borrowers and Agent, setting forth certain fees payable
by Borrowers to Agent for the benefit of itself and Lenders, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.46 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements, deposit account control
agreements, investment property control agreements, intercreditor agreements and
all other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by any Borrower or Obligor in connection with this
Agreement.
1.47 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except to
the extent of changes in the application thereof to comply with changes in GAAP.
1.48 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.49 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.50 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor or service provider (whether
or not an Affiliate) created, incurred, assumed or guaranteed by such Person in
the ordinary course of business of such Person in connection with obtaining
goods, materials or services that is not overdue by more than ninety (90) days,
unless the trade payable is being contested in good faith); (c) all obligations
as lessee under leases which have been, or should be, in accordance with GAAP,
recorded as Capital Leases; (d) any contractual obligation, contingent or
otherwise, of such Person to pay or be liable for the payment of any
indebtedness described in this definition of another
225156-14 11
Person, including, without limitation, any such indebtedness, directly or
indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances, drafts or similar documents or instruments issued for such
Person's account; (g) all indebtedness of such Person in respect of indebtedness
of another Person for borrowed money or indebtedness of another Person otherwise
described in this definition which is secured by any consensual lien, security
interest, collateral assignment, conditional sale, mortgage, deed of trust, or
other encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such person against fluctuations in interest rates or currency or commodity
values; and (i) all obligations owed by such Person under License Agreements
with respect to non-refundable, advance or minimum guarantee royalty payments.
1.51 "Information Certificate" shall mean, collectively, the
Information Certificates of Borrowers constituting Exhibit B hereto containing
material information with respect to Borrowers, their respective businesses and
assets provided by or on behalf of Borrowers to Agent in connection with the
preparation of this Agreement and the other Financing Agreements and the
financing arrangements provided for herein.
1.52 "Intellectual Property" shall mean, as to each Borrower, such
Borrower's now owned and hereafter arising or acquired: patents, patent rights,
patent applications, copyrights, works which are the subject matter of
copyrights, copyright registrations, trademarks, trade names, trade styles,
trademark and service xxxx applications, and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to xxx for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, domain names and domain name registration;
software and contract rights relating to computer software programs, in whatever
form created or maintained.
1.53 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as any
Borrower (or Administrative Borrower on behalf of such Borrower) may elect, the
exact duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, such Borrower (or
Administrative Borrower on behalf of such Borrower) may not elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.
225156-14 12
1.54 "Interest Rate" shall mean:
(a) Commencing as of the date of this Agreement and subject to
clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans, a rate equal to one-eighth
(1/8%) percent per annum in excess of the Prime Rate,
(ii) as to Eurodollar Rate Loans, a rate equal to one and
three-quarters (1 3/4 %) percent per annum in excess of the Adjusted Eurodollar
Rate (in each case, based on the Eurodollar Rate applicable for the Interest
Period selected by a Borrower, or by Administrative Borrower on behalf of such
Borrower, as in effect two (2) Business Days prior to the commencement of such
Interest Period, whether such rate is higher or lower than any rate previously
quoted to any Borrower);
(b) Subject to clause (c) of this definition below, effective as
of the first (1st) day of the second month of each fiscal quarter (commencing
with the fiscal quarter ending on or about January 31, 2004, the Interest Rate
payable by Borrower shall be increased or decreased, as the case may be, (i) as
to Prime Rate Loans, to the rate equal to the Applicable Margin on a per annum
basis in excess of the Prime Rate, and (ii) as to Eurodollar Rate Loans, to the
rate equal to the Applicable Margin on a per annum basis in excess of the
Adjusted Eurodollar Rate;
(c) Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this definition, the Applicable Margin otherwise used to
calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall
be the highest percentage set forth in the definition of the term Applicable
Margin for each category of Loans (without regard to the amount of Quarterly
Average Excess Availability) plus two (2%) percent per annum, at Lender's
option, (i) for the period (A) from and after the effective date of termination
or non-renewal hereof until Lender has received full and final payment of all
outstanding and unpaid Obligations which are not contingent and cash collateral
or letter of credit, as Lender may specify, in the amounts and on the terms
required under Section 12.1 hereof for contingent Obligations (notwithstanding
entry of a judgment against Borrower or any Obligor) and (B) from and after the
date of the occurrence of an Event of Default and for so long as such Event of
Default is continuing, and (ii) on Revolving Loans to Borrower at any time
outstanding in excess of the Borrowing Base or the Maximum Credit (whether or
not such excess(es) arise or are made with or without the knowledge or consent
of Lender and whether made before or after an Event of Default).
1.55 "Inventory" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter existing or acquired goods, wherever located,
which (a) are leased by such Borrower as lessor; (b) are held by such Borrower
for sale or lease or to be furnished under a contract of service; (c) are
furnished by such Borrower under a contract of service; or (d) consist of raw
materials, work in process, finished goods or materials used or consumed in its
business.
1.56 "Inventory Paper" shall have the meaning set forth in Section
5.2(b).
225156-14 13
1.57 "Investment Property Control Agreement" shall mean an agreement
in writing, in form and substance satisfactory to Agent, by and among Agent, any
Borrower (as the case may be) and any securities intermediary, commodity
intermediary or other person who has custody, control or possession of any
investment property of such Borrower acknowledging that such securities
intermediary, commodity intermediary or other person has custody, control or
possession of such investment property on behalf of Agent, that it will comply
with entitlement orders originated by Agent with respect to such investment
property, or other instructions of Agent, or (as the case may be) apply any
value distributed on account of any commodity contract as directed by Agent, in
each case, without the further consent of such Borrower and including such other
terms and conditions as Agent may require.
1.58 "Lenders" shall mean the financial institutions who are
signatories hereto as Lenders and other persons made a party to this Agreement
as a Lender in accordance with Section 13.7 hereof, and their respective
successors and assigns; each sometimes being referred to herein individually as
a "Lender".
1.59 "Letter of Credit Accommodations" shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Agent or any Lender for the account of
any Borrower or Obligor or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer the performance by
any Borrower or Obligor of its obligations to such issuer; sometimes being
referred to herein individually as "Letter of Credit Accommodation".
1.60 "License Agreements" shall have the meaning set forth in Section
8.11 hereof.
1.61 "Loans" shall mean, collectively, the Revolving Loans.
1.62 "Material Adverse Effect" shall mean a material adverse effect on
(a) the financial condition, business, performance or operations of Borrowers or
the legality, validity or enforceability of this Agreement or any of the other
Financing Agreements; (b) the legality, validity, enforceability, perfection or
priority of the security interests and liens of Agent upon the Collateral; (c)
the Collateral or its value, provided, that, in the case of the value of the
Collateral, a Material Adverse Effect shall be deemed to have occurred only if
such value has decreased by five (5%) percent or greater, (d) the ability of any
Borrower to repay the Obligations or of any Borrower to perform its obligations
under this Agreement or any of the other Financing Agreements as and when to be
performed; or (e) the ability of Agent or any Lender to enforce the Obligations
or realize upon the Collateral or otherwise with respect to the rights and
remedies of Agent and Lenders under this Agreement or any of the other Financing
Agreements.
1.63 "Material Contract" shall mean (a) any contract or other
agreement(other than the Financing Agreements), written or oral, of any Borrower
involving monetary liability of or to any Person in an amount in excess of
$5,000,000 in any fiscal year and (b) any other contract or other agreement
(other than the Financing Agreements), whether written or oral, to which any
Borrower is a party as to
225156-14 14
which the breach, nonperformance, cancellation or failure to renew by any party
thereto would have a Material Adverse Effect.
1.64 "Maximum Credit" shall mean the amount of $150,000,000 or such
other amount as may be established as the Maximum Credit subsequent to the date
hereof, pursuant to Section 2.1(e) of this Agreement.
1.65 "Multiemployer Plan" shall mean a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by any
Borrower or any ERISA Affiliate.
1.66 "Net Recovery Percentage" shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the recovery on
the aggregate amount of the Inventory at such time on a "going out of business
sale" basis as set forth in the most recent appraisal of Inventory received by
Agent in accordance with Section 7.3, net of operating expenses, liquidation
expenses and commissions, and (b) the denominator of which is the applicable
original cost of the aggregate amount of the Inventory subject to appraisal.
1.67 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any or all of Borrowers to Agent or any
Lender and/or any of their Affiliates, arising under this Agreement or any of
the other Financing Agreements, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any case with respect to such Borrower
under the United States Bankruptcy Code or any similar statute (including the
payment of interest and other amounts which would accrue and become due but for
the commencement of such case, whether or not such amounts are allowed or
allowable in whole or in part in such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, or secured or unsecured.
1.68 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrowers.
1.69 "Participant" shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.7 of this Agreement governing participations.
1.70 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation,
225156-14 15
trust, joint venture or other entity or any government or any agency or
instrumentality or political subdivision thereof.
1.71 "Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which any Borrower sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case of a Multiemployer
Plan has made contributions at any time during the immediately preceding six (6)
plan years.
1.72 "Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank.
1.73 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.74 "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations.
1.75 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any
Person in respect of any period in accordance with GAAP.
1.76 "Real Property" shall mean all now owned and hereafter acquired
real property of each Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located.
1.77 "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of each Borrower: (a) all Accounts; (b)
all interest, fees, late charges, penalties, collection fees and other amounts
due or to become due or otherwise payable in connection with any Account; and
(c) all of the following that, in each case, arise from the sale, license, lease
or other disposition of Inventory or the rendition of services or otherwise
directly related to any of the Accounts, Inventory or other Collateral: (i)
payment intangibles, (ii) letters of credit, indemnities, guarantees, security
or other deposits and proceeds thereof issued payable to any Borrower or
otherwise in favor of or delivered to any Borrower in connection with any
Account, and (iii) all other accounts, contract rights, chattel paper,
instruments, notes, general intangibles and other forms of obligations owing to
any Borrower, whether from the sale and lease of goods or other property,
licensing of any property (including Intellectual Property or other general
intangibles), rendition of services or from loans or advances by any Borrower
225156-14 16
or to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Borrower) or otherwise associated with any
Accounts, Inventory or general intangibles of any Borrower (including, without
limitation, choses in action, causes of action, tax refunds, tax refund claims,
any funds which may become payable to any Borrower in connection with the
termination of any Plan or other employee benefit plan and any other amounts
payable to any Borrower from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of
insurance and any proceeds thereof and proceeds of insurance covering the lives
of employees on which any Borrower is a beneficiary).
1.78 "Records" shall mean, as to each Borrower, all of such Borrower's
present and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of any
Borrower with respect to the foregoing maintained with or by any other person).
1.79 "Reference Bank" shall mean Wachovia Bank, National Association,
or such other bank as Agent may from time to time designate.
1.80 "Renewal Date" shall the meaning set forth in Section 13.1
hereof.
1.81 "Register" shall have the meaning set forth in Section 13.7
hereof.
1.82 "Required Lenders" shall mean, at any time, those Lenders whose
Pro Rata Shares aggregate fifty-one (51%) percent or more of the aggregate of
the Commitments of all Lenders, or if the Commitments shall have been
terminated, Lenders to whom at least fifty-one (51%) percent of the then
outstanding Obligations are owing.
1.83 "Reserves" shall mean as of any date of determination, such
amounts as Agent may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to any Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks
which, as determined by Agent in its good faith judgment, reasonably exercised,
adversely affect, or would have a reasonable likelihood of adversely affecting,
either (i) any of the Collateral of the types or categories included in the
Borrowing Base or related thereto or its value or (ii) the assets or business of
any Borrower or Obligor or (iii) the security interests and other rights of
Agent or any Lender in the Collateral (including the enforceability, perfection
and priority thereof) or (b) to reflect Agent's reasonable and good faith belief
that any collateral report or financial information furnished by or on behalf of
any Borrower or Obligor to Agent is or may have been incomplete, inaccurate or
misleading in any material respect or (c) to reflect outstanding Letter of
Credit Accommodations as provided in
225156-14 17
Section 2.2 hereof or (d) in respect of any state of facts which Agent
determines in good faith constitutes a Default or an Event of Default. Without
limiting the generality of the foregoing, Reserves may be established to reflect
any of the following that are at any time applicable: (i) inventory shrinkage,
(ii) reserves in respect of markdowns and cost variances (pursuant to
discrepancies between the purchase order price of Inventory and the actual cost
thereof), (iii) the aggregate amount of deposits, if any, received by any
Borrower from its retail customers in respect of unfilled orders for
merchandise, (iv) amounts due or to become due in respect of sales, use and/or
withholding taxes, (v) any rental payments, service charges or other amounts due
or to become due to lessors of real or personal property to the extent Inventory
or Records are located in or on such property or such Records are needed to
monitor or otherwise deal with the Collateral, (vi) amounts owing by Borrowers
to Credit Card Issuers or Credit Card Processors in connection with the Credit
Card Agreements, (vii) the aggregate amount of outstanding merchandise gift
cards that, on any date of determination, were issued at any time during the
ninety (90) days immediately preceding such date and fifty (50%) percent of the
aggregate amount of outstanding merchandise gift cards that were issued at any
time prior to the ninetieth (90th) day immediately preceding such date, (viii)
the purchase price of layaway goods, (ixA an increase in the number of days of
the turnover of Inventory or a change in the mix of the Inventory that results
in an overall decrease in the value thereof or a deterioration in its nature or
quality (but only to the extent not addressed by the lending formulas in a
manner satisfactory to Agent), and (x) variances between the perpetual inventory
records of Borrowers and the results of the test counts of Inventory conducted
by Agent with respect thereto in excess of the percentage acceptable to Agent.
The amount of any Reserve established by Agent shall have a reasonable
relationship to the event, condition or other matter which is the basis for such
Reserve as determined by Agent in good faith.
1.84 "Revolving Loans" shall mean the loans now or hereafter made by
or on behalf of any Lender or by Agent for the account of any Lender on a
revolving basis pursuant to the Credit Facility (involving advances, repayments
and readvances) as set forth in Section 2.1 hereof.
1.85 "Solvent" shall mean, at any time with respect to any Person,
that at such time such Person (a) is able to pay its debts as they mature and
has (and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date hereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
1.86 "Special Agent Advances" shall have the meaning set forth in
Section 12.11 hereof.
1.87 "Store Accounts" shall have the meaning set forth in Section 6.3
hereof.
225156-14 18
1.88 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.89 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of Florida, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of Florida on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.90 "Value" shall mean, as reasonably determined by Agent in good
faith, with respect to Inventory, the lower of (a) cost computed using the
retail method of accounting in accordance with GAAP or (b) market value,
provided, that, for purposes of the calculation of the Borrowing Base, (i) the
Value of the Inventory shall not include: (A) the portion of the Value of
Inventory equal to the profit earned by any Affiliate on the sale thereof to any
Borrower or (B) write-ups or write-downs in value with respect to currency
exchange rates and (ii) notwithstanding anything to the contrary contained
herein, the cost of the Inventory shall be computed in the same manner and
consistent with the most recent appraisal of the Inventory received by Agent
prior to the date hereof, if any.
1.91 "Voting Stock" shall mean with respect to any Person, (a) one (1)
or more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions contained
herein, each Lender severally (and not jointly) agrees to make its Pro Rata
Share of Revolving Loans to Borrowers from time to time in amounts requested by
Borrowers (or Administrative Borrower on behalf of Borrowers) up to the amount
outstanding at any time equal to the lesser of: (i) the Borrowing Base at such
time or (ii) Maximum Credit.
225156-14 19
(b) Agent may, in its discretion, from time to time, upon not
less than five (5) days prior notice to Administrative Borrower, reduce the
lending formula(s) with respect to Eligible Inventory to the extent that Agent
reasonably determines in good faith that: (i) the number of days of the turnover
of the Inventory for any period has adversely changed or (ii) the liquidation
value of the Eligible Inventory, or any category thereof, has decreased,
including any decrease attributable to a change in the nature, quality or mix of
the Inventory. The amount of any decrease in the lending formulas shall have a
reasonable relationship to the event, condition or circumstance which is the
basis for such decrease as determined by Agent in good faith. In determining
whether to reduce the lending formula(s), Agent may consider events, conditions,
contingencies or risks (collectively, "Risks") which are also considered in
determining Eligible Accounts, Eligible Inventory or in establishing Reserves,
provided however, that Agent will not concurrently reduce the lending formula(s)
and establish and maintain a Reserve with respect to the same Risks.
(c) Except in Agent's discretion, with the prior written consent
of all Lenders, or as otherwise provided herein, the aggregate amount of the
Loans and the Letter of Credit Accommodations outstanding at any time shall not
exceed the Maximum Credit.
(d) In the event that the aggregate principal amount of the
Revolving Loans and Letter of Credit Accommodations outstanding to Borrowers
exceeds the Borrowing Base or the Maximum Credit, or the aggregate amount of the
outstanding Letter of Credit Accommodations exceeds the sublimit for Letter of
Credit Accommodations set forth in Section 2.2(e), such event shall not limit,
waive or otherwise affect any rights of Agent or Lenders in such circumstances
or on any future occasions and Borrowers shall, upon demand by Agent, which may
be made at any time or from time to time, repay to Agent the entire amount of
any such excess(es) for which payment is demanded (i) within one (1) Business
Day after such demand if, at the time of such demand, Agent is not then
exercising its Cash Dominion rights in accordance with Section 6.3(a)(ii) and
(ii) immediately upon demand if, at the time of such demand, Agent is then
exercising its Cash Dominion rights in accordance with Section 6.3(a)(ii).
(e) Notwithstanding anything to the contrary contained herein, so
long as no Event of Default exists and is continuing, at any time after January
31, 2004, Borrowers may request, in writing, that (i) the Maximum Credit be
reduced to $125,000,000 ("Revolving Reduction Notice") or (ii) the Maximum
Credit be increased to $175,000,000 ("Revolving Increase Notice"). During the
term of this Agreement, Borrowers shall be permitted to send only one Revolving
Reduction Notice and only one Revolving Increase Notice. Any reduction of the
Maximum Credit shall be without penalty or premium and shall be effective thirty
(30) days after receipt by Agent of the Revolving Reduction Notice, and any
increase in the Maximum Credit shall be effective thirty (30) days after receipt
by Agent of the Revolving Increase Notice and in connection with such increase,
Borrowers shall pay to Agent, for the ratable benefit of Lenders, a fee in the
amount of one-quarter (1/4%) percent of $25,000,000 (i.e., $62,500) (which fee
shall be payable both in the case of (as applicable) (x) an increase in the
Maximum Credit from $150,000,000 to $175,000,000 and (y) an increase in the
Maximum Credit from $125,000,000 to $175,000,000), which fee shall be fully
earned on the date which is thirty days from receipt of the Revolving Increase
Notice and may be charged to any of Borrowers' accounts. Notwithstanding the
225156-14 20
foregoing, if the Borrowers terminate this Agreement in accordance with Section
13.1 within ninety (90) days from the receipt of a Revolving Reduction Notice,
then for the purposes of Section 13.1(c) hereof, the early termination fee shall
be based upon the Maximum Credit in effect ninety (90) days prior to the date
that this Agreement is terminated by Borrowers under Section 13.1.
2.2 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions contained
herein, at the request of a Borrower (or Administrative Borrower on behalf of
such Borrower), Agent agrees, for the ratable risk of each Lender according to
its Pro Rata Share, to provide or arrange for Letter of Credit Accommodations
for the account of Borrowers containing terms and conditions acceptable to Agent
and the issuer thereof. Any payments made by or on behalf of Agent or any Lender
to any issuer thereof and/or related parties in connection with the Letter of
Credit Accommodations provided to or for the benefit of a Borrower shall
constitute additional Revolving Loans to Borrowers pursuant to this Section 2
(or Special Agent Advances as the case may be).
(b) In addition to any charges, fees or expenses charged by any
bank or issuer in connection with the Letter of Credit Accommodations, Borrowers
shall pay to Agent, for the benefit of Lenders, a letter of credit fee at a rate
equal to one and one-half (1 1/2%) percent per annum, on the daily outstanding
balance of the Letter of Credit Accommodations for the immediately preceding
quarter (or part thereof), payable quarterly in arrears as of the first day of
each succeeding quarter, except that Agent may, and upon the written direction
of Required Lenders shall, require Borrowers to pay to Agent for the ratable
benefit of Lenders such letter of credit fee, at a rate equal to three and
one-half (3 1/2%) percent per annum on such daily outstanding balance for: (i)
the period from and after the date of termination hereof until Agent and Lenders
have received full and final payment of all Obligations (notwithstanding entry
of a judgment against any Borrower) and (ii) the period from and after the date
of the occurrence of an Event of Default for so long as such Event of Default is
continuing as determined by Agent. Such letter of credit fee shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed and
the obligation of Borrowers to pay such fee shall survive the termination of
this Agreement.
(c) The Borrower requesting such Letter of Credit Accommodation
(or Administrative Borrower on behalf of such Borrower) shall give Agent two (2)
Business Days' prior written notice of such Borrower's request for the issuance
of a Letter of Credit Accommodation. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit Accommodation
requested, the effective date (which date shall be a Business Day and in no
event shall be a date less than ten (10) days prior to the end of the then
current term of this Agreement) of issuance of such requested Letter of Credit
Accommodation, whether such Letter of Credit Accommodations may be drawn in a
single or in partial draws, the date on which such requested Letter of Credit
Accommodation is to expire (which date shall be a Business Day), the purpose for
which such Letter of Credit Accommodation is to be issued, and the beneficiary
of the requested Letter of Credit Accommodation. The Borrower requesting
225156-14 21
the Letter of Credit Accommodation (or Administrative Borrower on behalf of such
Borrower) shall attach to such notice the proposed terms of the Letter of Credit
Accommodation.
(d) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Agent: (i) the Borrower requesting such
Letter of Credit Accommodation (or Administrative Borrower on behalf of such
Borrower) shall have delivered to the proposed issuer of such Letter of Credit
Accommodation at such times and in such manner as such proposed issuer may
require, an application, in form and substance satisfactory to such proposed
issuer and Agent, for the issuance of the Letter of Credit Accommodation and
such other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Agent and such proposed issuer, (ii) as of the date of issuance,
no order of any court, arbitrator or other Governmental Authority shall purport
by its terms to enjoin or restrain money center banks generally from issuing
letters of credit of the type and in the amount of the proposed Letter of Credit
Accommodation, and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer of such Letter of
Credit Accommodation refrain from, the issuance of letters of credit generally
or the issuance of such Letters of Credit Accommodation; and (iii) the Excess
Availability of the Borrower requesting such Letter of Credit Accommodation,
prior to giving effect to any Reserves with respect to such Letter of Credit
Accommodations, on the date of the proposed issuance of any Letter of Credit
Accommodations, shall be equal to or greater than: (A) if the proposed Letter of
Credit Accommodation is for the purpose of purchasing Eligible Inventory and the
documents of title with respect thereto are consigned to the issuer, the sum of
(1) the percentage equal to one hundred (100%) percent minus the then applicable
percentage with respect to Eligible Inventory set forth in the definition of the
term Borrowing Base multiplied by the Value of such Eligible Inventory, plus (2)
freight, taxes, duty and other amounts which Agent estimates must be paid in
connection with such Inventory upon arrival and for delivery to one of such
Borrower's locations for Eligible Inventory within the United States of America
and (B) if the proposed Letter of Credit Accommodation is for any other purpose
or the documents of title are not consigned to the issuer in connection with a
Letter of Credit Accommodation for the purpose of purchasing Inventory, an
amount equal to one hundred (100%) percent of the face amount thereof and all
other commitments and obligations made or incurred by Agent with respect
thereto. Effective on the issuance of each Letter of Credit Accommodation, a
Reserve shall be established in the applicable amount set forth in Section
2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Agent's discretion, with the consent of all
Lenders, the amount of all outstanding Letter of Credit Accommodations and all
other commitments and obligations made or incurred by Agent or any Lender in
connection therewith shall not at any time exceed $25,000,000.
