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CREDIT AGREEMENT
Dated as of April 15, 1997
among
THE BON-TON DEPARTMENT STORES, INC.,
XXXX, XXXXXXX & XXXXXXXX CO., INC., and
THE BON-TON STORES OF LANCASTER, INC.
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
THE FIRST NATIONAL BANK OF BOSTON
as Collateral Agent and Lender
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent and Lender
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TABLE OF CONTENTS
1. AMOUNT AND TERMS OF CREDIT............................................. 2
1.1 Credit Facilities................................................ 2
1.2 Letters of Credit................................................ 5
1.3 Prepayments...................................................... 5
1.4 Use of Proceeds.................................................. 8
1.5 Interest and Applicable Margins.................................. 8
1.6 [Intentionally Omitted].......................................... 11
1.7 Eligible Inventory............................................... 11
1.8 Cash Management Systems.......................................... 13
1.9 Fees............................................................. 13
1.10 Receipt of Payments.............................................. 13
1.11 Application and Allocation of Payments........................... 14
1.12 Loan Account and Accounting...................................... 14
1.13 Indemnity........................................................ 15
1.14 Access........................................................... 16
1.15 Taxes............................................................ 17
1.16 Capital Adequacy; Increased Costs; Illegality.................... 17
1.17 Single Loan...................................................... 19
2. CONDITIONS PRECEDENT................................................... 19
2.1 Conditions to the Initial Loans.................................. 19
2.2 Further Conditions to Each Loan.................................. 21
2.3 Conditions to Commercial Letters of Credit....................... 22
3. REPRESENTATIONS AND WARRANTIES......................................... 22
3.1 Corporate Existence; Compliance with Law......................... 22
3.2 Executive Offices; FEIN.......................................... 23
3.3 Corporate Power, Authorization, Enforceable Obligations.......... 23
3.4 Financial Statements and Projections............................. 23
3.5 Material Adverse Effect.......................................... 24
3.6 Ownership of Property; Liens..................................... 24
3.7 Labor Matters.................................................... 25
3.8 Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness........................................... 26
3.9 Government Regulation............................................ 26
3.10 Margin Regulations............................................... 26
3.11 Taxes............................................................ 26
3.12 ERISA............................................................ 27
3.13 No Litigation.................................................... 28
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3.14 Brokers.......................................................... 28
3.15 Intellectual Property............................................ 28
3.16 Full Disclosure.................................................. 28
3.17 Environmental Matters............................................ 28
3.18 Insurance........................................................ 29
3.19 Deposit and Disbursement Accounts................................ 29
3.20 Government Contracts............................................. 30
3.21 Customer and Trade Relations..................................... 30
3.22 Agreements and Other Documents................................... 30
3.23 Solvency......................................................... 30
4. FINANCIAL STATEMENTS AND INFORMATION................................... 30
4.1 Reports and Notices.............................................. 30
4.2 Communication with Accountants................................... 31
5. AFFIRMATIVE COVENANTS.................................................. 31
5.1 Maintenance of Existence and Conduct of Business................. 31
5.2 Payment of Obligations........................................... 32
5.3 Books and Records................................................ 32
5.4 Insurance; Damage to or Destruction of Collateral................ 32
5.5 Compliance with Laws............................................. 34
5.6 Supplemental Disclosure.......................................... 34
5.7 Intellectual Property............................................ 34
5.8 Environmental Matters............................................ 34
5.9 Landlords' Agreements and Bailee Letters......................... 35
5.10 Further Assurances............................................... 36
6. NEGATIVE COVENANTS..................................................... 36
6.1 Mergers, Subsidiaries, Etc....................................... 36
6.2 Investments; Loans and Advances.................................. 36
6.3 Indebtedness..................................................... 36
6.4 Employee Loans and Affiliate Transactions........................ 37
6.5 Capital Structure and Business................................... 38
6.6 Guaranteed Indebtedness.......................................... 38
6.7 Liens............................................................ 38
6.8 Sale of Stock and Assets......................................... 38
6.9 ERISA............................................................ 39
6.10 Financial Covenants.............................................. 39
6.11 Hazardous Materials.............................................. 39
6.12 Sale-Leasebacks.................................................. 39
6.13 Cancellation of Indebtedness..................................... 39
6.14 Restricted Payments.............................................. 39
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6.15 Change of Corporate Name or Location; Change of Fiscal Year........ 40
6.16 No Impairment of Intercompany Transfers............................ 40
6.17 No Speculative Transactions........................................ 40
6.18 Leases............................................................. 41
6.19 Changes Relating to Securitization Documents....................... 41
6.20 Availability....................................................... 41
7. TERM..................................................................... 41
7.1 Termination........................................................ 41
7.2 Survival of Obligations Upon Termination of Financing Arrangements. 41
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES................................... 41
8.1 Events of Default.................................................. 41
8.2 Remedies........................................................... 43
8.3 Waivers by Credit Parties.......................................... 44
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENTS..................... 44
9.1 Assignment and Participations...................................... 44
9.2 Appointment of Agents.............................................. 46
9.3 Agents' Reliance, Etc.............................................. 47
9.4 GE Capital, FNBB and their Affiliates.............................. 48
9.5 Lender Credit Decision............................................. 48
9.6 Indemnification.................................................... 48
9.7 Successor Agents................................................... 49
9.8 Setoff and Sharing of Payments..................................... 49
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions
in Concert......................................................... 50
10. SUCCESSORS AND ASSIGNS................................................... 52
10.1 Successors and Assigns............................................. 52
11. MISCELLANEOUS............................................................ 53
11.1 Complete Agreement; Modification of Agreement...................... 53
11.2 Amendments and Waivers............................................. 53
11.3 Fees and Expenses.................................................. 54
11.4 No Waiver.......................................................... 56
11.5 Remedies........................................................... 56
11.6 Severability....................................................... 56
11.7 Conflict of Terms.................................................. 57
11.8 Confidentiality.................................................... 57
11.9 GOVERNING LAW...................................................... 57
11.10 Notices............................................................ 58
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11.11 Section Titles................................................ 59
11.12 Counterparts.................................................. 59
11.13 WAIVER OF JURY TRIAL.......................................... 59
11.14 Press Releases................................................ 59
11.15 Reinstatement................................................. 59
11.16 Advice of Counsel............................................. 60
11.17 No Strict Construction........................................ 60
12. CROSS-GUARANTY....................................................... 60
12.1 Cross-Guaranty................................................ 60
12.2 Waivers by Borrowers.......................................... 61
12.3 Benefit of Guaranty........................................... 61
12.4 Subordination of Subrogation, Etc............................. 61
12.5 Election of Remedies.......................................... 61
12.6 Limitation.................................................... 62
12.7 Contribution with Respect to Guaranty Obligations............. 62
12.8 Liability Cumulative.......................................... 63
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INDEX OF APPENDICES
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Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 2.3 - Form of Inspection Certificate
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Projections
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding
Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 5.4 - Insurance
Schedule 6.2 - Existing Investments
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Schedule 6.8 - Permitted Properties
Schedule A-1 - Designated Properties
Schedule A-2 - Location of Eligible Fixed Assets
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Schedule A-3 - Specified Properties
Schedule B-1 - Existing Letters of Credit
Schedule D-1 - Mortgaged Properties
Schedule F-1 - Form of Collateral Report
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
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Annex C (Section 1.8) - Cash Management Systems
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Annex D (Section 2.1(a)) - Schedule of Additional Closing Documents
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Annex E (Section 4.1(a)) - Financial Statements and Projections --
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Annex F (Section 4.1(b)) - Collateral Reports
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Annex G (Section 6.10) - Financial Covenants
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Annex H (Section 9.9(a)) - Wire Transfer Information
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Annex I (Section 11.10) - Notice Addresses
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CREDIT AGREEMENT, dated as of April 15, 1997 among The Bon-Ton
Department Stores Inc., a Pennsylvania corporation ("Bon-Ton" ), Xxxx, Xxxxxxx &
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Xxxxxxxx Co., Inc., a New York corporation ("AM&A"), The Bon-Ton Stores of
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Lancaster, Inc., a Pennsylvania corporation ("Lancaster") (Bon-Ton, AM&A and
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Lancaster are sometimes collectively referred to herein as the "Borrowers" and
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individually as a "Borrower"); the other Credit Parties signatory hereto; The
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First National Bank of Boston, a national banking association (in its individual
capacity, "FNBB") for itself, as Lender and Collateral Agent; General Electric
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Capital Corporation, a New York corporation (in its individual capacity, "GE
--
Capital"), for itself, as Lender, and as Administrative Agent for Lenders, and
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the other Lenders signatory hereto from time to time.
RECITALS
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WHEREAS, Borrowers desire that Lenders extend revolving credit
facilities to Borrowers of up to Two Hundred Million Dollars ($200,000,000) in
the aggregate for the purpose of refinancing certain indebtedness of Borrowers
and to provide (a) working capital financing for Borrowers, and (b) funds for
other general corporate purposes of Borrowers; and for these purposes, Lenders
are willing to make certain loans and other extensions of credit to Borrowers of
up to such amount upon the terms and conditions set forth herein; and
WHEREAS, Borrowers desire to secure all of their obligations under the
Loan Documents by granting to Administrative Agent, for the benefit of Agents
and Lenders, a security interest in and lien upon the Collateral hereinafter
referred to; and
WHEREAS, The Bon-Ton Corp., a Delaware corporation ("Holdings") is
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willing to guaranty all of the obligations of Borrowers to Lenders under the
Loan Documents and to pledge to Administrative Agent, for the benefit of itself,
Collateral Agent (collectively "Agents") and Lenders, all of the capital stock
of Bon-Ton to secure such guaranty; and
WHEREAS, The Bon-Ton Stores, Inc., a Pennsylvania corporation and the
sole stockholder of Holdings ("Parent") is willing to guaranty all of the
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obligations of Borrowers to Lenders under the Loan Documents and to pledge to
Administrative Agent, for the benefit of itself, Agents and Lenders, all of the
capital stock of Holdings to secure such guaranty; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A. All Annexes, Disclosure Schedules,
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Exhibits and other attachments (collectively, "Appendices") hereto, or expressly
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identified to this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities
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(a) Revolving Credit Facility. (i) Subject to the terms and
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conditions hereof, each Lender agrees to make available from time to time until
the Commitment Termination Date its Pro Rata Share of advances (each, a
"Revolving Credit Advance"). The Pro Rata Share of the Revolving Loan of any
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Lender shall not at any time exceed its separate Revolving Loan Commitment. The
obligations of each Lender hereunder shall be several and not joint. The
aggregate amount of Revolving Credit Advances outstanding shall not exceed at
any time the lesser of (A) the Maximum Amount less the sum of the Letter of
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Credit Obligations and (B) the Aggregate Borrowing Base less the sum of 35% of
----
the Eligible Trade L/C Obligations and 100% of such other Letter of Credit
Obligations and, in each case, less the Swing Line Loan outstanding at such time
("Borrowing Availability"). Moreover, the sum of the Revolving Loan and Swing
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Line Loan outstanding to any Borrower less 65% of the Eligible Trade L/C
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Obligations of such Borrower shall not exceed at any time that Borrower's
separate Borrowing Base. Until the Commitment Termination Date, Borrowers may
from time to time borrow, repay and reborrow under this Section 1.1(a). Each
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Revolving Credit Advance shall be made on notice by Borrower Representative on
behalf of the applicable Borrower to the representative of Administrative Agent
identified on Schedule 1.1 at the address specified thereon. Those notices must
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be given no later than (1) 11:00 a.m. (New York time) on the Business Day of the
proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (2)
11:00 a.m. (New York time) on the date which is three (3) Business Days prior to
the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such
notice (a "Notice of Revolving Credit Advance") must be given in writing (by
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telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i),
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and shall include the information required in such Exhibit and such other
information as may be required by Administrative Agent. If any Borrower desires
to have the Revolving Credit Advances bear interest by reference to a LIBOR
Rate, Borrower Representative must comply with Section 1.5(e).
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(ii) Each Borrower shall execute and deliver to each Lender a note
to evidence the Revolving Loan Commitment of that Lender. Each note shall be in
the principal amount of the Revolving Loan Commitment of the applicable Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(a)(ii) (each
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a "Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving
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Note shall represent the obligation of each Borrower to pay the amount of each
Lender's Revolving Loan Commitment or, if less, the applicable Lender's Pro Rata
Share of the aggregate unpaid principal amount of all Revolving Credit Advances
to such Borrower together with interest thereon as prescribed in Section 1.5.
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The entire unpaid balance of the aggregate Revolving Loan and all other non-
contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date.
(b) Swing Line Facility. (i) Administrative Agent shall notify the
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Swing Line Lender upon Administrative Agent's receipt of any Notice of Revolving
Credit Advance. Subject to the terms and conditions hereof, the Swing Line
Lender may, in its discretion, make available from time to time until the
Commitment Termination Date advances (each, a "Swing Line Advance") in
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accordance with any such notice. The aggregate amount of Swing Line Advances
outstanding shall not exceed the lesser of (A) the Swing Line Commitment and (B)
the Aggregate Borrowing Base less the outstanding balance of the Revolving Loan
----
plus 65% of the Eligible Trade
----
L/C Obligations at such time ("Swing Line Availability"). Moreover, the Swing
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Line Loan outstanding to any Borrower shall not exceed at any time that
Borrower's separate Borrowing Base less the Revolving Loan outstanding to such
----
Borrower plus 65% of the Eligible Trade L/C Obligations of such Borrower. Until
----
the Commitment Termination Date, Borrowers may from time to time borrow, repay
and reborrow under this Section 1.1(b). Each Swing Line Advance shall be made
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pursuant to a Notice of Revolving Credit Advance delivered to Administrative
Agent by Borrower Representative on behalf of the applicable Borrower in
accordance with Section 1.1(a). Those notices must be given no later than 11:00
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a.m. (New York time) on the Business Day of the proposed Swing Line Advance.
Notwithstanding any other provision of this Agreement or the other Loan
Documents, the Swing Line Loan shall constitute an Index Rate Loan. Borrowers
shall repay the aggregate outstanding principal amount of the Swing Line Loan
upon demand therefor by Administrative Agent.
(ii) Each Borrower shall execute and deliver to the Swing Line Lender
a promissory note to evidence the Swing Line Commitment. Each note shall be in
the principal amount of the Swing Line Commitment of the Swing Line Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(b)(ii)
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(each a "Swing Line Note" and, collectively, the "Swing Line Notes"). Each Swing
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Line Note shall represent the obligation of each Borrower to pay the amount of
the Swing Line Commitment or, if less, the aggregate unpaid principal amount of
all Swing Line Advances made to such Borrower together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the Swing Line Loan and
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all other non-contingent Obligations shall be immediately due and payable in
full in immediately available funds on the Commitment Termination Date if not
sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at any
-----------------------------
time and from time to time in its sole and absolute discretion (but no less
frequently than once per week), may on behalf of any Borrower (and each Borrower
hereby irrevocably authorizes the Swing Line Lender to so act on its behalf)
request each Revolving Lender (including the Swing Line Lender) to make a
Revolving Credit Advance to such Borrower (which shall be an Index Rate Loan) in
an amount equal to such Revolving Lender's Pro Rata Share of the principal
amount of such Borrower's Swing Line Loan (the "Refunded Swing Line Loan")
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outstanding on the date such notice is given. Unless any of the events
described in Sections 8.1(f), 8.1(g) or 8.1(h) shall have occurred (in which
---------------------------------
event the procedures of Section 1.1(b)(iv) shall apply) and regardless of
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whether the conditions precedent set forth in this Agreement to the making of a
Revolving Credit Advance are then satisfied, each Revolving Lender shall
disburse directly to Administrative Agent, its Pro Rata Share of a Revolving
Credit Advance on behalf of the Swing Line Lender, prior to 3:00 p.m. (New York
time), in immediately available funds on the Business Day next succeeding the
date such notice is given. The proceeds of such Revolving Credit Advances shall
be immediately paid to the Swing Line Lender and applied to repay the Refunded
Swing Line Loan of the applicable Borrower.
(iv) Participation in Swing Line Loans. If, prior to refunding a
---------------------------------
Swing Line Loan with a Revolving Credit Advance pursuant to Section 1.1(b)(iii),
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one of the events described in Sections 8.1(f), 8.1(g), 8.1(h) shall have
-------------------------------
occurred, then, subject to the provisions of Section 1.1(b)(v) below, each
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Revolving Lender will, on the date such Revolving Credit Advance was to have
been made for the benefit of the applicable Borrower, purchase from the Swing
Line Lender an undivided participation interest in the Swing Line Loan to such
Borrower in an amount equal to its Pro Rata Share of such Swing Line Loan. Upon
request, each Revolving Lender will promptly
3
transfer to the Swing Line Lender, in immediately available funds, the amount of
its participation.
(v) Revolving Lenders' Obligations Unconditional. Each Revolving
--------------------------------------------
Lender's obligation to make Revolving Credit Advances in accordance with Section
-------
1.1(b)(iii) and to purchase participating interests in accordance with Section
----------- -------
1.1(b)(iv) shall be absolute and unconditional and shall not be affected by any
----------
circumstance including (A) any setoff, counterclaim, recoupment, defense or
other right which such Revolving Lender may have against the Swing Line Lender,
any Borrower or any other Person for any reason whatsoever; (B) the occurrence
or continuance of any Default or Event of Default; (C) any inability of any
Borrower to satisfy the conditions precedent to borrowing set forth in this
Agreement on the date upon which such participating interest is to be purchased
or (D) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. If any Revolving Lender does not make
available to Administrative Agent or the Swing Line Lender, as applicable, the
amount required pursuant to Section 1.1(b)(iii) or 1.1(b)(iv), as the case may
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be, the Swing Line Lender shall be entitled to recover such amount on demand
from such Revolving Lender, together with interest thereon for each day from the
date of non-payment until such amount is paid in full at the Federal Funds Rate
for the first two Business Days and at the Index Rate thereafter.
(c) Reliance on Notices; Appointment of Borrower Representative.
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Administrative Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Notice of Revolving Credit Advance, Notice of
Conversion/Continuation or similar notice believed by Administrative Agent to be
genuine. Administrative Agent may assume that each Person executing and
delivering such a notice was duly authorized unless the responsible individual
acting thereon for Administrative Agent has actual knowledge to the contrary.
Each Borrower hereby designates Bon-Ton as its representative and agent on its
behalf for the purposes of issuing Notices of Revolving Credit Advances, Notices
of Swing Line Advances and Notices of Conversion/Continuation, giving
instructions with respect to the disbursement of the proceeds of the Loans,
selecting interest rate options, requesting Letters of Credit, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower or Borrowers under the Loan Documents.
Borrower Representative hereby accepts such appointment. Administrative Agent
and each other Agent and Lender may regard any notice or other communication
pursuant to any Loan Document from Borrower Representative as a notice or
communication from all Borrowers, and may give any notice or communication
required or permitted to be given to any Borrower or Borrowers hereunder to
Borrower Representative on behalf of such Borrower or Borrowers. Each Borrower
agrees that each notice, election, representation and warranty, covenant,
agreement and undertaking made on its behalf by Borrower Representative shall be
deemed for all purposes to have been made by such Borrower and shall be binding
upon and enforceable against such Borrower to the same extent as if the same had
been made directly by such Borrower.
1.2 Letters of Credit. Subject to and in accordance with the terms
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and conditions contained herein and in Annex B, Borrower Representative, on
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behalf of the applicable Borrower, shall have the right to request, and Lenders
agree to incur, or purchase participations in, Letter of Credit Obligations in
respect of each Borrower.
1.3 Prepayments.
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4
(a) Voluntary Prepayments. Borrowers may at any time voluntarily
---------------------
prepay all or part of the Revolving Loan without permanent reduction of the
Revolving Loan Commitment. In addition, Borrowers may at any time on at least
ten (10) days' prior written notice by Borrower Representative to Administrative
Agent terminate the Revolving Loan Commitment; provided that upon such
termination, all Loans and other Obligations shall be immediately due and
payable in full. Any such voluntary prepayment and any such termination of the
Revolving Loan Commitment must be accompanied by the payment of the fee required
by Section 1.9(c), if any, plus the payment of any LIBOR funding breakage costs
--------------
in accordance with Section 1.13(b). Upon any such permanent prepayment and
---------------
termination of the Revolving Loan Commitment, each Borrower's right to request
Revolving Credit Advances, or request that Letter of Credit Obligations be
incurred on its behalf, or request Swing Line Advances shall simultaneously be
permanently terminated, as the case may be.
(b) Mandatory Prepayments. (i) If at any time the outstanding
---------------------
balance of (A) the aggregate Revolving Loan exceeds the Maximum Amount or (B)
the aggregate Revolving Loan less 65% of the Eligible Trade L/C Obligations
----
exceeds the Aggregate Borrowing Base, less, in each case, the aggregate
----
outstanding Swing Line Loan at such time, Borrowers shall immediately repay the
aggregate outstanding Revolving Credit Advances to the extent required to
eliminate such excess; provided, however, that if the Aggregate Borrowing Base
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is less than the Maximum Amount and if such outstanding balance of the Revolving
Loan (less 65% of the Eligible Trade L/C Obligations) exceeds the Aggregate
----
Borrowing Base solely as a result of Agents adjusting the criteria, establishing
new criteria or adjusting advance rates with respect to Eligible Inventory, then
Borrowers shall repay the aggregate outstanding Revolving Credit Advances to the
extent required to eliminate such excess no later than five (5) Business Days
after written notice to Borrowers by Agents of such adjustment of criteria, such
establishment of new criteria or such adjustment of advance rates. If any such
excess remains after repayment in full of the aggregate outstanding Revolving
Credit Advances, Borrowers shall provide cash collateral for the Letter of
Credit Obligations in the manner set forth in Annex B to the extent required to
-------
eliminate such excess. Furthermore, if the outstanding balance of the Revolving
Loan of any Borrower less 65% of the Eligible Trade L/C Obligations of such
----
Borrower exceeds, at any time, that Borrower's separate Borrowing Base, less the
outstanding balance of the Swing Line Loan of such Borrower at such time, the
applicable Borrower shall immediately repay its Revolving Credit Advances in the
amount of such excess (and, if necessary, shall provide cash collateral for its
Letter of Credit Obligations as described above); provided, however, that if the
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Borrowing Base of such Borrower is less than the Maximum Amount and if such
outstanding balance of the Revolving Loan of such Borrower (less 65% of the
----
Eligible Trade L/C Obligations of such Borrower) exceeds the Borrowing Base of
such Borrower solely as a result of Agents adjusting the criteria, establishing
new criteria or adjusting advance rates with respect to Eligible Inventory, then
such Borrower shall repay the aggregate outstanding Revolving Credit Advances of
such Borrower to the extent required to eliminate such excess no later than five
(5) Business Days after written notice to Borrowers by Agents of such adjustment
of criteria, such establishment of new criteria or such adjustment of advance
rates.
(ii) Immediately upon receipt by any Credit Party of cash or cash
equivalent proceeds of any disposition of Collateral or any Specified Property
(including condemnation proceeds, but excluding proceeds of asset dispositions
permitted by Section 6.8, Borrowers shall prepay the Loans in an amount equal to
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all such proceeds, net of (A) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction
and payable by Borrowers in connection therewith (in each case, paid to non-
5
Affiliates), (B) transfer, sales or similar taxes, (C) amounts payable to
holders of senior Liens (to the extent such Liens constitute Permitted
Encumbrances hereunder), if any, and (D) an appropriate reserve for income taxes
in accordance with GAAP in connection therewith; provided, however, that the
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Borrowers shall not be required to prepay the Loans from the net cash proceeds
arising from the disposition of one or more such Specified Properties to the
extent the aggregate amount of such net cash proceeds arising therefrom exceeds
$7,500,000. Any such prepayment shall be applied in accordance with clause (c)
----------
below.
(c) Application of Certain Mandatory Prepayments. Any prepayments
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made by any Borrower pursuant to clauses (b)(ii) above shall be applied as
---------------
follows: first, to Fees and reimbursable expenses of Agents then due and payable
-----
pro rata pursuant to any of the Loan Documents; second, to interest then due and
-------- ------
payable on such Borrower's Swing Line Loan; third, to the principal balance of
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the Swing Line Loan outstanding to such Borrower until the same shall have been
repaid in full; fourth, to interest then due and payable on Revolving Credit
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Advances made to such Borrower; fifth, to the principal balance of Revolving
-----
Credit Advances outstanding to such Borrower until the same shall have been paid
in full; sixth, to any Letter of Credit Obligations of such Borrower to provide
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cash collateral therefor in the manner set forth in Annex B, until all such
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Letter of Credit Obligations have been fully cash collateralized in the manner
set forth in Annex B; seventh, to interest then due and payable on the Swing
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Line Loan of each other Borrower, pro rata; eighth, to the principal balance of
--- ---- ------
the Swing Line Loan outstanding to each other Borrower, pro rata, until the same
--- ----
shall have been repaid in full; ninth, to interest then due and payable on the
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Revolving Credit Advances outstanding to each other Borrower, pro rata; tenth,
--- ---- -----
to the principal balance of the Revolving Credit Advances made to each other
Borrower, pro rata, until the same shall have been paid in full, and last to the
--- ---- ----
Borrower which sold such assets. Neither the Revolving Loan Commitment nor the
Swing Line Commitment shall be permanently reduced by the amount of any such
prepayments.