(f) Borrowers shall indemnify and hold Agent and Lenders harmless
from and against any and all losses, claims, damages, liabilities, costs and
expenses which Agent or any Lender may suffer or
225156-14 22
incur in connection with any Letter of Credit Accommodations and any documents,
drafts or acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or wilful misconduct of Agent or any Lender as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Each Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
such Borrower's agent. Each Borrower assumes all risks for, and agrees to pay,
all foreign, Federal, State and local taxes, duties and levies relating to any
goods subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Each Borrower hereby releases and holds Agent and
Lenders harmless from and against any acts, waivers, errors, delays or
omissions, whether caused by any Borrower, by any issuer or correspondent or
otherwise with respect to or relating to any Letter of Credit Accommodation,
except for the gross negligence or wilful misconduct of Agent or any Lender as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction. The provisions of this Section 2.2(f) shall survive the payment of
Obligations and the termination of this Agreement.
(g) In connection with Inventory purchased pursuant to Letter of
Credit Accommodations, Borrowers shall, at Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Agent
holds a security interest to deliver them to Agent and/or subject to Agent's
order, and if they shall come into such Borrower's possession, to deliver them,
upon Agent's request, to Agent in their original form. Borrowers shall also, at
Agent's request, designate Agent as the consignee on all bills of lading and
other negotiable and non-negotiable documents.
(h) Each Borrower hereby irrevocably authorizes and directs any
issuer of a Letter of Credit Accommodation to name such Borrower as the account
party therein and to deliver to Agent all instruments, documents and other
writings and property received by issuer pursuant to the Letter of Credit
Accommodations and to accept and rely upon Agent's instructions and agreements
with respect to all matters arising in connection with the Letter of Credit
Accommodations or the applications therefor. Nothing contained herein shall be
deemed or construed to grant any Borrower any right or authority to pledge the
credit of Agent or any Lender in any manner. Agent and Lenders shall have no
liability of any kind with respect to any Letter of Credit Accommodation
provided by an issuer other than Agent or any Lender unless Agent has duly
executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrowers shall be bound by any reasonable interpretation made in good faith by
Agent, or any other issuer or correspondent under or in connection with any
Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of any Borrower.
(i) So long as no Event of Default exists or has occurred
and is continuing, a Borrower may (i) approve or resolve any questions of
non-compliance of documents, (ii) give any instructions as to
225156-14 23
acceptance or rejection of any documents or goods, (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery orders,
and (iv) with Agent's consent, grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or documents,
and agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letter of Credit Accommodations, or documents, drafts or acceptances thereunder
or any letters of credit included in the Collateral.
(j) At any time an Event of Default exists or has occurred and is
continuing, Agent shall have the right and authority to, and Borrowers shall
not, without the prior written consent of Agent, (i) approve or resolve any
questions of non-compliance of documents, (ii) give any instructions as to
acceptance or rejection of any documents or goods, (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery orders,
(iv) grant any extensions of the maturity of, time of payments for, or time of
presentation of, any drafts, acceptances, or documents, and (v) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Agent may take such actions either in its own
name or in any Borrower's name.
(k) Any rights, remedies, duties or obligations granted or
undertaken by any Borrower to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Agent for the
ratable benefit of Lenders. Any duties or obligations undertaken by Agent to any
issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent to the extent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrowers to Agent for the ratable
benefit of Lenders and to apply in all respects to Borrowers.
(l) Immediately upon the issuance or amendment of any Letter of
Credit Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender's Pro Rata
Share of the liability with respect to such Letter of Credit Accommodation
(including, without limitation, all Obligations with respect thereto).
(m) Each Borrower is irrevocably and unconditionally obligated,
without presentment, demand or protest, to pay to Agent any amounts paid by an
issuer of a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Loans in accordance with Section
2.2(a) or otherwise). In the event that any Borrower fails to pay Agent on the
date of any payment under a Letter of Credit Accommodation in an amount equal to
the amount of such payment, Agent (to the extent it has actual notice thereof)
shall promptly notify each Lender of the unreimbursed amount of such payment and
each Lender agrees, upon one (1) Business Day's notice, to fund to Agent the
purchase of its participation in such Letter of Credit Accommodation in an
amount
225156-14 24
equal to its Pro Rata Share of the unpaid amount. The obligation of each Lender
to deliver to Agent an amount equal to its respective participation pursuant to
the foregoing sentence is absolute and unconditional and such remittance shall
be made notwithstanding the occurrence or continuance of any Event of Default,
the failure to satisfy any other condition set forth in Section 4 or any other
event or circumstance. If such amount is not made available by a Lender when
due, Agent shall be entitled to recover such amount on demand from such Lender
with interest thereon, for each day from the date such amount was due until the
date such amount is paid to Agent at the interest rate then payable by any
Borrower in respect of Loans that are Prime Rate Loans as set forth in Section
3.1(a) hereof.
2.3 Commitments. The aggregate amount of each Lender's Pro Rata Share
of the Loans and Letter of Credit Accommodations shall not exceed the amount of
such Lender's Commitment, as the same may from time to time be amended in
accordance with the provisions hereof.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the benefit of Lenders,
interest on the outstanding principal amount of the Loans at the Interest Rate.
All interest accruing hereunder on and after the date of any Event of Default
and during the continuance thereof or termination hereof shall be payable on
demand.
(b) Each Borrower (or Administrative Borrower on behalf of such
Borrower) may from time to time request Eurodollar Rate Loans or may request
that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period. Such request
from a Borrower (or Administrative Borrower on behalf of such Borrower) shall
specify the amount of the Eurodollar Rate Loans or the amount of the Prime Rate
Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar
Rate Loans to be continued (subject to the limits set forth below) and the
Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the
terms and conditions contained herein, three (3) Business Days after receipt by
Agent of such a request from a Borrower (or Administrative Borrower on behalf of
such Borrower), such Eurodollar Rate Loans shall be made or Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall
continue, as the case may be, provided, that, (i) no Default or Event of Default
shall exist or have occurred and be continuing, (ii) no party hereto shall have
sent any notice of termination of this Agreement, such Borrower (or
Administrative Borrower on behalf of such Borrower) shall have complied with
such customary procedures as are established by Agent and specified by Agent to
Administrative Borrower from time to time for requests by Borrowers for
Eurodollar Rate Loans, (iii) no more than six (6) Interest Periods may be in
effect at any one time, (iv) the aggregate amount of the Eurodollar Rate Loans
must be in an amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, and (v) Agent and each Lender shall have
determined that the Interest Period or Adjusted Eurodollar Rate is available to
Agent and such Lender and can be readily determined as of the date of the
request for such Eurodollar Rate Loan by such Borrower. Any request
225156-14 25
by or on behalf of a Borrower for Eurodollar Rate Loans or to convert Prime Rate
Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans
shall be irrevocable. Notwithstanding anything to the contrary contained herein,
Agent and Lenders shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Agent and Lenders had purchased such deposits to fund the
Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Agent has received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by
Agent to Administrative Borrower, be subsequently converted to Prime Rate Loans
in the event that this Agreement shall terminate or not be renewed. Borrowers
shall pay to Agent, for the benefit of Lenders, upon demand by Agent (or Agent
may, at its option, charge any loan account of any Borrower) any amounts
required to compensate any Lender or Participant for any loss (including loss of
anticipated profits), cost or expense incurred by such person, as a result of
the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of
the foregoing.
(d) Interest shall be payable by Borrowers to Agent, for the
account of Lenders, quarterly in arrears not later than the first day of each
January, April, July and October while this Agreement is in effect and for so
long thereafter as any Obligations are outstanding and shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed. The
interest rate on non-contingent Obligations (other than Eurodollar Rate Loans)
shall increase or decrease by an amount equal to each increase or decrease in
the Prime Rate effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last day of the
month in which any such change occurs. In no event shall charges constituting
interest payable by Borrowers to Agent and Lenders exceed the maximum amount or
the rate permitted under any applicable law or regulation, and if any such part
or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.
3.2 Fees.
(a) Borrowers shall pay to Agent, for the ratable benefit of
Lenders, quarterly an unused line fee at a rate equal to the percentage (on a
per annum basis) set forth below calculated upon the amount by which the Maximum
Credit as then in effect exceeds the average daily principal balance of the
outstanding Loans and Letter of Credit Accommodations during the immediately
preceding calendar quarter (or part thereof) while this Agreement is in effect
and for so long thereafter as any Obligations are outstanding. Such fee shall be
payable in arrears on the first day of each January, April, July and October.
The percentage used for determining the unused line fee shall be three-eighths
(3/8%) percent, provided, that, effective as of the first (1st) day of the
second month of each fiscal quarter (commencing with the fiscal quarter ending
on or about January 31, 2004), the percentage used for determining the
225156-14 26
unused line fee shall be as set forth below if the Quarterly Average Excess
Availability for the immediately preceding fiscal quarter is at or within the
amounts indicated for such percentage:
Quarterly Average Unused Line
Excess Availability Fee Percentage
--------------------- ----------------
(i) $60,000,000 or 3/8%
greater
(ii) Greater than or equal to 3/8%
$30,000,000 and less than
$60,000,000
(iii) Greater than or equal to 1/4%
$15,000,000 and less than
$30,000,000
(iv) Less than $15,000,000 1/4%
provided, that, (i) the unused line fee percentage shall be calculated and
established once each fiscal quarter (commencing with the fiscal quarter ending
on or about January 31, 2004), (ii) solely for the purposes of the calculation
of the Quarterly Average Excess Availability, the amount determined pursuant to
clause (a) of the definition of Excess Availability shall be based solely upon
the Borrowing Base of Borrowers, without regard to the Maximum Credit, and (iii)
the Quarterly Average Excess Availability shall be calculated based upon the
average of the amount of Excess Availability as of the last Business Day of each
of the three (3) fiscal months during the immediately preceding fiscal quarter.
(b) Borrowers agree to pay to Agent the other fees and amounts
set forth in the Fee Letter in the amounts and at the times specified therein.
3.3 Changes in Laws and Increased Costs of Loans.
(a) If after the date hereof, either (i) any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to Lender or any
banking or financial institution from whom any Lender borrows funds or obtains
credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies with
any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank or any Lender determines that the adoption of
any applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or a Funding Bank or any Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii),
225156-14 27
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any Lender's capital as a consequence
of its obligations hereunder to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking into consideration
the Funding Bank's or Lender's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, and the result of any of the
foregoing events described in clauses (i), (ii) or (iii) is or results in an
increase in the cost to any Lender of funding or maintaining the Loans, the
Letter of Credit Accommodations or its Commitment, then Borrowers shall from
time to time upon demand by Agent pay to Agent additional amounts sufficient to
indemnify Lenders against such increased cost on an after-tax basis (after
taking into account applicable deductions and credits in respect of the amount
indemnified). A certificate as to the amount of such increased cost shall be
submitted to Administrative Borrower by Agent and shall be conclusive, absent
manifest error.
(b) If prior to the first day of any Interest Period, (i) Agent
shall have determined in good faith (which determination shall be conclusive and
binding upon Borrowers) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, (ii) Agent has received notice from
the Required Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to Lenders
of making or maintaining Eurodollar Rate Loans during such Interest Period, or
(iii) Dollar deposits in the principal amounts of the Eurodollar Rate Loans to
which such Interest Period is to be applicable are not generally available in
the London interbank market, Agent shall give telecopy or telephonic notice
thereof to Administrative Borrower as soon as practicable thereafter, and will
also give prompt written notice to Administrative Borrower when such conditions
no longer exist. If such notice is given (A) any Eurodollar Rate Loans requested
to be made on the first day of such Interest Period shall be made as Prime Rate
Loans, (B) any Loans that were to have been converted on the first day of such
Interest Period to or continued as Eurodollar Rate Loans shall be converted to
or continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan
shall be converted, on the last day of the then-current Interest Period thereof,
to Prime Rate Loans. Until such notice has been withdrawn by Agent, no further
Eurodollar Rate Loans shall be made or continued as such, nor shall any Borrower
(or Administrative Borrower on behalf of any Borrower) have the right to convert
Prime Rate Loans to Eurodollar Rate Loans.
(c) Notwithstanding any other provision herein, if the adoption
of or any change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the date hereof shall
make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate
Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly
give written notice of such circumstances to Administrative Borrower (which
notice shall be withdrawn whenever such circumstances no longer exist), (ii) the
commitment of such Lender hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate
Loans shall forthwith be canceled and, until such time as it shall no longer be
unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender
shall then have a commitment only to make a Prime Rate Loan when a Eurodollar
Rate Loan is requested and (iii) such Lender's Loans then outstanding as
Eurodollar
225156-14 28
Rate Loans, if any, shall be converted automatically to Prime Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Rate Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, Borrowers shall pay to such Lender
such amounts, if any, as may be required pursuant to Section 3.3(d) below.
(d) Borrowers shall indemnify Agent and each Lender and hold
Agent and each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur as a consequence of (i) default by Borrower in
making a borrowing of, conversion into or extension of Eurodollar Rate Loans
after such Borrower (or Administrative Borrower on behalf of such Borrower) has
given a notice requesting the same in accordance with the provisions of this
Loan Agreement, (ii) default by any Borrower in making any prepayment of a
Eurodollar Rate Loan after such Borrower has given a notice thereof in
accordance with the provisions of this Agreement, and (iii) the making of a
prepayment of Eurodollar Rate Loans on a day which is not the last day of an
Interest Period with respect thereto. With respect to Eurodollar Rate Loans,
such indemnification may include an amount equal to the excess, if any, of (A)
the amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or extend, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Rate Loans provided for herein over (B) the amount of interest (as determined in
good faith by such Agent or such Lender) which would have accrued to Agent or
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. This covenant
shall survive the termination or non-renewal of this Loan Agreement and the
payment of the Obligations.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance satisfactory
to Agent, all releases, terminations and such other documents as Agent may
request to evidence and effectuate the termination by the Existing Lenders of
their respective financing arrangements with Borrowers and the termination and
release by it or them, as the case may be, of any interest in and to any assets
and properties of each Borrower, duly authorized, executed and delivered by it
or each of them, including, but not limited to, (i) UCC termination statements
for all UCC financing statements previously filed by it or any of them or their
predecessors, as secured party and any Borrower, as debtor; and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds to secure
debt by any Borrower in favor of it or any of them, in form acceptable for
recording with the appropriate Governmental Authority, which may be delivered to
Agent in trust for release concurrently with, and subject to, payment and
satisfaction in full of all
225156-14 29
Indebtedness owing to the Existing Lenders (other than the Existing Letters of
Credit) in connection with Borrowers' termination of their existing financing
arrangements with Existing Lenders;
(b) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Agent, and Agent shall have received all information and
copies of all documents, including records of requisite corporate action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by appropriate
corporate officers or Governmental Authority (and including a copy of the
certificate of incorporation of each Borrower certified by the Secretary of
State (or equivalent Governmental Authority) which shall set forth the same
complete corporate name of such Borrower as is set forth herein and such
document as shall set forth the organizational identification number of each
Borrower, if one is issued in its jurisdiction of incorporation);
(c) no material adverse change shall have occurred in the assets,
business or prospects of Borrowers since the date of Agent's latest field
examination (not including for this purpose the field review referred to in
clause (d) below) and no change or event shall have occurred which would impair
the ability of any Borrower or Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Agent
or any Lender to enforce the Obligations or realize upon the Collateral;
(d) Agent shall have completed a field review of the Records and
such other information with respect to the Collateral as Agent may require to
determine the amount of Loans available to Borrowers (including, without
limitation, current perpetual inventory records and/or roll-forwards of
Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Agent, together with such supporting documentation as may
be necessary or appropriate, and other documents and information that will
enable Agent to accurately identify and verify the Collateral), the results of
which in each case shall be satisfactory to Agent, not more than three (3)
Business Days prior to the date hereof;
(e) Agent shall have received, in form and substance satisfactory
to Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, Collateral Access Agreements by
owners and lessors of leased premises of each Borrower consisting of Borrowers'
two (2) inventory distribution centers located at 000 Xxxxxx Xxxx, Xxxxxxxxx,
Xxx Xxxxxx 00000 and 0000 Xxxxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, by
processors and warehouses at which Collateral is located and by Persons who may
be from time to time in possession of Borrowers' computer readable Records with
respect to the Inventory or Accounts;
(f) the Excess Availability as determined by Agent, as of the
date hereof, shall be not less than $40,000,000 after giving effect to the
initial Loans made or to be made and Letter of Credit Accommodations issued or
to be issued in connection with the initial transactions hereunder;
225156-14 30
(g) Agent shall have received, in form and substance satisfactory
to Agent, Deposit Account Control Agreements by and among Agent, each Borrower,
as the case may be and each bank where such Borrower has a deposit account, in
each case, duly authorized, executed and delivered by such bank and Borrower, as
the case may be (or Agent shall be the bank's customer with respect to such
deposit account as Agent may specify);
(h) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has (or will have acquired, concurrently with
the making of the initial Revolving Loans hereunder) a valid perfected first
priority security interest in all of the Collateral;
(i) Agent shall have received and reviewed lien and judgment
search results for the jurisdiction of incorporation of each Borrower, the
jurisdiction of the chief executive office of each Borrower and all
jurisdictions in which assets of Borrowers are located, which search results
shall be in form and substance satisfactory to Agent;
(j) Agent shall have received Credit Card Acknowledgments in each
case, duly authorized, executed and delivered by the Credit Card Issuers and
Credit Card Processors other than American Express and Midwest Payment Systems,
Inc. ("Midwest"), and in the case of American Express and Midwest, Borrowers
shall have, concurrently with the execution hereof, executed and delivered to
each of American Express and Midwest an irrevocable authorization and direction
letter, in form and substance satisfactory to Agent, regarding payment of Credit
Card Receivables to Borrowers by each of American Express and Midwest;
(k) Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Agent, and certificates of insurance
policies and/or endorsements naming Agent as loss payee;
(l) Agent shall have received, in form and substance satisfactory
to Agent, such opinion letters of counsel to Borrowers with respect to the
Financing Agreements and such other matters as Agent may request; and
(m) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
the Loans and/or providing Letter of Credit Accommodations to Borrowers,
including the initial Loans and Letter of Credit Accommodations and any future
Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct with the same effect as
though such representations and warranties
225156-14 31
had been made on and as of the date of the making of each such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto, except
to the extent that such representations and warranties expressly relate solely
to an earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or providing
the Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or has a reasonable likelihood of having a Material Adverse Effect; and
(c) no Default or Event of Default shall exist or have occurred
and be continuing on and as of the date of the making of such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest. To secure payment and performance of
all Obligations, each Borrower hereby grants to Agent, for itself and the
benefit of Lenders, a continuing security interest in, a lien upon, and a right
of set off against, and hereby assigns to Agent, for itself and the benefit of
Lenders, as security, all personal property, and interests in personal property,
of each Borrower, whether now owned or hereafter acquired or existing, and
wherever located (together with all other collateral security for the
Obligations at any time granted to or held or acquired by Agent or any Lender,
collectively, the "Collateral"), including:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all
Intellectual Property;
(c) all Inventory;
(d) all chattel paper, including, without limitation, all
tangible and electronic chattel paper, in each case arising in connection with
or related to, or constituting identifiable proceeds of, any of the Accounts,
Inventory or other Collateral;
(e) all instruments, including, without limitation, all
promissory notes, in each case arising in connection with or related to, or
constituting identifiable proceeds of, any of the Accounts, Inventory or other
Collateral;
225156-14 32
(f) all documents and all credit card sales drafts, credit card
sales slips or charge slips or receipts and other forms of store receipts, in
each case arising in connection with or related to, or constituting identifiable
proceeds of, any of the Accounts, Inventory or other Collateral;
(g) all deposit accounts, excluding deposit accounts maintained
by Borrowers for the receipt of funds remitted by Borrowers' employees in
connection with such employees' purchase of shares of Xxxxx Mart's Capital Stock
pursuant to Borrowers' existing employee stock option plan and existing employee
stock purchase plan;
(h) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights, in each case arising in
connection with or related to, or constituting identifiable proceeds of, any of
the Accounts, Inventory or other Collateral;
(i) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(j) all (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (ii) monies, credit balances,
deposits and other property of any Borrower now or hereafter held or received by
or in transit to Agent, any Lender or its Affiliates or at any other depository
or other institution from or for the account of any Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise;
(k) all commercial tort claims arising in connection with or
related to, or constituting proceeds of, any of the Accounts, Inventory or other
Collateral;
(l) all Records arising in connection with, evidencing and/or in
manner relating to the Collateral;
(m) to the extent not otherwise described above, all Receivables;
and
(n) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.
225156-14 33
5.2 Perfection of Security Interests.
(a) Each Borrower irrevocably and unconditionally authorizes
Agent (or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Agent or its designee as the
secured party and such Borrower as debtor, as Agent may require, and including
any other information with respect to such Borrower or otherwise required by
part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as Agent
may determine, together with any amendment and continuations with respect
thereto, which authorization shall apply to all financing statements filed on,
prior to or after the date hereof. Each Borrower hereby ratifies and approves
all financing statements naming Agent or its designee as secured party and such
Borrower, as the case may be, as debtor with respect to the Collateral (and any
amendments with respect to such financing statements) filed by or on behalf of
Agent prior to the date hereof and ratifies and confirms the authorization of
Agent to file such financing statements (and amendments, if any). Each Borrower
hereby authorizes Agent to adopt on behalf of such Borrower any symbol required
for authenticating any electronic filing. In the event that the description of
the Collateral in any financing statement naming Agent or its designee as the
secured party and any Borrower as debtor includes assets and properties of such
Borrower that do not at any time constitute Collateral, whether hereunder, under
any of the other Financing Agreements or otherwise, the filing of such financing
statement shall nonetheless be deemed authorized by such Borrower to the extent
of the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. In no event
shall any Borrower at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Agent or
its designee as secured party and such Borrower as debtor.
(b) Each Borrower does not have any chattel paper (whether
tangible or electronic) or instruments as of the date hereof, except as set
forth in the Information Certificate. In the event that any Borrower shall be
entitled to or shall receive any chattel paper or instrument after the date
hereof that arises from the sale or other disposition of Borrowers' Inventory
(hereinafter collectively referred to as "Inventory Paper"), Borrowers shall
promptly notify Agent thereof in writing. Promptly upon the receipt of any
Inventory Paper by or on behalf of any Borrower (including by any agent or
representative), such Borrower shall deliver, or cause to be delivered to Agent,
all tangible Inventory Paper that such Borrower has or may at any time acquire,
accompanied by such instruments of transfer or assignment duly executed in blank
as Agent may from time to time specify, in each case except as Agent may
otherwise agree. At Agent's option, each Borrower shall, or Agent may at any
time on behalf of any Borrower, cause the original of any such Inventory Paper
to be conspicuously marked in a form and manner acceptable to Agent with the
following legend referring to chattel paper or instruments as applicable: "This
[chattel paper][instrument] is subject to the security interest of Congress
Financial Corporation (Florida), as Agent, and any sale, transfer, assignment or
encumbrance of this [chattel paper][instrument] violates the rights of such
secured party."
225156-14 34
(c) In the event that any Borrower shall at any time hold or
acquire an interest in any electronic chattel paper or any "transferable record"
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction that constitutes
Inventory Paper), such Borrower shall promptly notify Agent thereof in writing.
Promptly upon Agent's request, such Borrower shall take, or cause to be taken,
such actions as Agent may request to give Agent control of such electronic
chattel paper under Section 9-105 of the UCC and control of such transferable
record under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as in effect in such jurisdiction.
(d) Each Borrower does not have any deposit accounts as of the
date hereof, except as set forth in the Information Certificate. Borrowers shall
not, directly or indirectly, after the date hereof open, establish or maintain
any deposit account unless each of the following conditions is satisfied: (i)
Agent shall have received not less than five (5) Business Days prior written
notice of the intention of any Borrower to open or establish such account which
notice shall specify in reasonable detail and specificity acceptable to Agent
the name of the account, the owner of the account, the name and address of the
bank at which such account is to be opened or established, the individual at
such bank with whom such Borrower is dealing and the purpose of the account,
(ii) the bank where such account is opened or maintained shall be acceptable to
Agent, and (iii) on or before the opening of any such deposit account that is
not a Store Account, such Borrower shall as Agent may specify either (A) deliver
to Agent a Deposit Account Control Agreement with respect to such deposit
account duly authorized, executed and delivered by such Borrower and the bank at
which such deposit account is opened and maintained or (B) arrange for Agent to
become the customer of the bank with respect to the deposit account on terms and
conditions acceptable to Agent. The terms of this subsection (d) shall not apply
to deposit accounts specifically and exclusively used (i) as a Store Account,
(ii) for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of any Borrower's salaried employees, or (iii) for receipt of
funds remitted by Borrowers' employees in connection with such employees'
purchase of shares of Xxxxx Mart's Capital Stock pursuant to Borrowers' existing
employee stock option plan or employee stock purchase plan.
(e) No Borrower owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.
(i) In the event that any Borrower shall be entitled to or
shall at any time after the date hereof hold or acquire (subject to the terms of
Section 9.10) any certificated securities and Agent is then exercising its Cash
Dominion rights pursuant to Section 6.3(a)(ii), such Borrower shall promptly
endorse, assign and deliver the same to Agent, accompanied by such instruments
of transfer or assignment duly executed in blank as Agent may from time to time
specify. If any securities now or hereafter acquired by any Borrower are
uncertificated and are issued to such Borrower or its nominee
225156-14 35
directly by the issuer thereof and Agent is then exercising its Cash Dominion
rights pursuant to Section 6.3(a)(ii), such Borrower shall immediately notify
Agent thereof and shall as Agent may specify, either (A) cause the issuer to
agree to comply with instructions from Agent as to such securities, without
further consent of any Borrower or such nominee, or (B) arrange for Agent to
become the registered owner of the securities.
(ii) Borrowers shall not, directly or indirectly, after the
date hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary unless each
of the following conditions is satisfied: (A) Agent shall have received not less
than five (5) Business Days prior written notice of the intention of such
Borrower to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the account,
the owner of the account, the name and address of the securities intermediary or
commodity intermediary at which such account is to be opened or established, the
individual at such intermediary with whom such Borrower is dealing and the
purpose of the account, (B) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be acceptable to Agent, and (C) if Agent is then exercising its Cash
Dominion rights pursuant to Section 6.3(a)(ii), then, on or before the opening
of such investment account, securities account or other similar account with a
securities intermediary or commodity intermediary (or subsequent to the opening
of any such account, if Agent, if Agent was not exercising such Cash Dominion
rights at the time such account was opened and thereafter commences exercising
such Cash Dominion rights), such Borrower shall as Agent may specify either (1)
execute and deliver, and cause to be executed and delivered to Agent, an
Investment Property Control Agreement with respect thereto duly authorized,
executed and delivered by such Borrower and such securities intermediary or
commodity intermediary or (2) arrange for Agent to become the entitlement holder
with respect to such investment property on terms and conditions acceptable to
Agent.
(f) Borrowers are not the beneficiary or otherwise entitled to
any right to payment under any letter of credit, banker's acceptance or similar
instrument as of the date hereof, except as set forth in the Information
Certificate. In the event that any Borrower shall be entitled to or shall
receive any right to payment under any letter of credit, banker's acceptance or
any similar instrument that constitutes a part of the Collateral, whether as
beneficiary thereof or otherwise after the date hereof, such Borrower shall
promptly notify Agent thereof in writing. Such Borrower shall immediately, as
Agent may specify, either (i) deliver, or cause to be delivered to Agent, with
respect to any such letter of credit, banker's acceptance or similar instrument,
the written agreement of the issuer and any other nominated person obligated to
make any payment in respect thereof (including any confirming or negotiating
bank), in form and substance satisfactory to Agent, consenting to the assignment
of the proceeds of the letter of credit to Agent by such Borrower and agreeing
to make all payments thereon directly to Agent or as Agent may otherwise direct
or (ii) cause Agent to become, at Borrowers' expense, the transferee beneficiary
of the letter of credit, banker's acceptance or similar instrument (as the case
may be).
225156-14 36
(g) Borrowers do not have any commercial tort claims as of the
date hereof, except as set forth in the Information Certificate. In the event
that any Borrower shall at any time after the date hereof have any commercial
tort claims that constitute a part of the Collateral pursuant to Section 5.1(k)
("Commercial Tort Claims Collateral"), such Borrower shall promptly notify Agent
thereof in writing, which notice shall (i) set forth in reasonable detail the
basis for and nature of such commercial tort claim and (ii) include the express
grant by such Borrower to Agent of a security interest in such Commercial Tort
Claims Collateral (and the proceeds thereof). In the event that such notice does
not include such grant of a security interest, the sending thereof by such
Borrower to Agent shall be deemed to constitute such grant to Agent. Upon the
sending of such notice, any commercial tort claim described therein shall
constitute part of the Collateral and shall be deemed included therein. Without
limiting the authorization of Agent provided in Section 5.2(a) hereof or
otherwise arising by the execution by such Borrower of this Agreement or any of
the other Financing Agreements, Agent is hereby irrevocably authorized from time
to time and at any time to file such financing statements naming Agent or its
designee as secured party and such Borrower as debtor, or any amendments to any
financing statements, covering any such commercial tort claim as Collateral. In
addition, each Borrower shall promptly upon Agent's request, execute and
deliver, or cause to be executed and delivered, to Agent such other agreements,
documents and instruments as Agent may reasonably require in order for Agent to
perfect and maintain its security interest in and receive the proceeds of any
such commercial tort claim. Notwithstanding anything to the contrary contained
in this Agreement, so long as Agent shall not have exercised its Cash Dominion
rights pursuant to Section 6.3(a)(ii), Borrowers shall have the exclusive right
to pursue, negotiate, settle, dispose of and obtain a judgment with respect to
and collect all Borrowers' now existing and hereafter arising commercial tort
claims without the prior consent of Agent, provided, that, Borrowers shall
deliver notice to Agent of any settlement of or judgment entered with respect to
any commercial tort claim promptly after the occurrence thereof and Borrowers
shall deposit all proceeds of Commercial Tort Claims Collateral, as proceeds of
Collateral, into one of the Blocked Accounts, in accordance with Section
6.3(a)(ii), regardless of whether Agent shall be then exercising its Cash
Dominion rights pursuant to such Section 6.3(a)(ii).
(h) Borrowers do not have any goods, documents of title or other
Collateral in the custody, control or possession of a third party as of the date
hereof, except as set forth in the Information Certificate and except for goods
located in the United States in transit to a location of a Borrower permitted
herein in the ordinary course of business of such Borrower in the possession of
the carrier transporting such goods. In the event that any goods, documents of
title or other Collateral are at any time after the date hereof in the custody,
control or possession of any other person not referred to in the Information
Certificate or such carriers, Borrowers shall promptly notify Agent thereof in
writing. Promptly upon Agent's request, Borrowers shall deliver to Agent a
Collateral Access Agreement duly authorized, executed and delivered by such
person and the Borrower that is the owner of such Collateral.
(i) Borrowers shall take any other actions reasonably requested
by Agent from time to time to cause the attachment, perfection and first
priority of, and the ability of Agent to enforce, the security interest of Agent
in any and all of the Collateral, including, without limitation, (i) executing,
225156-14 37
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, to the extent, if any,
that any Borrower's signature thereon is required therefor, (ii) causing Agent's
name to be noted as secured party on any certificate of title for a titled good
if such notation is a condition to attachment, perfection or priority of, or
ability of Agent to enforce, the security interest of Agent in such Collateral,
(iii) complying with any provision of any statute, regulation or treaty of the
United States as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of Agent to
enforce, the security interest of Agent in such Collateral, (iv) obtaining the
consents and approvals of any Governmental Authority or third party, including,
without limitation, any consent of any licensor, lessor or other person
obligated on Collateral, and taking all actions required by any earlier versions
of the UCC or by other law, as applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of any Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Agent's customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Administrative Borrower each
month a statement setting forth the balance in the Borrowers' loan account(s)
maintained by Agent for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Agent but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers and
conclusively binding upon Borrowers as an account stated except to the extent
that Agent receives a written notice from Administrative Borrower of any
specific exceptions of Administrative Borrower thereto within thirty (30) days
after the date such statement has been received by Administrative Borrower.
Until such time as Agent shall have rendered to Administrative Borrower a
written statement as provided above, the balance in any Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing to Agent
and Lenders by Borrowers.
6.3 Collection of Accounts.
(a) Each Borrower shall establish and maintain, at its expense,
deposit account arrangements and merchant payment arrangements with the banks
set forth on Schedule 8.10 to the Information Certificate and subject to Section
5.2(d) hereof such other banks as such Borrower may hereafter select. The banks
set forth on Schedule 8.10 to the Information Certificate constitute all of the
banks with which Borrowers have deposit account arrangements and merchant
payment arrangements as of the date hereof and identifies each of the deposit
accounts at such banks that are used solely for receiving store receipts from a
retail store location of a Borrower ((together with any other deposit
225156-14 38
accounts at any time established or used by any Borrower for receiving such
store receipts from any retail store location, collectively, the "Store
Accounts" and each individually, a "Store Account") or otherwise describes the
nature of the use of such deposit account by such Borrower.
(i) Each Borrower shall deposit all proceeds from sales of
Inventory in every form, including, without limitation, cash, checks and other
forms of daily store receipts (other than credit card sales drafts, credit card
sales or charge slips or receipts), from each retail store location of such
Borrower on each Business Day into the Store Account of such Borrower used
solely for such purpose and identified to such retail store location as set
forth on Schedule 8.10 to the Information Certificate. All such funds deposited
into the Store Accounts shall be sent by wire transfer or other electronic funds
transfer no less frequently than weekly or more frequently upon Agent's request
at any time that an Event of Default exists or has occurred and is continuing to
the Blocked Accounts as provided in Section 6.3(a)(ii) below, except nominal
amounts which are required to be maintained in such Store Accounts under the
terms of such Borrower's arrangements with the bank at which such Store Accounts
are maintained, which nominal amounts shall not exceed $20,000 as to any
individual Store Account at any time.
(ii) Each Borrower shall establish and maintain, at its
expense, deposit accounts with such banks as are reasonably acceptable to Agent
(the "Blocked Accounts") into which each Borrower shall promptly either cause
all amounts on deposit in the Store Accounts of such Borrower to be sent as
provided in Section 6.3(a)(i) above or shall itself deposit or cause to be
deposited all proceeds from sales of Inventory, all amounts payable to each
Borrower from Credit Card Issuers and Credit Card Processors and all other
proceeds of Collateral. Borrowers shall deliver, or cause to be delivered to
Agent a Deposit Account Control Agreement duly authorized, executed and
delivered by each bank where a Blocked Account is maintained as provided in
Section 5.2 hereof or at any time and from time to time Agent may become the
bank's customer with respect to any of the Blocked Accounts and promptly upon
Agent's request, Borrowers shall execute and deliver such agreements and
documents as Agent may reasonably require in connection therewith. Each Deposit
Account Control Agreement with the depository banks at which the Blocked
Accounts are maintained shall provide that all proceeds from sales of Inventory
and all proceeds of other Collateral at any time received for deposit therein,
and all available funds from time on deposit therein, will be transferred, upon
written notice from Agent, to the Agent Payment Account (provided, however, that
proceeds of Loans remitted by Agent (on behalf of Agent and/or Lenders) to any
loan disbursement or operating account of Borrowers, that is identified as an
account maintained for such purpose on Schedule 8.10 to the Information
Certificate, shall not be so transferred to the Agent Payment Account). Until
such time as the Agent shall so notify the depository banks at which the Blocked
Accounts are maintained, each such depository bank shall transfer the funds on
deposit in the Blocked Accounts to such operating bank account of Borrowers as
Borrowers shall specify in writing to both the depository bank and Agent. Agent
will only instruct the depository banks at which the Blocked Accounts are
maintained to transfer to the Agent Payment Account all funds received or
deposited into the Blocked Account at any time that (A) a Default or Event of
Default shall have occurred and be continuing or (B) Borrower fails at any time
to maintain Excess Availability of at least $20,000,000. Solely for the purposes
of the calculation of Excess Availability pursuant to this
225156-14 39
Section 6.3(a)(ii), the amount determined pursuant to clause (a) of the
definition of Excess Availability shall be based solely upon the Borrowing Base
of Borrowers and without regard to the Maximum Credit. (Agent's issuance of such
instructions, in order to effect the transfer to the Agent Payment Account of
all funds received or deposited into the Blocked Accounts, is herein referred to
as "Cash Dominion"). In the event that, at any time after Agent has instructed
such depository banks to transfer such funds to the Agent Payment Account, each
of the conditions set forth in clauses (A) and (B) above do not exist or have
not occurred and are not continuing for a period of not less than ninety (90)
consecutive Business Days, then, upon Administrative Borrower's written request,
Agent shall instruct such depository banks at which the Blocked Accounts are
maintained to transfer the funds on deposit in such accounts to such operating
bank account of Borrowers as Administrative Borrower may specify in writing to
Agent until such time as Agent is entitled to notify, and shall notify, the
depository banks as otherwise provided above. Each Borrower agrees that, on and
after the time that Agent has instructed the depository banks at which the
Blocked Accounts are maintained to transfer funds on deposit therein to the
Agent Payment Account and for so long as such instructions are in effect, all
payments made to such Blocked Accounts or other funds received and collected by
Agent or any Lender, whether in respect of the Receivables, as proceeds of
Inventory or other Collateral or otherwise shall be treated as payments to
Agent, for the benefit of Lenders, in respect of the Obligations and therefore
shall constitute the property of Agent and Lenders to the extent of the then
outstanding Obligations.
(b) For purposes of calculating the amount of the Loans available
to each Borrower and for purposes of calculating interest on the Obligations,
such payments will be applied (conditional upon final collection) to the
Obligations on the Business Day of receipt by Agent of immediately available
funds in the Agent Payment Account provided such payments and notice thereof are
received in accordance with Agent's usual and customary practices as in effect
from time to time and within sufficient time to credit such Borrower's loan
account on such day, and if not, then on the next Business Day.
(c) Each Borrower and their respective shareholders, directors,
employees, agents, Subsidiaries or other Affiliates, acting as trustee for
Agent, in the event any of them receive, as the property of Agent, any monies,
checks, notes, drafts or any other payment relating to and/or proceeds of
Receivables or other Collateral which come into their possession or under their
control and immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Agent. In no event shall the same be commingled with a
Borrower's own funds. Each Borrower agrees to reimburse Agent and Lenders on
demand for any amounts owed or paid to any bank at which a Blocked Account is
established or any other bank or person involved in the transfer of funds to or
from the Blocked Accounts arising out of the payments by Agent or any Lender to
or indemnification of such bank or person in connection with such Blocked
Account or any amounts received therein or transferred therefrom. The obligation
of Borrowers to reimburse Agent and Lenders for such amounts pursuant to this
Section 6.3 shall survive the termination or non-renewal of this Agreement.
6.4 Payments.
225156-14 40
(a) All Obligations shall be payable to the Agent Payment Account
as provided in Section 6.3 or such other place as Agent may designate from time
to time. Agent shall apply payments received or collected from any Borrower or
for the account of any Borrower (including the monetary proceeds of collections
or of realization upon any Collateral) as follows: first, to pay any fees,
indemnities or expense reimbursements then due to Agent and Lenders from any
Borrower; second, to pay interest due in respect of any Loans (and including any
Special Agent Advances); third, to pay or prepay principal in respect of Special
Agent Advances; fourth, to pay principal due in respect of the Loans; fifth, to
pay or prepay any other Obligations whether or not then due, in such order and
manner as Agent determines. Notwithstanding anything to the contrary contained
in this Agreement, (i) unless so directed by Administrative Borrower, or unless
a Default or an Event of Default shall exist or have occurred and be continuing,
Agent shall not apply any payments which it receives to any Eurodollar Rate
Loans, except (A) on the expiration date of the Interest Period applicable to
any such Eurodollar Rate Loans or (B) in the event that there are no outstanding
Prime Rate Loans and (ii) to the extent any Borrower uses any proceeds of the
Loans or Letter of Credit Accommodations to acquire rights in or the use of any
Collateral or to repay any Indebtedness used to acquire rights in or the use of
any Collateral, payments in respect of the Obligations shall be deemed applied
first to the Obligations arising from Loans and Letter of Credit Accommodations
that were not used for such purposes and second to the Obligations arising from
Loans and Letter of Credit Accommodations the proceeds of which were used to
acquire rights in or the use of any Collateral in the chronological order in
which such Borrower acquired such rights in or the use of such Collateral.
(b) At Agent's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of any Borrower
maintained by Agent. Borrowers shall make all payments to Agent and Lenders on
the Obligations free and clear of, and without deduction or withholding for or
on account of, any setoff, counterclaim, defense, duties, taxes, levies,
imposts, fees, deductions, withholding, restrictions or conditions of any kind.
If after receipt of any payment of, or proceeds of Collateral applied to the
payment of, any of the Obligations, Agent or any Lender is required to surrender
or return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Agent or such
Lender. Borrowers shall be liable to pay to Agent, and do hereby indemnify and
hold Agent and Lenders harmless for the amount of any payments or proceeds
surrendered or returned. This Section 6.4(b) shall remain effective
notwithstanding any contrary action which may be taken by Agent or any Lender in
reliance upon such payment or proceeds. This Section 6.4 shall survive the
payment of the Obligations and the termination of this Agreement.
6.5 Authorization to Make Loans. Agent and Lenders are authorized to
make the Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of Administrative Borrower or any Borrower or other authorized person
or, at the discretion of Agent, if such Loans are necessary to satisfy any
Obligations. All requests for Loans or Letter of Credit Accommodations hereunder
shall specify the date on which the requested
225156-14 41
advance is to be made or Letter of Credit Accommodations established (which day
shall be a Business Day) and the amount of the requested Loan. Requests received
after 11:00 a.m. Miami, Florida time on any day shall be deemed to have been
made as of the opening of business on the immediately following Business Day.
All Loans and Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and for the
benefit of, any Borrower when deposited to the credit of any Borrower or
otherwise disbursed or established in accordance with the instructions of any
Borrower or in accordance with the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrowers shall use the initial proceeds of the
Loans provided by Agent to Borrowers hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrowers
to Agent on or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made or Letter of
Credit Accommodations provided to or for the benefit of any Borrower pursuant to
the provisions hereof shall be used by such Borrower only for general operating,
working capital and other proper corporate purposes of such Borrower not
otherwise prohibited by the terms hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
security or for the purposes of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the Loans to be considered a "purpose credit"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended, provided, that, it is understood and agreed that the
foregoing is not intended to apply to Xxxxx Mart's repurchase from time to time
of shares of its Capital Stock permitted pursuant to Section 9.11, if and to the
extent that Xxxxx Mart uses any proceeds of the Loans for such purpose.
6.7 Appointment of Administrative Borrower as Agent for Requesting
Loans and Receipts of Loans and Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to request and receive Loans and Letter of
Credit Accommodations pursuant to this Agreement and the other Financing
Agreements from Agent or any Lender in the name or on behalf of such Borrower.
Agent and Lenders may disburse the Loans to such bank account of Administrative
Borrower or a Borrower or otherwise make such Loans to a Borrower and provide
such Letter of Credit Accommodations to a Borrower as Administrative Borrower
may designate or direct, without notice to any other Borrower or Obligor.
Notwithstanding anything to the contrary contained herein, Agent may at any time
and from time to time require that Loans to or for the account of any Borrower
be disbursed directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by
Borrowers to act as the agent of Borrowers pursuant to this Section 6.7.
Administrative Borrower shall ensure that the disbursement of any Loans to each
Borrower requested by or paid to or for the account of Administrative Borrower,
or the issuance of any Letter of Credit Accommodations for a Borrower hereunder,
shall be paid to or for the account of such Borrower.
225156-14 42
(c) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to receive statements on account and all
other notices from Agent and Lenders with respect to the Obligations or
otherwise under or in connection with this Agreement and the other Financing
Agreements.
(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower by Administrative Borrower
shall be deemed for all purposes to have been made by such Borrower, as the case
may be, and shall be binding upon and enforceable against such Borrower to the
same extent as if made directly by such Borrower.
(e) No purported termination of the appointment of Administrative
Borrower as agent as aforesaid shall be effective, except after ten (10) days'
prior written notice to Agent.
6.8 Pro Rata Treatment. Except to the extent otherwise provided in
this Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans and (b) each
payment on account of any Obligations to or for the account of one or more of
Lenders in respect of any Obligations due on a particular day shall be allocated
among the Lenders entitled to such payments based on their respective Pro Rata
Shares and shall be distributed accordingly.
6.9 Sharing of Payments, Etc.
(a) Each Borrower agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim Agent or any
Lender may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower at any
of its offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due or within any applicable grace
period with respect thereto (if any) as set forth in this Agreement (regardless
of whether such balances are then due to such Borrower), in which case it shall
promptly notify Administrative Borrower and Agent thereof; provided, that, such
Lender's failure to give such notice shall not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from any
Borrower payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by any Borrower to such
Lender than the percentage thereof received by any other Lender, it shall
promptly pay to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the Loans or
such other amounts, respectively, owing to such other Lenders (or such interest
due thereon, as the case may be) in such amounts, and make such other
adjustments
225156-14 43
from time to time as shall be equitable, to the end that all Lenders shall share
the benefit of such excess payment (net of any expenses that may be incurred by
such Lender in obtaining or preserving such excess payment) in accordance with
their respective Pro Rata Shares or as otherwise agreed by Lenders. To such end
all Lenders shall make appropriate adjustments among themselves (by the resale
of participation sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(c) Each Borrower agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise
any right of setoff, banker's lien, counterclaims or similar rights or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other Indebtedness or obligation
of any Borrower. If, under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.10 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient
manner and to minimize the transfer of funds between Agent and Lenders, Agent
may, at its option, subject to the terms of this Section, make available, on
behalf of Lenders, the full amount of the Loans requested or charged to any
Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant to
the terms hereof, without requirement of prior notice to Lenders of the proposed
Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders
as provided in this Section, the amount of each Lender's Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
Miami, Florida time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a "Settlement Period"). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m. Miami,
Florida time, then such Lender shall make the settlement transfer described in
this Section by no later than 3:00 p.m. Miami, Florida time on the same Business
Day and if received by a Lender after 12:00 p.m. Miami, Florida time, then such
Lender shall make the settlement transfer by not
225156-14 44
later than 3:00 p.m. Miami, Florida time on the next Business Day following the
date of receipt. If, as of the end of any Settlement Period, the amount of a
Lender's Pro Rata Share of the outstanding Loans is more than such Lender's Pro
Rata Share of the outstanding Loans as of the end of the previous Settlement
Period, then such Lender shall forthwith (but in no event later than the time
set forth in the preceding sentence) transfer to Agent by wire transfer in
immediately available funds the amount of the increase. Alternatively, if the
amount of a Lender's Pro Rata Share of the outstanding Loans in any Settlement
Period is less than the amount of such Lender's Pro Rata Share of the
outstanding Loans for the previous Settlement Period, Agent shall forthwith
transfer to such Lender by wire transfer in immediately available funds the
amount of the decrease. The obligation of each of the Lenders to transfer such
funds and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Agent and each Lender agrees to xxxx
its books and records at the end of each Settlement Period to show at all times
the dollar amount of its Pro Rata Share of the outstanding Loans and Letter of
Credit Accommodations. Each Lender shall only be entitled to receive interest on
its Pro Rata Share of the Loans to the extent such Loans have been funded by
such Lender. Because the Agent on behalf of Lenders may be advancing and/or may
be repaid Loans prior to the time when Lenders will actually advance and/or be
repaid such Loans, interest with respect to Loans shall be allocated by Agent in
accordance with the amount of Loans actually advanced by and repaid to each
Lender and the Agent and shall accrue from and including the date such Loans are
so advanced to but excluding the date such Loans are either repaid by Borrowers
or actually settled with the applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts available
and the settlement described above shall not yet have occurred, upon repayment
of any Loans by a Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Lender to provide Agent with immediately available funds representing its Pro
Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
In such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender's obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to a Borrower (or
Administrative Borrower for the benefit of such Borrower) pursuant to this
Section on any day, Agent may assume that each Lender will make available to
Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of such
Borrower on such day. If Agent makes such corresponding amount available to a
Borrower and such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent's option based on the
225156-14 45
arithmetic mean determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of the three leading brokers of Federal funds transactions in New
York City selected by Agent) and if such amounts are not paid within three (3)
days of Agent's demand, at the highest Interest Rate provided for in Section 3.1
hereof applicable to Prime Rate Loans. During the period in which such Lender
has not paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Administrative Borrower's receipt of such notice. A Lender who fails to pay
Agent its Pro Rata Share of any Loans made available by the Agent on such
Lender's behalf, or any Lender who fails to pay any other amount owing by it to
Agent, is a "Defaulting Lender". Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender's
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or fees). Amounts payable
to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may
hold and, in its discretion, relend to a Borrower the amount of all such
payments received or retained by it for the account of such Defaulting Lender.