(d) Application of Prepayments from Insurance Proceeds. Prepayments
--------------------------------------------------
from insurance proceeds in accordance with Section 5.4(c) shall be applied first
--------------
to the Swing Line Loans and second to the Revolving Credit Advances of the
Borrower that incurred such casualties or losses. Neither the Revolving Loan
Commitment nor the Swing Line Loan Commitment shall be permanently reduced by
the amount of any such prepayments. If the insurance proceeds received as to a
particular Borrower exceed the outstanding principal balances of the Loans to
that Borrower, the allocation and application of those proceeds shall be
determined by Administrative Agent, subject to the approval of Requisite
Lenders.
(e) Nothing in this Section 1.3 shall be construed to constitute any
-----------
Agent's or Lender's consent to any transaction referred to in clauses (b)(ii)
---------------
and (b)(iii) above which is not permitted by other provisions of this Agreement
--------
or the other Loan Documents.
1.4 Use of Proceeds. Borrowers shall utilize the proceeds of the
---------------
Revolving Loan and the Swing Line Advances solely for the Refinancing (and to
pay any related transaction expenses), and for the financing of Borrowers'
ordinary working capital and general corporate needs (but excluding in any event
the making of any Restricted Payment not specifically permitted by Section
-------
6.14). Disclosure Schedule (1.4) contains a description of Borrowers' sources
-------------------------
and uses of funds as of the Closing Date, including Loans, Letter of Credit
Obligations to be made or incurred on that date, and a funds flow memorandum
detailing how funds from each source are to be transferred to particular uses.
6
1.5 Interest and Applicable Margins. (a) Borrowers shall pay
-------------------------------
interest to Administrative Agent, for the ratable benefit of Lenders in
accordance with the various Loans being made by each Lender, in arrears on each
applicable Interest Payment Date, at the following rates: (i) with respect to
the Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index
Margin per annum or, at the election of Borrower Representative, the applicable
LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based on the
aggregate Revolving Credit Advances outstanding from time to time and (ii) with
respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver
Index Margin per annum.
The Applicable Revolver Index Margin, and Applicable Revolver LIBOR
Margin, will be 1.25%, and 2.75% per annum, respectively, as of the Closing
Date. The Applicable Margins will be adjusted (up or down) prospectively on a
quarterly basis as determined by Parent's consolidated financial performance for
the trailing four quarters most recently ended, commencing with the earlier to
occur of (such date being the "Initial Adjustment Date") (i) the fifth Business
-----------------------
Day after delivery of Parent's audited Financial Statements to Lenders for the
Fiscal Year ending January 31, 1998 or (ii) the first day on which the Fixed
Asset Availability is permanently reduced by an amount equal to 33 1/3% of the
Maximum Fixed Asset Availability as of the Closing Date. Adjustments in
Applicable Margins will be determined by reference to the following grids:
If Interest Level of
Coverage Ratio is: Applicable Margins:
----------------- ------------------
greater than 3.5:1.0 Level I
greater than 2.75:1.0, but less than or equal to 3.5:1.0 Level II
greater than 2.5:1.0, but less than or equal to 2.75:1.0 Level III
greater than 2.0:1.0, but less than or equal to 2.5:1.0 Level IV
less than 2.0:1.0 Level V
Applicable Margins
------------------
Level I Level II Level III Level IV Level V
------- -------- --------- -------- -------
Applicable Revolver 0.25% 0.50% 0.75% 1.00% 1.25%
Index Margin
Applicable Revolver LIBOR 1.75% 2.00% 2.25% 2.50% 2.75%
Margin
Notwithstanding the foregoing, the Applicable Margins with respect to the
aggregate amount of Advances outstanding on any date in excess of the Aggregate
Borrowing Base, as of such date, determined with reference solely to Eligible
Inventory shall be equal to the then otherwise Applicable Margin plus .50%
All adjustments in the Applicable Margins after the Initial Adjustment
Date will be implemented quarterly on a prospective basis, for each calendar
month commencing after the date of delivery to Lenders of the quarterly
unaudited or annual audited (as applicable) Financial Statements of Parent
evidencing the need for an adjustment. Concurrently with the delivery of those
Financial Statements, Borrower Representative shall deliver to Administrative
Agent and Lenders a certificate, signed by its chief financial officer, setting
forth in reasonable detail the basis for the continuance of, or
7
any change in, the Applicable Margins. Failure to deliver such Financial
Statements shall, in addition to any other remedy provided for in this
Agreement, result in an increase in the Applicable Margins to the highest level
set forth in the foregoing grid, until the first day of the first calendar month
following the delivery of those Financial Statements demonstrating that such an
increase is not required. If an Event of Default shall have occurred or be
continuing at the time any reduction in the Applicable Margins is to be
implemented, that reduction shall be deferred until the first day of the first
calendar month following the date on which such Event of Default is waived or
cured.
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Administrative Agent on the basis of a three hundred
and sixty (360) day year, in each case for the actual number of days occurring
in the period for which such interest and Fees are payable. The Index Rate
shall be determined each day based upon the Index Rate as in effect each day.
Each determination by Administrative Agent of an interest rate hereunder shall
be conclusive, absent error.
(d) So long as any Event of Default shall have occurred and be
continuing, and at the election of Administrative Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Administrative
Agent to Borrower Representative, the interest rates applicable to the Loans and
the Letter of Credit Fees shall be increased by two percentage points (2%) per
annum above the rates of interest or the rate of such Fees otherwise applicable
hereunder ("Default Rate"), and all outstanding Obligations shall bear interest
------------
at the Default Rate applicable to such Obligations. Interest and Letter of
Credit Fees at the Default Rate shall accrue from the initial date of such Event
of Default until that Event of Default is cured or waived and shall be payable
upon demand.
(e) So long as no Default or Event of Default shall have occurred and
be continuing, and subject to the additional conditions precedent set forth in
Section 2.2, Borrower Representative shall have the option to (i) request that
-----------
any Revolving Credit Advances be made as a LIBOR Loan, (ii) convert at any time
all or any part of outstanding Loans (other than the Swing Line Loan) from Index
Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan,
subject to payment of LIBOR breakage costs in accordance with Section 1.13(b) if
---------------
such conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
last day of the LIBOR Period of the Loan to be continued. Any Loan to be made
or continued as, or converted into, a LIBOR Loan must be in a minimum amount of
$10,000,000 and integral multiples of $1,000,000 in excess of such amount. Any
such election must be made by 11:00 a.m. (New York time) on the third (3rd)
Business Day prior to (1) the date of any proposed Advance which is to bear
interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any
LIBOR Loans to be continued as such, or (3) the date on which Borrower
Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by Borrower Representative in such election. If no election
is received with respect to a LIBOR Loan by 11:00 a.m. (New York time) on the
third (3rd) Business Day prior to the end of the LIBOR Period with respect
thereto (or if a Default or an Event of Default shall have occurred and be
continuing or if the additional conditions precedent set forth in Section 2.2
-----------
shall not have been satisfied), that LIBOR Loan shall be converted to an Index
Rate Loan
8
at the end of its LIBOR Period. Borrower Representative must make such election
by notice to Administrative Agent in writing, by telecopy or overnight courier.
In the case of any conversion or continuation, such election must be made
pursuant to a written notice (a "Notice of Conversion/Continuation") in the form
---------------------------------
of Exhibit 1.5(e). No Loan may be made as or converted into a LIBOR Loan having
--------------
a LIBOR Period in excess of one month until the earlier of (i) forty-five (45)
days after the Closing Date or (ii) the date on which the Administrative Agent
advises Borrower Representative that the primary syndication of the Revolving
Loan has been completed and the Administrative Agent agrees to do so promptly
after such completion. The Borrowers hereby acknowledge and agree that the
Borrowers shall be responsible for the payment of all LIBOR funding breakage
costs in accordance with Section 1.13(b) during the primary syndication period.
---------------
(f) Notwithstanding anything to the contrary set forth in this Section
-------
1.5, if a court of competent jurisdiction determines in a final order that the
---
rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
-------------------
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
-------- -------
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Administrative
Agent, on behalf of Lenders, is equal to the total interest which would have
been received had the interest rate payable hereunder been (but for the
operation of this paragraph) the interest rate payable since the Closing Date as
otherwise provided in this Agreement. Thereafter, interest hereunder shall be
paid at the rate(s) of interest and in the manner provided in Sections 1.5(a)
---------------
through (e) above, unless and until the rate of interest again exceeds the
---
Maximum Lawful Rate, and at that time this paragraph shall again apply. In no
event shall the total interest received by any Lender pursuant to the terms
hereof exceed the amount which such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate. If the Maximum Lawful Rate is calculated pursuant to this
paragraph, such interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made. If, notwithstanding the provisions of this Section 1.5(f),
--------------
a court of competent jurisdiction shall finally determine that a Lender has
received interest hereunder in excess of the Maximum Lawful Rate, Administrative
Agent shall, to the extent permitted by applicable law, promptly apply such
excess in the order specified in Section 1.11 and thereafter shall refund any
------------
excess to Borrowers or as a court of competent jurisdiction may otherwise order.
1.6 [Intentionally Omitted]
1.7 Eligible Inventory. Based on the most recent Borrowing Base
------------------
Certificate delivered by each Borrower to Agents and determined based upon the
salability, at retail, of the Eligible Inventory or which reflects such other
factors as effects the marketability of the Eligible Inventory and on other
information available to Agents, Agents shall in their reasonable credit
judgment determine which Inventory of each Borrower shall be "Eligible
--------
Inventory" for purposes of this Agreement. In determining whether any
---------
particular Inventory of any Borrower constitutes Eligible Inventory, Agents
shall not include any such Inventory to which any of the exclusionary criteria
set forth below applies. Agents reserve the right, at any time and from time to
time after the Closing Date, to adjust any such criteria, to establish new
criteria and to adjust advance rates with respect to Eligible Inventory, in its
reasonable credit judgment, subject to the approval of Requisite Lenders in the
case of adjustments or new criteria or changes in advance rates which have the
effect of making more credit available. Without limiting the generality of the
foregoing, Eligible Inventory shall not include any Inventory of
9
any Borrower:
(a) that is not owned by such Borrower free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Borrower's performance with respect to that Inventory), except the Liens in
favor of Administrative Agent, on behalf of itself, the other Agent and Lenders
and Permitted Encumbrances;
(b) that is (i) not located on premises owned, leased or operated by
such Borrower or (ii) is stored with a bailee, warehouseman or similar Person,
unless Administrative Agent has given its prior consent thereto and unless (x) a
satisfactory bailee letter or landlord waiver has been delivered to
Administrative Agent, or (y) Reserves satisfactory to Agents have been
established with respect thereto, or (iii) located at any site if the aggregate
book value of Inventory at any such location is less than $100,000, unless in
each case such Inventory is Eligible In-Transit Inventory;
(c) that is placed on consignment or is in transit (other than
Eligible In-Transit Inventory);
(d) that is covered by a negotiable document of title, unless such
document has been delivered to Administrative Agent or other Persons acceptable
to it;
(e) that in accordance with the audits, appraisals and reports
conducted and/or delivered pursuant to Annex F, is excess, obsolete, unsalable,
-------
shopworn, seconds, damaged or unfit for sale or due to changes in the mix,
composition, balance shrink, or markup/markdown; provided, however that to the
--------
extent any of the foregoing items occur outside of the Borrowers' ordinary
course of business, the extent of such items shall be as reasonably determined
by the Agents;
(f) that consists of samples, display items or packing or shipping
materials, manufacturing supplies, work-in-process Inventory or replacement
parts;
(g) that consists of goods which have been returned by the buyer
because of any damage or imperfection;
(h) that is not of a type held for sale in the ordinary course of such
Borrower's business;
(i) as to which Administrative Agent's Lien, on behalf of itself, the
other Agent and Lenders, therein is not a first priority perfected Lien;
(j) as to which any of the representations or warranties pertaining to
Inventory set forth in this Agreement or the Security Agreement is untrue;
(k) consists of any costs associated with advertising load, unearned
discounts;
(l) consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available;
(m) is not covered by casualty insurance acceptable to Agents; or
10
(n) is otherwise unacceptable to Agents in their reasonable
credit judgment.
1.8 Cash Management Systems. On or prior to the Closing Date,
-----------------------
Borrowers will establish and will maintain until the Termination Date, the cash
management systems described on Annex C (the "Cash Management Systems").
------- -----------------------
1.9 Fees. (a) Borrowers shall pay to GE Capital and FNBB,
----
individually, the Fees specified in the GE Capital Fee Letter and the FNBB Fee
Letter, respectively, at the times specified for payment therein.
(b) As additional compensation for the Lenders, Borrowers agree
to pay to Administrative Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a fee in respect of the
Lenders' Commitments in an amount equal to three-eighths of one percent (0.375%)
per annum (calculated on the basis of a 360 day year for actual days elapsed) of
the difference between (x) the Maximum Amount and (y) the average for the period
of the daily closing balances of the aggregate Revolving Loan and Swing Line
Loan outstanding during the period for which such fee is due.
(c) If Borrowers terminate the Revolving Loan Commitment either
(i) voluntarily or (ii) involuntarily as a result of the occurrence of an Event
of Default specified in Section 8.1(a) arising from a failure to pay principal
or interest when due and payable, in each case, prior to the second anniversary
of the Closing Date, Borrowers shall pay to Administrative Agent, for the
benefit of Lenders as liquidated damages and compensation for the costs of being
prepared to make funds available hereunder an amount determined by multiplying
the Applicable Percentage (as defined below) by the Revolving Loan Commitment.
As used herein, the term "Applicable Percentage" shall mean (x) two and one-half
---------------------
percent (2.5%) in the case of a prepayment on or prior to the first anniversary
of the Closing Date, (y) one percent (1%) in the case of a prepayment after the
first anniversary of the Closing Date but on or prior to the date which is 540
calendar days after the Closing Date and (z) one half of one percent (.5%) in
the case of a prepayment after the date which is 540 calendar days after the
Closing Date but prior to the second anniversary of the Closing Date.
Notwithstanding the foregoing, no prepayment fee shall be payable by Borrowers
as a result of any other prepayment.
1.10 Receipt of Payments. Borrowers shall make each payment
-------------------
under this Agreement not later than 2:00 p.m. (New York time) on the day when
due in immediately available funds in Dollars to the Collection Account. For
purposes of computing interest and Fees and determining Borrowing Availability
or Net Borrowing Availability as of any date, all payments shall be deemed
received on the day of receipt of immediately available funds therefor in the
Collection Account prior to 2:00 p.m. New York time. Payments received after
2:00 p.m. New York time on any Business Day shall be deemed to have been
received on the following Business Day.
1.11 Application and Allocation of Payments. (a) So long as no
--------------------------------------
Default or Event of Default shall have occurred and be continuing, (i) voluntary
prepayments shall be applied as determined by Borrower Representative, subject
to the provisions of Section 1.3(a); and (ii) mandatory prepayments shall be
--------------
applied as set forth in Section 1.3. As to each other payment, and as to all
-----------
payments made when a Default or Event of Default shall have occurred and be
continuing or following the Commitment Termination Date, each Borrower hereby
irrevocably waives the right to direct the
11
application of any and all payments received from or on behalf of such Borrower,
and each Borrower hereby irrevocably agrees that Administrative Agent shall have
the continuing exclusive right to apply any and all such payments against the
Obligations of Borrowers as Administrative Agent may deem advisable
notwithstanding any previous entry by Administrative Agent in the Loan Account
or any other books and records. In the absence of a specific determination by
Administrative Agent with respect thereto, payments shall be applied to amounts
then due and payable in the following order: (1) to Fees and Agent's expenses
reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to principal
payments on the Swing Line Loan; (4) to interest on the Loans, ratably in
proportion to the interest accrued as to each Loan; (5) to principal payments on
the Loans and to provide cash collateral for Letter of Credit Obligations in the
manner described in Annex B, ratably to the aggregate, combined principal
-------
balance of the other Loans and outstanding Letter of Credit Obligations; and (6)
to all other Obligations including expenses of Lenders to the extent
reimbursable under Section 11.3.
------------
(b) Administrative Agent is authorized to, and at its sole
election may, charge to the Revolving Loan balance on behalf of each Borrower
and cause to be paid all Fees, expenses, Charges, costs (including insurance
premiums in accordance with Section 5.4(a)) and interest and principal, other
---------------
than principal of the Revolving Loan, owing by Borrowers under this Agreement or
any of the other Loan Documents if and to the extent Borrowers fail to promptly
pay any such amounts as and when due, even if such charges would cause the
balance of the aggregate Revolving Credit Advances and the Swing Line Loan to
exceed Borrowing Availability or would cause the balance of the Revolving Loan
and the Swing Line Loan of any Borrower less 65% of Eligible Trade L/C
----
Obligations of such Borrower to exceed such Borrower's separate Borrowing Base.
At Administrative Agent's option and to the extent permitted by law, any charges
so made shall constitute part of the Revolving Loan hereunder.
1.12 Loan Account and Accounting. Administrative Agent shall
---------------------------
maintain a loan account (the "Loan Account") on its books to record: (a) all
------------
Advances, (b) all payments made by Borrowers, and (c) all other debits and
credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Administrative Agent's customary accounting practices as in effect from time to
time. The balance in the Loan Account, as recorded on Administrative Agent's
most recent printout or other written statement, shall be presumptive evidence
of the amounts due and owing to Agents and Lenders by each Borrower; provided
--------
that any failure to so record or any error in so recording shall not limit or
otherwise affect any Borrower's duty to pay the Obligations. Administrative
Agent shall render to Borrower Representative a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account as to each Borrower. Unless Borrower Representative notifies
Administrative Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within thirty (30) days
after the date thereof, each and every such accounting shall (absent error) be
deemed final, binding and conclusive upon Borrowers in all respects as to all
matters reflected therein. Only those items expressly objected to in such
notice shall be deemed to be disputed by Borrowers.
1.13 Indemnity. (a) Each Credit Party that is a signatory
---------
hereto shall jointly and severally indemnify and hold harmless each of the
Agents, Lenders and their respective Affiliates, and each such Person's
respective officers, directors, employees, attorneys, agents and representatives
(each, an "Indemnified Person"), from and against any and all suits, actions,
------------------
proceedings, claims, damages, losses, liabilities and reasonable out-of-pocket
expenses (including attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal)
12
which may be instituted or asserted against or incurred by any such Indemnified
Person as the result of credit having been extended, suspended or terminated
under this Agreement and the other Loan Documents and the administration of such
credit, and in connection with or arising out of the transactions contemplated
hereunder and thereunder and any actions or failures to act in connection
therewith, including any and all Environmental Liabilities and legal costs and
expenses arising out of or incurred in connection with disputes between or among
any parties to any of the Loan Documents (unless such dispute is among any of
--- -------
the parties hereto other than Credit Parties or the Credit Parties prevail in
such dispute) (collectively, "Indemnified Liabilities"); provided, that no such
----------------------- --------
Credit Party shall be liable for any indemnification to an Indemnified Person to
the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results solely from that Indemnified Person's gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction. No Indemnified Person shall enter into any compromise or
settlement in any action as to which such Indemnified Person intends to seek
indemnification hereunder without the prior written consent of the Credit Party
from whom indemnification hereunder is sought, which consent shall not be
unreasonably withheld or delayed. NO PERSON SHALL BE RESPONSIBLE OR LIABLE TO
ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the
terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
is the result of acceleration, by operation of law or otherwise); (ii) any
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) any Borrower shall default in making any
borrowing of, conversion into or continuation of LIBOR Loans after Borrower
Representative has given notice requesting the same in accordance herewith; or
(iv) any Borrower shall fail to make any prepayment of a LIBOR Loan after
Borrower Representative has given a notice thereof in accordance herewith,
Borrowers shall jointly and severally indemnify and hold harmless each Lender
from and against all losses, costs and expenses resulting from or arising from
any of the foregoing. Such indemnification shall include any loss (including
loss of margin) or expense arising from the reemployment of funds obtained by it
or from fees payable to terminate deposits from which such funds were obtained.
For the purpose of calculating amounts payable to a Lender under this
subsection, each Lender shall be deemed to have actually funded its relevant
LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate
in an amount equal to the amount of that LIBOR Loan and having a maturity
comparable to the relevant Interest Period; provided, however, that each Lender
-------- -------
may fund each of its LIBOR Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this subsection. This covenant shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder. As
promptly as practicable under the circumstances, each Lender shall provide
Borrower Representative with its written calculation of all amounts payable
pursuant to this Section 1.13(b), and such calculation shall be binding on the
---------------
parties hereto unless Borrower Representative shall object in writing within ten
(10) Business Days of receipt thereof, specifying the basis for such objection
in detail.
13
1.14 Access. Each Credit Party which is a party hereto shall,
------
during normal business hours, from time to time upon one (1) Business Day's
prior notice as frequently as Administrative Agent reasonably determines to be
appropriate: (a) provide Agents, and any of their respective officers, employees
and agents access to its properties, facilities, advisors and employees
(including officers) of each Credit Party and to the Collateral, (b) permit
Agents, and any of their respective officers, employees and agents, to inspect,
audit and make extracts from any Credit Party's books and records, and (c)
permit Agents, and any of their respective officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the
Inventory and other Collateral of any Credit Party. If a Default or Event of
Default shall have occurred and be continuing, each such Credit Party shall
provide such access to Agents, and to each Lender at all times and without
advance notice. Furthermore, so long as any Event of Default shall have
occurred and be continuing, Borrowers shall provide Agents, and each Lender with
access to their suppliers and customers. Each Credit Party shall make available
to Administrative Agent and its counsel, as quickly as is possible under the
circumstances, originals or copies of all books and records which Administrative
Agent may request. Each Credit Party shall deliver any document or instrument
necessary for Administrative Agent, as it may from time to time request, to
obtain records from any service bureau or other Person which maintains records
for such Credit Party, and shall maintain duplicate records or supporting
documentation on media, including computer tapes and discs owned by such Credit
Party. Agents will give Lenders at least ten (10) days' prior written notice of
regularly scheduled audits. Representatives of Lenders may accompany Agents'
representatives on regularly scheduled audits at no charge to Borrowers.
1.15 Taxes. (a) Any and all payments by each Borrower hereunder
-----
(including any payments made pursuant to Section 12) or under the Notes shall be
----------
made, in accordance with this Section 1.15, free and clear of and without
------------
deduction for any and all present or future Taxes, excluding Taxes imposed by
reason of the failure of any Lender to timely comply with Section 1.15(c) (or
---------------
the inaccuracy of the certificates, documents and any other evidence
thereunder). If any Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder (including any sum payable pursuant
to Section 12) or under the Notes, (i) the sum payable shall be increased as
----------
much as shall be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
-------
1.15) Agents or Lenders, as applicable, receive an amount equal to the sum they
----
would have received had no such deductions been made, (ii) such Borrower shall
make such deductions, and (iii) such Borrower shall pay the full amount deducted
to the relevant taxing or other authority in accordance with applicable law.
Within thirty (30) days after the date of any payment of Taxes, Borrower
Representative shall furnish to Administrative Agent the original or a certified
copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and, within ten (10) days of demand therefor, pay each
Agent and each Lender for the full amount of Taxes (including any Taxes imposed
by any jurisdiction on amounts payable under this Section 1.15) paid by each
------------
Agent or such Lender, as appropriate, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
--------------
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower Representative and Administrative Agent a properly completed and
executed IRS Form
14
4224, Form 1001 or Form W-8 or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Lender's entitlement to such exemption (a "Certificate of Exemption"). Any
------------------------
foreign Person that seeks to become a Lender under this Agreement shall provide
a Certificate of Exemption to Borrower Representative and Administrative Agent
prior to becoming a Lender hereunder. No foreign Person may become a Lender
hereunder if such Person is unable to deliver a Certificate of Exemption. Within
ten (10) days of the date hereof or, if later, of acquiring an interest in the
Notes, each Lender that is a "United States person" as defined in IRC Section
7701(a)(30) shall deliver to Borrowers two duly completed Forms W-9. When any
form required in this Section 1.15(c) expires or becomes obsolete or inaccurate
---------------
in any respect, or after an event requiring a change in the most recent form
previously delivered to Borrowers, a substitute form, or a successor applicable
form, shall be delivered to Borrowers.
1.16 Capital Adequacy; Increased Costs; Illegality. (a) If any
---------------------------------------------
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender with any request or directive made after the date
hereof regarding capital adequacy, reserve requirements or similar requirements
(whether or not having the force of law) from any central bank or other
Governmental Authority increases or would have the effect of increasing the
amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder to a level below that which such Lender
could have achieved but for such adoption or compliance, then Borrowers shall
from time to time upon 90 days prior notice by such Lender (with a copy of such
demand to Administrative Agent) pay to Administrative Agent, for the account of
such Lender, additional amounts sufficient to compensate such Lender for such
reduction; provided, however that such Lender shall repay to Borrowers any
-------- -------
amounts paid by Borrowers to such Lender under this Section 1.16 at any time
------------
such Lender shall determine, in its sole judgment, that such adoption or
compliance was not applicable to, or required by, such Lender. A certificate as
to the amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower Representative and to Administrative Agent
shall, absent error, be final, conclusive and binding for all purposes.
(b) If, due to either (i) the enactment of or any change after
the date hereof in any law or regulation (or any change in the interpretation
thereof) or (ii) the compliance with any guideline or request made after the
date hereof from any central bank or other Governmental Authority (whether or
not having the force of law), there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Administrative Agent), pay to Administrative Agent for the
account of such Lender additional amounts sufficient to compensate such Lender
for such increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower Representative and to Administrative Agent by such Lender,
shall be conclusive and binding on Borrowers for all purposes, absent error.
Each Lender agrees that, as promptly as practicable after it becomes aware of
any circumstances referred to above which would result in any such increased
cost, the affected Lender shall, to the extent not inconsistent with such
Lender's internal policies of general application, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by
Borrowers pursuant to this Section 1.16(a) and (b).
-----------------------
(c) Notwithstanding anything to the contrary contained herein,
if the enactment of or any change in any law or regulation (or any change in the
interpretation thereof) made after the date
15
hereof shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender to agree to make or
to make or to continue to fund or maintain any LIBOR Loan, then, unless that
Lender is able to make or to continue to fund or to maintain such LIBOR Loan at
another branch or office of that Lender without, in that Lender's opinion,
adversely affecting it or its Loans or the income obtained therefrom, on notice
thereof and demand therefor by such Lender to Borrower Representative through
Administrative Agent, (i) the obligation of such Lender to agree to make or to
make or to continue to fund or maintain LIBOR Loans shall terminate and (ii)
each Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing
by such Borrower to such Lender, together with interest accrued thereon, unless
------
Borrower Representative on behalf of such Borrower, within five (5) Business
Days after the delivery of such notice and demand, converts all such Loans into
a Loan bearing interest based on the Index Rate.
(d) Replacement of Lender in Respect of Increased Costs. Within
---------------------------------------------------
fifteen (15) days after receipt by Borrower Representative of written notice and
demand from any Lender (an "Affected Lender") for payment of additional amounts
---------------
or increased costs as provided in Section 1.15(a), 1.16(a), 1.16(b) or 1.16(c),
--------------------------------------------
Borrower Representative may, at its option, notify Administrative Agent and
such Affected Lender of its intention to replace the Affected Lender. So long
as no Default or Event of Default shall have occurred and be continuing,
Borrower Representative, with the consent of Administrative Agent, may obtain,
at Borrowers' expense, a replacement Lender ("Replacement Lender") for the
------------------
Affected Lender, which Replacement Lender must be satisfactory to Administrative
Agent. If Borrowers obtain a Replacement Lender within ninety (90) days
following notice of their intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender for an amount equal
to the principal balance of all Loans held by the Affected Lender and all
accrued interest and Fees with respect thereto through the date of such sale,
provided that Borrowers shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment.
Notwithstanding the foregoing, Borrowers shall not have the right to
obtain a Replacement Lender if the Affected Lender rescinds its demand for
increased costs or additional amounts within fifteen (15) days following its
receipt of Borrowers' notice of intention to replace such Affected Lender.
Furthermore, if Borrowers give a notice of intention to replace and do not so
replace such Affected Lender within ninety (90) days thereafter, Borrowers'
rights under this Section 1.16(d) shall terminate and Borrowers shall promptly
---------------
pay all increased costs or additional amounts demanded by such Affected Lender
pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).
------------------------- -------
1.17 Single Loan. All Loans to each Borrower and all of the
-----------
other Obligations of each Borrower arising under this Agreement and the other
Loan Documents shall constitute one general obligation of that Borrower secured,
until the Termination Date, by all of its Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans.
-------------------------------
No Lender shall be obligated to make any Loan or incur any Letter of
Credit Obligations on the Closing Date, or to take, fulfill, or perform any
other action hereunder, until the following conditions have been satisfied or
provided for in a manner satisfactory to Agents, or waived in writing by Agents
and Lenders:
16
(a) Credit Agreement; Loan Documents. This Agreement or
--------------------------------
counterparts hereof shall have been duly executed by, and delivered to,
Borrowers, Agents and Lenders; and Administrative Agent shall have received such
documents, instruments, agreements and legal opinions as Agents shall request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance satisfactory to Agents.
-------
(b) Repayment of Prior Lender Obligations; Satisfaction of
-------------------------------------------------------
Outstanding L/Cs. (i) Administrative Agent shall have received a fully
----------------
executed original of a pay-off letter satisfactory to Administrative Agent
confirming that all of the Prior Lender Obligations will be repaid in full from
the proceeds of the initial Revolving Credit Advance and all Liens upon any of
the property of any Credit Party or any of their Subsidiaries in favor of Prior
Lender shall be terminated by Prior Lender immediately upon such payment; and
(ii) all letters of credit issued or guaranteed by Prior Lender shall have been
cash collateralized, supported by a guaranty of Administrative Agent or
supported by a Letter of Credit issued pursuant to Annex B, as mutually agreed
-------
upon by Administrative Agent, Borrowers and Prior Lender.
(c) Approvals. Administrative Agent shall have received (i)
---------
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including all requisite Governmental
Authorities, to the execution, delivery and performance of this Agreement and
the other Loan Documents and the consummation of the transactions contemplated
hereby or (ii) an officer's certificate in form and substance satisfactory to
Administrative Agent affirming that no such consents or approvals are required.
(d) Opening Availability. The Eligible Inventory of each Borrower
--------------------
and the Maximum Fixed Asset Availability supporting the initial Revolving Credit
Advance and the initial Letter of Credit Obligations incurred and the amount of
the Reserves to be established on the Closing Date shall be sufficient in value,
as determined by Administrative Agent, to provide Borrowers, collectively, with
Net Borrowing Availability, after giving effect to the initial Revolving Credit
Advance made to each Borrower, the incurrence of any initial Letter of Credit
Obligations (on a pro forma basis, with trade payables being paid currently, and
expenses and liabilities being paid in the ordinary course of business and
without acceleration of sales) of at least $15,000,000.
(e) Payment of Fees. Borrowers shall have paid the Fees required
---------------
to be paid on the Closing Date in the respective amounts specified in Section
-------
1.9 (including the Fees specified in the GE Capital Fee Letter and the FNBB Fee
---
Letter), and shall have reimbursed Agents for all fees, costs and expenses of
closing presented as of the Closing Date.
(f) Capital Structure: Other Indebtedness. The capital structure
-------------------------------------
of each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agents in their sole discretion.
2.2 Further Conditions to Each Loan. Except as otherwise
-------------------------------
expressly provided herein, no Lender shall be obligated to fund any Loan,
convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit
Obligation, if, as of the date thereof:
(a) Any representation or warranty by any Credit Party contained
herein or in any of the other Loan Documents shall be untrue or incorrect as of
such date in any material respect,
17
except to the extent that such representation or warranty expressly relates to
an earlier date and except for changes therein not prohibited by this Agreement;
or
(b) Any event or circumstance having a Material Adverse Effect
shall have occurred since the date hereof; or
(c) (i) Any Event of Default shall have occurred and be
continuing or would result after giving effect to any Loan (or the incurrence of
any Letter of Credit Obligations), or (ii) a Default shall have occurred and be
continuing or would result after giving effect to any Loan, and Administrative
Agent or Requisite Lenders shall have determined not to make any Loan or incur
any Letter of Credit Obligation so long as that Default is continuing; or
(d) After giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan less 65% of the Eligible Trade L/C Obligations would
----
exceed the Aggregate Borrowing Base less the then outstanding principal amount
----
of the Swing Line Loan, (ii) the aggregate Revolving Loan would exceed the
Maximum Amount less the then outstanding principal amount of the Swing Line
----
Loan, or (iii) the outstanding principal amount of the Revolving Loan of the
applicable Borrower less 65% of the Eligible Trade L/C Obligations of such
----
Borrower would exceed such Borrower's separate Borrowing Base less the
----
outstanding principal amount of the Swing Line Loan to such Borrower.
(e) After giving effect to any Swing Line Advance, (i) the
outstanding principal amount of the Swing Line Loan would exceed Swing Line
Availability, or (ii) the outstanding principal amount of the Swing Line Loan of
the applicable Borrower would exceed such Borrower's separate Borrowing Base
less the outstanding principal amount of the Revolving Loan to that Borrower
----
minus 65% of the Eligible Trade L/C Obligations of such Borrower.
-----
The request and acceptance by any Borrower of the proceeds of any Loan, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request or acceptance, (i) a representation
and warranty by Borrowers that the conditions in this Section 2.2 have been
-----------
satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty provisions
set forth in Section 12 and of the granting and continuance of Administrative
----------
Agent's Liens on behalf of itself, the other Agent and Lenders, pursuant to the
Collateral Documents.
2.3 Conditions to Commercial Letters of Credit. Administrative
------------------------------------------
Agent shall have no obligation to approve any request for a commercial Letter of
Credit for the purchase of finished goods unless each of the following documents
are required as conditions to any draw thereon, and for such commercial Letter
of Credit to constitute an Eligible Trade L/C, such deliveries must be
conditions to any draw thereon (except that the Administrative Agent may waive
any one or more of the following conditions):
(i) the original Eligible Trade L/C, if only one draw is
permitted thereunder or if multiple draws are permitted and the subject
draw is the final draw thereunder;
(ii) an inspection certificate substantially in the form attached
hereto as Disclosure Schedule (2.3), executed by a Borrower's employee or
-------------------------
agent at the point of origin of the finished goods;
18
(iii) a commercial invoice with respect to the purchase order(s)
against which such finished goods are being delivered and a packaging list
with respect to such goods;
(iv) a non-negotiable ocean xxxx of lading, freight forwarders
cargo receipt, a house xxxx of lading or a copy of an airway xxxx of lading
(a "Document of Title") issued by an Approved Shipper with respect to the
finished goods being shipped and providing for the delivery thereof to a
Borrower; and
(v) a certificate of origin.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agents and Lenders with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a)
----------------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (b) is duly qualified to conduct
business and is in good standing in each other jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification,
except where the failure to qualify, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect; (c) has the requisite
corporate power and authority and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now, heretofore and proposed to be
conducted; (d) has all licenses, permits, consents or approvals from or by, and
has made all filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct, except where such failures, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;
(e) is in compliance with its charter and by-laws; and (f) subject to specific
representations set forth herein regarding ERISA, Environmental Laws, tax and
other laws, is in compliance with all applicable provisions of law, except where
the failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
3.2 Executive Offices; FEIN. As of the Closing Date, the current
-----------------------
location of each Credit Party's chief executive office and principal place of
business is set forth in Disclosure Schedule (3.2), and none of such locations
-------------------------
have changed within the twelve (12) months preceding the Closing Date. In
addition, Disclosure Schedule (3.2) lists the federal employer identification
-------------------------
number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
-------------------------------------------------------
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's corporate power; (b) have been duly authorized by all
necessary or proper corporate and shareholder action; (c) do not contravene any
provision of such Person's charter or bylaws; (d) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict
19
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Administrative Agent,
on behalf of itself, the other Agent and Lenders, pursuant to the Loan
Documents; and (g) do not require the consent or approval of any Governmental
Authority or any other Person, except those referred to in Section 2.1(c), all
--------------
of which will have been duly obtained, made or complied with prior to the
Closing Date. On or prior to the Closing Date, each of the Loan Documents shall
have been duly executed and delivered by each Credit Party thereto and each such
Loan Document shall then constitute a legal, valid and binding obligation of
such Credit Party enforceable against it in accordance with its terms except as
such enforceability may be limited by fraudulent conveyance, bankruptcy,
insolvency or similar law or by general equitable principles.
3.4 Financial Statements and Projections. Except for the
------------------------------------
Projections, all Financial Statements concerning Parent and its Subsidiaries
which are referenced below have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the
periods then ended.
(a) The following Financial Statements attached hereto as
Disclosure Schedule (3.4(A)) have been delivered on the date hereof:
----------------------------
(i) The audited consolidated balance sheets at February 3, 1996
and January 28, 1995 and the related statements of income and cash flows of
Parent and its Subsidiaries for the Fiscal Years then ended, certified by
Xxxxxx Xxxxxxxx LLP.
(ii) The unaudited consolidated balance sheet(s) at February 1,
1997 and the related statement(s) of income and cash flows of Parent and
its Subsidiaries for the four Fiscal Quarters then ended.
(b) Projections. The Projections delivered on the date hereof and
-----------
attached hereto as Disclosure Schedule (3.4(B)) have been prepared by Parent in
----------------------------
light of the past operations of their businesses, but including future payments
of known contingent liabilities reflected on the balance sheet, and reflect
projections for the Fiscal Year period beginning on February 2, 1997 on a month
by month basis for the first year and on a year by year basis thereafter. The
Projections are based upon estimates and assumptions stated therein, all of
which Parent believe to be reasonable and fair in light of current conditions
and current facts known to Parent and, as of the Closing Date, reflect Parent's
good faith and reasonable estimates of the future financial performance of
Borrowers and of the other information projected therein for the period set
forth therein.
3.5 Material Adverse Effect. Between February 3, 1996 and the
-----------------------
Closing Date, (a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments which are not reflected in the unaudited
consolidated balance sheet at February 1, 1997 of Parent or incurred in the
ordinary course of business since February 1, 1997 and which, alone or in the
aggregate, could reasonably be expected
20
to have a Material Adverse Effect, (b) no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become binding upon
any Credit Party's assets and no law or regulation applicable to any Credit
Party has been adopted which has had or could reasonably be expected to have a
Material Adverse Effect, and (c) no Credit Party is in default and to the best
of Borrowers' knowledge no third party is in default under any material
contract, lease or other agreement or instrument, which alone or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
Between February 1, 1997 and the Closing Date no event has occurred, which alone
or together with other events, could reasonably be expected to have a Material
Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the
----------------------------
real estate ("Real Estate") listed on Disclosure Schedule (3.6) constitutes all
----------- -------------------------
of the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns insurable fee simple title to all of its owned real estate,
and valid leasehold interests in all of its leased Real Estate, all as described
on Disclosure Schedule (3.6), and copies of all such leases or a summary of
-------------------------
terms thereof satisfactory to Administrative Agent have been delivered to
Administrative Agent. Disclosure Schedule (3.6) further describes any Real
-------------------------
Estate with respect to which any Credit Party is a lessor, sublessor or assignor
as of the Closing Date. Each Credit Party also has good and marketable title to,
or valid leasehold interests in, all of its personal properties and assets. As
of the Closing Date, none of the properties and assets of any Credit Party are
subject to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements, bills of sale
and other documents, and has duly effected all recordings, filings and other
actions necessary to establish, protect and perfect such Credit Party's right,
title and interest in and to all such Real Estate and other properties and
assets. Disclosure Schedule (3.6) also describes any purchase options, rights of
-------------------------
first refusal or other similar contractual rights pertaining to any Real Estate.
As of the Closing Date, no portion of any Credit Party's Real Estate has
suffered any material damage by fire or other casualty loss which has not
heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied. As of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other
-------------
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matter which could be
reasonably expected to have a Material Adverse Effect; (c) all payments due from
any Credit Party for employee health and welfare insurance have been paid or
accrued as a liability on the books of such Credit Party; (d) except as set
forth in Disclosure Schedule (3.7), no Credit Party is a party to or bound by
-------------------------
any collective bargaining agreement, management agreement, consulting agreement
or any employment agreement (and true and complete copies of any agreements
described on Disclosure Schedule (3.7) have been delivered to Administrative
-------------------------
Agent); (e) there is no organizing activity involving any Credit Party pending
or, to any Credit Party's knowledge, threatened by any labor union or group of
employees which could be reasonably expected to have a Material Adverse Effect;
(f) there are no representation proceedings pending or, to any Credit Party's
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of any Credit Party has made a pending demand
for recognition which could be reasonably expected to have a Material
21
Adverse Effect; and (g) except as set forth in Disclosure Schedule (3.7), there
-------------------------
are no complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual which could be reasonably expected to have a Material
Adverse Effect.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
------------------------------------------------------------
Indebtedness. Except as set forth in Disclosure Schedule (3.8), no Credit Party
------------ -------------------------
has any Subsidiaries, is engaged in any joint venture or partnership with any
other Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Credit Party (other than Parent) is owned by each of
the stockholders and in the amounts set forth on Disclosure Schedule (3.8).
-------------------------
There are no outstanding rights to purchase, options, warrants or similar rights
or agreements pursuant to which any Credit Party (other than Parent) may be
required to issue, sell, repurchase or redeem any of its Stock or other equity
securities or any Stock or other equity securities of its Subsidiaries. All
outstanding Indebtedness of each Credit Party as of the Closing Date is
described in Section 6.3 (including Disclosure Schedule (6.3)).
----------- -------------------------
3.9 Government Regulation. No Credit Party is an "investment
---------------------
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940 as amended. No Credit Party is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, or any
other federal or state statute that restricts or limits its ability to incur
Indebtedness or to perform its obligations hereunder. The making of the Loans by
Lenders to Borrowers, the incurrence of the Letter of Credit Obligations on
behalf of Borrowers, the application of the proceeds thereof and repayment
thereof and consummation of the transactions contemplated hereby will not
violate any provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
------------------
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U or G of the Federal Reserve
Board as now and from time to time hereafter in effect (such securities being
referred to herein as "Margin Stock"). No Credit Party owns any Margin Stock,
------------
and none of the proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any Margin Stock
or for any other purpose which might cause any of the Loans or other extensions
of credit under this Agreement to be considered a "purpose credit" within the
meaning of Regulation G, T, U or X of the Federal Reserve Board. No Credit
Party will take or permit to be taken any action which might cause any Loan
Document to violate any regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
-----
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof (or any such fine,
penalty, interest, late charge or loss has been paid), excluding Charges or
other amounts being contested in accordance with Section 5.2(b) except where
--------------
such failures, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Proper and accurate amounts have
been withheld by each Credit Party from its respective employees for all periods
in full
22
and complete compliance with all applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
Governmental Authorities. Disclosure Schedule (3.11) sets forth as of the
--------------------------
Closing Date those taxable years for which any Credit Party's tax returns are
currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described on Disclosure
----------
Schedule (3.11), no Credit Party has executed or filed with the IRS or any other
---------------
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to each Credit Party's knowledge, as a transferee which in each case could
reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, no Credit Party has agreed or been requested to make any adjustment under
IRC Section 481(a), by reason of a change in accounting method or otherwise,
which would have a Material Adverse Effect.
3.12 ERISA. (a) Disclosure Schedule (3.12) lists and separately
----- --------------------------
identifies all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare
Plans. Copies of all such listed Plans, together with a copy of the latest form
5500 for each such Plan, have been delivered to Administrative Agent. Each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the IRC, and nothing has
occurred which would cause the loss of such qualification or tax-exempt status.
Each Plan is in all material respects in compliance with the applicable
provisions of ERISA and the IRC, including the filing of reports required under
the IRC or ERISA. No Credit Party or ERISA Affiliate has failed to make any
contribution or pay any amount due as required by either Section 412 of the IRC
or Section 302 of ERISA or the terms of any such Plan which could result in a
material liability to any Credit Party. No Credit Party or ERISA Affiliate has
engaged in a prohibited transaction, as defined in Section 4975 of the IRC, in
connection with any Plan, which would subject any Credit Party to a material tax
on prohibited transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no
--------------------------
Title IV Plan has any material Unfunded Pension Liability; (ii) no ERISA Event
or event described in Section 4062(e) of ERISA with respect to any Title IV Plan
has occurred or is reasonably expected to occur; (iii) there are no pending, or
to the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan
which could result in a material liability to any Credit Party; (iv) no Credit
Party or ERISA Affiliate has incurred or reasonably expects to incur any
liability as a result of a complete or partial withdrawal from a Multiemployer
Plan which could result in a material liability to any Credit Party; (v) within
the last five years no Title IV Plan with Unfunded Pension Liabilities has been
transferred outside of the "controlled group" which could result in a material
liability to any Credit Party (within the meaning of Section 4001(a)(14) of
ERISA) of any Credit Party or ERISA Affiliate; and (vi) no liability under any
Title IV Plan has been satisfied with the purchase of a contract from an
insurance company that was not rated AAA by the Standard & Poor's Corporation or
the equivalent by another nationally recognized rating agency at the time of
such purchase.
3.13 No Litigation. No action, claim, lawsuit, demand,
-------------
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party, before any Governmental Authority or
before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a)
----------
which challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan
23
Document or any action taken thereunder, or (b) which could reasonably be
expected to have a Material Adverse Effect. Except as set forth on Disclosure
----------
Schedule (3.13), as of the Closing Date there is no Litigation pending or
---------------
threatened which seeks damages in excess of $250,000 or injunctive relief or
alleges criminal misconduct of any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Credit
-------
Party brought about the obtaining, making or closing of the Loans or the
consummation of the transaction contemplated hereby, and no Credit Party has any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit
---------------------
Party owns or has rights to use all Intellectual Property necessary to continue
to conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each registered Patent, Trademark, Copyright and License is
listed, together with application or registration numbers, as applicable, in
Disclosure Schedule (3.15) hereto. Each Credit Party conducts its business and
--------------------------
affairs without infringement of or interference with any Intellectual Property
of any other Person, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
3.16 Full Disclosure. No information contained in this Agreement,
---------------
any of the other Loan Documents, any Projections, Financial Statements or
Collateral Reports or other reports from time to time delivered hereunder or any
written statement furnished by or on behalf of any Credit Party to any Agent or
Lender pursuant to the terms of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which they were made. The Liens granted to
Administrative Agent, on behalf of itself, the other Agent and Lenders, pursuant
to the Collateral Documents will at all times be fully perfected first priority
Liens in and to the Collateral described therein, subject, as to priority, only
to Permitted Encumbrances with respect to the Collateral other than Accounts.
3.17 Environmental Matters. (a) Except as set forth in Disclosure
--------------------- ----------
Schedule (3.17), as of the Closing Date: (i) the Real Estate is free of
---------------
contamination from any Hazardous Material except for such contamination which
would not result in Environmental Liabilities which could reasonably be expected
to exceed $250,000; (ii) no Credit Party has caused or suffered to occur any
Release of Hazardous Materials on, at, in, under, above, to, from or about any
of its Real Estate; (iii) the Credit Parties are and have been in compliance
with all Environmental Laws, except for such noncompliance which would not
result in Environmental Liabilities which could reasonably be expected to exceed
$250,000; (iv) the Credit Parties have obtained, and are in compliance with, all
Environmental Permits required by Environmental Laws for the operations of their
respective businesses as presently conducted or as proposed to be conducted,
except where the failure to so obtain or comply with such Environmental Permits
would not result in Environmental Liabilities which could reasonably be expected
to exceed $250,000, and all such Environmental Permits are valid, uncontested
and in good standing; (v) no Credit Party is involved in operations or knows of
any facts, circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any Environmental Liabilities of such
Credit Party which could reasonably be expected to exceed $250,000, and no
Credit Party has permitted any current or former tenant or occupant of the Real
Estate to engage in any such operations; (vi) the Credit Parties' estimated
costs of compliance with Environmental Laws and Environmental Permits for each
of the two Fiscal Years following the Closing Date are not in excess of $250,000
and $250,000, respectively; (vii) there is no Litigation involving any
24
Credit Party arising under or related to any Environmental Laws, Environmental
Permits or Hazardous Material which seeks damages, penalties, fines, costs or
expenses in excess of $25,000 or injunctive relief, or which alleges criminal
misconduct by any Credit Party; and (viii) no notice has been received by any
Credit Party identifying it as a "potentially responsible party" or requesting
information under CERCLA or analogous state statutes, and to the knowledge of
the Credit Parties, there are no facts, circumstances or conditions that could
reasonably be expected to result in any Credit Party being identified as a
"potentially responsible party" under CERCLA or analogous state statutes.
(b) Each Credit Party hereby acknowledges and agrees that
Administrative Agent (i) is not now, and has not ever been, in control of any of
the Real Estate or any Credit Party's affairs, and (ii) does not have the
capacity through the provisions of the Loan Documents or otherwise to influence
any Credit Party's conduct with respect to the ownership, operation or
management of any of its Real Estate or compliance with Environmental Laws or
Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance
--------- --------------------------
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
--------------------------------- --------------------------
lists all banks and other financial institutions at which any Credit Party
maintains deposits and/or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
3.20 Government Contracts. Except as set forth in Disclosure
-------------------- ----------
Schedule (3.20), as of the Closing Date, no Credit Party is a party to any
---------------
contract or agreement with any Governmental Authority and no Credit Party's
Accounts are subject to the Federal Assignment of Claims Act, as amended (31
U.S.C. Section 3727), or any similar state or local law.
3.21 Customer and Trade Relations. As of the Closing Date, there
----------------------------
exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in: (a) the business relationship of any Credit Party with any customer or
group of customers whose purchases during the preceding twelve (12) months
caused them to be ranked among the ten largest customers of such Credit Party;
or (b) the business relationship of any Credit Party with any supplier material
to its operations.