For purposes of voting or consenting to matters with respect to this Agreement
and the other Financing Agreements and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero (0). This Section shall remain effective
with respect to a Defaulting Lender until such default is cured. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the performance by any Borrower
or Obligor of their duties and obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that any Borrower may have
against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
6.11 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
225156-14 46
7.1 Collateral Reporting.
(a) Borrowers, or Administrative Borrower on behalf of Borrowers,
shall provide Agent with the following documents in a form satisfactory to
Agent:
(i) if requested by Agent, upon receipt by Borrowers each
fiscal month from any Credit Card Processor or Credit Card Issuer, a report of
credit card sales during such fiscal month, including the amount of the
chargebacks, fees and credits with respect thereto;
(ii) as soon as possible after the end of each fiscal month
(but in any event within fifteen (15) Business Days after the end thereof), on a
monthly basis or more frequently as Agent may request, (A) a summary perpetual
Inventory report by retail store department reflecting retail value,
substantially in the form of such report currently prepared by Borrowers, (B) a
retail stock ledger report reflecting retail value and cost, in the form
currently prepared by Borrower, (C) a reconciliation between (A) and (B) above,
(D) a summary report of Inventory markdowns, (E) a summary aging of Borrowers'
outstanding merchandise gift cards, (F) upon Agent's request, such other
Inventory reports as are at any time prepared by Borrowers, in the form prepared
by Borrowers, including, without limitation, Inventory reports by location and
category (consisting of retail, factory outlet, direct catalog, letter of credit
Inventory and in-transit Inventory and including the amounts of Inventory and
the value thereof at any leased locations and at premises of warehouses,
processors or other third parties), (G) prior to the occurrence of a Default or
Event of Default that is continuing, a summary aging of accounts payable by due
date and, from and after the occurrence and during the continuance of a Default
or Event of Default, a detailed aging of accounts payable, and (H) reports on
sales and use tax collections, deposits and payments, including monthly sales
and use tax accruals;
(iii) as soon as possible after the end of each
fiscal month (but in any event fifteen (15) Business Days after the end
thereof), in each case certified by the chief financial officer or controller of
Borrowers or Administrative Borrower as true and correct: (A) a statement
confirming the payment of rent and other amounts due to owners and lessors of
real property used by Borrower in the immediately preceding month, subject to
year-end or periodic adjustments, (B) the addresses of all new retail store
locations of Borrowers opened and existing retail store locations closed or
sold, in each case since the date of the most recent certificate delivered to
Agent containing the information required under this clause, and (C) a report of
any new deposit account established or used by any Borrower with any bank or
other financial institution, including the Borrower in whose name the account is
maintained, the account number, the name and address of the financial
institution at which such account is maintained, the purpose of such account
and, if any, the amount held in such account on or about the date of such
report;
(iv) promptly following Agent's request, (A) copies of
(or, so long as no Default or Event of Default shall have occurred and be
continuing, access to Borrowers' original records relating to) deposit slips and
bank statements, (B) copies of (or so long as no Default or Event of Default
shall have occurred and be continuing, access to Borrowers' original records
relating to) shipping and
225156-14 47
delivery documents for Inventory sold by any Borrower, and (C) copies of (or so
long as no Default or Event of Default shall have occurred and be continuing,
access to Borrowers' original records relating to) purchase orders, invoices and
delivery documents for Inventory acquired by any Borrower;
(v) promptly following Agent's request, (A) reports of sales
for each category of Inventory, including, without limitation, sales of
inventory consigned to Borrowers at each shoe department leased by Xxxxx Mart to
other Persons at Xxxxx Mart's retail store locations, and (B) reports of
aggregate Inventory purchases (including all costs related thereto, such as
freight, duty and taxes) and identifying items of Inventory in transit to any
Borrower related to the applicable documentary letter of credit and/or xxxx of
lading number;
(vi) upon Agent's request, such information as shall be
sufficient to enable Agent to monitor the transactions pursuant to the Credit
Card Agreements;
(vii) such other reports as to the Collateral as Agent
shall reasonably request from time to time.
(b) If any Borrower's records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, such Borrower hereby irrevocably authorizes such service, contractor,
shipper or agent to deliver such records, reports, and related documents to
Agent and to follow Agent's instructions with respect to further services at any
time that an Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Each Borrower shall notify Agent promptly of the assertion
of (i) any claims, offsets, defenses or counterclaims by any account debtor,
Credit Card Issuer or Credit Card Processor or any disputes with any of such
persons or any settlement, adjustment or compromise thereof, to the extent any
of the foregoing exceeds $1,000,000 in any one case or $2,000,000 in the
aggregate and (ii) all material adverse information relating to the financial
condition of any account debtor, Credit Card Issuer or Credit Card Processor. No
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor, Credit Card Issuer or Credit Card
Processor except in the ordinary course of a Borrower's business in accordance
with the current practices of such Borrower as in effect on the date hereof. So
long as no Event of Default exists or has occurred and is continuing, no
Borrower shall settle, adjust or compromise any claim, offset, counterclaim or
dispute with any account debtor, Credit Card Issuer, Credit Card Processor. At
any time that an Event of Default exists or has occurred and is continuing,
Agent shall, at its option, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account debtors,
Credit Card Issuers or Credit Card Processors or grant any credits, discounts or
allowances.
(b) With respect to each Account: (i) no payments shall be
made thereon except payments delivered to Agent pursuant to the terms of this
Agreement, (ii) there shall be no setoffs,
225156-14 48
deductions, contras, defenses, counterclaims or disputes existing or asserted
with respect thereto except as reported to Agent in accordance with the terms of
this Agreement and (iii) none of the transactions giving rise thereto will
violate in any material respect any applicable State or Federal Laws or
regulations, all documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be legally enforceable
in accordance with its terms.
(c) Each Borrower shall notify Agent promptly of: (i) any
notice of a material default by such Borrower under any of the Credit Card
Agreements or of any default which has a reasonable likelihood of resulting in
the Credit Card Issuer or Credit Card Processor ceasing to make payments or
suspending payments to such Borrower, (ii) any notice from any Credit Card
Issuer or Credit Card Processor that such person is ceasing or suspending, or
will cease or suspend, any present or future payments due or to become due to
such Borrower from such person, or that such person is terminating or will
terminate any of the Credit Card Agreements, and (iii) the failure of such
Borrower to comply with any material terms of the Credit Card Agreements or any
terms thereof which has a reasonable likelihood of resulting in the Credit Card
Issuer or Credit Card Processor ceasing or suspending payments to such Borrower.
(d) Agent shall have the right at any time or times, in
Agent's name or in the name of a nominee of Agent, to verify the validity,
amount or any other matter relating to any Receivables or other Collateral, by
mail, telephone, facsimile transmission or otherwise.
7.3 Inventory Covenants. With respect to the Inventory: (a) each
Borrower shall at all times maintain inventory records reasonably satisfactory
to Agent, keeping correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, such Borrower's cost therefor and
daily withdrawals therefrom and additions thereto; (b) Borrowers shall conduct a
physical count of the Inventory either through periodic cycle counts or wall to
wall counts, so that all Inventory is subject to such counts at least once each
year, but at any time or times as Agent may request at any time an Event of
Default exists or has occurred and is continuing, and promptly following such
physical inventory (whether through periodic cycle counts or wall to wall
counts) shall supply Agent with a report in the form and with such specificity
as may be reasonably satisfactory to Agent concerning such physical count; (c)
Borrowers shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Agent, except for sales
of Inventory in the ordinary course of Borrowers' business and except to move
Inventory directly from one location set forth or permitted herein to another
such location and except for Inventory shipped from the manufacturer thereof to
such Borrower which is in transit to the locations set forth or permitted
herein; (d) upon Agent's request, Borrowers shall, at their expense, no more
than one (1) time in any twelve (12) month period, but at any time or times as
Agent may request at Agent's expense, or at any time or times as Agent may
request at Borrowers' expense at any time an Event of Default exists or has
occurred and is continuing, deliver or cause to be delivered to Agent written
reports or appraisals as to the Inventory in form, scope and methodology
acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent
and upon which Agent and Lenders are expressly permitted to rely; (e) upon
Agent's request, Borrowers shall, at their expense, conduct through RGIS
Inventory Specialists, Inc. or another inventory counting
225156-14 49
service acceptable to Agent, a physical count of the Inventory in form, scope
and methodology acceptable to Agent not more than two (2) times in any twelve
(12) month period; provided, that, so long as no Event of Default has occurred
and is continuing, only one (1) such physical count conducted in any such twelve
(12) month period shall be conducted at Borrowers' expense, but at any time or
times as Agent may request at any time an Event of Default exists or has
occurred and is continuing or at any time or times as Agent may request in the
event of test count variances in excess of the shrinkage reserve established by
any Borrower, the results of which shall be reported directly by such inventory
counting service to Agent and Borrowers shall promptly deliver confirmation in a
form satisfactory to Agent that appropriate adjustments have been made to the
inventory records of Borrowers to reconcile the inventory count to Borrowers'
inventory records; (f) each Borrower shall produce, use, store and maintain the
Inventory, with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with applicable laws
(including the requirements of the Federal Fair Labor Standards Act of 1938, as
amended and all rules, regulations and orders related thereto); (g) none of the
Inventory or other Collateral constitutes farm products or the proceeds thereof;
(h) each Borrower assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory; (i)
Borrowers shall not sell Inventory to any customer on approval, or any other
basis which entitles the customer to return or may obligate any Borrower to
repurchase such Inventory except for the right of return given to retail
customers of such Borrower in the ordinary course of the business of such
Borrower in accordance with the then current return policy of such Borrower; (j)
Borrowers shall keep the Inventory in good and marketable condition; (k)
Borrowers shall not, without prior written notice to Agent or the specific
identification of such Inventory in a report with respect thereto provided by
Administrative Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or
accept any Inventory on consignment or approval.
7.4 [Reserved].
7.5 Power of Attorney. Each Borrower hereby irrevocably designates
and appoints Agent (and all persons designated by Agent) as such Borrower's true
and lawful attorney-in-fact, and authorizes Agent, in such Borrower's or Agent's
name, to: (a) at any time an Event of Default exists or has occurred and is
continuing (i) demand payment on Receivables or other Collateral, (ii) enforce
payment of Receivables by legal proceedings or otherwise, (iii) exercise all of
such Borrower's rights and remedies to collect any Receivable or other
Collateral, (iv) sell or assign any Receivable upon such terms, for such amount
and at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release any
Receivable, (vii) prepare, file and sign such Borrower's name on any proof of
claim in bankruptcy or other similar document against an account debtor or other
obligor in respect of any Receivables or other Collateral, (viii) notify the
post office authorities to change the address for delivery of remittances from
account debtors or other obligors in respect of Receivables or other proceeds of
Collateral to an address designated by Agent, and open and dispose of all mail
addressed to such Borrower and handle and store all mail relating to the
Collateral; and (ix) do all acts and things which are necessary, in Agent's
determination, to fulfill such Borrower's obligations under this Agreement and
the other Financing Agreements and (b) at any time to (i) take control in any
manner of any item of payment in respect of Receivables or constituting
Collateral
225156-14 50
or otherwise received in or for deposit in the Blocked Accounts or otherwise
received by Agent or any Lender, (ii) have access to any lockbox or postal box
into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, (iii) endorse
such Borrower's name upon any items of payment in respect of Receivables or
constituting Collateral or otherwise received by Agent and any Lender and
deposit the same in Agent's account for application to the Obligations, (iv)
endorse such Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Receivable or any
goods pertaining thereto or any other Collateral, including any warehouse or
other receipts, or bills of lading and other negotiable or non-negotiable
documents, (v) clear Inventory the purchase of which was financed with Letter of
Credit Accommodations through U.S. Customs or foreign export control authorities
in such Borrower's name, Agent's name or the name of Agent's designee, and to
sign and deliver to customs officials powers of attorney in such Borrower's name
for such purpose, and to complete in such Borrower's or Agent's name, any order,
sale or transaction, obtain the necessary documents in connection therewith and
collect the proceeds thereof, and (vi) sign such Borrower's name on any
verification of Receivables and notices thereof to account debtors or any
secondary obligors or other obligors in respect thereof. Each Borrower hereby
releases Agent and Lenders and their respective officers, employees and
designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of Agent's or any Lender's own gross negligence or wilful misconduct
as determined pursuant to a final non-appealable order of a court of competent
jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to
Administrative Borrower, (a) cure any default by any Borrower under any material
agreement with a third party that affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower to perform its obligations hereunder or under any of the other
Financing Agreements, (b) pay or bond on appeal any judgment entered against any
Borrower, (c) discharge taxes, liens, security interests or other encumbrances
at any time levied on or existing with respect to the Collateral and pay any
amount, incur any expense or perform any act which, in Agent's judgment, is
necessary or appropriate to preserve, protect, insure or maintain the Collateral
and the rights of Agent and Lenders with respect thereto. Agent may add any
amounts so expended to the Obligations and charge any Borrower's account
therefor, such amounts to be repayable by Borrowers on demand. Agent and Lenders
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of any
Borrower. Any payment made or other action taken by Agent or any Lender under
this Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
7.7 Access to Premises. From time to time as requested by Agent, at
the cost and expense of Borrowers, (a) Agent or its designee shall have complete
access to all of each Borrower's premises during normal business hours and after
notice to Administrative Borrower, which right shall be exercised by Agent in a
manner reasonably designed to minimize disruption of Borrowers' business, so
long as no Event of Default has occurred and is continuing, or at any time and
without notice to Administrative
225156-14 51
Borrower if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
each Borrower's books and records, including the Records, and (b) each Borrower
shall promptly furnish to Agent such copies of such books and records or
extracts therefrom as Agent may request, and Agent or any Lender or Agent's
designee may use during normal business hours such of any Borrower's personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Receivables and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations to Borrowers:
8.1 Corporate Existence, Power and Authority. Each Borrower is a
corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a Material Adverse Effect on such Borrower's financial condition,
results of operation or business or the rights of Agent in or to any of the
Collateral. The execution, delivery and performance of this Agreement, the other
Financing Agreements and the transactions contemplated hereunder and thereunder
(a) are all within each Borrower's corporate powers, (b) have been duly
authorized, (c) are not in contravention of law or the terms of any Borrower's
certificate of incorporation, by-laws, or other organizational documentation, or
any indenture, agreement or undertaking to which any Borrower is a party or by
which any Borrower or its property are bound and (d) will not result in the
creation or imposition of, or require or give rise to any obligation to grant,
any lien, security interest, charge or other encumbrance upon any property of
any Borrower. This Agreement and the other Financing Agreements to which any
Borrower is a party constitute legal, valid and binding obligations of such
Borrower enforceable in accordance with their respective terms.
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of each Borrower is as set forth on
the signature page of this Agreement and in the Information Certificate. No
Borrower has, during the five years prior to the date of this Agreement, been
known by or used any other corporate or fictitious name or been a party to any
merger or consolidation, or acquired all or substantially all of the assets of
any Person, or acquired any of its property or assets out of the ordinary course
of business, except as set forth in the Information Certificate.
(b) Each Borrower is an organization of the type and organized
in the jurisdiction set forth in the Information Certificate. The Information
Certificate accurately sets forth the organizational
225156-14 52
identification number of each Borrower or accurately states that such Borrower
has none and accurately sets forth the federal employer identification number of
each Borrower.
(c) The chief executive office and mailing address of each
Borrower and each Borrower's Records concerning Accounts are located only at the
address identified as such in Schedule 8.2 to the Information Certificate and
its only other places of business and the only other locations of Collateral, if
any, are the addresses set forth in Schedule 8.2 to the Information Certificate,
subject to the rights of any Borrower to establish new locations in accordance
with Section 9.2 below. The Information Certificate correctly identifies any of
such locations which are not owned by a Borrower and sets forth the owners
and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All financial
statements relating to any Borrower which have been or may hereafter be
delivered by any Borrower to Agent and Lenders have been prepared in accordance
with GAAP (except as to any interim financial statements, to the extent such
statements are subject to normal year-end adjustments and do not include any
notes) and fairly present in all material respects the financial condition and
the results of operation of such Borrower as at the dates and for the periods
set forth therein. Except as disclosed in any interim financial statements
furnished by Borrowers to Agent prior to the date of this Agreement, there has
been no act, condition or event which has had or is reasonably likely to have a
Material Adverse Effect since the date of the most recent audited financial
statements of any Borrower furnished by any Borrower to Agent prior to the date
of this Agreement.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Agent under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens indicated on
Schedule 8.4 to the Information Certificate and the other liens permitted under
Section 9.8 hereof. Each Borrower has good and marketable fee simple title to or
valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof. As of the date hereof, all inventory held for sale at each of Borrowers'
retail store shoe departments has been consigned to Borrowers by Persons who
operate such shoe departments pursuant to lease arrangements with Borrowers,
none of such shoe inventory is owned by Borrowers, and none of such shoe
inventory, nor any Accounts or other proceeds arising from the sale thereof,
constitutes a part of the Collateral.
8.5 Tax Returns. Each Borrower has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to be
filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Each Borrower has paid or caused
to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower and with respect to which adequate reserves have
225156-14 53
been set aside on its books. Adequate provision has been made for the payment of
all accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on Schedule 8.6 to the
Information Certificate, (a) there is no investigation by any Governmental
Authority pending, or to the best of any Borrower's knowledge threatened,
against or affecting any Borrower, its or their assets or business and (b) there
is no action, suit, proceeding or claim by any Person pending, or to the best of
any Borrower's knowledge threatened, against any Borrower or its or their assets
or goodwill, or against or affecting any transactions contemplated by this
Agreement, in each case, which if adversely determined against such Borrower has
or could reasonably be expected to have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) Except as set forth on Schedule 8.7 to the Information
Certificate, Borrowers are not in default in any respect under, or in violation
in any respect of the terms of, any material agreement, contract, instrument,
lease or other commitment to which it is a party or by which it or any of its
assets are bound. Borrowers are in compliance with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
relating to their respective businesses, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health Act
of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
the Code, as amended, and the rules and regulations thereunder, and all
Environmental Laws, except for any non-compliance therewith that has not
resulted, and could not reasonably be expected to result, in a Material Adverse
Effect.
(b) Borrowers have obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental
Authority required for the lawful conduct of its business (the "Permits"),
except for any permits in respect of which Borrowers' failure to obtain the same
has not resulted, and could not reasonably be expected to result, in a Material
Adverse Effect. All of the Permits are valid and subsisting and in full force
and effect. There are no actions, claims or proceedings pending or to the best
of any Borrower's knowledge, threatened that seek the revocation, cancellation,
suspension or modification of any of the Permits.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers and any Subsidiary of any Borrower have not generated,
used, stored, treated, transported, manufactured, handled, produced or disposed
of any Hazardous Materials, on or off its premises (whether or not owned by it)
in any manner which at any time violates in any respect any applicable
Environmental Law or Permit, and the operations of Borrowers and any Subsidiary
of any Borrower complies in all respects with all Environmental Laws and all
Permits, except for any such violation or
225156-14 54
non-compliance therewith that has not resulted, and could not reasonably be
expected to result, in a Material Adverse Effect..
(b) Except as set forth on Schedule 8.8 to the Information
Certificate, there has been no investigation by any Governmental Authority or
any proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person nor is any pending or to the best of
any Borrower's knowledge threatened, with respect to any non-compliance with or
violation of the requirements of any Environmental Law by any Borrower and any
Subsidiary of any Borrower or the release, spill or discharge, threatened or
actual, of any Hazardous Material or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials or any other environmental, health or safety matter, which adversely
affects or could reasonably be expected to adversely affect in any material
respect any Borrower or its or their business, operations or assets or any
properties at which such Borrower has transported, stored or disposed of any
Hazardous Materials.
(c) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers and their Subsidiaries have no material liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Borrowers and their Subsidiaries have all Permits required
to be obtained or filed in connection with the operations of Borrowers under any
Environmental Law and all of such licenses, certificates, approvals or similar
authorizations and other Permits are valid and in full force and effect, except
for any such licenses, certificates, approvals or similar authorizations and
other Permits, in respect of which Borrowers' failure to obtain and maintain the
same in full force and effect has not resulted, and could not reasonably be
expected to result, in a Material Adverse Effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other Federal or State law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and
to the best of any Borrower's knowledge, nothing has occurred which would cause
the loss of such qualification. Each Borrower and its ERISA Affiliates have made
all required contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending, or to the best of any Borrower's
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan.
225156-14 55
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) are not less than such Plan's liabilities under Section 4001(a)(16) of
ERISA; (iii) each Borrower, and their ERISA Affiliates, have not incurred and do
not reasonably expect to incur, any liability under Title IV of ERISA with
respect to any Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) each Borrower, and their ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) each Borrower, and their ERISA Affiliates, have not
engaged in a transaction that would be subject to Section 4069 or 4212(c) of
ERISA.
8.10 Bank Accounts. All of the deposit accounts, investment accounts
or other accounts in the name of or used by any Borrower maintained at any bank
or other financial institution are set forth on Schedule 8.10 to the Information
Certificate, subject to the right of each Borrower to establish new accounts in
accordance with Section 5.2 hereof.
8.11 Intellectual Property. Each Borrower owns or licenses or
otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted. As
of the date hereof, Borrowers do not have any Intellectual Property registered,
or subject to pending applications, in the United States Patent and Trademark
Office or any similar office or agency in the United States, any State thereof,
any political subdivision thereof or in any other country, other than those
described in Schedule 8.11 to the Information Certificate and has not granted
any licenses with respect thereto other than as set forth in Schedule 8.11 to
the Information Certificate. No event has occurred which permits or would permit
after notice or passage of time or both, the revocation, suspension or
termination of such rights. Except as set forth on Schedule 8.11 to the
Information Certificate, to the best of any Borrower's knowledge, no slogan or
other advertising device, product, process, method, substance or other
Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by any Borrower infringes any
patent, trademark, servicemark, tradename, copyright, license or other
Intellectual Property owned by any other Person presently and no claim or
litigation is pending or threatened against or affecting any Borrower contesting
its right to sell or use any such Intellectual Property. Schedule 8.11 to the
Information Certificate sets forth all of the agreements or other arrangements
of each Borrower pursuant to which such Borrower has a license or other right to
use any trademarks, logos, designs, representations or other Intellectual
Property owned by another person as in effect on the date hereof and the dates
of the expiration of such agreements or other arrangements of such Borrower as
in effect on the date hereof (collectively, together with such agreements or
other arrangements as may be entered into by any Borrower after the date hereof,
collectively, the "License Agreements" and individually, a "License Agreement").
No trademark, servicemark, copyright or other Intellectual Property at any time
used by any Borrower which is owned by another person, or owned by such Borrower
subject to any security interest, lien, collateral assignment, pledge or other
encumbrance in favor of any person other than Agent, is affixed to any Eligible
Inventory, except (a) to the extent permitted under the term of the
225156-14 56
license agreements listed on Schedule 8.11 to the Information Certificate and
(b) to the extent the sale of Inventory to which such Intellectual Property is
affixed is permitted to be sold by such Borrower under applicable law (including
the United States Copyright Act of 1976).
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) Each Borrower does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 to the Information Certificate,
except that, there may from time to time exist Persons (in addition to Xxx
Xxxxx) who have acquired in excess of ten (10%) percent of Xxxxx Mart's publicly
traded shares of Capital Stock and who therefore, by virtue of such Capital
Stock ownership, constitute Affiliates of Borrowers who are not listed on such
Schedule 8.12 to the Information Certificate.