3.22 Agreements and Other Documents. As of the Closing Date, each
------------------------------
Credit Party has provided to Administrative Agent or its counsel, on behalf of
Lenders, accurate and complete copies (or summaries) of all of the following
agreements or documents to which any is subject and each of which are listed on
Disclosure Schedule (3.22): (a) supply agreements and purchase agreements not
--------------------------
terminable by such Credit Party within sixty (60) days following written notice
issued by such Credit Party and involving transactions in excess of $1,000,000
per annum; (b) any lease of Equipment having a remaining term of one year or
longer and requiring aggregate rental and other payments in excess of $500,000
per annum; (c) licenses and permits held by the Credit Parties, the absence of
which could be reasonably likely to have a Material Adverse Effect; (d)
instruments or documents evidencing Indebtedness of such Credit Party and any
security interest granted by such Credit Party with respect thereto; and (e)
instruments and agreements evidencing the issuance of any equity securities,
warrants, rights or options to purchase equity securities of such Credit Party
(other
25
than Parent).
3.23 Solvency. Both before and after giving effect to (a) the
--------
Loans and Letter of Credit Obligations to be made or extended on the Closing
Date or such other date as Loans and Letter of Credit Obligations requested
hereunder are made or extended, (b) the disbursement of the proceeds of such
Loans pursuant to the instructions of Borrower Representative, (c) the
Refinancing and the consummation of the other transactions contemplated hereby
and (d) the payment and accrual of all transaction costs in connection with the
foregoing, each Credit Party is Solvent.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Each Credit Party executing this
-------------------
Agreement hereby agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agents and/or Lenders, as required, the
Financial Statements, notices, Projections and other information at the times,
to the Persons and in the manner set forth in Annex E.
-------
(b) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, it shall deliver
to Agents and/or Lenders, as required, the various Collateral Reports (including
Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the times, to the
---------------
Persons and in the manner set forth in Annex F.
-------
4.2 Communication with Accountants. Each Credit Party executing
------------------------------
this Agreement authorizes Agents and, so long as a Default or Event of Default
shall have occurred and be continuing, each Agent and Lender, to communicate
directly with its independent certified public accountants including Xxxxxx
Xxxxxxxx LLP, and authorizes and shall instruct those accountants and advisors
to disclose and make available to Agents and each Lender any and all Financial
Statements and other supporting financial documents, schedules and information
relating to any Credit Party (including copies of any issued management letters)
with respect to the business, financial condition and other affairs of any
Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof and until
the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. (a) Each
------------------------------------------------
Credit Party shall: (a) do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and its rights and
franchises necessary to conduct its business (except as a result of any merger
permitted hereunder); (b) continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; (c) at all times maintain,
preserve and protect all of its assets and properties used or useful in the
conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and
tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (d) transact business only in
such corporate and trade names as are set forth in Disclosure Schedule (5.1),
-------------------------
unless in each case Borrower Representative gives the Administrative Agent at
least thirty (30) days prior written notice of any change.
26
(b) Each Subsidiary of the Credit Parties in existence as of
the Closing Date (i) shall continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder and (ii) shall not acquire any
assets other than in the ordinary course of business and which are related to
the business of such Subsidiary as now conducted or otherwise permitted
hereunder.
5.2 Payment of Obligations. (a) Subject to Section 5.2(b), each
---------------------- --------------
Credit Party shall pay and discharge or cause to be paid and discharged promptly
all Charges payable by it, including (A) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security and unemployment withholding with respect to its
employees, and (B) lawful claims for labor, materials, supplies and services or
otherwise, before any thereof shall become past due, except where the failure to
do so could not reasonably be expected to have a Material Adverse Effect.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
-------------- --------
contest are maintained on the books of such Credit Party, in accordance with
GAAP, (ii) such contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection or enforcement of such Charges or
claims or any Lien in respect thereof, (iii) none of the Collateral becomes
subject to forfeiture or loss as a result of such contest, (iv) no Lien shall be
imposed to secure payment of such Charges or claims other than Permitted
Encumbrances, (v) such Credit Party shall promptly pay or discharge such
contested Charges or claims and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Administrative Agent evidence acceptable
to Administrative Agent of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to such Credit Party or the
conditions set forth in this Section 5.2(b) are no longer met, and (vi)
--------------
Administrative Agent has not advised Borrowers in writing that Administrative
Agent reasonably believes that nonpayment or nondischarge thereof could have or
result in a Material Adverse Effect.
5.3 Books and Records. Each Credit Party shall keep adequate
-----------------
books and records with respect to its business activities in which proper
entries, reflecting all financial transactions, are made in accordance with GAAP
and on a basis consistent with the Financial Statements attached as Disclosure
----------
Schedule (3.4(A)).
-----------------
5.4 Insurance; Damage to or Destruction of Collateral. (a) The
-------------------------------------------------
Credit Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule (3.18) in form and with insurers
--------------------------
acceptable to Agents (it being acknowledged that as of the date hereof the
current form and insurers are acceptable). If any Credit Party at any time or
times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay all premiums relating thereto, Administrative
Agent may at any time or times thereafter obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
which Administrative Agent deems advisable. No Agent shall have any obligation
to obtain insurance for any Credit Party or pay any premiums therefor. By doing
so, no Agent shall be deemed to have waived any Default or Event of Default
arising from any Credit Party's failure to maintain such insurance or pay any
premiums therefor. All sums so disbursed, including attorneys' fees, court
costs and other charges related thereto, shall be payable on demand by Borrowers
to Administrative Agent and shall be additional Obligations hereunder secured by
the Collateral.
27
(b) Administrative Agent reserves the right at any time upon any
material change in any Credit Party's risk profile (including any change in the
product mix maintained by any Credit Party or any laws affecting the potential
liability of such Credit Party) to require additional forms and limits of
insurance to, in Administrative Agent's opinion, adequately protect Agents' and
Lenders' interests in all or any portion of the Collateral and to ensure that
each Credit Party is protected by insurance in amounts and with coverage
customary for its industry. If requested by Administrative Agent, each Credit
Party shall deliver to Administrative Agent from time to time a report of a
reputable insurance broker, satisfactory to Administrative Agent, with respect
to its insurance policies.
(c) Each Borrower shall deliver to Administrative Agent, in form
and substance satisfactory to Agents, endorsements to (i) all "All Risk" and
business interruption insurance naming Administrative Agent, on behalf of
itself, the other Agent and Lenders, as loss payee with respect to the
Collateral, and (ii) all general liability and other liability policies naming
Administrative Agent, on behalf of itself, the other Agent and Lenders, as
additional insured. Each Borrower irrevocably makes, constitutes and appoints
Administrative Agent (and all officers, employees or agents designated by
Administrative Agent), so long as any Default or Event of Default shall have
occurred and be continuing or the anticipated insurance proceeds exceed
$1,000,000, as such Borrower's true and lawful agent and attorney-in-fact for
the purpose of making, settling and adjusting claims under such "All Risk"
policies of insurance, endorsing the name of such Borrower on any check or other
item of payment for the proceeds of such "All Risk" policies of insurance and
for making all determinations and decisions with respect to such "All Risk"
policies of insurance. Administrative Agent shall have no duty to exercise any
rights or powers granted to it pursuant to the foregoing power-of-attorney.
Borrower Representative shall promptly notify Administrative Agent of any loss,
damage, or destruction to the Collateral in the amount of $250,000 or more,
whether or not covered by insurance. After deducting from such proceeds the
expenses, if any, incurred by Administrative Agent in the collection or handling
thereof, Administrative Agent may, at its option, apply such proceeds to the
reduction of the Obligations in accordance with Section 1.3(d), or permit or
--------------
require the applicable Borrower to use such money, or any part thereof, to
replace, repair, restore or rebuild the Collateral in a diligent and expeditious
manner with materials and workmanship of substantially the same quality as
existed before the loss, damage or destruction. Notwithstanding the foregoing,
if the casualty giving rise to such insurance proceeds would not reasonably be
expected to have a Material Adverse Effect, Administrative Agent shall permit
the applicable Borrower to replace, restore, repair or rebuild the property;
provided that if such Borrower shall not have completed or entered into binding
--------
agreements to complete such replacement, restoration, repair or rebuilding
within 180 days of such casualty, Administrative Agent may apply such insurance
proceeds to the Obligations in accordance with Section 1.3(d). All insurance
--------------
proceeds which are to be made available to any Borrower to replace, repair,
restore or rebuild the Collateral shall be applied by Administrative Agent to
reduce the outstanding principal balance of the Revolving Loan of such Borrower
(which application shall not result in a permanent reduction of the Revolving
Loan Commitment) and upon such application, Administrative Agent shall establish
a Reserve against the separate Borrowing Base of the affected Borrower in an
amount equal to the amount of such proceeds so applied. Thereafter, such funds
shall be made available to that Borrower to provide funds to replace, repair,
restore or rebuild the Collateral as follows: (i) Borrower Representative shall
request a Revolving Credit Advance be made to such Borrower in the amount
requested to be released; (ii) so long as the conditions set forth in Section
-------
2.2 have been met, Lenders shall make such Revolving Credit Advance; and (iii)
---
the Reserve established with respect to such insurance proceeds shall be reduced
by the amount of such Revolving Credit Advance. To the extent not used to
replace, repair, restore or rebuild the Collateral, such insurance proceeds
shall be applied in accordance with Section 1.3(d).
--------------
28
5.5 Compliance with Laws. Each Credit Party shall comply with all
--------------------
federal, state, local and foreign laws and regulations applicable to it,
including those relating to ERISA and labor matters and Environmental Laws and
Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be
-----------------------
requested by Administrative Agent (which request will not be made more
frequently than once each year absent the occurrence and continuance of an Event
of Default), the Credit Parties shall supplement each Disclosure Schedule
hereto, or any representation herein or in any other Loan Document, with respect
to any matter hereafter arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or which is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall be or be
deemed a waiver of any Default or Event of Default resulting from the matters
disclosed therein, except as consented to by Administrative Agent and Requisite
Lenders in writing; and (b) no supplement shall be required as to
representations and warranties that relate solely to the Closing Date.
5.7 Intellectual Property. Each Credit Party will conduct its
---------------------
business and affairs without material infringement of or material interference
with any Intellectual Property of any other Person.
5.8 Environmental Matters. Each Credit Party shall and shall
---------------------
require each Person within its control to: (a) conduct its operations and keep
and maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance which could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions which are required to
comply with Environmental Laws and Environmental Permits pertaining to the
presence, generation, treatment, storage, use, disposal, transportation or
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate; (c) notify Administrative Agent promptly after such
Credit Party becomes aware of any violation of Environmental Laws or
Environmental Permits or any Release on, at, in, under, above, to, from or about
any Real Estate which is reasonably likely to result in Environmental
Liabilities in excess of $100,000 and (d) promptly forward to Administrative
Agent a copy of any order, notice, request for information or any communication
or report received by such Credit Party in connection with any such violation or
Release or any other matter relating to any Environmental Laws or Environmental
Permits that could reasonably be expected to result in Environmental Liabilities
in excess of $250,000, in each case whether or not the Environmental Protection
Agency or any Governmental Authority has taken or threatened any action in
connection with any such violation, Release or other matter. If Administrative
Agent at any time has a reasonable basis to believe that there may be a
violation of any Environmental Laws or Environmental Permits by any Credit Party
or any Environmental Liability arising thereunder, or a Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate,
which, in each case, could reasonably be expected to have a Material Adverse
Effect, then each Credit Party shall, upon Administrative Agent's written
request (i) cause the performance of such environmental audits to address such
potential violation, liability or release including, if necessary, subsurface
sampling of soil and groundwater, and preparation of such environmental reports,
at
29
Borrowers' expense, as Administrative Agent may from time to time request,
which shall be conducted by reputable environmental consulting firms acceptable
to Administrative Agent and shall be in form and substance acceptable to
Administrative Agent, and (ii) if the Credit Party fails to perform any of the
audits or testing requested pursuant to clause (i) above, permit Administrative
Agent or its representatives to have access to all Real Estate for the purpose
of conducting such environmental audits and testing as Administrative Agent
deems appropriate, including, if necessary, subsurface sampling of soil and
groundwater. Borrowers shall reimburse Administrative Agent for the costs of
such audits and tests and the same will constitute a part of the Obligations
secured hereunder.
5.9 Landlords' Agreements and Bailee Letters. Each Credit
----------------------------------------
Party shall use its reasonable commercial efforts to obtain a landlord's
agreement or bailee letter, as applicable, from the lessor of each leased
property or with respect to any warehouse, processor or converter facility or
other location where Collateral is located, which agreement or letter shall
contain a waiver or subordination of all Liens or claims that the landlord or
bailee may assert against the Inventory or other Collateral at that location,
and shall otherwise be satisfactory in form and substance to Administrative
Agent. With respect to such locations or warehouse space leased as of the
Closing Date, if Administrative Agent has not received a landlord or bailee
letter as of the Closing Date, any Borrower's Eligible Inventory or Eligible
Fixed Assets at that location, in Agents' discretion, may be subject to such
Reserves as may be established by Agents in their reasonable credit judgment;
provided, however, that the maximum amount of any such Reserve shall not exceed
-------- -------
the lesser of (i) the maximum value of the Inventory from time to time located
at such location or warehouse space and (ii) the maximum amount payable by a
Credit Party to the landlord or bailee and in respect of which such landlord or
bailee has recourse against Inventory situated at such location or warehouse
space. After the Closing Date, (i) no real property or warehouse space shall be
leased or acquired by any Credit Party, (ii) no Eligible Fixed Asset shall be
located on real property or in warehouse space, and (iii) no Inventory shall be
shipped to a processor or converter under arrangements established after the
Closing Date, unless and until, in each case, a satisfactory landlord agreement
or bailee letter, as appropriate, shall first have been obtained with respect to
such location. Each Credit Party shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located, except
for any good faith contest by appropriate proceedings of the amount or validity
of any payment or other obligation under any such leases or agreements.
5.10 Further Assurances. Each Credit Party executing this
------------------
Agreement agrees that it shall and shall cause each other Credit Party to, at
such Credit Party's expense and upon request of either Agent, duly execute and
deliver, or cause to be duly executed and delivered, to Administrative Agent
such further instruments and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of either Agent to perfect or
maintain the Liens of the Administrative Agent for the benefit of itself, the
other Agent and Lenders on the Collateral.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees as
to all Credit Parties that, without the prior written consent of Administrative
Agent and the Requisite Lenders, from and after the date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc No Credit Party shall directly or
--------------------------
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with,
30
acquire all or substantially all of the assets or capital stock of, or otherwise
combine with or acquire, any Person or operating division of any Person, except
that any Credit Party may merge with another Credit Party, provided that Bon-Ton
--------
and Parent shall be the survivor of any such merger to which each may be a
party.
6.2 Investments; Loans and Advances.
-------------------------------
Except as otherwise expressly permitted by this Section 6, no Credit Party shall
---------
make or permit to exist any investment in, or make, accrue or permit to exist
loans or advances of money to, any Person, through the direct or indirect
lending of money, holding of securities or otherwise, except that (a) Borrowers
may hold investments comprised of notes payable, or stock or other securities
issued by Account Debtors to any Borrower pursuant to negotiated agreements with
respect to settlement of such Account Debtor's Accounts in the ordinary course
of business consistent with past practice; (b) each Credit Party may maintain
its existing investments as of the Closing Date described in Disclosure Schedule
--------------------------------
(6.2); (c) Parent or Holdings may make investments in any Borrower, (d) the
-----
Deferred Payment Note and (e) other investments not exceeding $500,000 in the
aggregate at any time outstanding.
6.3 Indebtedness. (a) No Credit Party shall create, incur, assume
------------
or permit to exist any Indebtedness, except (without duplication) (i)
Indebtedness secured by purchase money security interests and Capital Leases
permitted in clause (c) of Section 6.7, (ii) the Loans and the other
Obligations, (iii) deferred taxes, (iv) unfunded pension fund and other employee
benefit plan obligations and liabilities to the extent they are permitted to
remain unfunded under applicable law, (v) existing Indebtedness described in
Disclosure Schedule (6.3) and refinancings thereof or amendments or
-------------------------
modifications thereto which do not have the effect of increasing the principal
amount thereof and which are otherwise on terms and conditions, taken as a
whole, no less favorable to any Credit Party, Agent or Lender, as determined by
Administrative Agent, than the terms of the Indebtedness being refinanced,
amended or modified, (vi) other Indebtedness not in excess of $10,000,000 to the
extent such Indebtedness is secured by mortgages on Real Estate other than the
Mortgaged Properties and (vii) Indebtedness consisting of intercompany loans and
advances made by any Credit Party to any Borrower, provided that (A) each
--------
Borrower shall have executed and delivered to each other Borrower, on the
Closing Date, a demand note (collectively, the "Intercompany Notes") to evidence
------------------
any such intercompany Indebtedness owing at any time by such Borrower to such
other Borrowers which Intercompany Notes shall be in form and substance
satisfactory to Administrative Agent and shall be pledged and delivered to
Administrative Agent pursuant to the applicable Pledge Agreement or Security
Agreement as additional collateral security for the Obligations; (B) each
Borrower shall record all intercompany transactions on its books and records in
a manner satisfactory to Administrative Agent; (C) the obligations of each
Borrower under any such Intercompany Notes shall be subordinated to the
Obligations of such Borrower hereunder in a manner satisfactory to
Administrative Agent; (D) at the time any such intercompany loan or advance is
made by any Borrower to any other Borrower and after giving effect thereto, each
such Borrower shall be Solvent; and (E) no Default or Event of Default would
occur and be continuing after giving effect to any such proposed intercompany
loan.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations, (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Sections 6.8(b) or (c), (iii) other Indebtedness not in excess of $250,000
---------------
and (iv) refinancing of Indebtedness permitted hereunder.
31
6.4 Employee Loans and Affiliate Transactions.
-----------------------------------------
(a) Except as otherwise expressly permitted in this Section 6 with
respect to Affiliates, no Credit Party shall enter into or be a party to any
transaction with any other Credit Party or any Affiliate thereof except in the
ordinary course of and pursuant to the reasonable requirements of such Credit
Party's business and upon fair and reasonable terms that are no less favorable
to such Credit Party than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate of such Credit Party. In addition,
if any such transaction or series of related transactions involves payments in
excess of $1,000,000 in the aggregate, the terms of these transactions must be
disclosed in advance to Agents and Lenders. All such transactions existing as
of the date hereof are described on Disclosure Schedule (6.4(a)).
---------------------------
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to their
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes up to a maximum of $250,000 to any employee and up to a maximum of
$1,500,000 in the aggregate at any one time outstanding.
6.5 Capital Structure and Business. No Credit Party shall (a) make
------------------------------
any changes in any of its business objectives, purposes or operations which
could in any way materially adversely affect the repayment of the Loans or any
of the other Obligations or could reasonably be expected to have a Material
Adverse Effect, (b) make any change in its capital structure as described on
Disclosure Schedule (3.8), including, other than as to Parent, the issuance of
-------------------------
any shares of Stock, warrants or other securities convertible into Stock or any
revision of the terms of its outstanding Stock, or (c) amend its charter or
bylaws in each case in a manner which would materially adversely affect Agents
or Lenders or such Credit Party's duty or ability to repay the Obligations. No
Credit Party shall engage in any business other than the businesses currently
engaged in by it or businesses reasonably related thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur,
-----------------------
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is not prohibited by this
Agreement.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
-----
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7) and replacements and refinancings thereof to the
-------------------------
extent such refinancing is permitted hereunder; (c) Liens created after the date
hereof by conditional sale or other title retention agreements (including
Capital Leases) or in connection with purchase money Indebtedness with respect
to Equipment and Fixtures acquired by any Credit Party in the ordinary course of
business, involving the incurrence of an aggregate amount of purchase money
Indebtedness and Capital Lease Obligations of not more than $7,500,000
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within twenty (20) days following such purchase and does not exceed
100% of the purchase price of the subject assets). In addition, no Credit Party
shall become a party to any
32
agreement, note, indenture or instrument, or take any other action, which would
prohibit the creation of a Lien on any of its properties or other assets in
favor of Administrative Agent, on behalf of itself, the other Agent and Lenders,
as additional collateral for the Obligations, except operating leases, Capital
Leases, purchase money financing documents or Licenses which prohibit Liens upon
the assets that are subject thereto.
6.8 Sale of Stock and Assets. Except as permitted under Section 6.2,
------------------------
no Credit Party shall sell, transfer, convey, assign or otherwise dispose of any
of its properties or other assets, including (other than as to Parent) its
capital Stock or the capital Stock of any of its (including as to Parent)
Subsidiaries (whether in a public or a private offering or otherwise) other than
(a) the sale of Inventory in the ordinary course of business, (b) the sale,
transfer, conveyance or other disposition by a Credit Party in the ordinary
course of such Credit Party's business of Equipment, Fixtures or Real Estate
that are obsolete or no longer used or useful in such Credit Party's business
(c) other Equipment and Fixtures having a value not exceeding $250,000 in any
single transaction or $1,000,000 in the aggregate in any Fiscal Year, (d) the
sale, transfer or other conveyance of any asset by a Credit Party (other than
Holdings and Parent) to another Credit Party (other than Holdings and Parent),
(e) the sale of any asset by a Credit Party if the proceeds from such sale are
used to purchase a "like-kind" replacement asset within ninety (90) days of the
sale of the original asset, (f) sales of Borrowers' private-label credit card
receivables pursuant to the Transfer Agreement and (g) sales of Designated
Properties, Specified Properties or any property listed on Disclosure Schedule
-------------------
(6.8). With respect to any disposition of assets or other properties permitted
-----
pursuant to clause (b), clause (c), clause (f) and clause (g) above,
---------- ---------- ---------- ----------
Administrative Agent agrees on reasonable prior written notice to release its
Lien on such assets or other properties in order to permit the applicable Credit
Party to effect such disposition and shall execute and deliver to Borrowers, at
Borrowers' expense, appropriate UCC-3 termination statements and other releases
as reasonably requested by Borrowers.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
-----
Affiliate to, cause or permit to occur an event which could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA.
6.10 Financial Covenants. Borrowers shall not breach or fail to
-------------------
comply with any of the Financial Covenants (the "Financial Covenants") set forth
-------------------
in Annex G.
-------
6.11 Hazardous Materials. No Credit Party shall cause or permit a
-------------------
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations, liabilities or impacts which could not reasonably be expected
to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-
---------------
leaseback, synthetic lease or similar transaction involving any of its assets
other than any Specified Property.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
----------------------------
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
-------------------
Payment,
33
except (a) intercompany loans and advances between Borrowers and Credit
Parties to the extent permitted by Section 6.3 above, (b) dividends and
-----------
distributions by Subsidiaries of any Borrower paid to such Borrower or a
Subsidiary of such Borrower, (c) dividends and distributions by AM&A or
Lancaster to Bon-Ton; (d) dividends paid to Holdings by Bon-Ton and dividends to
Parent by Holdings to pay for the ordinary course operating expenses of Holdings
and Parent, (e) employee loans permitted under Section 6.4(b) above, (f)
--------------
dividends paid to Holdings by Bon-Ton and dividends to Parent by Holdings for
the repurchase of Parent's outstanding common stock and payments made by Parent
for such repurchase, provided that with respect to clause (f) above (i) no
-------- ----------
Default or Event of Default shall have occurred and be continuing or would
result after giving effect to any such payment, (ii) Borrowers collectively
shall have Net Borrowing Availability of at least $30,000,000 before and after
giving effect to any such payment; (iii) Borrowers shall have Excess Cash Flow
for the four Fiscal Quarter periods then ended of at least $20,000,000; (iv) the
amount of such dividends shall not in the aggregate exceed 50% of Borrowers'
Excess Cash Flow for such four Fiscal Quarter periods, (v) Borrowers shall have,
on a pro forma basis, after giving effect to such payment a Fixed Charge
--- -----
Coverage Ratio for the four Fiscal Quarter period then ended of not less than
1.75:1.0; and (vi) the timing of such payments shall be set at dates which
permit the delivery of Financial Statements necessary to determine current
financial covenant compliance prior to each payment.
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
-----------------------------------------------------------
Credit Party shall (a) change its corporate name, or (b) change its chief
executive office, principal place of business, corporate offices or warehouses
or locations at which Collateral is held or stored, or the location of its
records concerning the Collateral, in any case without at least thirty (30) days
prior written notice to Collateral Agent and Administrative Agent and after
Administrative Agent's written acknowledgment that any reasonable action
requested by Collateral Agent or Administrative Agent in connection therewith,
including to continue the perfection of any Liens in favor of Administrative
Agent, on behalf of itself, the other Agent and Lenders, in any Collateral, has
been completed or taken, and provided that any such new location shall be in the
--------
continental United States. Without limiting the foregoing, no Credit Party shall
change its name, identity or corporate structure in any manner which might make
any financing or continuation statement filed in connection herewith seriously
misleading within the meaning of Section 9-402(7) of the Code or any other then
applicable provision of the Code except upon prior written notice to
Administrative Agent and Lenders and after Administrative Agent's written
acknowledgment that any reasonable action requested by Administrative Agent in
connection therewith, including to continue the perfection of any Liens in favor
of Administrative Agent, on behalf of itself, the other Agent and Lenders in any
Collateral, has been completed or taken. No Credit Party shall change its
Fiscal Year without the consent of Administrative Agent.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
---------------------------------------
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) which could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of any Borrower
to any Borrower or between Borrowers.
6.17 No Speculative Transactions. No Credit Party shall engage in any
---------------------------
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
34
6.18 Leases. No Credit Party shall enter into any operating lease for
------
Equipment or Real Estate, if the aggregate of all such operating lease payments
payable in any year for Borrowers and their Subsidiaries on a consolidated basis
would exceed $25,000,000.
6.19 Changes Relating to Securitization Documents. Bon-Ton shall not,
--------------------------------------------
and shall not permit any of its Subsidiaries to change, refinance, waive or
amend the terms of any Securitization Document if the effect of such change,
waiver refinancing or amendment is to: (a) change the payment, termination or
repurchase provisions thereof other than to extend the dates therefor; and (b)
change, refinance, waive or amend any other term if such change or amendment
would materially increase the obligations of the obligor or confer additional
rights to the purchasers and/or investors or any other party to the
Securitization Documents in each case, taken as a whole in a manner materially
adverse to any Credit Party, Agent or Lenders. Without limiting the generality
of the foregoing, neither Bon-Ton nor any of its subsidiaries shall permit any
purchaser or investor under the Securitization Documents to purchase a
percentage participation in receivables greater than that currently provided for
in the Securitization Documents.
6.20 Availabililty. During the period commencing March 1 and ending
-------------
on December 31 of each calendar year, the Credit Parties will not permit the
Revolving Credit Advances to exceed Borrowing Availability less $10,000,000 at
such times as the advance rate against Eligible Inventory for purposes of the
Bon-Ton Borrowing Base is seventy-five percent (75%).
7. TERM
7.1 Termination. The financing arrangements contemplated hereby
-----------
shall be in effect until the Commitment Termination Date, and the Loans and all
other Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing
-----------------------------------------------------
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
------------
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of
Agents and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of the
Agents and Lender, all as contained in the Loan Documents, shall not terminate
or expire, but rather shall survive any such termination or cancellation and
shall continue in full force and effect until the Termination Date; provided
however, that in all events the provisions of Section 11, the payment
----------
obligations under Sections 1.15 and 1.16, and the indemnities contained in the
------------- ----
Loan Documents shall survive the Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
-----------------
following events (regardless of the reason therefor) shall constitute an "Event
-----
of Default" hereunder:
----------
(a) Any Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable in each case,
35
with respect to interest and fees, not cured within one Business Day after
notice from Administrative Agent, or (ii) fails to pay or reimburse any Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following either Agent's demand for such reimbursement or
payment of expenses.
(b) Any Credit Party shall fail or neglect to perform, keep or observe
any of the provisions of Sections 1.4, 1.8, 4, 5.4 or 6, or any of the
------------ --- - --- -
provisions set forth in Annexes C (other than inadvertent violations of the
---------
provisions thereof), E, F or G, respectively.
- - -
(c) Any Credit Party shall fail or neglect to perform, keep or observe
any other provision of this Agreement or of any of the other Loan Documents
(other than any provision embodied in or covered by any other clause of this
Section 8.1) and the same shall remain unremedied for twenty (20) days after the
-----------
earlier of the date on which (i) a Responsible Officer of a Credit Party becomes
aware of such failure or (ii) written notice thereof shall have been given to
Borrower Representative by Administrative Agent.
(d) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $1,000,000 in the aggregate,
or (ii) causes, or permits any holder of such Indebtedness or a trustee to
cause, Indebtedness or a portion thereof in excess of $1,000,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, unless such default is waived or cured.
(e) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect, or any representation or warranty herein or
in any Loan Document or in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or delivered to any
Agent or any Lender by any Credit Party is untrue or incorrect in any material
respect as of the date when made or deemed made.
(f) Assets of any Credit Party with a fair market value of $500,000 or
more shall be attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for sixty (60) days or more.
(g) A case or proceeding shall have been commenced against any Credit
Party seeking a decree or order in respect of any Credit Party (i) under Title
11 of the United States Code, as now constituted or hereafter amended or any
other applicable federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) for any Credit Party or of any substantial part of any
such Person's assets, or (iii) ordering the winding-up or liquidation of the
affairs of any Credit Party, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) days or more or such court shall enter a
decree or order granting the relief sought in such case or proceeding.
(h) Any Credit Party (i) shall file a petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) shall fail to contest in a timely and appropriate manner or shall consent
to the institution of proceedings thereunder or to the filing of any such
petition or to the
36
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of any Credit Party or
of any substantial part of any such Person's assets, (iii) shall make an
assignment for the benefit of creditors, (iv) shall take any corporate action in
furtherance of any of the foregoing; or (v) shall admit in writing its inability
to, or shall be generally unable to, pay its debts as such debts become due.
(i) A final judgment or judgments for the payment of money in excess
of $250,000 in the aggregate at any time outstanding shall be rendered against
any Credit Party and the same shall not, within thirty (30) days after the entry
thereof, have been discharged or execution thereof stayed or bonded pending
appeal, or shall not have been discharged prior to the expiration of any such
stay.
(j) Any material provision of any Loan Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any security interest created under any Loan Document shall cease to be a
valid and perfected first priority security interest or Lien (except as
otherwise permitted herein or therein) in any of the Collateral having a value
in excess of $500,000 purported to be covered thereby.
(k) Any "Change of Control" shall occur.
(l) A "Termination Event" under and as defined in the Securitization
Documents shall have occurred which is not cured within any applicable grace
period.
8.2 Remedies. (a) If any Event of Default shall have occurred and
--------
be continuing or if a Default shall have occurred and be continuing and
Administrative Agent or Requisite Lenders shall have determined not to make any
Advances or incur any Letter of Credit Obligations so long as that specific
Default is continuing, Administrative Agent may (and at the written request of
the Requisite Lenders shall), without notice, suspend this facility with respect
to further Advances and/or the incurrence of further Letter of Credit
Obligations whereupon any further Advances and Letter of Credit Obligations
shall be made or extended in Administrative Agent's sole discretion (or in the
sole discretion of the Requisite Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Event of Default shall have occurred and be continuing, Administrative Agent may
(and at the written request of Requisite Lenders shall), without notice except
as otherwise expressly provided herein, increase the rate of interest applicable
to the Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be continuing,
Administrative Agent may (and at the written request of the Requisite Lenders
shall), without notice, (i) terminate this facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations; (ii) declare
all or any portion of the Obligations, including all or any portion of any Loan
to be forthwith due and payable, and require that the Letter of Credit
Obligations be cash collateralized as provided in Annex B, all without
-------
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrowers and each other Credit Party; and (iii) exercise
any rights and remedies provided to Administrative Agent under the Loan
Documents and/or at law or equity, including all remedies provided under the
Code; provided, however, that upon the occurrence of an Event of Default
-------- -------
specified in Sections 8.1 (g) or (h), all of the Obligations, including the
------------ --- ---
aggregate Revolving
37
Loan, shall become immediately due and payable without declaration, notice or
demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in
-------------------------
this Agreement or in any other Loan Document or by applicable law, each Credit
Party waives (including for purposes of Section 12): (a) presentment, demand and
----------
protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Administrative Agent on which any Credit Party may in any
way be liable, and hereby ratifies and confirms whatever Administrative Agent
may do in this regard, (b) all rights to notice and a hearing prior to
Administrative Agent's taking possession or control of, or to Administrative
Agent's replevy, attachment or levy upon, the Collateral or any bond or security
which might be required by any court prior to allowing Administrative Agent to
exercise any of its remedies, and (c) the benefit of all valuation, appraisal,
marshalling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENTS
9.1 Assignment and Participations. (a) The Credit Parties signatory
-----------------------------
hereto consent to any Lender's assignment of, and/or sale of participations in,
at any time or times, the Loan Documents, Loans, Letter of Credit Obligations
and any Commitment or of any portion thereof or interest therein, including any
Lender's rights, title, interests, remedies, powers or duties thereunder,
whether evidenced by a writing or not. Any assignment by a Lender shall (i)
require the consent of Agents and Bon-Ton (which shall not be unreasonably
withheld or delayed) and the execution of an assignment agreement (an
"Assignment Agreement") substantially in the form attached hereto as Exhibit
--------------------- -------
9.1(a) and otherwise in form and substance satisfactory to, and acknowledged by,
------
Administrative Agent, provided, however, that the consent of Bon-Ton shall not
-------- -------
be required for any assignment by a Lender if at the time of such assignment a
Default or Event of Default shall have occurred and be continuing; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and
Administrative Agent that it is purchasing the applicable Loans to be assigned
to it for its own account, for investment purposes and not with a view to the
distribution thereof; (iii) if a partial assignment, be in an amount at least
equal to $5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; and (iv) include a payment to Administrative Agent of an assignment
fee of $3,500. In the case of an assignment by a Lender under this Section 9.1,
-----------
the assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as it would if it were a Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Commitments or assigned portion thereof from and after the date of such
assignment. Each Borrower hereby acknowledges and agrees that any assignment
will give rise to a direct obligation of Borrowers to the assignee and that the
assignee shall be considered to be a "Lender". In all instances, each Lender's
liability to make Loans hereunder shall be several and not joint and shall be
limited to such Lender's Pro Rata Share of the applicable Commitment. In the
event Administrative Agent or any Lender assigns or otherwise transfers all or
any part of a Note, Administrative Agent or any such Lender shall so notify
Borrowers and Borrowers shall, upon the request of Administrative Agent or such
Lender, execute new Notes in exchange for the Notes being assigned.
Notwithstanding the foregoing provisions of this Section 9.1(a), any Lender may
--------------
at any time pledge or assign all or any portion of such Lender's rights under
this Agreement and the other Loan Documents to a Federal Reserve Bank; provided,
--------
however, that no such pledge or assignment shall release such Lender from such
-------
Lender's obligations hereunder or under any other Loan Document.
38
(b) Any participation by a Lender of all or any part of its
Commitments shall be in an amount at least equal to $5,000,000, and with the
understanding that all amounts payable by Borrowers hereunder shall be
determined as if that Lender had not sold such participation, and that the
holder of any such participation shall not be entitled to require such Lender to
take or omit to take any action hereunder except actions directly affecting (i)
any reduction in the principal amount of, or interest rate or Fees payable with
respect to, any Loan in which such holder participates, (ii) any extension of
the scheduled amortization of the principal amount of any Loan in which such
holder participates or the final maturity date thereof, and (iii) any release of
all or substantially all of the Collateral (other than in accordance with the
terms of this Agreement, the Collateral Documents or the other Loan Documents).
Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, each Borrower
------------- ---- ---- ---
acknowledges and agrees that a participation shall give rise to a direct
obligation of Borrowers to the participant and the participant shall be
considered to be a "Lender". Except as set forth in the preceding sentence no
Borrower or Credit Party shall have any obligation or duty to any participant.
No Agent nor any Lender (other than the Lender selling a participation) shall
have any duty to any participant and may continue to deal solely with the Lender
selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender shall,
-----------
as between Borrowers and that Lender, or any Agent and that Lender, be relieved
of any of its obligations hereunder as a result of any sale, assignment,
transfer or negotiation of, or granting of participation in, all or any part of
the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 9.1 as
-----------
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested not
inconsistent with the terms of the Loan Documents and, if requested by Agents,
the preparation of informational materials for, and the participation of
management in meetings with, potential assignees or participants. Each Credit
Party executing this Agreement shall certify the correctness, completeness and
accuracy of all descriptions of the Credit Parties and their affairs contained
in any selling materials provided by them and all other information provided by
them and included in such materials, except that any Projections delivered by
Borrowers shall only be certified by Borrowers as having been prepared by
Borrowers in compliance with the representations contained in Section 3.4(c).
--------------
(e) A Lender may furnish any information concerning Credit Parties in
the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained in Section 11.8.
------------
(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.16(a),
---------------
increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
---------------
Section 1.16(c), or withholding taxes in accordance with Section 1.16(d).
--------------- ---------------
9.2 Appointment of Agents. GE Capital and FNBB are hereby appointed
---------------------
to act on
39
behalf of all Lenders as Administrative Agent and Collateral Agent,
respectively, under this Agreement and the other Loan Documents. The provisions
of this Section 9.2 are solely for the benefit of Agents and Lenders and no
-----------
Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. FNBB may perform its obligations
as Collateral Agent hereunder and under the other Loan Documents either directly
or indirectly through its Affiliate, GBFC, Inc. In performing its functions and
duties under this Agreement and the other Loan Documents, Agents shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for any Credit Party or any other Person. Agents shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agents shall be mechanical and
administrative in nature and Agents shall not have, or be deemed to have, by
reason of this Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. No Agents nor any of its Affiliates nor
any of their respective officers, directors, employees, agents or
representatives shall be liable to any Lender for any action taken or omitted to
be taken by it hereunder or under any other Loan Document, or in connection
herewith or therewith, except for damages solely caused by its or their own
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
If an Agent shall request instructions from Requisite Lenders or
all affected Lenders with respect to any act or action (including failure to
act) in connection with this Agreement or any other Loan Document, then such
Agent shall be entitled to refrain from such act or taking such action unless
and until it shall have received instructions from Requisite Lenders or all
affected Lenders, as the case may be, and such Agent shall not incur liability
to any Person by reason of so refraining. Agents shall be fully justified in
failing or refusing to take any action hereunder or under any other Loan
Document (a) if such action would, in the opinion of such Agent, be contrary to
law or the terms of this Agreement or any other Loan Document, (b) if such
action would, in the opinion of such Agent, expose Agents to Environmental
Liabilities or (c) if such Agent shall not first be indemnified to its
satisfaction against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against any
Agent as a result of an Agent acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of Requisite
Lenders or all affected Lenders, as applicable.
9.3 Agents' Reliance, Etc. No Agent nor any of its Affiliates nor any
----------------------
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages solely
caused by its or their own gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Without limitation of the
generality of the foregoing, each Agent: (a) may treat the payee of any Note
as the holder thereof until Administrative Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
Administrative Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and
40
records) of any Credit Party; (e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
9.4 GE Capital, FNBB and their Affiliates. With respect to its
-------------------------------------
Commitments hereunder, GE Capital and FNBB shall have the same rights and powers
under this Agreement and the other Loan Documents as any other Lender and may
exercise the same as though it were not Agents hereunder; and the term "Lender"
or "Lenders" shall, unless otherwise expressly indicated, include GE Capital and
FNBB in their individual capacity. GE Capital and FNBB and their Affiliates may
lend money to, invest in, and generally engage in any kind of business with, any
Credit Party, any of their Affiliates and any Person who may do business with or
own securities of any Credit Party or any such Affiliate, all as if GE Capital
and FNBB were not Agents and without any duty to account therefor to Lenders.
GE Capital and FNBB and their Affiliates may accept fees and other consideration
from any Credit Party for services in connection with this Agreement or
otherwise without having to account for the same to Lenders. Each Lender
acknowledges the potential conflict of interest between GE Capital and FNBB,
each as a Lender and GE Capital and FNBB, each as an Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon any Agent or any other Lender and based
on the Financial Statements referred to in Section 3.4(a) and such other
--------------
documents and information as it has deemed appropriate, made its own credit and
financial analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon any 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 credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify each Agent (to the
---------------
extent not reimbursed by Credit Parties and without limiting the obligations of
Credit Parties hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against any Agent, in any way relating to or arising out of this Agreement or
any other Loan Document or any action taken or omitted by any Agent in
connection therewith; provided, however, that no Lender shall be liable for any
-------- -------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from an
Agent's, gross negligence or wilful misconduct as finally determined by a court
of competent jurisdiction. Without limiting the foregoing, each Lender agrees
to reimburse each Agent promptly upon demand for its ratable share of any out-
of-pocket expenses (including counsel fees) incurred by it in connection with
the preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that each Agent is not reimbursed
for such expenses by Credit Parties.
41
9.7 Successor Agents. Each Agent may resign at any time by giving
----------------
not less than thirty (30) days' prior written notice thereof to the other Agent,
Lenders and Borrower Representative. Upon any such resignation, the Requisite
Lenders shall have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Requisite Lenders and shall have
accepted such appointment within 30 days after the resigning Agent's giving
notice of resignation, then the resigning Agent may, on behalf of Lenders,
appoint a successor Agent, which shall be a Lender, if a Lender is willing to
accept such appointment, or otherwise shall be a commercial bank or financial
institution or a subsidiary of a commercial bank or financial institution if
such commercial bank or financial institution is organized under the laws of the
United States of America or of any State thereof and has a combined capital and
surplus of at least $300,000,000. If no successor Agent has been appointed
pursuant to the foregoing, by the 30th day after the date such notice of
resignation was given by the resigning Agent, such resignation shall become
effective and the Requisite Lenders shall thereafter perform all the duties of
such resigning Agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above. Any successor Agent appointed by
Requisite Lenders hereunder shall be subject to the approval of Borrower
Representative, such approval not to be unreasonably withheld or delayed;
provided that such approval shall not be required if a Default or an Event of
--------
Default shall have occurred and be continuing. Upon the acceptance of any
appointment as an Agent hereunder by a successor Agent, such successor Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the resigning Agent. Upon the earlier of the acceptance of any
appointment as an Agent hereunder by a successor Agent or the effective date of
the resigning Agent's resignation, the resigning Agent shall be discharged from
its duties and obligations under this Agreement and the other Loan Documents,
except that any indemnity rights or other rights in favor of such resigning
Agent shall continue. After any resigning Agent's resignation hereunder, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
---------
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents. An Agent may be removed at the written direction of the
holders (other than such Agent) of two-thirds or more of the Commitments
(excluding such Agent's Commitment); provided that in so doing, such Lenders
shall be deemed to have waived and released any and all claims they may have
against such Agent.
42
9.8 Setoff and Sharing of Payments. In addition to any rights now or
------------------------------
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender and each holder of any Note is hereby authorized at any time or from
time to time, without notice to any Credit Party or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all balances held by it at any of its offices for the account of
any Credit Party (regardless of whether such balances are then due to such
Credit Party) and any other properties or assets any time held or owing by that
Lender or that holder to or for the credit or for the account of Credit Parties
against and on account of any of the Obligations which are not paid when due.
Any Lender or holder of any Note exercising a right to set off or otherwise
receiving any payment on account of the Obligations in excess of its Pro Rata
Share thereof shall purchase for cash (and the other Lenders or holders shall
sell) such participations in each such other Lender's or holder's Pro Rata Share
of the Obligations as would be necessary to cause such Lender to share the
amount so set off or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares. Each Lender's obligation
under this Section 9.8 shall be in addition to and not limitation of its
-----------
obligations to purchase a participation in an amount equal to its Pro Rata Share
of the Swing Line Loans under Section 1.1. Each Credit Party agrees, to the
-----------
fullest extent permitted by law, that (a) any Lender or holder may exercise its
right to set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the set-
off amount or payment otherwise received is thereafter recovered from the Lender
that has exercised the right of set-off, the purchase of participations by that
Lender shall be rescinded and the purchase price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
----------------------------------------------------------------
Concert
-------
(a) Advances; Payments. (i) Lenders shall refund or participate in
------------------
the Swing Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(b).
If the Swing Line Lender declines to make a Swing Line Loan or if the Swing Line
Availability is zero, Administrative Agent shall notify the other Agent and
Lenders, promptly after receipt of a Notice of Revolving Credit Advance and in
any event prior to 1:00 p.m. (New York time) on the date such Notice of
Revolving Credit Advance is received, by telecopy, telephone or other similar
form of transmission. Each Lender shall make the amount of such Lender's Pro
Rata Share of each Revolving Credit Advance available to Administrative Agent in
same day funds by wire transfer to Administrative Agent's account as set forth
in Annex H not later than 3:00 p.m. (New York time) on the requested funding
-------
date, in the case of an Index Rate Loan and not later than 11:00 a.m. (New York
time) on the requested funding date in the case of a LIBOR Loan. After receipt
of such wire transfers (or, in the Administrative Agent's sole discretion,
before receipt of such wire transfers), subject to the terms hereof,
Administrative Agent shall make the requested Revolving Credit Advance to the
Borrower designated by Borrower Representative in the Notice of Revolving Credit
Advance. All payments by each Lender shall be made without setoff, counterclaim
or deduction of any kind.
(ii) On the second (2nd) Business Day of each calendar week or
more frequently as aggregate cumulative payments in excess of $2,000,000 are
received with respect to the Loans (other than the Swing Line Loan) (each, a
"Settlement Date"), Administrative Agent will advise
---------------
43
each Lender by telephone, or telecopy of the amount of such Lender's Pro Rata
Share of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that such Lender has made all payments
required to be made by it and has purchased all participations required to be
purchased by it under this Agreement and the other Loan Documents as of such
Settlement Date, Administrative Agent will pay to each Lender such Lender's Pro
Rata Share of principal, interest and Fees paid by Borrowers since the previous
Settlement Date for the benefit of that Lender on the Loans held by it. Such
payments shall be made by wire transfer to such Lender's account (as specified
by such Lender in Annex H or the applicable Assignment Agreement) not later than
-------
2:00 p.m. (New York time) on the next Business Day following each Settlement
Date.
(b) Availability of Lender's Pro Rata Share. Administrative Agent
---------------------------------------
may assume that each Lender will make its Pro Rata Share of each Revolving
Credit Advance available to Administrative Agent on each funding date. If such
Pro Rata Share is not, in fact, paid to Administrative Agent by such Lender when
due, Agent will be entitled to recover such amount on demand from such Lender
without set-off, counterclaim or deduction of any kind. If any Lender fails to
pay the amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower Representative and Borrowers shall immediately repay
such amount to Agent. Nothing in this Section 9.9(b) or elsewhere in this
--------------
Agreement or the other Loan Documents 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 Commitments hereunder or to prejudice any rights that
Borrowers may have against any Lender as a result of any default by such Lender
hereunder. To the extent that Agent advances funds to any Borrower on behalf of
any Lender and is not reimbursed therefor on the same Business Day as such
Advance is made, Agent shall be entitled to retain for its account all interest
accrued on such Advance until reimbursed by the applicable Lender.
(c) Return of Payments. (i) If Administrative Agent pays an
------------------
amount to a Lender under this Agreement in the belief or expectation that a
related payment has been or will be received by Agent from Borrowers and such
related payment is not received by Administrative Agent, then Administrative
Agent will be entitled to recover such amount from such Lender on demand without
set-off, counterclaim or deduction of any kind.
(ii) If Administrative Agent determines at any time that any amount
received by Administrative Agent under this Agreement must be returned to any
Borrower or paid to any other Person pursuant to any insolvency law or
otherwise, then, notwithstanding any other term or condition of this Agreement
or any other Loan Document, Agent will not be required to distribute any portion
thereof to any Lender. In addition, each Lender will repay to Administrative
Agent on demand any portion of such amount that Administrative Agent has
distributed to such Lender, together with interest at such rate, if any, as
Administrative Agent is required to pay to any Borrower or such other Person,
without set-off, counterclaim or deduction of any kind.
44
(d) Non-Funding Lenders. The failure of any Lender (such Lender, a
-------------------
"Non-Funding Lender") to make any Revolving Credit Advance or to purchase any
-------------------
participation in any Swing Line Loan to be made or purchased by it on the date
specified therefor shall not relieve any other Lender (each such other Lender,
an "Other Lender") of its obligations to make such Advance or purchase such
------------
participation on such date, but neither any Other Lender nor any Agent shall be
responsible for the failure of any Non-Funding Lender to make an Advance to be
made, or to purchase a participation to be purchased, by such Non-Funding
Lender, and no Non-Funding Lender shall have any obligation to any Agent or any
Other Lender for the failure by such Non-Funding Lender. Notwithstanding
anything set forth herein to the contrary, a Non-Funding Lender shall not have
any voting or consent rights under or with respect to any Loan Document or
constitute a "Lender" (or be included in the calculation of "Requisite Lenders"
hereunder) for any voting or consent rights under or with respect to any Loan
Document.
(e) Dissemination of Information. Administrative Agent will use
----------------------------
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Administrative Agent from, or delivered by Administrative
Agent to, any Credit Party, with notice of any Event of Default of which
Administrative Agent has actually become aware and with notice of any action
taken by Administrative Agent following any Event of Default; provided, however,
that Administrative Agent shall not be liable to any Lender for any failure to
do so, except to the extent that such failure is attributable solely to
Administrative Agent's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Lenders acknowledge that
Borrowers are required to provide Financial Statements and Collateral Reports to
Lenders in accordance with Annexes E and F hereto and agree that Administrative
--------- -
Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
------------------
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of Administrative Agent or Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert and
at the direction or with the consent of Administrative Agent.
45
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
----------------------
Documents shall be binding on and shall inure to the benefit of each Credit
Party each Agent, and Lenders and their respective successors and permitted
assigns (including, in the case of any Credit Party, a debtor-in-possession on
behalf of such Credit Party), except as otherwise provided herein or therein.
No Credit Party may assign, transfer, hypothecate or otherwise convey its
rights, benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Administrative Agent and
Requisite Lenders. Any such purported assignment, transfer, hypothecation or
other conveyance by any Credit Party without the prior express written consent
of Administrative Agent and Requisite Lenders shall be void. The terms and
provisions of this Agreement are for the purpose of defining the relative rights
and obligations of each Credit Party, Agents and Lenders with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any of the
other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan
---------------------------------------------
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 11.2 below. Any letter of interest, commitment letter
------------
and/or fee letter (other than the GE Capital Fee Letter and the FNBB Fee Letter)
between any Credit Party and any Agent or any Lender or any of their respective
affiliates predating this Agreement and relating to a financing of substantially
similar form, purpose or effect shall be superseded by this Agreement.