(b) Each Borrower is the record and beneficial owner of all of
the issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed on Schedule 8.12 to the Information Certificate as being owned by such
Borrower and there are no proxies, irrevocable or otherwise, with respect to
such shares and no equity securities of any of the Subsidiaries are or may
become required to be issued by reason of any options, warrants, rights to
subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is or may become bound to issue additional shares of it Capital Stock or
securities convertible into or exchangeable for such shares.
(c) The issued and outstanding shares of Capital Stock of each
Borrower are directly and beneficially owned and held by the persons indicated
in the Information Certificate, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Agent prior to the date hereof.
(d) Each Borrower is Solvent and will continue to be Solvent
after the creation of the Obligations, the security interests of Agent and the
other transaction contemplated hereunder.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information Certificate
is a list (including dates of termination) of all collective bargaining or
similar agreements between or applicable to each Borrower and any union, labor
organization or other bargaining agent in respect of the employees of any
Borrower on the date hereof.
(b) There is (i) no significant unfair labor practice
complaint pending against any Borrower or, to the best of any Borrower's
knowledge, threatened against it, before the National Labor Relations Board, and
no significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
any Borrower or, to best of
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any Borrower's knowledge, threatened against it, and (ii) no significant strike,
labor dispute, slowdown or stoppage is pending against any Borrower or, to the
best of any Borrower's knowledge, threatened against any Borrower.
8.14 Restrictions on Subsidiaries. Except for restrictions contained
in this Agreement or any other agreement with respect to Indebtedness of any
Borrower permitted hereunder as in effect on the date hereof, there are no
contractual or consensual restrictions on any Borrower or any of its
Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash or
other assets (i) between any Borrower and any of its or their Subsidiaries or
(ii) between any Subsidiaries of any Borrower or (b) the ability of any Borrower
or any of its or their Subsidiaries to incur Indebtedness or grant security
interests to Agent or any Lender in the Collateral.
8.15 Material Contracts. Schedule 8.15 to the Information Certificate
sets forth all Material Contracts to which any Borrower is a party or is bound
as of the date hereof. Borrowers have delivered true, correct and complete
copies of such Material Contracts to Agent on or before the date hereof.
Borrowers are not in breach or in default in any material respect of or under
any Material Contract and have not received any notice of the intention of any
other party thereto to terminate any Material Contract.
8.16 Credit Card Agreements. Set forth in Schedule 8.16 hereto is a
correct and complete list of all of the Credit Card Agreements and all other
agreements, documents and instruments existing as of the date hereof between or
among any Borrower, the Credit Card Issuers, the Credit Card Processors and any
Affiliates of the Credit Card Issuers and/or the Credit Card Processors. The
Credit Card Agreements constitute all of such agreements necessary for each
Borrower to operate its business as presently conducted with respect to credit
cards and debit cards and no Receivables of any Borrower arise from purchases by
customers of Inventory with credit cards or debit cards, other than those which
are issued by Credit Card Issuers with whom such Borrower has entered into one
of the Credit Card Agreements set forth on Schedule 8.16 hereto or with whom
Borrower has entered into a Credit Card Agreement in accordance with Section
9.17 hereof. Each of the Credit Card Agreements constitutes the legal, valid and
binding obligations of the Borrower that is party thereto and to the best of
each Borrower's knowledge, the other parties thereto, enforceable in accordance
with their respective terms and is in full force and effect. To the best of each
Borrower's knowledge, no default or event of default, or act, condition or event
which after notice or passage of time or both, would constitute a default or an
event of default under any of the Credit Card Agreements exists or has occurred.
Each Borrower has complied in all material respects with all of the terms and
conditions of the Credit Card Agreements to the extent necessary for such
Borrower to be entitled to receive all payments thereunder. Borrowers have
delivered, or caused to be delivered to Agent, true, correct and complete copies
of all of the Credit Card Agreements.
8.17 Payable Practices. Each Borrower has not made any material change
in the historical accounts payable practices from those in effect immediately
prior to the date hereof.
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8.18 Accuracy and Completeness of Information. All information
furnished by or on behalf of any Borrower in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the date
as of which such information is dated or certified and, to Borrowers' knowledge,
does not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has had or could
reasonably be expected to have a Material Adverse Affect, which has not been
fully and accurately disclosed to Agent in writing prior to the date hereof.
8.19 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agent and Lenders regardless of any
investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Borrower shall now
or hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Each Borrower shall at all times preserve, renew and keep
in full force and effect its corporate existence and rights and franchises with
respect thereto and maintain in full force and effect all licenses, trademarks,
tradenames, approvals, authorizations, leases, contracts and Permits necessary
to carry on the business as presently or proposed to be conducted.
(b) No Borrower shall change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from Administrative Borrower of such
proposed change in its corporate name, which notice shall accurately set forth
the new name; and (ii) Agent shall have received a copy of the amendment to the
Certificate of Incorporation of such Borrower providing for the name change
certified by the Secretary of State of the jurisdiction of incorporation or
organization of such Borrower as soon as it is available.
(c) No Borrower shall change its chief executive office or its
mailing address or organizational identification number (or if it does not have
one, shall not acquire one) unless Agent shall have received not less than
thirty (30) days' prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. No Borrower shall change
its type of organization, jurisdiction of organization or other legal structure.
225156-14 59
9.2 New Collateral Locations; New Back-up Data Service Providers. (a)
Each Borrower may only open any new location within the continental United
States provided such Borrower (i) gives Agent thirty (30) days prior written
notice of the intended opening of any such new location and (ii) in the case of
any new Inventory distribution center and any new warehouse location, executes
and delivers, or causes to be executed and delivered, to Agent, such agreements,
documents, and instruments as Agent may deem reasonably necessary or desirable
to protect its interests in the Collateral at such location.
(b) Each Borrower may only enter into (i) back-up data
services arrangements with respect to Borrowers' computer data Records with a
Person in addition to or in replacement of Iron Mountain Records Management,
Inc., of Jacksonville, Florida, and (ii) back-up computer program services
arrangements with respect to Borrowers' computer programs, now or hereafter
utilized in the ordinary course of Borrowers' business operations for the
maintenance of such computer Records, with a Person in addition to or in
replacement of Sunguard Availability Services, of Philadelphia, Pennsylvania,
provided, in each case, Borrowers (A) give Agent thirty (30) days prior written
notice of such additional or replacement arrangements, together with a copy of
any agreement that Borrowers propose to enter into and execute in connection
therewith and (B) execute and deliver, or cause to be executed and delivered, to
Agent such agreements, documents and instruments as Agent shall reasonably
require to protect Agent's interests in such Records.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower shall, and shall cause any Subsidiary to, at
all times, comply in all material respects with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe
all requirements of any foreign, Federal, State or local Governmental Authority,
including ERISA, the Code, the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, and all statutes,
rules, regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including all of the Environmental
Laws, except where the failure to comply with any of the foregoing has not
resulted in, and could not reasonably be expected to result in, a Material
Adverse Effect.
(b) Borrowers shall give written notice to Agent immediately
upon any Borrower's receipt of any notice of, or any Borrower's otherwise
obtaining knowledge of, (i) the occurrence of any event involving the release,
spill or discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by any Borrower or (B) the release, spill or discharge,
threatened or actual, of any Hazardous Material other than in the ordinary
course of business and other than as permitted under any applicable
Environmental Law. Copies of all environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations shall be promptly
furnished, or caused to be furnished, by such Borrower to Agent. Each Borrower
shall take prompt action to respond to any material non-compliance with any of
the Environmental Laws and shall regularly report to Agent on such response.
225156-14 60
(c) Without limiting the generality of the foregoing, whenever
Agent reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of any Borrower in order to avoid any
non-compliance, with any Environmental Law, Borrowers shall, at Agent's request
and Borrowers' expense: (i) cause an independent environmental engineer
reasonably acceptable to Agent to conduct such tests of the site where
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(d) Each Borrower shall indemnify and hold harmless Agent and
Lenders and their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower and
the preparation and implementation of any closure, remedial or other required
plans. All representations, warranties, covenants and indemnifications in this
Section 9.3 shall survive the payment of the Obligations and the termination of
this Agreement.
9.4 Payment of Taxes and Claims. Each Borrower shall, and shall cause
any Subsidiary to, duly pay and discharge all taxes, assessments, contributions
and governmental charges upon or against it or its properties or assets, except
for taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower or Subsidiary, as
the case may be, and with respect to which adequate reserves have been set aside
on its books. Each Borrower shall be liable for any tax or penalties imposed on
Agent or any Lender as a result of the financing arrangements provided for
herein and each Borrower agrees to indemnify and hold Agent harmless with
respect to the foregoing, and to repay to Agent, for the benefit of Lenders, on
demand the amount thereof, and until paid by such Borrower such amount shall be
added and deemed part of the Loans, provided, that, nothing contained herein
shall be construed to require any Borrower to pay any income or franchise taxes
attributable to the income of Lenders from any amounts charged or paid hereunder
to Lenders. The foregoing indemnity shall survive the payment of the Obligations
and the termination of this Agreement.
9.5 Insurance. Each Borrower shall, and shall cause any Subsidiary
to, at all times, maintain with financially sound and reputable insurers
insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or carried
by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer. Borrowers shall
furnish certificates, policies or endorsements to Agent as Agent shall
reasonably require
225156-14 61
as proof of such insurance, and, if any Borrower fails to do so, Agent is
authorized, but not required, to obtain such insurance at the expense of
Borrowers. All policies shall provide for at least thirty (30) days prior
written notice to Agent of any cancellation or reduction of coverage and that
Agent may act as attorney for each Borrower in obtaining, and at any time an
Event of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. Borrowers shall cause Agent to be named
as a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Borrowers shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to Agent. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Agent as its interests may appear and further specify that Agent and Lenders
shall be paid regardless of any act or omission by any Borrower or any of its or
their affiliates. Without limiting any other rights of Agent or Lenders, any
insurance proceeds received by Agent at any time may be applied to payment of
the Obligations, whether or not then due, in any order and in such manner as
Agent may determine. Upon application of such proceeds to the Revolving Loans,
Revolving Loans may be available subject and pursuant to the terms hereof to be
used for the costs of repair or replacement of the Collateral lost or damages
resulting in the payment of such insurance proceeds.
9.6 Financial Statements and Other Information.
(a) Each Borrower shall, and shall cause any Subsidiary to,
keep proper books and records in which true and complete entries shall be made
of all dealings or transactions of or in relation to the Collateral and the
business of such Borrower and its Subsidiaries in accordance with GAAP.
Borrowers shall promptly furnish to Agent and Lenders all such financial and
other information as Agent shall reasonably request relating to the Collateral
and the assets, business and operations of Borrowers, and Borrower shall notify
the auditors and accountants of Borrowers that Agent is authorized to obtain
such information directly from them. Without limiting the foregoing, Borrowers
shall furnish or cause to be furnished to Agent, the following: (i) within
thirty (30) days after the end of each fiscal month, monthly unaudited
consolidated financial statements (including in each case, statements of income
and loss and, upon Agent's request, a trial balance, all in reasonable detail,
fairly presenting the results of the operations of Borrowers and their
Subsidiaries as of the end of and through such fiscal month, certified to be
correct by the chief financial officer of Borrowers, subject to normal year-end
adjustments and no footnotes and accompanied by a compliance certificate
substantially in the form of Exhibit C hereto, and, at Agent's request, such
information as Agent may reasonably request with respect to Borrowers' liability
reflected on such monthly financial statements in respect of Borrowers'
self-insurance program covering employee health and workmen's compensation
claims ("Self-insurance Liability"), (ii) within forty-five (45) days after the
end of each fiscal quarter, quarterly unaudited consolidated financial
statements (including in each case balance sheets, statements of income and
loss, statements of cash flow and statements of shareholder's equity), all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Borrowers and their Subsidiaries as of the end of each and
through such fiscal quarter, together with a summary report by retail store
location of sales and operating profits for each such retail store location
(which may be delivered to Agent in EXCEL spreadsheet format and downloaded by
Borrower by means of the ESSBASE system), in each case certified to be correct
by
225156-14 62
the chief financial officer of Borrowers, accompanied by a compliance
certificate substantially in the form of Exhibit C hereto, and a copy of
Borrowers' internally prepared analysis with respect to Borrowers'
Self-insurance Liability reflected on such quarterly financial statements and
(iii) within ninety (90) days after the end of each fiscal year, audited
consolidated financial statements of Borrowers and their Subsidiaries (including
in each case balance sheets, statements of income and loss, statements of cash
flow, and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position and
the results of the operations of Borrowers and their Subsidiaries as of the end
of and for such fiscal year, together with the unqualified opinion of
independent certified public accountants with respect to the audited
consolidated financial statements, which accountants shall be an independent
accounting firm selected by Borrowers and acceptable to Agent, that such audited
consolidated financial statements have been prepared in accordance with GAAP,
and present fairly the results of operations and financial condition of
Borrowers and their Subsidiaries as of the end of and for the fiscal year then
ended and together with such information as Agent may reasonably request with
respect to Borrowers' liability reflected on such audited financial statements
with respect to Borrowers' Self-insurance Liability.
(b) Borrowers shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $2,500,000 or which if
adversely determined would result in any Material Adverse Effect, (ii) any
Material Contract being terminated or amended or any new Material Contract
entered into (in which event Borrowers shall provide Agent with a copy of such
Material Contract), (iii) any order, judgment or decree in excess of $2,500,000
shall have been entered against any Borrower any of its or their properties or
assets, (iv) any notification of a material violation of laws or regulations
received by any Borrower, (v) any ERISA Event, and (vi) the occurrence of any
Default or Event of Default.
(c) Borrowers shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent (i) within forty-five (45)
days after the end of each fiscal quarter, Borrowers' Form 10-Q Report that
Borrowers are required to file with respect to such fiscal quarter with the
Securities and Exchange Commission and (ii) within ninety (90) days after the
end of each fiscal year, Borrowers' Form 10-K Report that Borrowers are required
to file with the Securities and Exchange Commission with respect to such fiscal
year.
(d) Borrowers shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
any Borrower sends to its stockholders generally and copies of all reports
(other than Securities and Exchange Commission Form 10-Q and Form 10-K Reports)
and registration statements which any Borrower files with the Securities and
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(e) Borrowers shall furnish or cause to be furnished to Agent
copies of such budgets, forecasts, projections and other information respecting
the Collateral and the business of Borrowers, as Agent may, from time to time,
reasonably request, which may be generally furnished in the form historically
prepared by Borrowers, but shall in all events be in form and substance
reasonably
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satisfactory to Agent. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrowers to any court or other Governmental Authority or to any Lender or
Participant or prospective Lender or Participant or any Affiliate of any Lender
or Participant. Each Borrower hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Agent, at Borrowers' expense, copies of
the financial statements of any Borrower and any reports or management letters
prepared by such accountants or auditors on behalf of any Borrower and to
disclose to Agent and Lenders such information as they may have regarding the
business of any Borrower. Any documents, schedules, invoices or other papers
delivered to Agent or any Lender may be destroyed or otherwise disposed of by
Agent or such Lender one (1) year after the same are delivered to Agent or such
Lender, except as otherwise designated by Administrative Borrower to Agent or
such Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Each Borrower shall not, and shall not permit any Subsidiary to, directly or
indirectly:
(a) merge into or with or consolidate with any other Person
or permit any other Person to merge into or with or consolidate with it;
(b) sell, issue, assign, lease, license, transfer, abandon or
otherwise dispose of any Capital Stock or Indebtedness to any other Person or
any of its assets to any other Person, except for
(i) sales of Inventory in the ordinary course of business,
(ii) the issuance and sale by any Borrower of Capital
Stock of such Borrower after the date hereof; provided, that, (A) Agent shall
have received not less than ten (10) Business Days' prior written notice of such
issuance and sale by such Borrower, which notice shall specify the parties to
whom such shares are to be sold, the terms of such sale, the total amount which
it is anticipated will be realized from the issuance and sale of such stock and
the net cash proceeds which it is anticipated will be received by such Borrower
from such sale, (B) such Borrower shall not be required to pay any cash
dividends or repurchase or redeem such Capital Stock or make any other payments
in respect thereof, except as otherwise permitted in Section 9.11 hereof, (C)
the terms of such Capital Stock, and the terms and conditions of the purchase
and sale thereof, shall not include any terms that include any limitation on the
right of any Borrower to request or receive Loans or Letter of Credit
Accommodations or the right of any Borrower to amend or modify any of the terms
and conditions of this Agreement or any of the other Financing Agreements or
otherwise in any way relate to or affect the arrangements of Borrowers with
Agent and Lenders or are more restrictive or burdensome to any Borrower than the
terms of any Capital Stock in effect on the date hereof, and (D) as of the date
of such issuance and sale and after giving effect thereto, no Default or Event
of Default shall exist or have occurred,
(iii) the issuance of Capital Stock of any Borrower
consisting of common stock pursuant to an employee stock option or grant,
employee stock purchase plan or similar equity
225156-14 64
plan or 401(k) plans of such Borrower for the benefit of its employees,
directors and consultants, provided, that, in no event shall such Borrower be
required to issue, or shall such Borrower issue, Capital Stock pursuant to such
stock plans or 401(k) plans which would result in a Change of Control or other
Event of Default, and
(iv) sales or other dispositions by any Borrower of
assets in connection with the closing or sale of any one or more retail store
locations of such Borrower in the ordinary course of such Borrower's business
which consist of leasehold interests in the premises of such store, the
Inventory, Equipment and fixtures located at such premises and the books and
records relating exclusively and directly to the operations of such store;
provided, that, as to each and all such sales and closings, (A) on the date of,
and after giving effect to, any such closing or sale, the number of retail store
locations closed or sold by Borrowers from and after the Closing Date (excluding
for the purposes hereof retail store locations that Borrowers are in the process
of closing as of the Closing Date) minus the number of retail stores opened by
Borrowers from and after the Closing Date, shall not exceed the amount equal to
fifteen (15%) percent of the number of store locations of Borrowers as of the
day immediately preceding the Closing Date, but in no event shall the aggregate
amount of all sales at all of the store locations closed or sold by Borrowers
during the term of this Agreement have been more than $200,000,000, (B) Agent
shall have received not less than ten (10) Business Days prior written notice of
such sale or closing, which notice shall set forth in reasonable detail
satisfactory to Agent, the parties to such sale or other disposition, the assets
to be sold or otherwise disposed of, the purchase price and the manner of
payment thereof and such other information with respect thereto as Agent may
reasonably request, (C) as of the date of such sale or other disposition and
after giving effect thereto, no Event of Default shall exist or have occurred
and be continuing, (D) such sale shall be on commercially reasonable prices and
terms in a bona fide arm's length transaction, and (E) any and all proceeds
payable or delivered to such Borrower in respect of such sale or other
disposition shall be paid or delivered, or caused to be paid or delivered, to
Agent in accordance with the terms of this Agreement; or
(c) wind up, liquidate or dissolve; or
(d) agree to do any of the foregoing.
9.8 Encumbrances. Each Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any security interest or lien with respect to any such assets
or properties, except:
(a) the security interests and liens of Agent for itself and
the benefit of Lenders;
(b) liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings and/or other
appropriate actions diligently pursued and available to such Borrower or
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Subsidiary, as the case may be, and with respect to which adequate reserves have
been set aside on its books, if required in accordance with GAAP;
(c) non-consensual statutory liens (other than liens securing
the payment of taxes) arising in the ordinary course of such Borrower's or
Subsidiary's business to the extent: (i) such liens secure Indebtedness which is
not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured (except for any deductible or self-insured
portion) and being defended at the sole cost and expense and at the sole risk of
the insurer or which are being contested in good faith by appropriate
proceedings and/or other appropriate actions diligently pursued and available to
such Borrower or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books, if required in accordance with GAAP;
(d) zoning restrictions, easements, licenses, covenants and
other restrictions affecting the use of Real Property which do not interfere in
any material respect with the use of such Real Property by a Borrower or
Subsidiary or ordinary conduct of the business of such Borrower or such
Subsidiary as presently conducted thereon or materially impair the value of the
Real Property to Borrowers or such Subsidiary which may be subject thereto;
(e) purchase money security interests in Equipment (including
Capital Leases) and purchase money mortgages on Real Property to secure
Indebtedness permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by any Borrower after the
date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Borrower as of the date hereof;
(g) pledges and deposits of cash by any Borrower existing as
of the date hereof described on Schedule 9.8 to the Information Certificate and
made after the date hereof to secure the performance of tenders, bids, leases,
trade contracts (other than for the repayment of Indebtedness), statutory
obligations and other similar obligations, in each case in the ordinary course
of business consistent with the current practices of such Borrower as of the
date hereof; provided, that, in connection with any performance bonds issued by
a surety or other person, the issuer of such bond shall have waived in writing
any rights in or to, or other interest in, any of the Collateral in an
agreement, in form and substance satisfactory to Agent;
(h) liens arising from (i) operating leases and the
precautionary UCC financing statement filings in respect thereof and (ii)
equipment or other materials which are not owned by any Borrower located on the
premises of such Borrower (but not in connection with, or as part of, the
financing thereof) from time to time in the ordinary course of business and
consistent with current practices of such Borrower and the precautionary UCC
financing statement filings in respect thereof;
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(i) liens or rights of setoff against credit balances of
Borrowers with Credit Card Issuers or amounts owing by such Credit Card Issuers
to Borrower in the ordinary course of business, but not liens on or rights of
setoff against any other property or assets of Borrowers, pursuant to the Credit
Card Agreements (as in effect on the date hereof) to secure the obligations of
Borrowers to the Credit Card Issuers as a result of fees and chargebacks;
(j) statutory or common law liens or rights of setoff of
depository banks with respect to funds of Borrowers at such banks to secure fees
and charges in connection with returned items or the standard fees and charges
of such banks in connection with the deposit accounts maintained by Borrowers at
such banks (but not any other Indebtedness or obligations);
(k) deposits of cash with the owner or lessor of premises or
other assets leased and operated by Borrowers in the ordinary course of the
business of Borrowers to secure the performance by Borrowers of their respective
obligations under the terms of the lease for such premises;
(l) judgments and other similar liens arising in connection
with court proceedings that do not constitute an Event of Default, provided,
that, (i) such liens are being contested in good faith and by appropriate
proceedings diligently pursued, (ii) adequate reserves or other appropriate
provision, if any, as are required by GAAP have been made therefor, (iii) a stay
of enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto;
(m) the security interests and liens set forth on Schedule 8.4
to the Information Certificate; and
(n) security interests and liens in assets and properties of
Borrowers that do not constitute Collateral to secure Indebtedness permitted
under Section 9.9(g).