11.2 Amendments and Waivers. (a) Except for actions expressly
----------------------
permitted to be taken by Agents, no amendment, modification, termination or
waiver of any provision of this Agreement or any of the Notes, or any consent to
any departure by any Credit Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by Borrowers and by Requisite
Lenders or all affected Lenders, as applicable. Except as set forth in clause
------
(b) below, all such amendments, modifications, terminations or waivers requiring
---
the consent of any Lenders shall require the written consent of Requisite
Lenders.
(b) No amendment, modification, termination or waiver shall, unless in
writing and signed by each Lender directly affected thereby, do any of the
following: (i) increase the principal amount of any Lender's Commitment (which
action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date of the principal amount of any Loan of any
affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender; (v) except as otherwise permitted
herein or in the other Loan Documents, release any Guaranty or permit any Credit
Party to sell or otherwise dispose of any Collateral with a value exceeding
$5,000,000 in the aggregate (which action shall be deemed to directly affect all
Lenders); (vi) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for Lenders or any
of them to take any action hereunder; and (vii) amend or waive this Section 11.2
------------
or the definition of the term "Requisite Lenders" insofar as such definition
affects the substance of this Section 11.2. Furthermore, no amendment,
------------
modification, termination or waiver affecting the rights or duties of any Agent
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by such
46
Agent, in addition to Borrowers and Lenders required hereinabove to take such
action. Each amendment, modification, termination or waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given. No amendment, modification, termination or waiver shall be required for
Administrative Agent to take additional Collateral pursuant to any Loan
Document. No amendment, modification, termination or waiver of any provision of
any Note shall be effective without the written concurrence of the holder of
that Note. No notice to or demand on any Credit Party in any case shall entitle
such Credit Party or any other Credit Party to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 11.2
------------
shall be binding upon each holder of the Notes at the time outstanding and each
future holder of the Notes.
(c) If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):
---------------
(i) requiring the consent of all affected Lenders, the consent
of Requisite Lenders is obtained, but the consent of other Lenders
whose consent is required is not obtained (any such Lender whose
consent is not obtained as described in this clause (i) and in clause
---------- ------
(ii) below being referred to as a "Non-Consenting Lender"), or
---- ---------------------
(ii) requiring the consent of Requisite Lenders, the consent of
Lenders holding 51% or more of the aggregate Commitments is obtained,
but the consent of Requisite Lenders is not obtained,
then, so long as Administrative Agent or Collateral Agent is not a Non-
Consenting Lender, at Borrower Representative's request, Administrative Agent or
a Person acceptable to Administrative Agent shall have the right with
Administrative Agent's consent and in Administrative Agent's sole discretion
(but shall have no obligation) to purchase from such Non-Consenting Lenders, and
such Non-Consenting Lenders agree that they shall, upon Administrative Agent's
request, sell and assign to Administrative Agent or such Person, all of the
Commitments and all rights in its Notes and under the Loan Documents of such
Non-Consenting Lender for an amount equal to the principal balance of all Loans
held by the Non-Consenting Lender and all accrued interest and Fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.
(d) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations under Section 1.13) and
------------
termination of the Commitments, Agents shall deliver to Borrowers termination
statements, mortgage releases and other documents necessary or appropriate to
evidence the termination of the Liens securing payment of the Obligations.
(e) Notwithstanding anything to the contrary in this Section, the
Agents may waive the Borrowers' compliance with the provisions of Section 6.20
hereof without the consent of any Lender, provided that, without the consent of
-------------
the Requisite Lenders, (i) the Agents may not waive compliance with the
provisions of Section 6.20 hereof more than six times in any one March 1 to
December 31 period, and (ii) the aggregate amount of time during which the
Borrowers shall not be required to comply with the provisions of Section 6.20
shall not exceed 30 days with respect to any single waiver or an aggregate of 90
days in any one March 1 to December 31 period.
11.3 Fees and Expenses. Borrowers shall reimburse Agents for all
-----------------
reasonable
47
out-of-pocket expenses incurred in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its special loan
counsel, advisors, consultants and auditors retained in connection with the Loan
Documents and the other transactions contemplated hereby and advice in
connection therewith). Borrowers shall reimburse Agents (and, with respect to
clauses (c) and (d) below, all Lenders) for all reasonable fees,
----------- ---
costs and expenses, including the reasonable fees, costs and expenses of counsel
or other advisors (including environmental and management consultants and
appraisers) for advice, assistance, or other representation in connection with:
(a) the forwarding to Borrowers or any other Person on behalf
of Borrowers by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or the transactions contemplated hereby or
advice in connection with the administration of the Loans made pursuant hereto
or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by any Agent, any Lender, any Borrower or any other
Person) in any way relating to the Collateral, any of the Loan Documents or any
other agreement to be executed or delivered in connection therewith or herewith,
whether as party, witness, or otherwise, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the Borrowers or
any other Person that may be obligated to any Agent by virtue of the Loan
Documents; including any such litigation, contest, dispute, suit, proceeding or
action arising in connection with any work-out or restructuring of the Loans
during the pendency of one or more Events of Default; provided that in the case
---------
of reimbursement of counsel for Lenders other than Agents, such reimbursement
shall be limited to one counsel for all such Lenders; provided, further, however
-------- ------- -------
that the Borrowers shall not be required to reimburse any Agent or Lender for
any such costs, fees or expenses if it is finally determined by a court of
competent jurisdiction that such litigation, consent, dispute, suit, proceeding
or action resulted solely from such Agent's or Lender's gross negligence or
wilful misconduct;
(d) any attempt to enforce any remedies of Agents against any
or all of the Credit Parties or any other Person that may be obligated to Agents
or any Lender by virtue of any of the Loan Documents; including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
--------
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders; provided,
--------
further, however that Borrowers shall not be required to reimburse any Agent or
------- -------
Lender for such costs, fees and expenses if it is finally determined by a court
of competent jurisdiction that such attempt to enforce remedies was not
justified or legally permitted;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default;
(f) efforts to verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral subject
to the provisions of Annex F with respect to appraisals and audits of
-------
Collateral;
including all reasonable attorneys' and other professional and service
providers' fees arising from such
48
services, including those in connection with any appellate proceedings; and all
reasonable expenses, costs, charges and other fees incurred by such counsel and
others in any way or respect arising in connection with or relating to any of
the events or actions described in this Section 11.3 shall be payable, on
------------
demand, by Borrowers to the Agents. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include: fees, costs and
expenses of accountants, environmental advisors, appraisers, investment bankers,
management and other consultants and paralegals; court costs and expenses;
photocopying and duplication expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; telegram or telecopy
charges; secretarial overtime charges; and expenses for travel, lodging and food
paid or incurred in connection with the performance of such legal or other
advisory services.
11.4 No Waiver. Agents' or Lenders' failure, at any time or times, to
---------
require strict performance by the Credit Parties of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agents or Lenders thereafter to demand strict compliance
and performance therewith. Any suspension or waiver of an Event of Default
shall not suspend, waive or affect any other Event of Default whether the same
is prior or subsequent thereto and whether the same or of a different type.
Subject to the provisions of Section 11.2, none of the undertakings, agreements,
------------
warranties, covenants and representations of any Credit Party contained in this
Agreement or any of the other Loan Documents and no Default or Event of Default
by any Credit Party shall be deemed to have been suspended or waived by Agent or
any Lender, unless such waiver or suspension is by an instrument in writing
signed by an officer of or other authorized employee of Administrative Agent and
the applicable required Lenders, and directed to Borrowers specifying such
suspension or waiver.
11.5 Remedies. Agents' and Lenders' rights and remedies under this
--------
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agents or Lenders may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this
------------
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7 Conflict of Terms. Except as otherwise provided in this
-----------------
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
11.8 Confidentiality. Each Agent and each Lender agrees to use
---------------
commercially reasonable efforts (equivalent to the efforts such Agent or Lender
applies to maintaining the confidentiality of its own confidential information)
to maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that Agents and any Lender may disclose such
information (a) to Persons employed or engaged by them in evaluating, approving,
structuring or administering the Loans and the Commitments; (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any such
------------
49
bona fide assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as described in
clause (a) above); (c) as required or requested by any Governmental Authority or
----------
reasonably believed by such Agent or Lender to be compelled by any court decree,
subpoena or legal or administrative order or process, provided that in any such
--------
instance in which such Agent or Lender intends to make such disclosure, such
Agent or Lender shall give Borrower Representative such prior written notice
thereof as is reasonably practicable under the circumstances in order to allow
the Credit Party or Credit Parties affected thereby opportunity to seek a
protective order or injunctive relief; (d) as, in the opinion of such Agent's or
Lender's counsel, required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any Litigation to
which such Agent or Lender is a party; or (f) which ceases to be confidential
through no fault of such Agent or Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
-------------
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX XXXXXX,
XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENTS AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENTS, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
--------
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY, CITY OF NEW YORK, NEW YORK AND, PROVIDED, FURTHER NOTHING IN THIS
-------- -------
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENTS FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENTS. EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT
PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
-----
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
--- ----------
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT
PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO
-------
MADE SHALL BE DEEMED COMPLETED UPON SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF.
50
11.10 Notices. Except as otherwise provided herein, whenever it is
-------
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
-------
11.10), (c) one (1) Business Day after deposit with a reputable overnight
-----
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated on Annex I or to such other address
-------
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower Representative or any Agent)
designated on Annex I to receive copies shall in no way adversely affect the
-------
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.11 Section Titles. The Section titles and Table of Contents
--------------
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
--------------------
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENTS, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases. Each Credit Party executing this Agreement
--------------
agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of GE Capital, FNBB or their
respective Affiliates or referring to this Agreement, the other Loan Documents
or the transactions contemplated hereby or thereby without at least two (2)
Business Days' prior notice to GE Capital and/or FNBB and without the prior
written consent of GE Capital and/or
51
FNBB, as the case maybe, unless (and only to the extent that) such Credit Party
or Affiliate is required to do so under law and then, in any event, such Credit
Party or Affiliate will consult with GE Capital and/or FNBB before issuing such
press release or other public disclosure. Each Credit Party consents to the
publication by Agents or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement.
11.15 Reinstatement. This Agreement shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against
any Borrower for liquidation or reorganization, should any Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each
-----------------
other party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
------------- -----
11.17 No Strict Construction. The parties hereto have participated
----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
12. CROSS-GUARANTY
12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower
--------------
is jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agents and Lenders and their respective successors and assigns,
the full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to
Agents and Lenders by each other Borrower. Each Borrower agrees that its
guaranty obligation hereunder is a continuing guaranty of payment and
performance and not of collection, and that its obligations under this Section
-------
12 shall be absolute and unconditional, irrespective of, and unaffected by,
--
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document
or any other agreement, document or instrument to which any Borrower is or
may become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 12) or any other Loan Document or the waiver or
-----------
consent by Agents and Lenders with respect to any of the provisions
thereof;
(c) the existence, value or condition of, or failure to perfect
its Lien against, any security for the Obligations or any action, or the
absence of any action, by Agents
52
and Lenders in respect thereof (including the release of any such
security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor,
it being agreed by each Borrower that its obligations under this Section 12
----------
shall not be discharged until the payment and performance, in full, of the
Obligations has occurred. Each Borrower shall be regarded, and shall be in the
same position, as principal debtor with respect to the Obligations guaranteed
hereunder.
12.2 Waivers by Borrowers. Each Borrower expressly waives all rights
--------------------
it may have now or in the future under any statute, or at common law, or at law
or in equity, or otherwise, to compel Agents or Lenders to xxxxxxxx assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agents and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agents and Lenders would
----------
decline to enter into this Agreement.
12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of
-------------------
this Section 12 are for the benefit of Agents and Lenders and their respective
----------
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agents, or Lenders, the
obligations of such other Borrower under the Loan Documents.
12.4 Subordination of Subrogation, Etc. Notwithstanding anything to
----------------------------------
the contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
------------
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit Agents and Lenders and shall not limit or otherwise affect such
Borrower's liability hereunder or the enforceability of this Section 12, and
----------
that Agents, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 12.4.
------------
12.5 Election of Remedies. If any Agent or any Lender may, under
--------------------
applicable law, proceed to realize its benefits under any of the Loan Documents
giving such person a Lien upon any Collateral, whether owned by any Borrower or
by any other Person, either by judicial foreclosure or by non-judicial sale or
enforcement, any Agent or any Lender may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 12. If, in the exercise of any of its rights and
----------
remedies, any Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower hereby consents to such action by such
Agent or Lender and waives any claim based upon such action, even if such action
by such Agent or Lender shall result in a full or partial loss of any rights
53
of subrogation which each Borrower might otherwise have had but for such action
by such Agent or Lender. Any election of remedies which results in the denial or
impairment of the right of any Agent or Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event any Agent or Lender shall bid at
any foreclosure or trustee's sale or at any private sale permitted by law or the
Loan Documents, such Agent or Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by such Agent or such
Lender but shall be credited against the Obligations. The amount of the
successful bid at any such sale, whether any Agent or Lender or any other party
is the successful bidder, shall be conclusively deemed to be the fair market
value of the Collateral and the difference between such bid amount and the
remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Section 12, notwithstanding
----------
that any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which any Agent or Lender
might otherwise be entitled but for such bidding at any such sale.
12.6 Limitation. Notwithstanding any provision herein contained to
----------
the contrary, each Borrower's liability under this Section 12 (which liability
----------
is in any event in addition to amounts for which such Borrower is primarily
liable under Section 1) shall be limited to an amount not to exceed as of any
---------
date of determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower under
this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(b) the amount which could be claimed by Agents and Lenders from such
Borrower under this Section 12 without rendering such claim voidable or
----------
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 12.7.
------------
12.7 Contribution with Respect to Guaranty Obligations.
-------------------------------------------------
(a) To the extent that any Borrower shall make a payment under this
Section 12 of all or any of the Obligations (other than Loans made to that
----------
Borrower for which it is primarily liable) (a "Guarantor Payment") which, taking
-----------------
into account all other Guarantor Payments then previously or concurrently made
by any other Borrower, exceeds the amount which such Borrower would otherwise
have paid if each Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower's "Allocable Amount"
----------------
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
----
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
--- ----
effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any
----------------
Borrower shall be equal to the maximum amount of the claim which could then be
recovered from such Borrower under this Section 12 without rendering such claim
----------
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform
54
Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative rights
------------
of Borrowers and nothing set forth in this Section 12.7 is intended to or shall
------------
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 12.1. Nothing contained in this Section
------------ -------
12.7 shall limit the liability of any Borrower to pay the Loans made directly or
----
indirectly to that Borrower and accrued interest, Fees and expenses with respect
thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such
contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other Credit
Parties under this Section 12.7 shall be exercisable upon the full and
------------
indefeasible payment of the Obligations and the termination of the Commitments.
12.8 Liability Cumulative. The liability of Borrowers under this
--------------------
Section 12 is in addition to and shall be cumulative with all liabilities of
----------
each Borrower to Agents and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
55
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
THE BON-TON DEPARTMENT STORES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------
Title: Senior Vice President
----------------------------
XXXX, XXXXXXX & XXXXXXXX CO., INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Title: Secretary
----------------------------
THE BON-TON STORES OF LANCASTER, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Title: Secretary
----------------------------
Revolving Loan GENERAL ELECTRIC CAPITAL
Commitment CORPORATION,
(including a as Administrative Agent and
Swing Line Lender
Commitment of
$20,000,000):
$75,000,000 By: /s/ Xxxxxxx Xxxxxx
----------------------------
Title: Duly Authorized Signatory
----------------------------
56
Revolving Loan THE FIRST NATIONAL BANK OF BOSTON,
Commitment: as Collateral Agent and Lender
$75,000,000
By: /s/ Xxxxx Xxxx
----------------------------
Title: Director
----------------------------
Revolving Loan THE CIT GROUP/BUSINESS CREDIT, INC.
Commitment:
$25,000,000
By: /s/ Xxxxx Xxxxxxxxxx
----------------------------
Title: Vice President
----------------------------
Revolving XXXXXX FINANCIAL, INC.
Commitment:
$25,000,000
By: /s/ Xxxxxx Xxxxxx
----------------------------
Title: Vice President
----------------------------
57
The following Persons are signatories to this Agreement in their capacity
as Credit Parties and not as Borrowers.
THE BON-TON STORES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------
Title: Senior Vice President
----------------------------
THE BON-TON CORP.
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------
Title: Treasurer
----------------------------
THE BON-TON NATIONAL CORP.
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------
Title: Treasurer
----------------------------
THE BON-TON TRADE CORP.
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------
Title: Treasurer
----------------------------
58
ANNEX A (Recitals)
--------
to
CREDIT AGREEMENT
----------------
DEFINITIONS
-----------
Capitalized terms used in the Loan Documents shall have (unless otherwise
provided elsewhere in the Loan Documents) the following respective meanings and
all section references in the following definitions shall refer to Sections of
the Agreement:
"Account Debtor" shall mean any Person who may become obligated to any
--------------
Credit Party under, with respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code,
--------
now owned or hereafter acquired by any Credit Party and, in any event, including
(a) all accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to any Credit Party, whether arising out of goods sold or
services rendered by it or from any other transaction (including any such
obligations which may be characterized as an account or contract right under the
Code), (b) all of each Credit Party's rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services,
(c) all of each Credit Party's rights to any goods represented by any of the
foregoing (including unpaid sellers' rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to any Credit Party, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such Credit Party or in connection with any other transaction (whether
or not yet earned by performance on the part of such Credit Party) now or
hereafter in existence, including the right to receive the proceeds of said
purchase orders and contracts, and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Administrative Agent" shall mean GE Capital or its successor appointed
--------------------
pursuant to Section 9.
"Activation Event" and "Activation Notice" shall have the meanings set
---------------- -----------------
forth in Annex C.
--------
"Advance" shall mean any Revolving Credit Advance or Swing Line Advance, as
-------
the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each Person that,
---------
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, ten percent (10%) or more of the Stock having
ordinary voting power in the election of directors of such Persons, (b) each
Person that controls, is controlled by or is under common control with such
Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in the case of Borrowers, the
A-1
immediate family members, spouses and lineal descendants of individuals who are
Affiliates of any Borrower. For the purposes of this definition, "control" of
-------
a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through
the ownership of voting securities, by contract or otherwise; provided, however,
-------- -------
that the term "Affiliate" shall specifically exclude Agents and each Lender.
----------
"Agents" shall mean, collectively, Administrative Agent and Collateral
------
Agent.
"Aggregate Borrowing Base" shall mean, as of any date of determination, an
------------------------
amount equal to the sum of the Bon-Ton Borrowing Base, the AM&A Borrowing Base
and the Lancaster Borrowing Base.
"Agreement" shall mean the Credit Agreement by and among Borrowers, the
---------
other Credit Parties named therein, FNBB, as Collateral Agent, GE Capital, as
Administrative Agent and Lender and the other Lenders signatory from time to
time to the Agreement.
"AM&A" means Xxxx, Xxxxxxx & Xxxxxxxx Co., Inc., a New York corporation.
----
"AM&A Borrowing Base" shall mean, as of any date of determination by
-------------------
Agents, from time to time, an amount equal to the Fixed Asset Availability of
AM&A at such time less any Reserves established by Agents at such time.
----
"Appendices" shall have the meaning assigned to it in the recitals to the
----------
Agreement.
"Applicable Margins" means collectively, the Applicable Revolver Index
------------------
Margin and the Applicable Revolver LIBOR Margin.
"Applicable Revolver Index Margin" shall mean the per annum interest rate
--------------------------------
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a)
--------------
of the Agreement.
"Applicable Revolver LIBOR Margin" shall mean the per annum interest rate
--------------------------------
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as determined by reference to Section 1.5(a) of the
--------------
Agreement.
"Appraised Value" shall mean with respect to any Designated Property or any
---------------
Eligible Fixed Asset, the value of such asset as of the Closing Date as
determined by an independent third-party appraisal which has been previously
delivered to Agents.
"Approved Shipper" shall mean any reputable and creditworthy shipper or
----------------
freight forwarder transporting finished goods Inventory from overseas to a
Borrower's Distribution Center.
"Assignment Agreement" shall have the meaning assigned to it in Section
-------------------- -------
9.1(a).
------
A-2
"Attributed Value" shall mean with respect to (i) a Designated Property,
----------------
the product of the Appraised Value of such Designated Property and 50% and (ii)
an Eligible Fixed Asset, the product of the Appraised Value of such asset and
75%.
"Bon-Ton" means The Bon-Ton Department Stores, Inc., a Pennsylvania
-------
corporation.
"Bon-Ton Borrowing Base" shall mean, as of any date of determination by
----------------------
Agents, from time to time, an amount equal to the sum at such time of sixty-five
percent (65%) of the cost of Bon-Ton's Eligible Inventory based upon the
salability, at retail, of such Eligible Inventory (valued on a first-in, first-
out basis) (at the lower of cost or market), plus the Fixed Asset Availability
----
of Bon-Ton at such time less, in each case, any Reserves established by Agents
----
in their reasonable credit judgment at such time; provided, however, that the
-------- -------
advance rate for Eligible Inventory may be increased to seventy-five percent
(75%) of the cost of Bon-Ton's Eligible Inventory based upon the salability, at
retail, of such Eligible Inventory (valued on a first-in, first-out basis (at
the lower of cost or market)), less any Reserves established by Agents in their
----
reasonable credit judgment at such time, during the period commencing March 1
through December 31 of each calendar year commencing with March 1, 1997 if (i)
at such time no Default or Event of Default has occurred and is continuing, (ii)
EBITDA of Parent for the prior Fiscal Year was at least $31,500,000, and (iii)
during Fiscal Year 1997 Parent has received aggregate cash proceeds equal to at
least $7,500,000 from the cancellation of the Xxxx'x Department Stores, Inc.
Employees Pension Plan and/or the consummation of either a sale, sale/leaseback
transaction or mortgage of one or more of the Specified Properties, in each case
on terms and conditions reasonably satisfactory to Agents.
"Bon-Ton Receivables" shall mean The Bon-Ton Receivables Partnership, L.P.,
-------------------
a Pennsylvania limited partnership.
"Borrower Accounts" shall have the meaning assigned to it in Annex C.
----------------- -------
"Borrower Representative" shall mean Bon-Ton in its capacity as Borrower
-----------------------
Representative pursuant to the provisions of Section 1.1(c).
--------------
"Borrowers" and "Borrower" shall have the respective meanings assigned
--------- --------
thereto in the recitals to the Agreement.
"Borrowing Availability" shall have the meaning assigned to it in Section
---------------------- -------
1.1(a)(i).
---------
"Borrowing Base" shall mean, as the context may require, the Bon-Ton
--------------
Borrowing Base, the AM&A Borrowing Base and the Lancaster Borrowing Base or any
such Borrowing Base.
"Borrowing Base Certificate" shall mean a certificate to be executed and
--------------------------
delivered from time to time by each Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
--------------
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day
------------
on which banks are required or permitted to be closed in the State of New York
and in reference to LIBOR Loans shall
A-3
mean any such day that is also a LIBOR Business Day.
"Capital Expenditures" shall mean, with respect to any Person, all
--------------------
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements (other than any repair or replacement of a property to the
extent from insurance proceeds covering such property), substitutions or
additions thereto, that have a useful life of more than one year and that are
required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of any
-------------
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease of
------------------------
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Cash Management Systems" shall have the meaning assigned to it in Section
----------------------- -------
1.8.
---
"Change of Control" means any of the following: (a) any issuance or change
-----------------
in ownership or other occurrence in respect of any shares of any class of
capital Stock of Parent which would result in M. Xxxxxx Xxxxxxxxxx, his heirs or
devisees, or any trusts of which any such Person serves as sole trustee now or
hereafter established for any of his family members ceasing to have the power to
control the election of a majority of the board of directors of Parent, (b) such
Persons' ceasing to own and control shares of capital Stock of Parent having at
least 51% of the aggregate voting power of all outstanding shares of the capital
Stock of Parent, (c) Parent shall cease to own and control all of the economic
and voting rights associated with all of the outstanding capital Stock of
Holdings, except as a result of any merger permitted under clause (b) of Section
---------- -------
6.1 of the Agreement, or (d) Holdings shall cease to own and control all of the
---
economic and voting rights associated with all of the outstanding capital Stock
of Bon-Ton, except as a result of any merger permitted under clause (b) of
----------
Section 6.1 of the Agreement.
-----------
"Charges" shall mean all federal, state, county, city, municipal, local,
-------
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (b) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is defined in
-------------
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Closing Date" shall mean April 15, 1997.
------------
A-4
"Closing Checklist" shall mean the schedule, including all appendices,
-----------------
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.
-------
"Code" shall mean the Uniform Commercial Code as the same may, from time to
----
time, be enacted and in effect in the State of New York; provided, however, in
-------- -------
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Administrative Agent's or any Lender's
security interest in any Collateral is governed by the Uniform Commercial Code
as enacted and in effect in a jurisdiction other than the State of New York, the
term "Code" shall mean the Uniform Commercial Code as enacted and in effect in
----
such other jurisdiction solely for purposes of the provisions hereof and the
Security Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Collateral" shall mean the property covered by the Security Agreement, the
----------
Mortgages and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Administrative Agent, on behalf of itself, the other Agent and Lenders, to
secure the Obligations, provided however, that the Collateral shall not include
any "Designated Asset" as that term is defined in the Intercreditor Agreement.