9.9 Indebtedness. Each Borrower shall not, and shall not permit any
Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse,
or otherwise become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other Person, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases)
arising after the date hereof to the extent secured by purchase money security
interests in Equipment (including Capital Leases) not to exceed $10,000,000 in
the aggregate at any time outstanding (the "Maximum Purchase Money
Indebtedness") so long as such security interests do not apply to any property
of such Borrower or Subsidiary other than the Equipment so acquired, and the
Indebtedness secured thereby does not exceed the cost of the Equipment so
acquired, as the case may be, except that, if Borrowers incur purchase money
Indebtedness (including Capital Leases) after the date hereof in connection with
Borrowers' acquisition of a new point-of-sale register system for all, or
substantially all, of Borrowers'
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then existing retail stores, then, solely in that event, the Maximum Purchase
Money Indebtedness shall be $25,000,000;
(c) guarantees by any Borrower of the Obligations of the other
Borrowers in favor of Agent for the benefit of
Lenders;
(d) the Indebtedness of any Borrower to any other Borrower
arising after the date hereof pursuant to loans by any Borrower permitted under
Section 9.10(g) hereof;
(e) unsecured Indebtedness of any Borrower arising after the
date hereof to any third person (but not to any other Borrower), provided, that,
each of the following conditions is satisfied as determined by Agent: (i) such
Indebtedness shall be on terms and conditions acceptable to Agent and shall be
subject and subordinate in right of payment to the right of Agent and Lenders to
receive the prior indefeasible payment and satisfaction in full payment of all
of the Obligations pursuant to the terms of a subordination agreement between
Agent and such third party, in form and substance satisfactory to Agent, (ii)
Agent shall have received not less than ten (10) days prior written notice of
the intention of such Borrower to incur such Indebtedness, which notice shall
set forth in reasonable detail satisfactory to Agent the amount of such
Indebtedness, the person or persons to whom such Indebtedness will be owed, the
interest rate, the schedule of repayments and maturity date with respect thereto
and such other information as Agent may request with respect thereto, (iii)
Agent shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to such Indebtedness,
(iv) except as Agent may otherwise agree in writing, all of the proceeds of the
loans or other accommodations giving rise to such Indebtedness shall be paid to
Agent for application to the Obligations in such order and manner as Agent may
determine or at Agent's option, to be held as cash collateral for the
Obligations, (v) as of the date of incurring such Indebtedness and after giving
effect thereto, no Default or Event of Default shall exist or have occurred,
(vi) such Borrower shall not, directly or indirectly, (A) amend, modify, alter
or change the terms of such Indebtedness or any agreement, document or
instrument related thereto, except, that, such Borrower may, after prior written
notice to Agent, amend, modify, alter or change the terms thereof so as to
extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness (except pursuant to regularly scheduled payments
permitted herein), or set aside or otherwise deposit or invest any sums for such
purpose, and (vii) Borrowers shall furnish to Agent all notices or demands in
connection with such Indebtedness either received by any Borrower or on its
behalf promptly after the receipt thereof, or sent by any Borrower or on its
behalf concurrently with the sending thereof, as the case may be;
(f) the Indebtedness set forth on Schedule 9.9 to the
Information Certificate; provided, that, (i) Borrowers may only make regularly
scheduled payments of principal and interest in respect of such Indebtedness in
accordance with the terms of the agreement or instrument evidencing or giving
rise to such Indebtedness as in effect on the date hereof, (ii) Borrowers shall
not, directly or
225156-14 68
indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or
any agreement, document or instrument related thereto as in effect on the date
hereof except, that, Borrowers may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof,
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness (other than pursuant to payments thereof), or
to reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, and (iii) Borrowers
shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by any Borrower or on its behalf, promptly after
the receipt thereof, or sent by any Borrower or on its behalf, concurrently with
the sending thereof, as the case may be; and
(g) other Indebtedness in an aggregate principal amount not to
exceed $15,000,000 at any time outstanding.
9.10 Loans, Investments, Etc. Each Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly, make any loans or advance
money or property to any person, or invest in (by capital contribution, dividend
or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all
or a substantial part of the assets or property of any person, or form or
acquire any Subsidiaries, or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit
in the ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that,
(i) no Loans are then outstanding and (ii) the terms and conditions of Section
5.2 hereof shall have been satisfied with respect to the deposit account,
investment account or other account in which such cash or Cash Equivalents are
held;
(c) the existing equity investments of each Borrower as of the
date hereof in its Subsidiaries and any such equity investments made after the
date hereof by Xxxxx Mart in Buying Corp., provided, that, no Borrower shall
have any further obligations or liabilities to make any capital contributions or
other additional investments or other payments to or in or for the benefit of
any of such Subsidiaries (other than any such obligations or liabilities on the
part of Xxxxx Mart running in favor of Buying Corp.);
(d) loans and advances by any Borrower to employees of such
Borrower not to exceed the principal amount of $50,000 in the aggregate at any
time outstanding for: (i) reasonably and necessary work-related travel or other
ordinary business expenses to be incurred by such employee in connection with
their work for such Borrower and (ii) reasonable and necessary relocation
expenses of such employees (including home mortgage financing for relocated
employees);
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(e) stock or obligations issued to any Borrower by any Person
(or the representative of such Person) in respect of Indebtedness of such Person
owing to such Borrower in connection with the insolvency, bankruptcy,
receivership or reorganization of such Person or a composition or readjustment
of the debts of such Person; provided, that, the original of any such stock or
instrument evidencing such obligations shall be promptly delivered to Agent,
upon Agent's request, together with such stock power, assignment or endorsement
by such Borrower as Agent may request;
(f) obligations of account debtors to any Borrower arising
from Accounts which are past due evidenced by a promissory note made by such
account debtor payable to such Borrower;
(g) loans by a Borrower to another Borrower after the date
hereof, provided, that, as to all of such loans, (A) within thirty (30) days
after the end of each fiscal month, Borrowers shall provide to Agent a report in
form and substance satisfactory to Agent of the outstanding amount of such loans
as of the last day of the immediately preceding month and indicating any loans
made and payments received during the immediately preceding month, (B) as of the
date of any such loan and after giving effect thereto, the Borrower making such
loan shall be Solvent, and (C) as of the date of any such loan and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing;
(h) the loans and advances set forth on Schedule 9.10 to the
Information Certificate; provided, that, as to such loans and advances,
Borrowers shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto and Borrowers shall furnish to Agent all notices or demands in
connection with such loans and advances either received by any Borrower or on
its behalf, promptly after the receipt thereof, or sent by any Borrower or on
its behalf, concurrently with the sending thereof, as the case may be.
9.11 Dividends and Redemptions. Each Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
any Capital Stock of such Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except that:
(a) any Borrower may declare and pay such dividends or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock for consideration in the form of shares of common stock (so long
as both immediately prior thereto and after giving effect thereto no Change of
Control or other Default or Event of Default shall exist or occur);
(b) Xxxxx Mart may declare and pay dividends with respect to
its Capital Stock and repurchase its Capital Stock; provided, that, as to any
such dividend or Capital Stock repurchase, each of the following conditions is
satisfied: (i) as of the date of such dividend declaration or the making of a
commitment with respect to such Capital Stock repurchase and after giving effect
thereto, no Default or
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Event of Default shall exist or have occurred and be continuing, (ii) such
dividend or such repurchase shall be paid with funds legally available therefor,
and (iii) such dividend and such repurchase shall not violate any law or
regulation or the terms of any indenture, agreement or undertaking to which any
Borrower is a party or by which any Borrower or its property is bound; except
that, in addition to compliance with each of the conditions set forth in clauses
(i), (ii) and (iii) of this Section 9.11(b), if Xxxxx Mart elects to make
dividends and repurchases of Capital Stock in an aggregate amount that exceeds
$5,000,000 in any fiscal year of Borrowers, any such excess dividend and
repurchase shall be subject to, in each instance, Borrowers having Excess
Availability of at least $30,000,000 both at all time during the sixty (60)
consecutive Business Days immediately preceding the date of declaration of such
dividend payment or commitment with respect to such Capital Stock repurchase and
after giving effect thereto (provided that, solely for the purposes of this
Section 9.11(b), the amount determined pursuant to clause (a) of the definition
of Excess Availability shall be based solely upon Borrowers' Borrowing Base and
without regard to the Maximum Credit); and
(c) any Subsidiary of a Borrower may pay dividends to a
Borrower.
9.12 Transactions with Affiliates. Each Borrower shall not,
directly or indirectly:
(a) purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, director or other Affiliate of
such Borrower, except (i) in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's business (as the case may be) and
upon fair and reasonable terms no less favorable to such Borrower than such
Borrower would obtain in a comparable arm's length transaction with an
unaffiliated person and (ii) Xxxxx Mart may purchase Inventory and obtain
licenses for the use of Intellectual Property from Buying Corp., in the ordinary
course of Xxxxx Mart's business, on substantially the same terms on which such
Inventory purchases and Intellectual Property licenses have historically
occurred; or
(b) make any payments (whether by loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness for borrowed money, owing to any officer, employee,
shareholder, director or any other Affiliate of such Borrower (collectively,
"Affiliate Payments") that exceed $100,000 in the aggregate for all such
Affiliate Payments in any fiscal year. The foregoing covenant with respect to
Affiliate Payments does not in any manner limit or affect reasonable
compensation (including, without limitation, the payment of director fees and
legal fees and costs) to officers, employees and directors for services rendered
to Borrowers in the ordinary course of business.
9.13 Compliance with ERISA. Each Borrower shall, and shall cause each
of its ERISA Affiliates, to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
Federal and State law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) not terminate any of such
Plans so as to incur any material liability to the Pension Benefit Guaranty
Corporation; (d) not allow or suffer to exist any prohibited transaction
involving any of such Plans or any trust created thereunder which would
225156-14 71
subject such Borrower or such ERISA Affiliate to a material tax or penalty or
other liability on prohibited transactions imposed under Section 4975 of the
Code or ERISA; (e) make all required contributions to any Plan which it is
obligated to pay under Section 302 of ERISA, Section 412 of the Code or the
terms of such Plan; (f) not allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such Plan; or (g) allow
or suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any such Plan that is a single employer plan, which
termination could result in any material liability to the Pension Benefit
Guaranty Corporation.
9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower shall, for
financial reporting purposes, cause its and each of its Subsidiaries' (a) fiscal
years to end on or about January 31 of each year and (b) fiscal quarters to end
on or about January 31, April 30, July 31, and October 31 of each year.
9.15 Change in Business. Each Borrower shall not engage in any
business other than the business of such Borrower on the date hereof and any
business reasonably related, ancillary or complimentary to the business in which
such Borrower is engaged on the date hereof.
9.16 Limitation of Restrictions Affecting Subsidiaries. Each Borrower
shall not, directly, or indirectly, create or otherwise cause or suffer to exist
any encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of such Borrower to (a) pay dividends or make other distributions or
pay any Indebtedness owed to such Borrower or any Subsidiary of such Borrower;
(b) make loans or advances to such Borrower or any Subsidiary of such Borrower,
(c) transfer any of its properties or assets to such Borrower or any Subsidiary
of such Borrower; or (d) create, incur, assume or suffer to exist any lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, other than encumbrances and restrictions arising under (i) applicable
law, (ii) this Agreement, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of such Borrower or any
Subsidiary of such Borrower, (iv) customary restrictions on dispositions of real
property interests found in reciprocal easement agreements of such Borrower or
any Subsidiary of such Borrower, (v) any agreement relating to permitted
Indebtedness incurred by a Subsidiary of such Borrower prior to the date on
which such Subsidiary was acquired by such Borrower and outstanding on such
acquisition date, and (vi) the extension or continuation of contractual
obligations in existence on the date hereof; provided, that, any such
encumbrances or restrictions contained in such extension or continuation are no
less favorable to Agent and Lenders than those encumbrances and restrictions
under or pursuant to the contractual obligations so extended or continued.
9.17 Credit Card Agreements. Each Borrower shall (a) observe and
perform all material terms, covenants, conditions and provisions of the Credit
Card Agreements to be observed and performed by it at the times set forth
therein; and (b) at all times maintain in full force and effect the Credit Card
Agreements and not terminate, cancel, surrender, modify, amend, waive or release
any of the Credit Card Agreements, or consent to or permit to occur any of the
foregoing; except, that, (i) any Borrower may terminate or cancel any of the
Credit Card Agreements in the ordinary course of the
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business of such Borrower; provided, that, such Borrower shall give Agent not
less than fifteen (15) days prior written notice of its intention to so
terminate or cancel any of the Credit Card Agreements; (d) not enter into any
new Credit Card Agreements with any new Credit Card Issuer unless (i) Agent
shall have received not less than thirty (30) days prior written notice of the
intention of such Borrower to enter into such agreement (together with such
other information with respect thereto as Agent may request) and (ii) such
Borrower delivers, or causes to be delivered to Agent, a Credit Card
Acknowledgment in favor of Agent, (e) give Agent immediate written notice of any
Credit Card Agreement entered into by such Borrower after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may request; and (f) furnish to Agent,
promptly upon the request of Agent, such information and evidence as Agent may
require from time to time concerning the observance, performance and compliance
by such Borrower or the other party or parties thereto with the terms, covenants
or provisions of the Credit Card Agreements.
9.18 License Agreements.
(a) Each Borrower shall (i) promptly and faithfully observe
and perform all of the material terms, covenants, conditions and provisions of
the material License Agreements to which it is a party to be observed and
performed by it, at the times set forth therein, if any, (ii) not do, permit,
suffer or refrain from doing anything that could reasonably be expected to
result in a default under or breach of any of the terms of any material License
Agreement, (iii) not cancel, surrender, modify, amend, waive or release any
material License Agreement in any material respect or any term, provision or
right of the licensee thereunder in any material respect, or consent to or
permit to occur any of the foregoing; except, that, subject to Section 9.18(b)
below, such Borrower may cancel, surrender or release any material License
Agreement in the ordinary course of the business of such Borrower; provided,
that, such Borrower (as the case may be) shall give Agent not less than thirty
(30) days prior written notice of its intention to so cancel, surrender and
release any such material License Agreement, (iv) give Agent prompt written
notice of any material License Agreement entered into by such Borrower after the
date hereof, together with a true, correct and complete copy thereof and such
other information with respect thereto as Agent may request, (v) give Agent
prompt written notice of any material breach of any obligation, or any default,
by any party under any material License Agreement, and deliver to Agent
(promptly upon the receipt thereof by such Borrower in the case of a notice to
such Borrower and concurrently with the sending thereof in the case of a notice
from such Borrower) a copy of each notice of default and every other notice and
other communication received or delivered by such Borrower in connection with
any material License Agreement which relates to the right of such Borrower to
continue to use the property subject to such License Agreement, and (vi) furnish
to Agent, promptly upon the request of Agent, such information and evidence as
Agent may reasonably require from time to time concerning the observance,
performance and compliance by such Borrower or the other party or parties
thereto with the material terms, covenants or provisions of any material License
Agreement.
(b) Each Borrower will either exercise any option to renew or
extend the term of each material License Agreement to which it is a party in
such manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such
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option and give prompt written notice thereof to Agent or give Agent prior
written notice that such Borrower does not intend to renew or extend the term of
any such material License Agreement or that the term thereof shall otherwise be
expiring, not less than sixty (60) days prior to the date of any such
non-renewal or expiration. In the event of the failure of such Borrower to
extend or renew any material License Agreement to which it is a party, Agent
shall have, and is hereby granted, the irrevocable right and authority, at its
option, to renew or extend the term of such material License Agreement, whether
in its own name and behalf, or in the name and behalf of a designee or nominee
of Agent or in the name and behalf of such Borrower, as Agent shall determine at
any time that an Event of Default shall exist or have occurred and be
continuing. Agent may, but shall not be required to, perform any or all of such
obligations of such Borrower under any of the License Agreements, including, but
not limited to, the payment of any or all sums due from such Borrower
thereunder. Any sums so paid by Agent shall constitute part of the Obligations.
9.19 [Reserved.]
9.20 Costs and Expenses. Borrowers shall pay to Agent on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Agent's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) costs and expenses and
fees for insurance premiums, environmental audits, title insurance premiums,
surveys, assessments, engineering reports and inspections (except that, so long
as the Collateral does not include any Real Property, Borrowers shall have no
liability to Agent for any costs incurred by Agent in connect with environmental
audits, title insurance premiums, surveys, assessments or engineering reports
and inspections, in each case that may be incurred with respect to any of
Borrowers' Real Property), appraisal fees and search fees, costs and expenses of
remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Agent's
customary charges and fees with respect thereto; (c) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (d) costs and expenses of preserving and protecting the
Collateral; (e) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of Agent,
selling or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Financing Agreements or defending any
claims made or threatened against Agent or any Lender arising out of the
transactions contemplated hereby and thereby (including preparations for and
consultations concerning any such matters); (f) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Agent during the
course of periodic field examinations of the Collateral and such Borrower's
operations, plus a per diem charge at Agent's then standard rate for Agent's
examiners in the field and office (which rate as of the date hereof is $750 per
person per day (collectively, the "Audit Fees")), except that, so long as no
Event of Default has occurred
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and is continuing, (i) Borrowers shall pay for all such Audit Fees and costs
with respect to not more than four (4) such field examinations performed by
Agent in any of Borrowers' fiscal years and (ii) the Monthly Servicing Fees paid
by Borrowers to Lender pursuant to the Fee Letter shall be applied to and
constitute payment of all Audit Fees (but not the costs incurred by Agent in
connection therewith), provided that, (A) Borrowers shall be responsible for and
pay to Agent the amount of Audit Fees that are at any time due and owing to
Agent hereunder that exceed the amount of the Monthly Servicing Fees paid to
Agent on or about the date on which Agent makes request to Borrowers for payment
of such Audit Fees and (B) from and after the occurrence and during the
continuance of any Event of Default, Borrowers shall pay to Agent, upon demand,
all Audit Fees and related costs for all such field examinations as shall be
conducted by Agent in its sole discretion; and (g) the reasonable fees and
disbursements of counsel (including legal assistants) to Agent in connection
with any of the foregoing.
9.21 Further Assurances. At the request of Agent at any time and from
time to time, Borrowers shall, at their expense, duly execute and deliver, or
cause to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Agent may
at any time and from time to time request a certificate from an officer of any
Borrower representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In the
event of such request by Agent, Agent and Lenders may, at Agent's option, cease
to make any further Loans or provide any further Letter of Credit Accommodations
until Agent has received such certificate and, in addition, Agent has determined
that such conditions are satisfied.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay any of the Obligations
within one (1) Business Day of the due date thereof or (ii) any Borrower or
Obligor fails to perform any of the covenants contained in Sections 9.3, 9.4,
9.13, 9.14, 9.15, and 9.16 of this Agreement and such failure shall continue for
twenty (20) days; provided, that, such twenty (20) day period shall not apply in
the case of: (A) any failure to observe any such covenant which is not capable
of being cured at all or within such twenty (20) day period or which has been
the subject of a prior failure within a six (6) month period or (B) an
intentional breach by any Borrower or Obligor of any such covenant or (iii) any
Borrower or Obligor fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements
other than those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by
any Borrower to Agent in this Agreement, the other Financing Agreements or any
other written agreement, schedule,
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confirmatory assignment or otherwise shall when made or deemed made be false or
misleading in any material respect;
(c) any Obligor revokes or terminates or purports to revoke or
terminate or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender with respect to any of the Obligations;
(d) any judgment for the payment of money is rendered against
any Borrower or Obligor in excess of $5,000,000 in any one case or in excess of
$5,000,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower or Obligor or any of the Collateral
having a value in excess of $5,000,000;
(e) any Obligor (being a natural person or a general partner
of an Obligor which is a partnership) dies or any Borrower or Obligor, which is
a partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) any Borrower or Obligor makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or calls a
meeting of its creditors or principal creditors in connection with a moratorium
or adjustment of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower or Obligor or all or any part of its
properties and such petition or application is not dismissed within thirty (30)
days after the date of its filing or any Borrower or Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Obligor or for all or any part of its
property;
(i) any default in respect of any Indebtedness of any Borrower
or Obligor (other than Indebtedness owing to Agent and Lenders hereunder), in
any case in an amount in excess of $5,000,000, which default continues for more
than the applicable cure period, if any, with respect thereto or any default by
any Borrower or Obligor under any Material Contract, which default continues for
more than the applicable cure period, if any, with respect thereto and/or is not
waived in writing by the other parties thereto, or any default by any Borrower
or any Obligor under any Material Contract
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(including, without limitation, any of the Credit Card Agreements), which
default continues for more than the applicable cure period, if any, with respect
thereto or any Credit Card Issuer or Credit Card Processor withholds payment of
amounts otherwise payable to a Borrower to fund a reserve account or otherwise
hold as collateral, or shall require a Borrower to pay funds into a reserve
account or for such Credit Card Issuer or Credit Card Processor to otherwise
hold as collateral, or any Borrower shall provide a letter of credit, guarantee,
indemnity or similar instrument to or in favor of such Credit Card Issuer or
Credit Card Processor such that in the aggregate all of such funds in the
reserve account, other amounts held as collateral and the amount of such letters
of credit, guarantees, indemnities or similar instruments shall exceed
$1,000,000 or any Credit Card Issuer or Credit Card Processor shall debit or
deduct any amounts from any deposit account of any Borrower in excess of
$300,000;
(j) any Credit Card Issuer or Credit Card Processor shall send
notice to any Borrower that it is ceasing to make or suspending payments to any
Borrower of amounts due or to become due to any Borrower or shall cease or
suspend such payments, or shall send notice to any Borrower that it is
terminating its arrangements with any Borrower or such arrangements shall
terminate as a result of any event of default under such arrangements, which
continues for more than the applicable cure period, if any, with respect
thereto, unless such Borrower shall have entered into arrangements with another
Credit Card Issuer or Credit Card Processor, as the case may be, within thirty
(30) days after the date of any such notice;
(k) any material provision hereof or of any of the other
Financing Agreements shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Agent) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein) that has a value in excess of one (1%) percent of the value of all
then existing Collateral;
(l) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of any Borrower in an aggregate
amount in excess of $1,000,000 and such ERISA Event is not cured within twenty
(20) days after the occurrence thereof;
(m) any Change of Control;
(n) the indictment by any Governmental Authority, or as Agent
may reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of any Borrower or Obligor of which any Borrower, Obligor
or Agent receives notice, in either case, as to which there is a reasonable
possibility of an adverse determination, in the good faith determination of
Agent, under any criminal statute, or commencement or threatened commencement of
criminal or civil proceedings against
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such Borrower or Obligor, pursuant to which statute or proceedings the penalties
or remedies sought or available include forfeiture of (i) any of the Collateral
having a value in excess of $5,000,000 or (ii) any other property of any
Borrower which is necessary or material to the conduct of its business;
(o) there shall be a material adverse change in the business,
assets or prospects of any Borrower or Obligor after the date hereof; or
(p) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and
is continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by any Borrower or Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against any Borrower or Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent may, in its discretion,
and upon the direction of the Required Lenders, shall (i) accelerate the payment
of all Obligations and demand immediate payment thereof to Agent for itself and
the ratable benefit of Lenders (provided, that, upon the occurrence of any Event
of Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in
which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the
Collateral, (iii) require any Borrower or Obligor, at Borrowers' expense, to
assemble and make available to Agent any part or all of the Collateral at any
place and time designated by Agent, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker's board,
at any office of Agent or elsewhere) at such prices or terms as Agent may deem
reasonable, for cash, upon credit or for future delivery, with the Agent having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
any Borrower or Obligor, which right or equity of redemption
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is hereby expressly waived and released by Borrowers and Obligors and/or (vii)
terminate this Agreement. If any of the Collateral is sold or leased by Agent
upon credit terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by Agent. If
notice of disposition of Collateral is required by law, ten (10) days prior
notice by Agent to Administrative Borrower designating the time and place of any
public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrowers and Obligors waive any other notice. In the event Agent
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, each Borrower and Obligor waives the
posting of any bond which might otherwise be required. At any time an Event of
Default exists or has occurred and is continuing, upon Agent's request,
Borrowers will either, as Agent shall specify, furnish cash collateral to the
issuer to be used to secure and fund Agent's reimbursement obligations to the
issuer in connection with any Letter of Credit Accommodations or furnish cash
collateral to Agent for the Letter of Credit Accommodations. Such cash
collateral shall be in the amount equal to one hundred ten (110%) percent of the
amount of the Letter of Credit Accommodations plus the amount of any fees and
expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations.
(c) At any time or times that an Event of Default exists or
has occurred and is continuing, Agent may, in its discretion, and upon the
direction of the Required Lenders, Agent shall, enforce the rights of any
Borrower or Obligor against any account debtor, secondary obligor or other
obligor in respect of any of the Accounts or other Receivables. Without limiting
the generality of the foregoing, Agent may, in its discretion, and upon the
direction of the Required Lenders, Agent shall, at such time or times (i) notify
any or all account debtors, secondary obligors or other obligors in respect
thereof that the Receivables have been assigned to Agent and that Agent has a
security interest therein and Agent may direct any or all accounts debtors,
secondary obligors and other obligors to make payment of Receivables directly to
Agent, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the account debtor or any secondary
obligors or other obligors in respect thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Receivables or such
other obligations, but without any duty to do so, and Agent and Lenders shall
not be liable for any failure to collect or enforce the payment thereof nor for
the negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Agent and are payable directly
and only to Agent and Borrowers and Obligors shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require. In the
event any account debtor returns Inventory when an Event of Default exists or
has occurred and is continuing, Borrowers shall, upon Agent's request, hold the
returned Inventory in trust for Agent, segregate all returned Inventory from all
of its other property, dispose of the returned Inventory solely
225156-14 79
according to Agent's instructions, and not issue any credits, discounts or
allowances with respect thereto without Agent's prior written consent.
(d) To the extent that applicable law imposes duties on Agent
or any Lender to exercise remedies in a commercially reasonable manner (which
duties cannot be waived under such law), each Borrower acknowledges and agrees
that it is not commercially unreasonable for Agent or any Lender (i) to fail to
incur expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as any Borrower, for expressions of
interest in acquiring all or any portion of the Collateral, (vii) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (ix) to dispose of assets
in wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Agent or Lenders
against risks of loss, collection or disposition of Collateral or to provide to
Agent or Lenders a guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the
services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. Each Borrower acknowledges that the purpose of this Section is to
provide non-exhaustive indications of what actions or omissions by Agent or any
Lender would not be commercially unreasonable in the exercise by Agent or any
Lender of remedies against the Collateral and that other actions or omissions by
Agent or any Lender shall not be deemed commercially unreasonable solely on
account of not being indicated in this Section. Without limitation of the
foregoing, nothing contained in this Section shall be construed to grant any
rights to any Borrower or to impose any duties on Agent or Lenders that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section.
(e) For the purpose of enabling Agent to exercise the rights
and remedies hereunder, each Borrower and Obligor hereby grants to Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable at any
time an Event of Default shall exist or have occurred and for so long as the
same is continuing) without payment of royalty or other compensation to any
Borrower or Obligor, to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual
225156-14 80
Property and general intangibles now owned or hereafter acquired by any Borrower
or Obligor, wherever the same maybe located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof.
(f) Agent may apply the cash proceeds of Collateral actually
received by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Agent may elect, whether or not then due. Borrowers shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and expenses.
(g) Without limiting the foregoing, upon the occurrence of a
Default or an Event of Default, (i) Agent and Lenders may, at Agent's option,
and upon the occurrence of an Event of Default at the direction of the Required
Lenders, Agent and Lenders shall, without notice, (A) cease making Loans or
arranging for Letter of Credit Accommodations or reduce the lending formulas or
amounts of Loans and Letter of Credit Accommodations available to Borrowers
and/or (B) terminate any provision of this Agreement providing for any future
Loans or Letter of Credit Accommodations to be made by Agent and Lenders to
Borrowers and (ii) Agent may, at its option, establish such Reserves as Agent
determines, without limitation or restriction, notwithstanding anything to the
contrary contained herein.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Florida but
excluding any principles of conflicts of law or other rule of law that would
cause the application of the law of any jurisdiction other than the laws of the
State of Florida.
(b) Borrowers, Agent and Lenders irrevocably consent and
submit to the non-exclusive jurisdiction of the Circuit Court of Dade County,
Florida and the United States District Court for the Southern District of
Florida, whichever Agent may elect, and waive any objection based on venue or
forum non conveniens with respect to any action instituted therein arising under
this Agreement or any of the other Financing Agreements or in any way connected
with or related or incidental to the dealings of the parties hereto in respect
of this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Agent and Lenders shall have the right to bring any
action or proceeding against any Borrower or its or their property in the courts
of any
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other jurisdiction which Agent deems necessary or appropriate in order to
realize on the Collateral or to otherwise enforce its rights against any
Borrower or its or their property).
(c) Each Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent's option,
by service upon any Borrower (or Administrative Borrower on behalf of such
Borrower) in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, such Borrower shall appear in answer
to such process, failing which such Borrower shall be deemed in default and
judgment may be entered by Agent against such Borrower for the amount of the
claim and other relief requested.
(d) BORROWERS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, AGENT
AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY
BORROWER, AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to any
Borrower (whether in tort, contract, equity or otherwise) for losses suffered by
such Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by a
final and non-appealable judgment or court order binding on Agent and such
Lender, that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Agent and Lenders
shall be entitled to the benefit of the rebuttable presumption that it acted in
good faith and with the exercise of ordinary care in the performance by it of
the terms of this Agreement. Each Borrower: (i) certifies that neither Agent,
any Lender nor any representative, agent or attorney acting for or on behalf of
Agent or any Lender has represented, expressly or otherwise, that Agent and
Lenders would not, in the event of litigation, seek to enforce any of the
waivers provided for in this Agreement or any of the other Financing Agreements
and (ii) acknowledges that in entering into this Agreement and the other
Financing Agreements, Agent and Lenders are relying upon, among other things,
the waivers and certifications set forth in this Section 11.1 and elsewhere
herein and therein.
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11.2 Waiver of Notices. Each Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and chattel paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on any Borrower which Agent or any Lender may elect to give shall
entitle such Borrower to any other or further notice or demand in the same,
similar or other circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement
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
Agent and the Required Lenders or at Agent's option, by Agent with the
authorization of the Required Lenders, and as to amendments to any of the
Financing Agreements (other than with respect to any provision of Section 12
hereof), by any Borrower; except, that, no such amendment, waiver, discharge or
termination shall:
(i) reduce the interest rate or any fees or extend the
time of payment of principal, interest or any fees or reduce the principal
amount of any Loan or Letter of Credit Accommodations, in each case without the
consent of each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over the amount
thereof then in effect or provided hereunder, in each case without the consent
of the Lender directly affected thereby, except that, (A) no such consent shall
be required in the case of the concurrent increase in the Commitments of all
Lenders in connection with Borrowers' exercise of their right under Section
2.1(e) to increase the amount of the Maximum Credit, which Commitments shall
increase pro rata for each Lender, based upon each Lender's Pro Rata Share of
the Commitments as in effect immediately prior to Borrowers' exercise of such
right, and (B) if Borrowers shall have previously exercised their right pursuant
to Section 2.1(e) to decrease the amount of the Maximum Credit to $125,000,000
prior to their exercise of such right to increase the amount of the Maximum
Credit to $175,000,000, then (I) no consent of any Lender shall be required to
the concurrent increase in the Commitments of all Lenders in connection with
Borrowers' exercise of such right to increase the Maximum Credit to $175,000,000
and (II) each Lender's Commitment shall, in connection with such Maximum Credit
increase, be increased by an amount equal to its Pro Rata Share of $50,000,000;
provided, however, that the Maximum Credit shall not be increased above
$175,000,000 without the prior written consent of Agent and all of Lenders,
(iii) release any Collateral (except as expressly
required hereunder or under any of the other Financing Agreements or applicable
law and except as permitted under Section 12.11(b) hereof) or any Borrower,
without the consent of Agent and all of Lenders,
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(iv) reduce any percentage specified in the definition
of Required Lenders, without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by any
Borrower of any of their rights and obligations under this Agreement, without
the consent of Agent and all of Lenders,
(vi) amend, modify or waive any terms of Section 6.4
(a) or of this Section 11.3 hereof, without the consent of Agent and all of
Lenders, or
(vii) increase the advance rates constituting part of
the Borrowing Base or amend or supplement the definition of the Borrowing Base
in any respect that would have the effect of increasing the amount of Loans
available to Borrower under this Agreement, in each case, without the consent of
Agent and all of Lenders.
(b) Agent and Lenders shall not, by any act, delay, omission
or otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in
Section 11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Congress shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Congress of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Congress or such Eligible Transferee as Congress may specify, the Commitment of
such Non-Consenting Lender and all rights and interests of such Non-Consenting
Lender pursuant thereto. Congress shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify the date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Congress, or such Eligible Transferee
specified by Congress, shall pay to the Non-Consenting Lender the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the Non-Consenting
Lender to the effective date of the purchase (but in no event shall the
Non-Consenting Lender be deemed entitled to any early termination fee), minus
(iii) the amount of the closing fee received by the Non-Consenting Lender
pursuant to the terms hereof or of any of the other Financing Agreements
multiplied by the
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fraction, the numerator of which is the number of months remaining in the then
current term of the Credit Facility and the denominator of which is the number
of months in the then current term thereof. Such purchase and sale shall be
effective on the date of the payment of such amount to the Non-Consenting Lender
and the Commitment of the Non-Consenting Lender shall terminate on such date.
(d) The consent of Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of Agent hereunder or under any
of the other Financing Agreements, in addition to the consent of the Lenders
otherwise required by this Section and the exercise by Agent of any of its
rights hereunder with respect to Reserves or Eligible Accounts or Eligible
Inventory shall not be deemed an amendment to the advance rates provided for in
this Section 11.3.
11.4 Waiver of Counterclaims. Each Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Each Borrower shall, jointly and severally,
indemnify and hold Agent and each Lender, and its officers, directors, agents,
employees, advisors and counsel and their respective Affiliates (each such
person being an "Indemnitee"), harmless from and against any and all losses,
claims, damages, liabilities, costs or expenses (including attorneys' fees and
expenses) imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing Agreements,
or any undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except that Borrowers shall not have any obligation under this Section
11.5 to indemnify an Indemnitee with respect to a matter covered hereby
resulting from the gross negligence or wilful misconduct of such Indemnitee as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction (but without limiting the obligations of Borrowers as to any other
Indemnitee). To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrowers shall pay the maximum portion which it is
permitted to pay under applicable law to Agent and Lenders in satisfaction of
indemnified matters under this Section. To the extent permitted by applicable
law, no Borrower shall assert, and each Borrower hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any of
the other Financing Agreements or any undertaking or transaction contemplated
hereby. All amounts due under this Section shall be payable upon demand. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
SECTION 12. THE AGENT
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12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any Lender; (b) shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in any
of the other Financing Agreements, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Agreement or any other document referred to or provided for herein or
therein or for any failure by any Borrower or any Obligor or any other Person to
perform any of its obligations hereunder or thereunder; and (c) shall not be
responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent. The identification of Wachovia Bank, National
Association and Fleet Retail Finance, Inc. as co-arrangers hereunder and of
General Electric Capital Corporation as Documentation Agent hereunder shall not
create any rights in favor of any of them in such capacity nor subject any of
them to any duties or obligations in such capacity.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such instructions of
such Agents and any action taken or failure to act pursuant thereto shall be
binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of
the occurrence of a Default or an Event of Default or other failure of a
condition precedent to the Loans and Letter of Credit Accommodations hereunder,
unless and until Agent has received written notice from a Lender or a Borrower
specifying such Event of Default or any unfulfilled condition precedent, and
stating that such
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notice is a "Notice of Default or Failure of Condition". In the event that Agent
receives such a Notice of Default or Failure of Condition, Agent shall give
prompt notice thereof to the Lenders. Agent shall (subject to Section 12.7) take
such action with respect to any such Event of Default or failure of condition
precedent as shall be directed by the Required Lenders; provided, that, unless
and until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to or by reason of such Event of Default or failure of condition precedent, as
it shall deem advisable in the best interest of Lenders. Without limiting the
foregoing, and notwithstanding the existence or occurrence and continuance of an
Event of Default or any other failure to satisfy any of the conditions precedent
set forth in Section 4 of this Agreement to the contrary, Agent may, but shall
have no obligation to, continue to make Loans and issue or cause to be issued
Letter of Credit Accommodations for the ratable account and risk of Lenders from
time to time if Agent believes making such Loans or issuing or causing to be
issued such Letter of Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender
may assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against any Borrower or
Obligor or any of the Collateral or other property of any Borrower or Obligor.
12.4 Congress in its Individual Capacity. With respect to its
Commitment and the Loans made and Letter of Credit Accommodations issued or
caused to be issued by it (and any successor acting as Agent), so long as
Congress shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Congress in its individual capacity as Lender
hereunder. Congress (and any successor acting as Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to, make
investments in and generally engage in any kind of business with Borrowers (and
any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and
Congress and its Affiliates may accept fees and other consideration from any
Borrower and any of its Subsidiaries and Affiliates for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrowers hereunder and without limiting any obligations of
Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable
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judgment of a court of competent jurisdiction. The foregoing indemnity shall
survive the payment of the Obligations and the termination or non-renewal of
this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Borrowers and Obligors and has made its own decision to enter
into this Agreement and that it will, independently and without reliance upon
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by any Borrower or Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of any Borrower or Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from any
Borrower or Obligor which is required to be provided to Lenders or deemed to be
requested by Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Agent from any Borrower or any Lender;
provided, that, Agent shall not be liable to any Lender for any failure to do
so, except to the extent that such failure is attributable to Agent's own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Except for notices, reports and
other documents expressly required to be furnished to Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any Lender
with any other credit or other information concerning the affairs, financial
condition or business of any Borrower or Obligor that may come into the
possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Revolving Loans or
provide any Letter of Credit Accommodations to any Borrower on behalf of Lenders
intentionally and with actual knowledge that such Revolving Loans or Letter of
Credit Accommodations would cause the aggregate amount of the total outstanding
Revolving Loans and Letter of Credit Accommodations to such Borrower to exceed
the Borrowing Base of such Borrower, without the prior consent of all Lenders,
except, that, Agent may make such additional Revolving Loans or provide such
additional Letter of Credit Accommodations on behalf of Lenders, intentionally
and with actual knowledge that such Revolving Loans or Letter of Credit
Accommodations will cause the total outstanding Revolving Loans and Letter of
Credit Accommodations to such Borrower to exceed the Borrowing Base of such
Borrower, as Agent may deem necessary or advisable in its discretion, provided,
that: (a) the total principal amount of the additional Revolving Loans or
additional Letter of Credit Accommodations to any Borrower which Agent may make
or provide after obtaining such actual knowledge that the aggregate principal
amount of
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the Revolving Loans equal or exceed the Borrowing Base of Borrowers, plus the
amount of Special Agent Advances made pursuant to Section 12.11(a)(ii) hereof
then outstanding, shall not exceed the aggregate amount equal to ten (10%)
percent of the Borrowing Base and shall not cause the total principal amount of
the Loans and Letter of Credit Accommodations to exceed the Maximum Credit and
(b) no such additional Revolving Loan or Letter of Credit Accommodation shall be
outstanding more than ninety (90) days after the date such additional Revolving
Loan or Letter of Credit Accommodation is made or issued (as the case may be),
except as the Required Lenders may otherwise agree. Each Lender shall be
obligated to pay Agent the amount of its Pro Rata Share of any such additional
Revolving Loans or Letter of Credit Accommodations.
12.9 Concerning the Collateral and the Related Financing Agreements.
Each Lender authorizes and directs Agent to enter into this Agreement and the
other Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report and report with respect to the Borrowing Base prepared or
received by Agent (each field audit or examination report and report with
respect to the Borrowing Base being referred to herein as a "Report" and
collectively, "Reports"), appraisal and financial statements;
(b) expressly agrees and acknowledges that Agent (i) does not
make any representation or warranty as to the accuracy of any Report, appraisal
or financial statement or (ii) shall not be liable for any information contained
in any Report, appraisal or financial statement;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrowers and will rely significantly upon Borrowers' books and records, as well
as on representations of Borrowers' personnel; and
(d) agrees to keep all Reports confidential and strictly for
its internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.
12.11 Collateral Matters.
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(a) Agent may, at its option, from time to time, at any time
on or after an Event of Default and for so long as the same is continuing or
upon any other failure of a condition precedent to the Loans and Letter of
Credit Accommodations hereunder, make such disbursements and advances ("Special
Agent Advances") which Agent, in its sole discretion, (i) deems necessary or
desirable either to preserve or protect the Collateral or any portion thereof or
(ii) to enhance the likelihood or maximize the amount of repayment by Borrowers
of the Loans and other Obligations, provided, that, the aggregate principal
amount of the Special Agent Advances pursuant to this clause (ii), plus the then
outstanding principal amount of the additional Loans and Letter of Credit
Accommodations which Agent may make or provide as set forth in Section 12.8
hereof, shall not exceed the aggregate amount of ten (10%) percent of the
Borrowing Base and shall not cause the total principal amount of the Loans and
Letter of Credit Accommodations to exceed the Maximum Credit, or (iii) to pay
any other amount chargeable to any Borrower pursuant to the terms of this
Agreement or any of the other Financing Agreements consisting of (A) costs, fees
and expenses and (B) payments to any issuer of Letter of Credit Accommodations.
Special Agent Advances shall be repayable on demand and together with all
interest thereon shall constitute Obligations secured by the Collateral. Special
Agent Advances shall not constitute Loans but shall otherwise constitute
Obligations hereunder. Interest on Special Agent Advances shall be payable at
the Interest Rate then applicable to Prime Rate Loans and shall be payable on
demand. Without limitation of its obligations pursuant to Section 6.10, each
Lender agrees that it shall make available to Agent, upon Agent's demand, in
immediately available funds, the amount equal to such Lender's Pro Rata Share of
each such Special Agent Advance. If such funds are not made available to Agent
by such Lender, such Lender shall be deemed a Defaulting Lender and Agent shall
be entitled to recover such funds, on demand from such Lender together with
interest thereon for each day from the date such payment was due until the date
such amount is paid to Agent at the Federal Funds Rate for each day during such
period (as published by the Federal Reserve Bank of New York or at Agent's
option based on the arithmetic mean determined by Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of the three leading brokers of Federal
funds transactions in New York City selected by Agent) and if such amounts are
not paid within three (3) days of Agent's demand, at the highest Interest Rate
provided for in Section 3.1 hereof applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option
and in its discretion to release any security interest in, mortgage or lien
upon, any of the Collateral (i) upon termination of the Commitments and payment
and satisfaction of all of the Obligations and delivery of cash collateral to
the extent required under Section 13.1 below, or (ii) constituting property
being sold or disposed of if Administrative Borrower or any Borrower certifies
to Agent that the sale or disposition is made in compliance with Section 9.7
hereof (and Agent may rely conclusively on any such certificate, without further
inquiry), or (iii) constituting property in which any Borrower did not own an
interest at the time the security interest, mortgage or lien was granted or at
any time thereafter, or (iv) having a value in the aggregate during the term of
this Agreement of less than the greater of (x) twenty (20% percent of the
Maximum Credit or (y) $30,000,000, but in any twelve (12) month period following
the Closing Date, having a value in the aggregate of less than the greater of
(x) ten (10%) percent of the Maximum Credit or (y) $15,000,000, or (v) if
required or permitted under the terms of any of the other Financing
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Agreements, including any intercreditor agreement, or (vi) approved, authorized
or ratified in writing by all of Lenders. Except as provided above, Agent will
not release any security interest in, mortgage or lien upon, any of the
Collateral without the prior written authorization of all of Lenders. Upon
request by Agent at any time, Lenders will promptly confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to this
Section.
(c) Without any manner limiting Agent's authority to act
without any specific or further authorization or consent by the Required
Lenders, each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section. Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the security interest,
mortgage or liens granted to Agent upon any Collateral to the extent set forth
above; provided, that, (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to liability or
create any obligations or entail any consequence other than the release of such
security interest, mortgage or liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any security interest, mortgage or lien upon (or obligations of any Borrower in
respect of) the Collateral retained by such Borrower.
(d) Agent shall have no obligation whatsoever to any Lender or
any other Person to investigate, confirm or assure that the Collateral exists or
is owned by any Borrower or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, Agent
may act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any other Lender.
12.12 Agency for Perfection. Each Lender hereby appoints Agent and each
other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
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12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days'
notice to Lenders and Administrative Borrower. If Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
agent for Lenders. If no successor agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with
Lenders and Administrative Borrower, a successor agent from among Lenders. Upon
the acceptance by the Lender so selected of its appointment as successor agent
hereunder, such successor agent shall succeed to all of the rights, powers and
duties of the retiring Agent and the term "Agent" as used herein and in the
other Financing Agreements shall mean such successor agent and the retiring
Agent's appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Section
12 shall inure to its benefit as to any actions taken or omitted by it while it
was Agent under this Agreement. If no successor agent has accepted appointment
as Agent by the date which is thirty (30) days after the date of a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nonetheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date"); provided, that, so long as no Default
or Event of Default shall have occurred and be continuing, Borrowers may, at
their option (without the consent or approval of Lenders), extend the term of
this Agreement and the other Financing Agreements to the date that is one (1)
year after the Renewal Date (the "Renewal Extension Date") by the Administrative
Borrower giving Agent notice thereof at least sixty (60) days prior to the
Renewal Date, unless this Agreement and the other Financing Agreements shall be
sooner terminated pursuant to the terms hereof. In addition, Borrowers may
terminate this Agreement at any time upon ten (10) days prior written notice to
Agent (which notice shall be irrevocable) and Agent may, at its option, and
shall at the direction of Required Lenders, terminate this Agreement at any time
on or after an Event of Default that is continuing at the time of such
termination. This Agreement and all other Financing Agreements must be
terminated simultaneously. Upon the Renewal Date or the Renewal Extension Date
(as applicable) or any other effective date of termination of the Financing
Agreements, Borrowers shall pay to Agent all outstanding and unpaid Obligations
and shall furnish cash collateral to Agent (or at Agent's option, a letter of
credit issued for the account of Borrowers and at Borrowers' expense, in form
and substance satisfactory to Agent, by an issuer acceptable to Agent and
payable to Agent as beneficiary) in such amounts as Agent determines are
reasonably necessary to secure Agent and Lenders from loss, cost, damage or
expense, including attorneys' fees and expenses, in connection with any
contingent Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment and any continuing obligations of Agent or any Lender
pursuant
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to any Deposit Account Control Agreement. The amount of such cash collateral (or
letter of credit, as Agent may determine) as to any Letter of Credit
Accommodations shall be in the amount equal to one hundred ten (110%) percent of
the amount of the Letter of Credit Accommodations plus the amount of any fees
and expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations. Such payments in
respect of the Obligations and cash collateral shall be remitted by wire
transfer in Federal funds to the Agent Payment Account or such other bank
account of Agent, as Agent may, in its discretion, designate in writing to
Administrative Borrower for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrowers to the
Agent Payment Account or other bank account designated by Agent are received in
such bank account later than 12:00 noon, Miami, Florida time. Each Borrower
agrees that such Borrower is jointly (with the other Borrower) and severally
liable for the full and prompt payment (whether on the Renewal Date, the Renewal
Extension Date, by acceleration or otherwise) and performance of, all
Obligations owed and at any time hereafter owing to Agent and Lenders.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Agent's continuing security interest in the Collateral and the rights and
remedies of Agent and Lenders hereunder, under the other Financing Agreements
and applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid. Accordingly, except as may be otherwise
provided herein, each Borrower waives any rights it may have under the UCC to
demand the filing of termination statements with respect to the Collateral and
Agent shall not be required to send such termination statements to Borrowers, or
to file them with any filing office, unless and until this Agreement shall have
been terminated in accordance with its terms and all Obligations paid and
satisfied in full in immediately available funds.
(c) If for any reason this Agreement is terminated prior to
the Renewal Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Agent's and each Lender's lost profits as a result
thereof, Borrowers agree to pay to Agent for itself and the ratable benefit of
Lenders, upon the effective date of such termination, an early termination fee
in the amount equal to
Amount Period
------ ------
1/2% of Maximum Credit From the date hereof to and including
the first anniversary of the date
hereof
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers agree that it is reasonable under the circumstances currently
existing. In addition, Agent and Lenders shall be entitled to such early
termination fee upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h) hereof, even if Agent and Lenders do not exercise
the right to terminate this Agreement, but elect, at their option, to provide
financing to any Borrower or permit the use of cash collateral under the United
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States Bankruptcy Code. The early termination fee provided for in this Section
13.1 shall be deemed included in the Obligations.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1,
Article 8 or Article 9 of the UCC shall have the meanings given therein unless
otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to any Borrower, Agent and Lenders pursuant
to the definitions set forth in the recitals hereto, or to any other person
herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall
mean "including, without limitation".
(f) An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 11.3
or is cured in a manner satisfactory to Agent, if such Event of Default is
capable of being cured as determined by Agent.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrowers shall have the burden of proving any lack of
good faith on the part of Agent or any Lender alleged by any Borrower at any
time.