"Collateral Agent" shall mean either FNBB, GBFC, Inc., if FNBB is
----------------
performing its duties as Collateral Agent indirectly through GBFC, Inc., or its
successor appointed pursuant to Section 9.
"Collateral Documents" shall mean the Security Agreement, the Pledge
--------------------
Agreement, the Guaranty, the Mortgages, the Trademark Security Agreement, and
all similar agreements entered into guaranteeing payment of, or granting a Lien
upon property as security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to the Collateral
------------------
referred to in Annex F.
-------
"Collection Account" shall mean that certain account of Administrative
------------------
Agent, account number 000-000-00 in the name of Administrative Agent at Bankers
Trust Company in New York, New York.
"Commitment Termination Date" shall mean the earliest of (a) April 15,
---------------------------
2000, (b) the date of termination of Lenders' obligations to make Advances
and/or incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
--------------
prepayment in full by Borrowers of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
-------
reduction of the Revolving Loan Commitment and the Swing Line Commitment to zero
dollars ($0), in accordance with the provisions of Section 1.3(a).
--------------
"Commitments" shall mean (a) as to any Lender, the aggregate of such
-----------
Lender's Revolving
A-5
Loan Commitment (including without duplication the Swing Line Lender's Swing
Line Commitment) as set forth on the signature page to the Agreement or in the
most recent Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate of all Lenders' Revolving Loan Commitments (including
without duplication the Swing Line Lender's Swing Line Commitment) which
aggregate commitment shall be Two Hundred Million ($200,000,000) on the Closing
Date, as such amount may be adjusted, if at all, from time to time in accordance
with the Agreement.
"Compliance Certificate" shall have the meaning assigned to it in Annex E.
---------------------- -------
"Concentration Accounts" shall have the meaning assigned to it in Annex C.
---------------------- -------
"Contracts" shall mean all "contracts," as such term is defined in the
---------
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Copyright License" shall mean any and all rights now owned or hereafter
-----------------
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter
----------
acquired by any Credit Party: (a) all copyrights and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Copyright Office or in any similar office
or agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all reissues, extensions
or renewals thereof.
"Credit Parties" shall mean Parent, Holdings, each Borrower, The Bon-Ton
--------------
National Corp. and The Bon-Ton Trade Corp.
"Default" shall mean any event which, with the passage of time or notice or
-------
both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(d).
------------ --------------
"Deferred Payment Note" shall have the meaning assigned to such term in the
---------------------
Transfer Agreement.
"Designated Properties" shall mean, collectively, the Real Estate of any
---------------------
Borrower listed on Disclosure Schedule (A-1).
-------------------------
"Disbursement Accounts" shall have the meaning assigned to it on Annex C.
--------------------- -------
A-6
"Disclosure Schedules" shall mean the Schedules prepared by Borrowers and
--------------------
denominated as Disclosure Schedules 1.4 through D-1 in the Index to the
------------- ---
Agreement.
"Distribution Center" shall mean the warehouse and distribution facilities
-------------------
operated by Bon-Ton and located at 0000 X. Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx, 000 Xx. Xxxx Xxxx, Xxxx Xxxxxxxxxxxx and 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx.
"Documents" shall mean any "documents," as such term is defined in the
---------
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" shall mean lawful currency of the United States of
------- -
America.
"EBITDA" shall mean, with respect to any Person for any fiscal period, an
------
amount equal to (a) consolidated net income of such Person for such period,
minus (b) the sum of (i) income tax credits, (ii) interest income, (iii) gain
-----
from extraordinary items for such period, (iv) any aggregate net gain (but not
any aggregate net loss) during such period arising from the sale, exchange or
other disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any other non-cash
gains which have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, plus
----
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period, (iv) the amount of non-cash
charges (including depreciation and amortization) for such period, (v) amortized
debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included in
the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of this definition,
the following items shall be excluded in determining consolidated net income of
a Person: (1) the income (or deficit) of any other Person accrued prior to the
date it became a Subsidiary of, or was merged or consolidated into, such Person
or any of such Person's Subsidiaries; (2) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person
in the form of cash dividends or distributions; (3) the undistributed earnings
of any Subsidiary of such Person to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.
A-7
"Eligible Fixed Assets" shall mean, as determined from time to time,
---------------------
pursuant to an appraisal acceptable to Agents, Equipment, Fixtures and owned
furniture of each Borrower; provided, however, that Eligible Fixed Assets shall
-------- -------
not include any such fixed asset as to which any of the following exclusionary
criteria applies:
(a) such asset is not owned by a Borrower free and clear of all Liens
and rights of others, except the Liens in favor of Administrative Agent for
itself and the benefit of the other Agent and Lenders and Permitted
Encumbrances;
(b) such asset is not located on premises leased, owned or operated by
a Borrower referenced on either Disclosure Schedule (3.6) or (A-2);
----------------------------------
(c) such asset is in the possession or control of a bailee,
warehouseman, processor, converter or other Person other than a Borrower, unless
Administrative Agent is in possession of such agreements, instruments and
documents as Administrative Agent may require (each in form and content
acceptable to Administrative Agent and duly executed, as appropriate by the
bailee, warehouseman, processor, converter or other Person in possession or
control of such asset as applicable), including but not limited to warehouse
receipts in Administrative Agent's name covering such asset, except to the
extent that Agents have established a Reserve with respect to such asset;
(d) such asset is Equipment, Fixtures or furniture held on or at
leased premises where the landlord thereof has not executed a consent and waiver
in form and substance satisfactory to Administrative Agent, except to the extent
that Administrative Agent has established a reserve with respect to such asset;
or
(e) such asset is Equipment, Fixtures or furniture which in any way
fails to meet or violates in any material respect any warranty, representation
or covenant contained in this Agreement or any other Loan Document.
"Eligible In-Transit Inventory" shall mean Inventory which is not excluded
-----------------------------
from being Eligible Inventory by any of the criteria set forth in Section 1.7,
-----------
except that such Inventory is in-transit from the manufacturer thereof to the
Distribution Center or by drop shipment to one or more stores operated by a
Borrower. In furtherance of and without limiting the foregoing: Eligible In-
Transit Inventory shall be limited to finished goods (i) in the possession of an
Approved Shipper under contract with a Borrower and in which such Borrower has
good title; (ii) as to which Administrative Agent for the benefit of itself, the
other Agent and Lenders has a first priority security interest through
constructive possession of documents of title thereof by means of a bailee
agreement with an Approved Shipper or other means acceptable to Administrative
Agent; (iii) which have been accepted by a Borrower (F.O.B. shipping point) as
conforming goods and as to which the L/C Issuer has received an inspection
certificate signed by a Borrower's agent or employee; (iv) which are fully
insured against loss under insurance naming Administrative Agent as loss payee
for the benefit of itself, the other Agent and Lenders; (v) as to which the
purchase price has been paid to the manufacturer by a draw under the
corresponding Eligible Trade L/C or otherwise and (vi) with an aggregate book
value equal to or less
A-8
than $15,000,000 at any time.
"Eligible Inventory" shall have the meaning assigned to it in Section 1.7
------------------ -----------
of the Agreement. Unless the context otherwise requires, Eligible Inventory
shall include Eligible In-Transit Inventory.
"Eligible Trade L/Cs" shall mean, subject to further conditions contained
-------------------
in Section 2.3 of the Agreement, trade letters of credit issued by the L/C
-----------
Issuer for the account of a Borrower for payment of the purchase price of
finished goods inventory which will be Eligible In-Transit Inventory upon
presentation of a draft under that trade letter of credit.
"Eligible Trade L/C Obligations" shall mean all outstanding obligations
------------------------------
incurred by Administrative Agent and Lenders at the request of a Borrower,
whether direct or indirect, contingent or otherwise, due or not due, in
connection with the issuance of a reimbursement agreement or guaranty by
Administrative Agent or purchase of a participation as set forth in Annex B with
-------
respect to any Eligible Trade L/C. The Amount of any such Eligible Trade L/C
Obligations shall equal the maximum amount which may be payable by
Administrative Agent or Lenders thereupon or pursuant thereto.
"Environmental Laws" shall mean all applicable federal, state, local and
------------------
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and in each case as amended or supplemented from time to
time, and any applicable judicial or administrative interpretation thereof,
including any applicable judicial or administrative order, consent decree, order
or judgment, imposing liability or standards of conduct for or relating to the
regulation and protection of human health and safety, as it relates to
occupational exposure to Hazardous Materials, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. (S)(S) 9601 et seq.)
-------
("CERCLA"); the Hazardous Materials Transportation Authorization Act of 1994 (49
------
U.S.C. (S)(S) 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
-------
Act (7 U.S.C. (S)(S) 136 et seq.); the Solid Waste Disposal Act (42 U.S.C.
-------
(S)(S) 6901 et seq.); the Toxic Substances Control Act (15 U.S.C. (S)(S) 2601 et
------- --
seq.); the Clean Air Act (42 U.S.C. (S)(S) 7401 et seq.); the Federal Water
---- -------
Pollution Control Act (33 U.S.C. (S)(S) 1251 et seq.); the Occupational Safety
-------
and Health Act (29 U.S.C. (S)(S) 651 et seq.); and the Safe Drinking Water Act
-------
(42 U.S.C. (S)(S) 300(f) et seq.), each as from time to time amended, and any
-------
and all regulations promulgated thereunder, and all analogous state, local and
foreign counterparts or equivalents and any transfer of ownership notification
or approval environmental statutes.
"Environmental Liabilities" shall mean, with respect to any Person, all
-------------------------
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil
A-9
statute or common law relating to the protection of the environment, including
any arising under or related to any Environmental Laws, Environmental Permits,
or in connection with any Release or threatened Release or presence of a
Hazardous Material whether on, at, in, under, from or about or in the vicinity
of any real or personal property.
"Environmental Permits" shall mean all permits, licenses, authorizations,
---------------------
certificates, approvals, registrations or other written documents required by
any Governmental Authority under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is defined in the
---------
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a
part of real property, all whether now owned or hereafter acquired, and wherever
situated, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
-----
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any trade
---------------
or business (whether or not incorporated) which, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or any ERISA
-----------
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan for which the requirement to provide notice has not been waived;
(b) the withdrawal of any Credit Party or ERISA Affiliate from a Title IV Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA which could
result in a material liability to any Credit Party; (c) the complete or partial
withdrawal of any Credit Party or any ERISA Affiliate from any Multiemployer
Plan which could result in a material liability to any Credit Party; (d) the
filing of a notice of intent to terminate a Title IV Plan under Section 4041(c)
of ERISA or the treatment of a plan amendment as a termination under Section
4041(c) of ERISA; (e) the institution of proceedings to terminate a Title IV
Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party or
ERISA Affiliate to make when due required contributions to a Multiemployer Plan
or Title IV Plan unless such failure is cured within 30 days or does not result
in a material liability to any Credit Party; (g) any other 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 by the PBGC to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under
A-10
Section 4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan
under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 of ERISA; or (i) the loss of a Qualified
Plan's qualification or tax exempt status which could result in a material
liability to any Credit Party.
"ESOP" shall mean a Plan which is intended to satisfy the requirements of
----
Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section 8.1.
---------------- -----------
"Excess Cash Flow" shall mean, without duplication, with respect to any
----------------
Fiscal Year of Borrowers and their Subsidiaries, consolidated net income plus
----
(a) depreciation, amortization and other non-cash charges and Interest Expense
to the extent deducted in determining consolidated net income, minus (b) Capital
-----
Expenditures during such Fiscal Year (excluding the financed portion thereof),
minus (c) Interest Expense paid or accrued (excluding any original issue
-----
discount, interest paid in kind or amortized debt discount, to the extent
included in determining Interest Expense) and scheduled principal payments paid
or payable in respect of Funded Debt, plus or minus (as the case may be), (d)
---- -----
extraordinary gains or losses which are cash items not included in the
calculation of net income, minus (e) mandatory prepayments paid in cash pursuant
-----
to Section 1.3 other than mandatory prepayments made pursuant to Sections
----------- --------
1.3(b)(i), or 1.3(d), plus (f) taxes deducted in determining consolidated net
--------- ------ ----
income to the extent not paid for in cash.
"Existing Letters of Credit" shall have the meaning ascribed to such term
--------------------------
in Annex B.
-------
"Federal Funds Rate" shall mean, for any day, a floating rate equal to the
------------------
weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, as determined by Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
---------------------
System, or any successor thereto.
"Fees" shall mean any and all fees payable to Agents or any Lender pursuant
----
to the Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the consolidated and consolidating income
--------------------
statements, statements of cash flows and balance sheets of Parent and its
Subsidiaries delivered in accordance with Section 3.4 of the Agreement and Annex
----------- -----
E to the Agreement.
-
"Fiscal Month" shall mean any of the monthly accounting periods of Parent.
------------
"Fiscal Quarter" shall mean a fiscal quarter of Parent and its Subsidiaries
--------------
for financial accounting purposes.
"Fiscal Year" shall mean the period of 52 or 53 weeks, as the case may be,
-----------
ending on the
A-11
Saturday nearer to January 31 of the succeeding calendar year.
"Fixed Asset Availability" shall mean, on any date of determination, an
------------------------
amount equal to (i) from the Closing Date through and including December 31,
1997, Maximum Fixed Asset Availability, (ii) for calendar year 1998, up to
66 2/3% of Maximum Fixed Asset Availability, (iii) for calendar year 1999, up to
33 1/3% of Maximum Fixed Asset Availability and (iv) thereafter, $0. Upon a sale
or other disposition of a Designated Property or Eligible Fixed Asset, Fixed
Asset Availability shall be reduced (but not below zero) by an amount equal to
(i) with respect to a Designated Property sold or otherwise disposed of for an
amount equal to or greater than its Appraised Value, the Appraised Value of such
Designated Property, (ii) with respect to a Designated Property sold or
otherwise disposed of for an amount less than its Attributed Value, the
Attributed Value of such Designated Property and (iii) with respect to either
(A) any Eligible Fixed Asset or (B) any Designated Property sold or otherwise
disposed of for an amount greater than its Attributed Value but less than its
Appraised Value, then in each case the amount received upon the disposition of
such Eligible Fixed Asset or Designated Property.
"Fixed Charges" shall mean, with respect to any Person for any fiscal
-------------
period, the aggregate of all Interest Expense paid or accrued during such period
plus (a) scheduled payments of principal with respect to Indebtedness during
such period, plus (b) Capital Expenditures funded with cash proceeds other than
cash proceeds of Indebtedness permitted under clause (a)(vi) of Section 6.3 of
-------------- -----------
the Agreement during such period, plus (c) cash taxes actually paid during such
period.
"Fixed Charge Coverage Ratio" shall mean, with respect to any Person for
---------------------------
any fiscal period, the ratio of EBITDA to Fixed Charges.
"Fixtures" shall mean any "fixtures" as such term is defined in the Code,
--------
now owned or hereafter acquired by any Credit Party located at a Mortgaged
Property.
"FNBB Fee Letter" shall mean that certain letter, dated as of January 24,
---------------
1997, between FNBB and Borrowers with respect to certain Fees to be paid from
time to time by Borrowers to FNBB.
"Funded Debt" shall mean, with respect to any Person, all Indebtedness for
-----------
borrowed money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and which by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at such Person's option under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from the date of creation thereof,
and specifically including Capital Lease Obligations, current maturities of
long-term debt, revolving credit and short-term debt extendible beyond one year
at the option of the debtor, and also including, in the case of Borrowers, the
Obligations.
"GAAP" shall mean generally accepted accounting principles in the United
----
States of America as in effect on the Closing Date, consistently applied as such
term is further defined in Annex G to the Agreement.
-------
A-12
"GE Capital Fee Letter" shall mean that certain letter, dated as of January
---------------------
24, 1997, between GE Capital and Borrowers with respect to certain Fees to be
paid from time to time by Borrowers to GE Capital.
"General Intangibles" shall mean any "general intangibles," as such term is
-------------------
defined in the Code, now owned or hereafter acquired by any Credit Party, and,
in any event, including all right, title and interest which such Credit Party
may now or hereafter have in or under any Contract, all customer lists,
Licenses, Copyrights, Trademarks, Patents, and all applications therefor and
reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party, provided however, that General Intangibles shall not
include the rights of any Credit Party under any agreement which, by the terms
of such agreement (taking into account the provisions of Section 9-318 of the
Code), may not be liened or mortgaged by such Credit Party.
"Governmental Authority" shall mean any nation or government, any state or
----------------------
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
-----------------------
such Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
------------------- ---------------
manner, including any obligation or arrangement of such Person (a) to purchase
or repurchase any such primary obligation, (b) to advance or supply funds (i)
for the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
made and (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.
A-13
"Guarantors" shall mean Parent, Holdings, The Bon-Ton National Corp, The
----------
Bon-Ton Trade Corp., and each other Person, if any, which executes a guarantee
or other similar agreement in favor of Administrative Agent in connection with
the transactions contemplated by the Agreement and the other Loan Documents.
"Guaranty" shall mean the guaranty of even date herewith executed by each
--------
of Parent, Holdings, The Bon-Ton National Corp. and The Bon-Ton Trade Corp. in
favor of Administrative Agent, on behalf of itself, the other Agent and Lenders.
"Hazardous Material" shall mean any substance, material or waste which is
------------------
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"Holdings" shall have the meaning ascribed thereto in the recitals to the
--------
Agreement.
"Indebtedness" of any Person shall mean without duplication (a) all
------------
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (i) the
Obligations.
"Indemnified Liabilities" shall have the meaning assigned to it in Section
----------------------- -------
1.13.
----
"Index Rate" shall mean, for any day, a floating rate equal to the higher
----------
of (i) the rate publicly quoted from time to time by The Wall Street Journal as
-----------------------
the "base rate on corporate loans at large U.S.
A-14
money center commercial banks" (or, if The Wall Street Journal ceases quoting
-----------------------
a base rate of the type described, the highest per annum rate of interest
published by the Federal Reserve Board in Federal Reserve statistical release
H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus fifty (50) basis points per
annum. Each change in any interest rate provided for in the Agreement based upon
the Index Rate shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or portion thereof bearing interest by
---------------
reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is defined in the
-----------
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all notes and other, without limitation, evidences of indebtedness,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents,
---------------------
Copyrights, Trademarks, trade secrets and customer lists.
"Intercompany Notes" shall have the meaning assigned to it in Section 6.3.
------------------ -----------
"Intercreditor Agreement" shall mean the Intercreditor Agreement of even
-----------------------
date herewith executed by The First National Bank of Chicago, Bon-Ton, The Bon-
Ton Receivables Partnership, L.P. and the Administrative Agent.
"Interest Coverage Ratio" shall mean, with respect to any Person for any
-----------------------
period, the ratio of EBITDA to Interest Expense.
"Interest Expense" shall mean, with respect to any Person for any fiscal
----------------
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including, in
any event, interest expense with respect to any Funded Debt of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan, the first
---------------------
Business Day of each month to occur while such Loan is outstanding, (b) as to
any LIBOR Loan, the last day of the applicable LIBOR Period; provided that in
--------
the case of any LIBOR Period greater than three months in duration, interest
shall be payable at three-month intervals and on the last day of such LIBOR
Period; and provided further that, in addition to the foregoing, each of (x) the
-------- -------
date upon which all of the Commitments have been terminated and the Loans have
been paid in full and (y) the Commitment Termination Date shall be deemed to be
an "Interest Payment Date" with respect to any interest which is then accrued
under the Agreement.
"Inventory" shall mean any "inventory," as such term is defined in the
---------
Code, now or hereafter owned or acquired by any Credit Party, wherever located,
and in any event including inventory,
A-15
merchandise, goods and other personal property which are held by or on behalf of
any Credit Party for sale or lease or are furnished or are to be furnished under
a contract of service, or which constitute raw materials, work in process or
materials used or consumed or to be used or consumed in such Credit Party's
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including other supplies.
"Investment Property" shall have the meaning ascribed thereto in Section 9-
-------------------
115 of the Code in those jurisdictions in which such definition has been adopted
and shall include (i) all securities, whether certificated or uncertificated,
including stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of any Credit Party, including the rights of any Credit
Party to any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account; (iii)
all securities accounts held by any Credit Party; (iv) all commodity contracts
held by any Credit Party; and (v) all commodity accounts held by any Credit
Party.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
---
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
---
"Lancaster" means The Bon-Ton Stores of Lancaster, a Pennsylvania
---------
corporation.
"Lancaster Borrowing Base" shall mean, as of any date of determination by
------------------------
Agents, from time to time, an amount equal to the Fixed Asset Availability of
Lancaster at such time, less any Reserves established by Agents at such time.
----
"L/C Availability" shall have the meaning assigned to such term in Annex B.
---------------- -------
"L/C Issuer" shall have the meaning assigned to such term in Annex B.
---------- -------
"L/C Sublimit" shall have the meaning assigned to such term in Annex B.
------------ -------
"Lenders" shall mean GE Capital, FNBB, the other Lenders named on the
-------
signature page of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include such assignee.
"Letter of Credit Fee" has the meaning ascribed thereto in Annex B.
--------------------
"Letter of Credit Obligations" shall mean all outstanding obligations
----------------------------
incurred by Administrative Agent and Lenders at the request of Borrower
Representative, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance of a reimbursement agreement or guaranty by
Administrative Agent or purchase of a participation as set forth in Annex B with
-------
respect to any Letter of Credit. The amount of such Letter of Credit
Obligations shall equal the maximum amount which may be payable by
Administrative or Lenders thereupon or pursuant thereto. This term
A-16
expressly includes Eligible Trade L/C Obligations.
"Letters of Credit" shall mean commercial or standby letters of credit,
-----------------
including without limitation any Eligible Trade L/C issued for the account of
any Borrower by any L/C Issuer, and bankers' acceptances issued by any Borrower,
for which Administrative Agent and Lenders have incurred Letter of Credit
Obligations.
"LIBOR Business Day" shall mean a Business Day on which banks in the city
------------------
of London are generally open for interbank or foreign exchange transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing interest by
----------
reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan, each period
------------
commencing on a LIBOR Business Day selected by Borrower Representative pursuant
to the Agreement and ending one, two, three or six months thereafter, as
selected by Borrower Representative's irrevocable notice to Administrative Agent
as set forth in Section 1.5(e) provided that the foregoing provision relating to
-------------- --------
LIBOR Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR
Business Day, such LIBOR Period shall be extended to the next succeeding
LIBOR Business Day unless the result of such extension would be to carry
such LIBOR Period into another calendar month in which event such LIBOR
Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end two (2) LIBOR Business Days prior to such date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the last
LIBOR Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
LIBOR Period) shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period for
such Loan; and
(e) Borrower Representative shall select LIBOR Periods so that there shall
be no more than five (5) separate LIBOR Loans in existence at any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
----------
determined by Administrative Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00
a.m., London time, on the second full LIBOR Business Day next preceding the
first day of each LIBOR Period (unless such date is
A-17
not a Business Day, in which event the next succeeding Business Day will be
used); divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication) of
-----
the rates (expressed as a decimal fraction) of reserve requirements in
effect on the day which is two (2) LIBOR Business Days prior to the
beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve system or other governmental authority having jurisdiction
with respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as "Eurocurrency liabilities"
in Regulation D of such Board which are required to be maintained by a
member bank of the Federal Reserve System (such rate to be adjusted to the
nearest one sixteenth of one percent (1/16th of 1%) or, if there is not a
nearest one sixteenth of one percent (1/16th of 1%), to the next highest
one sixteenth of one percent (1/16th of 1%).
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to
Administrative Agent and Borrower Representative.
"License" shall mean any Copyright License, Patent License, Trademark
-------
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
----
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction) functionally equivalent to a lien or
security interest.
"Litigation" shall have the meaning assigned to it in Section 3.13.
---------- ------------
"Loan Account" shall have the meaning assigned to it in Section 1.12.
------------ ------------
"Loan Documents" shall mean the Agreement, the Notes, the Collateral
--------------
Documents, the FNBB Fee Letter, the GE Capital Fee Letter, the Intercreditor
Agreement and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Administrative Agent and/or Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, and all other written
matter whether heretofore, now or hereafter executed by or on behalf of any
Credit Party, or any employee of any Credit Party, and delivered to
Administrative Agent or any Lender in connection with the Agreement or the
transactions contemplated hereby. Any reference in the Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to such Agreement as the same may be in
effect at any and all times such reference becomes operative.
A-18
"Loans" shall mean the Revolving Loan and the Swing Line Loan.
-----
"Material Adverse Effect" shall mean a material adverse effect on (a) the
-----------------------
business, assets, operations, prospects or financial or other condition of the
Credit Parties considered as a whole, (b) any Borrower's ability to pay any of
the Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Administrative Agent's Liens, on behalf of
itself, the other Agent and Lenders, on the Collateral or the priority of such
Liens, or (d) any Agent's or Lender's rights and remedies under the Agreement
and the other Loan Documents. Without limiting the foregoing, any event or
occurrence which results or could reasonably be expected to result in costs or
liabilities in excess of 10% of Borrowing Availability as of any date of
determination shall be deemed to have had Material Adverse Effect.
"Maximum Amount" shall mean, at any particular time, an amount equal to the
--------------
Revolving Loan Commitment of all Lenders.