(h) Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrowers most recently
received by Agent prior to the date hereof. Notwithstanding anything to the
contrary contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is not only unqualified but also does not
include any explanatory note or language, including
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any explanation, supplemental comment or other comment concerning the ability of
the applicable person to continue as a going concern or otherwise.
(i) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including", the
words "to" and "until" each mean "to but excluding" and the word "through" means
"to and including".
(j) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(l) This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Agent and the
other parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements shall not be construed against Agent or
Lenders merely because of Agent's or any Lender's involvement in their
preparation.
13.3 Notices. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, seven (7) days after mailing. All notices, requests
and demands upon the parties are to be given to the following addresses (or to
such other address as any party may designate by notice in accordance with this
Section):
If to any Borrower: Xxxxx Mart, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
225156-14 95
If to Agent: Congress Financial Corporation (Florida)
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Portfolio Manager
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
13.4 Partial Invalidity. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 Confidentiality.
(a) Agent and each Lender shall use all reasonable efforts
to keep confidential, in accordance with its customary procedures for
handling confidential information and safe and sound lending practices, any
non-public information supplied to it by any Borrower pursuant to this Agreement
which is clearly and conspicuously marked as confidential at the time such
information is furnished by such Borrower to Agent or such Lender, provided,
that, nothing contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order, (ii) to bank examiners and other regulators, auditors and/or
accountants, in connection with any litigation to which Agent or such Lender is
a party, (iii) to any Lender or Participant (or prospective Lender or
Participant) or to any Affiliate of any Lender so long as such Lender or
Participant (or prospective Lender or Participant) or Affiliate shall have been
instructed to treat such information as confidential in accordance with this
Section 13.5, or (iv) to counsel for Agent or any Lender or Participant (or
prospective Lender or Participant).
(b) In the event that Agent or any Lender receives a request
or demand to disclose any confidential information pursuant to any subpoena
or court order, Agent or such Lender, as the case may be, agrees (i) to
the extent permitted by applicable law or if permitted by applicable law, to the
extent Agent or such Lender determines in good faith that it will not create any
risk of liability to Agent or such Lender, Agent or such Lender will promptly
notify Administrative Borrower of such request so that Administrative Borrower
may seek a protective order or other appropriate relief or remedy and (ii) if
disclosure of such information is required, disclose such information and,
subject to reimbursement by Borrowers of Agent's or such Lender's expenses,
cooperate with Administrative Borrower in the reasonable efforts to obtain an
order or other reliable assurance that confidential treatment will be accorded
to such portion of the disclosed information which Administrative Borrower so
designates, to the extent permitted by applicable law or if permitted by
applicable law, to the extent Agent or such Lender determines in good faith that
it will not create any risk of liability to Agent or such Lender.
225156-14 96
(c) In no event shall this Section 13.5 or any other provision
of this Agreement, any of the other Financing Agreements or applicable law be
deemed: (i) to apply to or restrict disclosure of information that has been or
is made public by any Borrower or any third party or otherwise becomes generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent or any Lender (or any Affiliate of any Lender) on a
non-confidential basis from a person other than a Borrower, (iii) to require
Agent or any Lender to return any materials furnished by a Borrower to Agent or
a Lender or prevent Agent or a Lender from responding to routine informational
requests in accordance with the Code of Ethics for the Exchange of Credit
Information promulgated by The Xxxxxx Xxxxxx Associates or other applicable
industry standards relating to the exchange of credit information. The
obligations of Agent and Lenders under this Section 13.5 shall supersede and
replace the obligations of Agent and Lenders under any confidentiality letter
signed prior to the date hereof.
(d) Notwithstanding anything to the contrary set
forth herein or in any of the other Financing Agreements or any other written or
oral understanding or agreement, (i) any obligations of confidentiality
contained herein, in any of the other Financing Agreements or any such other
understanding or agreement do not apply and have not applied from the
commencement of discussions between the parties to the tax treatment and tax
structure of the transactions contemplated herein (and any related transactions
or arrangements), and (ii) each party (and each of its employees,
representatives, or other agents) may disclose to any and all persons the tax
treatment and tax structuring of the transactions contemplated herein and all
materials of any kind (including opinions or other tax analyses) that are
provided to such party relating to such tax treatment and tax structure, all
within the meaning of Treasury Regulation Section 1.6011-4; provided, that, each
party recognizes that the privilege that it may, in its discretion, maintain
with respect to the confidentiality of a communication relating to the
transactions contemplated herein, including a confidential communication with
its attorney or a confidential communication with a federally authorized tax
practitioner under Section 7525 of the Internal Revenue Code, is not intended to
be affected by the foregoing. Borrowers do not intend to treat the Loans and
related transactions as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4). In the event Borrowers determine to take
any action inconsistent with such intention, it will promptly notify Agent
thereof. Each Borrower acknowledges that one or more of Lenders may treat its
Loans as part of a transaction that is subject to Treasury Regulation Section
1.6011-4 or Section 301.6112-1, and the Agent and such Lender or Lenders, as
applicable, may file such IRS forms or maintain such lists and other records as
they may determine is required by such Treasury Regulations.
13.6 Successors. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Agent, Lenders, Borrowers and their
respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in
225156-14 97
Section 13.7 below. The terms and provisions of this Agreement and the other
Financing Agreements are for the purpose of defining the relative rights and
obligations of Borrowers, Agent and Lenders with respect to the transactions
contemplated hereby and there shall be no third party beneficiaries of any of
the terms and provisions of this Agreement or any of the other Financing
Agreements.
13.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of Agent,
assign all or, if less than all, a portion equal to at least $10,000,000 in the
aggregate for the assigning Lender, of such rights and obligations under this
Agreement to one or more Eligible Transferees (but not including for this
purpose any assignments in the form of a participation), each of which assignees
shall become a party to this Agreement as a Lender by execution of an Assignment
and Acceptance; provided, that, (i) such transfer or assignment will not be
effective until recorded by Agent on the Register and (ii) Agent shall have
received for its sole account payment of a processing fee from the assigning
Lender or the assignee in the amount of $5,000.
(b) Agent shall maintain a register of the names and addresses
of Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to
each Assignment and Acceptance. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and any Borrowers,
Obligors, Agent and Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Administrative Borrower and any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
the assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and the
assigning Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance,
the assignor and assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower,
225156-14 98
Obligor or any of their Subsidiaries or the performance or observance by any
Borrower or Obligor of any of the Obligations; (iii) such assignee confirms that
it has received a copy of this Agreement and the other Financing Agreements,
together with such other documents and information it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance, (iv) such assignee will, independently and without reliance upon the
assigning Lender, Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Financing
Agreements, (v) such assignee appoints and authorizes Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement and the
other Financing Agreements as are delegated to Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto, and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other
Financing Agreements are required to be performed by it as a Lender. Agent and
Lenders may furnish any information concerning any Borrower or Obligor in the
possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it and
its participation in the Letter of Credit Accommodations, without the consent of
Agent or the other Lenders); provided, that, (i) such Lender's obligations under
this Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, the other Lenders and Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Financing Agreements, and (iii)
the Participant shall not have any rights under this Agreement or any of the
other Financing Agreements (the Participant's rights against such Lender in
respect of such participation to be those set forth in the agreement executed by
such Lender in favor of the Participant relating thereto) and all amounts
payable by any Borrower or Obligor hereunder shall be determined as if such
Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any
Lender from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders from such Federal Reserve Bank.
(g) Borrowers shall assist Agent or any Lender permitted to
sell assignments or participations under this Section 13.7 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Borrowers shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of
225156-14 99
Borrowers and their affairs provided, prepared or reviewed by any Borrower that
are contained in any selling materials and all other information provided by it
and included in such materials.
13.8 Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
13.9 Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
[SIGNATURE PAGES FOLLOW]
225156-14 100
IN WITNESS WHEREOF, Agent, Co-Arrangers, Documentation Agent, Lenders
and Borrowers have caused these presents to be duly executed as of the day and
year first above written.
AGENT BORROWER
CONGRESS FINANCIAL CORPORATION XXXXX MART, INC.
(FLORIDA), as Agent
By:______________________________ By: /s/ Xxxxx X. Xxxxx
Title:___________________________ Title: Senior Vice President and
Chief Financial Officer
CO-ARRANGERS BORROWER
WACHOVIA BANK,
NATIONAL ASSOCIATION, XXXXX MART BUYING CORP.
as Co-Arranger
By:______________________________ By: /s/ Xxxxx X. Xxxxx
Title:___________________________ Title: Senior Vice President and
Chief Financial Officer
FLEET RETAIL FINANCE, INC.,
as Co-Arranger
By:______________________________
Title:___________________________
DOCUMENTATION AGENT
GENERAL ELECTRIC CAPITAL CORPORATION,
as Documentation Agent
By:______________________________
Title:___________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
225156-14
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
LENDERS
CONGRESS FINANCIAL CORPORATION
(FLORIDA)
By:______________________________
Title:___________________________
FLEET RETAIL FINANCE, INC.
By:______________________________
Title:___________________________
GENERAL ELECTRIC CAPITAL CORPORATION
By:______________________________
Title:___________________________
XXXXX FARGO FOOTHILL, LLC
By:______________________________
Title:___________________________
ISRAEL DISCOUNT BANK OF NEW YORK
By:______________________________
Title:___________________________
225156-14
SCHEDULE I
Commitments
Original Commitment Commitment if Maximum Commitment if Maximum
(Maximum Credit equal to Credit Increased to Credit Decreased to
$150,000,000) $175,000,000 pursuant to $125,000,000 pursuant
Lender Section 2.1(e) to Section 2.1(e)
Congress Financial Corporation (Florida) $42,857,143 $50,000,000 $35,714,286
General Electric Capital Corporation $42,857,143 $50,000,000 $35,714,286
Fleet Retail Finance, Inc. $34,285,714 $40,000,000 $28,571,429
Xxxxx Fargo Foothill, Inc. $21,428,571 $25,000,000 $17,857,143
Israel Discount Bank of New York $8,571,429 $10,000,000 $7,142,857
Total Commitments $150,000,000 $175,000,000 $125,000,000
225156-14
EXHIBIT A
to
LOAN AND SECURITY AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of _____________, 200_ is made between
________________________ (the "Assignor") and ____________________ (the
"Assignee").
W I T N E S S E T H:
WHEREAS, Congress Financial Corporation (Florida), in its capacity as
agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on
behalf of the financial institutions which are parties thereto as lenders (in
such capacity, "Agent"), and the financial institutions which are parties to the
Loan Agreement as lenders (individually, each a "Lender" and collectively,
"Lenders") have entered or are about to enter into financing arrangements
pursuant to which Agent and Lenders may make loans and advances and provide
other financial accommodations to Xxxxx Mart, Inc., a Florida corporation and to
Xxxxx Mart Buying Corp., a Florida corporation (collectively, "Borrowers") as
set forth in the Loan and Security Agreement, dated July __, 2003, by and among
Borrowers, certain of their affiliates, Agent and Lenders (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, the "Loan Agreement"), and the other agreements, documents
and instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the
Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements");
WHEREAS, as provided under the Loan Agreement, Assignor committed to
making Loans (the "Committed Loans") to Borrowers in an aggregate amount not to
exceed $___________ (the "Commitment");
WHEREAS, Assignor wishes to assign to Assignee [part of the] [all]
rights and obligations of Assignor under the Loan Agreement in respect of its
Commitment in an amount equal to $______________ (the "Assigned Commitment
Amount") on the terms and subject to the conditions set forth herein and
Assignee wishes to accept assignment of such rights and to assume such
obligations from Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
225156-14 A-1
(a) Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and
Assignee hereby purchases, assumes and undertakes from Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) an interest in (i) the Commitment and each of the
Committed Loans of Assignor and (ii) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Loan Agreement and the other Financing Agreements, so that after giving effect
thereto, the Commitment of Assignee shall be as set forth below and the Pro Rata
Share of Assignee shall be _______ (__%) percent.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), Assignee shall be a party to the Loan Agreement and succeed
to all of the rights and be obligated to perform all of the obligations of a
Lender under the Loan Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Commitment Amount. Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment of Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Commitment Amount
and Assignor shall relinquish its rights and be released from its obligations
under the Loan Agreement to the extent such obligations have been assumed by
Assignee; provided, that, Assignor shall not relinquish its rights under
Sections 2.1, 6.4, 6.8 and 6.9 of the Loan Agreement to the extent such rights
relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date Assignee's Commitment will be
$______________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date Assignor's Commitment will be
$______________ (as such amount may be further reduced by any other assignments
by Assignor on or after the date hereof).
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee's Pro Rata Share of the principal amount of all Committed
Loans.
(b) Assignee shall pay to Agent the processing fee in the
amount specified in Section 13.7(a) of the Loan Agreement.
3. Reallocation of Payments. Any interest, fees and other payments
accrued to the Effective Date with respect to the Commitment, Committed Loans
and outstanding Letter of Credit Accommodations shall be for the account of
Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Commitment Amount shall be for the
account of Assignee. Each of Assignor and Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.
225156-14 A-2
4. Independent Credit Decision. Assignee acknowledges that it has
received a copy of the Loan Agreement and the Schedules and Exhibits thereto,
together with copies of the most recent financial statements of Xxxxx Mart, Inc.
and its Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance and agrees that it will, independently and
without reliance upon Assignor, Agent or any Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit and legal decisions in taking or not taking action under the Loan
Agreement.
5. Effective Date; Notices.
(a) As between Assignor and Assignee, the effective date for
this Assignment and Acceptance shall be _______________, 200_ (the "Effective
Date"); provided, that, the following conditions precedent have been satisfied
on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed
and delivered by Assignor and Assignee;
(ii) the consent of Agent as required for an
effective assignment of the Assigned Commitment Amount by Assignor to Assignee
shall have been duly obtained and shall be in full force and effect as of the
Effective Date;
(iii) written notice of such assignment, together
with payment instructions, addresses and related information with respect to
Assignee, shall have been given to Administrative Borrower and Agent;
(iv) Assignee shall pay to Assignor all amounts due
to Assignor under this Assignment and Acceptance; and
(v) the processing fee referred to in Section 2(b)
hereof shall have been paid to Agent.
(b) Promptly following the execution of this Assignment and
Acceptance, Assignor shall deliver to Administrative Borrower and Agent for
acknowledgment by Agent, a Notice of Assignment in the form attached hereto as
Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
(a) Assignee hereby appoints and authorizes Assignor in its
capacity as Agent to take such action as agent on its behalf to exercise such
powers under the Loan Agreement as are delegated to Agent by Lenders pursuant to
the terms of the Loan Agreement.
(b) Assignee shall assume no duties or obligations held by
Assignor in its capacity as Agent under the Loan Agreement.]
225156-14 A-3
7. Withholding Tax. Assignee (a) represents and warrants to Assignor,
Agent and Borrowers that under applicable law and treaties no tax will be
required to be withheld by Assignee, Agent or Borrowers with respect to any
payments to be made to Assignee hereunder or under any of the Financing
Agreements, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to Agent and
Borrowers prior to the time that Agent or Borrowers are required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form W-8BEN or W-8ECI, as applicable
(wherein Assignee claims entitlement to the benefits of a tax treaty that
provides for a complete exemption from U.S. federal income withholding tax on
all payments hereunder) and agrees to provide new such Forms upon the expiration
of any previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by Assignee, and (c) agrees to comply with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.
8. Representations and Warranties.
(a) Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any security interest, lien, encumbrance or
other adverse claim, (ii) it is duly organized and existing and it has the full
power and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment
and Acceptance and to fulfill its obligations hereunder, (iii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the other Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of Borrowers or any of their respective
Affiliates, or the performance or observance by Borrowers or any other Person,
of any of its respective obligations under the Loan Agreement or any other
instrument or document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder, (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due
225156-14 A-4
execution, delivery and performance of this Assignment and Acceptance, and apart
from any agreements or undertakings or filings required by the Loan Agreement,
no further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; and (iii) this Assignment and
Acceptance has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of Assignee, enforceable against Assignee in
accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights to general equitable principles.
9. Further Assurances. Assignor and Assignee each hereby agree to
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Assignment and Acceptance, including the delivery of any
notices or other documents or instruments to Borrowers or Agent, which may be
required in connection with the assignment and assumption contemplated hereby.
10. Miscellaneous
(a) Any amendment or waiver of any provision of this Assignment
and Acceptance shall be in writing and signed by the parties hereto. No failure
or delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other for further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) Assignor and Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF FLORIDA. Assignor and
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in Dade County, Florida over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Florida State or Federal court. Each party to
this Assignment and Acceptance hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND
225156-14 A-5
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
225156-14 A-6
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
and Acceptance to be executed and delivered by their duly authorized officers as
of the date first above written.
[ASSIGNOR]
By:______________________________
Title:___________________________
[ASSIGNEE]
By:______________________________
Title:___________________________
225156-14 A-7
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
___, 20__
Congress Financial Corporation (Florida)
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn.: Portfolio Manager
Re: Xxxxx Mart, Inc. and Xxxxx Mart Buying Corp.
Ladies and Gentlemen:
Congress Financial Corporation (Florida), in its capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the financial institutions which are parties thereto as lenders (in such
capacity, "Agent"), and the financial institutions which are parties to the Loan
Agreement as lenders (individually, each a "Lender" and collectively, "Lenders")
have entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans and advances and provide other financial
accommodations to Xxxxx Mart, Inc., a Florida corporation, and Xxxxx Mart Buying
Corp., a Florida corporation (collectively, "Borrowers") as set forth in the
Loan and Security Agreement, dated July __, 2003, by and among Borrowers,
certain of their affiliates, Agent and Lenders (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the "Loan Agreement"), and the other agreements, documents and
instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the
Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"). Capitalized terms not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Loan Agreement.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________________ (the "Assignor") to ___________________
(the "Assignee") such that after giving effect to the assignment Assignee shall
have an interest equal to ________ (__%) percent of the total Commitments
pursuant to the Assignment and Acceptance Agreement attached hereto (the
"Assignment and Acceptance"). We understand that the Assignor's Commitment shall
be reduced by $_____________, as the same may be further reduced by other
assignments on or after the date hereof.
2. Assignee agrees that, upon receiving the consent of Agent to such
assignment, Assignee will be bound by the terms of the Loan Agreement as fully
and to the same extent as if the Assignee were the Lender originally holding
such interest under the Loan Agreement.
3. The following administrative details apply to Assignee:
225156-14 A-8
(A) Notice address:
Assignee name:_________________________
Address: _________________________
_________________________
Attention: _________________________
Telephone: _________________________
Telecopier: _________________________
(B) Payment instructions:
Account No.: _________________________
At: _________________________
_________________________
_________________________
Reference: _________________________
Attention: _________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of Assignor and Assignee contained in the Assignment and
Acceptance.
225156-14 A-9
IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:______________________________
Title:___________________________
[NAME OF ASSIGNEE]
By:______________________________
Title:___________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
CONGRESS FINANCIAL CORPORATION
(FLORIDA), as Agent
By:______________________________
Title:___________________________
225156-14 A-10
EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT
Compliance Certificate
To: Congress Financial Corporation
(Florida), as Agent
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
I hereby certify to you pursuant to Section 9.6 of the Loan Agreement
(as defined below) as follows:
1. I am the duly elected Chief Financial Officer of Xxxxx Mart, Inc., a
Florida corporation, and Xxxxx Mart Buying Corp., a Florida corporation
(collectively, "Borrowers"). Capitalized terms used herein without definition
shall have the meanings given to such terms in the Loan and Security Agreement,
dated July __, 2003, by and among Congress Financial Corporation (Florida) as
agent for the financial institutions party thereto as lenders (in such capacity,
"Agent") and the financial institutions party thereto as lenders (collectively,
"Lenders"), and Borrowers (as such Loan and Security Agreement is amended,
modified or supplemented, from time to time, the "Loan Agreement").
2. I have reviewed the terms of the Loan Agreement, and have made, or
have caused to be made under my supervision, a review in reasonable detail of
the transactions and the financial condition of Borrowers, during the
immediately preceding fiscal month.
3. The review described in Section 2 above did not disclose the
existence during or at the end of such fiscal month, and I have no knowledge of
the existence and continuance on the date hereof, of any condition or event
which constitutes a Default or an Event of Default, except as set forth on
Schedule I attached hereto. Described on Schedule I attached hereto are the
exceptions, if any, to this Section 3 listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
any Borrower has taken, is taking, or proposes to take with respect to such
condition or event.
4. I further certify that, based on the review described in Section 2
above, to my knowledge, neither Borrower has at any time during or at the end of
such fiscal month, except as specifically described on Schedule II attached
hereto or as permitted by the Loan Agreement, done any of the following:
(a) Changed its respective corporate name, or transacted
business under any trade name, style, or fictitious name,
other than those previously described to you and set forth
in the Financing Agreements.
225156-14 C-1
(b) Changed the location of its chief executive office, changed
its jurisdiction of incorporation, changed its type of
organization or changed the location of or disposed of any
of its properties or assets (other than the sale of
Inventory in the ordinary course of its business or as
otherwise permitted by Section 9.7 of the Loan Agreement),
or established any new asset locations.
(c) Materially changed the terms upon which it sells goods
(including sales on consignment) or provides services, nor
has any vendor or trade supplier to any Borrower, to whom
Borrowers were indebted during the immediately preceding
month for accounts payable constituting at least ten (10%)
percent of all accounts payables then owing by Borrowers to
all vendors and trade suppliers, during or at the end of
such period materially adversely changed the terms upon
which it supplies goods to any Borrower.
(d) Permitted or suffered to exist any security interest in or
liens on any of its properties, whether real or personal,
other than as specifically permitted in the Financing
Agreements.
(e) Received any notice of, or obtained knowledge of any of the
following not previously disclosed to Agent: (i) the
occurrence of any event involving the release, spill or
discharge of any Hazardous Material in violation of
applicable Environmental Law in a material respect or (ii)
any investigation, proceeding, complaint, order, directive,
claims, citation or notice with respect to: (A) any
non-compliance with or violation of any applicable
Environmental Law by any Borrower in any material respect or
(B) the release, spill or discharge of any Hazardous
Material in violation of applicable Environmental Law in a
material respect or (C) the generation, use, storage,
treatment, transportation, manufacture, handling, production
or disposal of any Hazardous Materials in violation of
applicable Environmental Laws in a material respect or (D)
any other environmental, health or safety matter, which has
a material adverse effect on any Borrower or its business,
operations or assets or any properties at which such
Borrower transported, stored or disposed of any Hazardous
Materials.
(f) Become aware of, obtained knowledge of, or received
notification of, any breach or violation of any material
covenant contained in any instrument or agreement in respect
of Indebtedness for money borrowed by any Borrower.
The foregoing certifications are made and delivered this day
of ___________, 20__.
Very truly yours,
XXXXX MART, INC.
By:______________________________
Title:___________________________
225156-14 C-2
SCHEDULE 1.43
Existing Lenders
SunTrust Bank
Fleet National Bank
Wachovia Bank, N.A. (formerly known as First Union Bank)
US Bank National Association
Carolina First Bank
Compass Bank
Republic Bank
Israel Discount Bank Limited
Regions Bank
225156-14
SCHEDULE 1.44
Existing Letters of Credit
15 separate Standby Letters of Credit issued by the Existing
Lender for the benefit of various persons in the aggregate undrawn principal
amount of $2,869,330, as listed in Wachovia Bank, National Association
Irrevocable Standby Letter of Credit No. SM204036W issued in such principal
amount for the account of Borrowers hereunder and for the benefit Existing
Lender (the "Back-up Letter of Credit"), payment of which Existing Letters of
Credit will be covered by the Back-up Letter of Credit.
225156-14
SCHEDULE 8.16
Existing Credit Card Agreements
1. Merchant Services Agreement between Discover Financial Services,
Inc. and Xxxxx Mart, Inc. [undated].
2. Agreement for American Express Card Acceptance, dated as of July 1,
2003, by and between American Express Travel Related Services Company, Inc. and
Xxxxx Mart, Inc.
3. Bank Card Merchant Agreement, dated on or about June 15, 2002,
executed by and among The Fifth Third Bank, Midwest Payment Systems, Inc. and
Xxxxx Mart, Inc.
225156-14