"Maximum Fixed Asset Availability" shall mean, on any date of
--------------------------------
determination, an amount (rounded up to the nearest million) equal to the lesser
of (i) $15,000,000 and (ii) the sum of (x) 75% of the Appraised Value of all
Eligible Fixed Assets of Borrowers and (y) 50% of the Appraised Value of the
Designated Properties.
"Mortgaged Properties" shall have the meaning assigned to it in Annex D.
-------------------- -------
"Mortgages" shall mean each of the mortgages, deeds of trust, leasehold
---------
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Administrative
Agent with respect to the Mortgaged Properties, all in form and substance
satisfactory to Administrative Agent.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, in each case
in the last six years. contributions on behalf of participants who are or were
employed by any of them.
"Net Borrowing Availability" shall mean as of any date of determination (a)
--------------------------
as to all Borrowers, the lesser of (i) the Maximum Amount (less the aggregate
Revolving Loan and Swing Line Loan) and (ii) the Aggregate Borrowing Base, less
----
the sum of the aggregate Revolving Loan and the Swing Line Loan plus 65% of the
----
Eligible Trade L/C Obligations then outstanding, or (b) as to an individual
Borrower, the lesser of (i) the Maximum Amount less the sum of the aggregate
----
Revolving Loan and Swing Line Loan outstanding to all other Borrowers and (ii)
that Borrower's separate Borrowing Base, less the sum of the aggregate Revolving
----
Loan, Swing Line Loan of such Borrower plus 65% of the Eligible Trade L/C
----
Obligations of such Borrower then outstanding.
"Notes" shall mean the Revolving Notes and the Swing Line Notes,
-----
collectively.
"Notice of Conversion/Continuation" shall have the meaning assigned to it
---------------------------------
in Section 1.5(e).
--------------
A-19
"Notice of Revolving Credit Advance" shall have the meaning assigned to it
----------------------------------
in Section 1.1(a).
--------------
"Obligations" shall mean all loans, advances, debts, liabilities and
-----------
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agents or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest which accrues after the commencement of any case or proceeding in
bankruptcy after the insolvency of, or for the reorganization of any Credit
Party, whether or not allowed in such proceeding), Fees, Charges, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents.
"Parent" shall have the meaning ascribed thereto in the recitals to the
------
Agreement.
"Patent License" shall mean rights under any written agreement now owned or
--------------
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Credit Party now
-------
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
----
thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (a) Liens
----------------------
for taxes or assessments or other governmental Charges not yet due and payable;
(b) pledges or deposits of money securing obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (c) pledges or deposits of money securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Credit Party is a party as lessee made in the ordinary course of business; (d)
deposits of money securing statutory obligations of any Credit Party; (e)
inchoate workers', mechanics' or similar liens arising in the ordinary course of
business, so long as such Liens attach only to Equipment, Fixtures and/or Real
Estate; (f) (i) with respect to Inventory, carriers', warehousemen's, suppliers'
or other similar possessory liens arising in the ordinary course of business,
and (ii) with respect to any Equipment, Fixtures or furniture, warehousemen's or
other similar possessory liens arising in the ordinary course of business so
long as such Liens attach only to such asset; (g) deposits securing, or in lieu
of, surety, appeal or customs bonds in proceedings to which any Credit Party is
a party; (h) any attachment or judgment lien not constituting an Event of
Default under Section 8.1(i), so long as such Lien only attaches to Real Estate;
--------------
(i) zoning restrictions, easements, licenses, or other restrictions on the use
of any Real Estate or other
A-20
minor irregularities in title (including leasehold title) thereto, so long as
the same do not materially impair the use, value, or marketability of such Real
Estate; (j) presently existing or hereinafter created Liens in favor of
Administrative Agent, on behalf of itself, the other Agent and Lenders; and
(k) Liens expressly permitted under clauses (b) and (c) of Section 6.7 of
----------- --- ------- ---
the Agreement.
"Person" shall mean any individual, sole proprietorship, partnership, joint
------
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"Plan" shall mean an employee benefit plan, as defined in Section 3(3) of
----
ERISA, which any Credit Party maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any Credit
Party.
"Pledge Agreement" shall mean the Pledge Agreement of even date herewith
----------------
executed by each of Parent, Holdings, Bon-Ton and The Bon-Ton National Corp. in
favor of Administrative Agent, on behalf of itself, the other Agent and Lenders.
"Prior Credit Agreement" shall mean the Amended and Restated Credit
----------------------
Agreement, dated as of March 20, 1996, as amended among Borrowers and The Bon-
Ton Trade Corp., as borrowers, the financial institutions party thereto and PNC
Bank, National Association and The First National Bank of Chicago, as co-agents.
"Prior Lender" shall mean, collectively, the Lenders and Co-Agents under
------------
and as defined in the Prior Credit Agreement.
"Prior Lender Obligations" shall mean the obligations of the Credit Parties
------------------------
or any of their Subsidiaries under the Prior Credit Agreement.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and,
--------
in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, and (e) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
"Projections" means Borrowers' forecasted consolidated and consolidating:
-----------
(a) balance sheets;
A-21
(b) profit and loss statements; (c) cash flow statements; and (d) capitalization
statements, all prepared on a Subsidiary by Subsidiary or division by division
basis, if applicable, and otherwise consistent with the historical Financial
Statements of the Borrowers, together with appropriate supporting details and a
statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters relating to any
--------------
Lender the percentage obtained by dividing (a) the Revolving Loan Commitment of
that Lender by (b) the aggregate Revolving Loan Commitments, as any such
percentages may be adjusted by assignments permitted pursuant to Section 9.1.
-----------
"Qualified Plan" shall mean a Plan which is intended to be tax-qualified
--------------
under Section 401(a) of the IRC.
"Real Estate" shall have the meaning assigned to it in Section 3.6.
----------- -----------
"Refinancing" shall mean the repayment in full by Borrowers of the Prior
-----------
Lender Obligations on the Closing Date.
"Release" shall mean any release, threatened release, spill, emission,
-------
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Requisite Lenders" shall mean (a) Lenders having more than sixty-six and
-----------------
two-thirds percent (66 2/3%) of the Commitments of all Lenders, or (b) if the
Commitments have been terminated, more than sixty-six and two-thirds percent (66
2/3%) of the aggregate outstanding amount of all Loans (with the Swing Line Loan
being attributed to the Lender making such Loan).
"Reserves" shall mean, with respect to the Borrowing Base of any Borrower
--------
(a) reserves established by Agents from time to time against Eligible Inventory
or Fixed Asset Availability pursuant to either Section 1.7 or Section 5.9, (b)
----------- -----------
reserves established pursuant to Section 5.4(c) and (c) such other reserves
--------------
against Eligible Inventory, Eligible Fixed Assets or Designated Properties or
Borrowing Availability of any Borrower which Agents may, in their reasonable
credit judgment, establish from time to time. Without limiting the generality
of the foregoing, Reserves may include but not be limited to Reserves based upon
unpaid rent, taxes, gift certificates, layaway or customer deposits established
to ensure the payment of accrued Interest Expenses or Indebtedness shall be
deemed to be a reasonable exercise of Agents' credit judgment.
"Responsible Officer" shall mean, with respect to any Credit Party, such
-------------------
Credit Party's Vice Chairman, Chief Executive Officer, Chief Financial Officer,
General Counsel, Treasurer, Assistant Treasurer or Controller.
"Restricted Payment" shall mean (a) the declaration or payment of any
------------------
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets
A-22
in respect of a Person's Stock, (b) any payment on account of the purchase,
redemption, defeasance, sinking fund or other retirement of a Person's Stock or
any other payment or distribution made in respect thereof, either directly or
indirectly, (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Subordinated Debt; (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Person
now or hereafter outstanding; (e) any payment of a claim for the rescission of
the purchase or sale of, or for material damages arising from the purchase or
sale of, any shares of such Person's Stock or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission; (f) any payment, loan, contribution, or other transfer of
funds or other property to any Stockholder of such Person, except for services
rendered (other than any fees for management or consulting services in excess of
$100,000 per Fiscal Year) or goods furnished, in each case in the ordinary
course of business of such Person; and (g) any payment of management fees (or
other fees of a similar nature) by such Person to any Stockholder of such Person
or their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a "welfare
--------------------
plan" as defined in Section 3(2) of ERISA, that provides for continuing coverage
or benefits for any participant or any beneficiary of a participant after such
participant's termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC and at the sole expense of the
participant or the beneficiary of the participant.
"Revolving Credit Advance" shall have the meaning assigned to it in Section
------------------------ -------
1.1(a)(i).
---------
"Revolving Loan" shall mean as the context may require, at any time, the
--------------
sum of (i) the aggregate amount of Revolving Credit Advances outstanding to any
Borrower or to all Borrowers plus (ii) the aggregate Letter of Credit
----
Obligations incurred on behalf of any Borrower or all Borrowers.
"Revolving Loan Commitment" shall mean (a) as to any Lender, the aggregate
-------------------------
commitment of such Lender to make Revolving Credit Advances (including without
duplication Swing Line Advances) and/or incur Letter of Credit Obligations as
set forth in the signature page to the Agreement or in the most recent
Assignment Agreement executed by such Lender and (b) as to all Lenders, the
aggregate commitment of all Lenders to make Revolving Credit Advances (including
without duplication Swing Line Advances) and/or incur Letter of Credit
Obligations, which aggregate commitment shall be Two Hundred Million Dollars
($200,000,000) on the Closing Date, as such amount may be adjusted, if at all,
from time to time in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in Section
-------------- -------
1.1(a)(ii).
----------
"Security Agreement" shall mean the Security Agreement of even date
------------------
herewith entered into among Administrative Agent, on behalf of itself, the other
Agent and Lenders, and each Credit Party that is a signatory thereto.
"Securitization Documents" shall mean, collectively, (i) the Receivables
------------------------
Purchase Agreement,
A-23
dated as of January 27, 1995 as amended, among Bon-Ton Receivables, The Bon-Ton
Receivables Corp., Falcon Asset Securitization Corporation, the financial
institutions party thereto and The First National Bank of Chicago, as agent,
(ii) the Transfer Agreement, (iii) the Deferred Payment Note and (iv) any other
agreement pursuant to which a Borrower sells or otherwise transfers Accounts to
Bon-Ton Receivables.
"Solvent" shall mean, with respect to any Person on a particular date,
-------
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probably liability of such
Person on its debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guarantees and pension plan liabilities) at any time shall
be computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably be expected
to become an actual or matured liability.
"Specified Properties" shall mean, collectively, the Real Estate of
--------------------
Borrowers specified on Disclosure Schedule (A-3).
-------------------------
"Stock" shall mean all shares, options, warrants, general or limited
-----
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Subsidiary" shall mean, with respect to any Person, (a) any corporation of
----------
which an aggregate of more than fifty percent (50%) of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, 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) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person has the right to vote or
designate the vote of fifty percent (50%) or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (b) any partnership or
limited liability company in which such Person and/or one or more Subsidiaries
of such Person shall have an interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%) or of which any such Person is a general partner or may exercise the
powers of a general partner.
"Swing Line Advance" has the meaning assigned to it in Section 1.1(b)(i).
------------------ -----------------
"Swing Line Availability" has the meaning assigned to it in Section
----------------------- -------
1.1(b)(i).
---------
"Swing Line Commitment" shall mean, as to the Swing Line Lender, the
---------------------
commitment of the
A-24
Swing Line Lender to make Swing Line Loans as set forth on the signature page to
the Agreement, which commitment constitutes a subfacility of the Revolving Loan
Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
-----------------
"Swing Line Loan" shall mean, as the context may require, at any time, the
---------------
aggregate amount of Swing Line Advances outstanding to any Borrower or to all
Borrowers.
"Swing Line Note" has the meaning assigned to it in Section 1.1(b)(ii).
--------------- ------------------
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
-----
withholdings, and all liabilities with respect thereto, excluding capital stock
and franchise taxes and other taxes imposed on or measured by the net income or
gross receipts of any Lender by the United States of America, the jurisdictions
under the laws of which Lender's applicable lending office is located or other
jurisdictions where such Lender is subject to tax solely by reason of its
activities or former activities in such jurisdictions other than activities in
connection with the transactions contemplated by this Agreement or, in each
case, any political subdivision thereof.
"Termination Date" shall mean the date on which the Loans have been repaid
----------------
in full and all other Obligations under the Agreement and the other Loan
Documents have been completely discharged and Letter of Credit Obligations have
been cash collateralized, cancelled or backed by stand-by letters of credit in
accordance with Annex B, and none of Borrowers shall have any further right to
-------
borrow any monies under the Agreement.
"Title IV Plan" shall mean an employee pension benefit plan, as defined in
-------------
Section 3 (2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Trademark Security Agreements" shall mean the Trademark Security
-----------------------------
Agreements made in favor of Administrative Agent, on behalf of itself, the other
Agent and Lenders, by each applicable Credit Party.
"Trademark License" shall mean rights under any written agreement now owned
-----------------
or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" shall mean all of the following now owned or hereafter
----------
acquired by any Credit Party: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any
A-25
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill
associated with or symbolized by any of the foregoing.
"Transfer Agreement" shall mean that Transfer Agreement dated as of June
------------------
12, 1995 as amended, between Bon-Ton and Bon-Ton Receivables.
"Unfunded Pension Liability" shall mean, at any time, the aggregate amount,
--------------------------
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of New York to the extent the same are used or
defined therein. Unless otherwise specified, references in the Agreement or any
of the Appendices to a Section, subsection or clause refer to such Section,
subsection or clause as contained in the Agreement. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer to the
Agreement as a whole, including all Annexes, Exhibits and Schedules, as the same
may from time to time be amended, restated, modified or supplemented, and not to
any particular section, subsection or clause contained in the Agreement or any
such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents) or, in the case
of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of the same and any successor statutes and regulations. Whenever
any provision in any Loan Document refers to the knowledge (or an analogous
phrase) of any Credit Party, such words are intended to signify that such Credit
Party has actual knowledge or awareness of a particular fact or circumstance or
that such Credit Party, if it had exercised reasonable diligence, would have
known or been aware of such fact or circumstance.
A-26
ANNEX B (Section 1.2)
-----------
to
CREDIT AGREEMENT
----------------
LETTERS OF CREDIT
-----------------
(a) Issuance. Subject to the terms and conditions of the Agreement,
--------
Administrative Agent and Lenders agree to incur, from time to time prior to the
Commitment Termination Date, upon the request of Borrower Representative on
behalf of the applicable Borrower and for such Borrower's account, Letter of
Credit Obligations by causing Letters of Credit to be issued (by a Lender or
other legally authorized Person selected by or acceptable to Administrative
Agent in its sole discretion (each, an "L/C Issuer")) for such Borrower's
----------
account and guaranteed by Administrative Agent; provided, however, that if the
-------- -------
L/C Issuer is a Lender, then such Letters of Credit shall not be guaranteed by
Administrative Agent but rather each Lender shall, subject to the terms and
conditions hereinafter set forth, purchase (or be deemed to have purchased) risk
participations in all such Letters of Credit issued with the written consent of
Administrative Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall not at any time
exceed the lesser of (i) Twenty Million Dollars ($20,000,000) (the "L/C
---
Sublimit"), and (ii) the Maximum Amount less the aggregate outstanding principal
-------- ----
balance of the Revolving Credit Advances and the Swing Line Loan; provided,
--------
however, that the sum of 35% of the Eligible Trade L/Cs Obligations and 100% of
-------
such other Letter of Credit Obligations shall not exceed the Aggregate Borrowing
Base less the aggregate outstanding principal balance of the Revolving Credit
----
Advances and the Swing Line Loan (the determination of availability described in
this sentence is herein referred to as the "L/C Availability"). Furthermore,
----------------
the sum of 35% of the Eligible Trade L/C Obligations and 100% aggregate amount
of all other Letter of Credit Obligations incurred on behalf of any Borrower
shall not at any time exceed such Borrower's separate Borrowing Base less the
----
aggregate principal balance of the Revolving Credit Advances and the Swing Line
Loan to such Borrower. No such Letter of Credit shall have an expiry date which
is more than (i) if such Letter of Credit is a documentary Letter of Credit, six
months following the date of issuance thereof or such longer period with the
consent of Agents or (ii) any other Letter of Credit, one year following the
date of issuance thereof, and in no event shall the Agents or Lenders shall be
under any obligation to incur Letter of Credit Obligations in respect of, or
purchase risk participations in, any Letter of Credit having an expiry date
which is later than 30 days prior to the Commitment Termination Date. Subject
to satisfaction of the conditions set forth in Section 2, on the Closing Date
---------
the L/C Issuer shall issue a Letter of Credit in favor of the issuer under the
Prior Credit Agreement to secure the letters of credit on Disclosure Schedule
-------------------
(B-1) (such letters of credit being herein referred to as the "Existing Letters
----- ----------------
of Credit").
---------
(b) (i) Advances Automatic; Participations. In the event that
----------------------------------
Administrative Agent or any Lender shall make any payment on or pursuant to any
Letter of Credit Obligation, such payment shall then be deemed automatically to
constitute a Revolving Credit Advance to the applicable Borrower under Section
-------
1.1(a) of the Agreement regardless of whether a Default or Event of Default
------
shall have occurred and be continuing and notwithstanding any Borrower's failure
to satisfy the conditions precedent set forth in Section 2, and each Lender
---------
shall be obligated to pay its Pro Rata
B-1
Share thereof in accordance with the Agreement. The failure of any Lender to
make available to Administrative Agent for Administrative Agent's own account
its Pro Rata Share of any such Revolving Credit Advance or payment by
Administrative Agent under or in respect of a Letter of Credit shall not relieve
any other Lender of its obligation hereunder to make available to Administrative
Agent its Pro Rata Share thereof, but no Lender shall be responsible for the
failure of any other Lender to make available such other Lender's Pro Rata Share
of any such payment.
(ii) If the L/C Issuer is a Lender, or if it shall be illegal
or unlawful for any Borrower to incur Revolving Credit Advances as
contemplated by paragraph (b)(i) above because of an Event of Default described
in Section 8.1(g) or (h) or otherwise or if it shall be illegal or unlawful for
-------------- ---
any Lender to be deemed to have assumed a ratable share of the reimbursement
obligations owed to an L/C Issuer, then (i) immediately and without further
action whatsoever, each Lender shall be deemed to have irrevocably and
unconditionally purchased from Administrative Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation equal to such Lender's Pro
Rata Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations in respect of all Letters of Credit then outstanding and (ii)
thereafter, immediately upon issuance of any Letter of Credit, each Lender shall
be deemed to have irrevocably and unconditionally purchased from Administrative
Agent (or such L/C Issuer, as the case may be) an undivided interest and
participation in such Lender's Pro Rata Share (based on the Revolving Loan
Commitments) of the Letter of Credit Obligations with respect to such Letter of
Credit on the date of such issuance. Each Lender shall fund its participation in
all payments or disbursements made under the Letters of Credit in the same
manner as provided in the Agreement with respect to Revolving Credit Advances.
(c) Cash Collateral. If Borrowers are required to provide cash
---------------
collateral for any Letter of Credit Obligations pursuant to the Agreement prior
to the Commitment Termination Date, each Borrower will pay to Administrative
Agent for the benefit of Lenders cash or cash equivalents acceptable to
Administrative Agent ("Cash Equivalents") in an amount equal to 105% of the
----------------
maximum amount then available to be drawn under each applicable Letter of Credit
outstanding for the benefit of such Borrower. Such funds or Cash Equivalents
shall be held by Administrative Agent in a cash collateral account (the "Cash
----
Collateral Account") maintained at a bank or financial institution acceptable to
------------------
Administrative Agent. The Cash Collateral Account shall be in the name of the
applicable Borrower and shall be pledged to, and subject to the control of,
Administrative Agent, for the benefit of Administrative Agent and Lenders, in a
manner satisfactory to Administrative Agent. Each Borrower hereby pledges and
grants to Administrative Agent, on behalf of Lenders, a security interest in all
such funds and Cash Equivalents held in the Cash Collateral Account from time to
time and all proceeds thereof, as security for the payment of all amounts due in
respect of the Letter of Credit Obligations and other Obligations, whether or
not then due. The Agreement, including this Annex B, shall constitute a
-------
security agreement under applicable law.
If any Letter of Credit Obligations, whether or not then due and payable,
shall for any reason be outstanding on the Commitment Termination Date,
Borrowers shall either (i) provide cash collateral therefor in the manner
described above, or (ii) cause all such Letters of Credit and guaranties thereof
to be canceled and returned, or (iii) deliver a stand-by letter (or letters) of
credit in guaranty of such Letter of Credit Obligations, which stand-by letter
(or letters) of credit shall be of like tenor and duration as,
B-2
and in an amount equal to 105% of the aggregate maximum amount then available to
be drawn under, the Letters of Credit to which such outstanding Letter of Credit
Obligations relate and shall be issued by a Person, and shall be subject to such
terms and conditions, as are be satisfactory to Administrative Agent in its sole
discretion.
From time to time after funds are deposited in the Cash Collateral Account
by any Borrower, whether before or after the Commitment Termination Date,
Administrative Agent may apply such funds or Cash Equivalents then held in the
Cash Collateral Account to the payment of any amounts, in such order as
Administrative Agent may elect, as shall be or shall become due and payable by
such Borrower to Lenders with respect to such Letter of Credit Obligations of
such Borrower and, upon the satisfaction in full of all Letter of Credit
Obligations of such Borrower and, upon the satisfaction in full of all Letter
of Credit Obligations of such Borrower, to any other Obligations of any
Borrower then due and payable.
No Borrower nor any Person claiming on behalf of or through any Borrower
shall have any right to withdraw any of the funds or Cash Equivalents held in
the Cash Collateral Account, except that upon the termination of all Letter of
Credit Obligations and the payment of all amounts payable by Borrowers to
Lenders in respect thereof, any funds remaining in the Cash Collateral Account
shall be applied to other Obligations when due and owing and upon payment in
full of such Obligations, any remaining amount shall be paid to Borrowers or
as otherwise required by law.
(d) Fees and Expenses. Borrowers agree to pay to Administrative Agent
-----------------
for the benefit of Lenders, as compensation to such Lenders for Letter of Credit
Obligations incurred hereunder, (x) all costs and expenses incurred by
Administrative Agent or any Lender on account of such Letter of Credit
Obligations, and (y) for each month during which any Letter of Credit Obligation
shall remain outstanding, a fee (the "Letter of Credit Fee") in an amount equal
--------------------
to one and one-half percent (1.5%) per annum multiplied by the maximum amount
available from time to time to be drawn under the applicable Letter of Credit.
Such fee shall be paid to Administrative Agent for the benefit of the Lenders in
arrears, on the first day of each month. In addition, Borrowers shall pay to
any L/C Issuer, within five (5) days after demand, such costs and expenses,
charges and expenses of such L/C Issuer in respect of the issuance, negotiation,
acceptance, amendment, transfer and payment of such Letter of Credit or
otherwise payable pursuant to the application and related documentation under
which such Letter of Credit is issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
------------------------------------------------------
Representative shall give Administrative Agent at least two (2) Business Days
prior written notice requesting the incurrence of any Letter of Credit
Obligation, specifying the date such Letter of Credit Obligation is to be
incurred, identifying the beneficiary and the Borrower to which such Letter of
Credit Obligation relates and describing the nature of the transactions proposed
to be supported thereby. The notice shall be accompanied by the form of the
Letter of Credit (which shall be acceptable to the L/C Issuer) to be guarantied.
Notwithstanding anything contained herein to the contrary, Letter of Credit
applications by Borrower Representative and approvals by Administrative Agent
and the L/C Issuer may be made and transmitted pursuant to electronic codes and
security measures mutually agreed upon and established by and among Borrower
Representative, Administrative Agent and the L/C Issuer.
B-3
(f) Obligation Absolute. The obligation of Borrowers to reimburse
-------------------
Administrative Agent and Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Lender to make payments to Administrative Agent or the L/C
Issuer if it is a Lender with respect to Letters of Credit shall be
unconditional and irrevocable subject to clause (iii) of the second paragraph of
------------
paragraph (g) below. Such obligations of Borrowers and Lenders shall be paid
-------------
strictly in accordance with the terms hereof under all circumstances including
the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit or
the Agreement or the other Loan Documents or any other agreement;
(ii) the existence of any claim, set-off, defense or other right which
any Borrower or any of their respective Affiliates or any Lender may at any
time have against a beneficiary or any transferee of any Letter of Credit
(or any Persons or entities for whom any such transferee may be acting),
Administrative Agent, any Lender, or any other Person, whether in
connection with the Agreement, the Letter of Credit, the transactions
contemplated herein or therein or any unrelated transaction (including any
underlying transaction between any Borrower or any of their respective
Affiliates and the beneficiary for which the Letter of Credit was
procured);
(iii) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Administrative Agent or any L/C Issuer under any
Letter of Credit or guaranty thereof against presentation of a demand,
draft or certificate or other document which does not comply with the terms
of such Letter of Credit or such guaranty, except as set forth in the
proviso to clause (iii) of the second paragraph of paragraph (g) below;
------------ -------------
(v) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have
occurred and be continuing.
B-4
(g) Indemnification; Nature of Lenders' Duties. In addition to
------------------------------------------
amounts payable as elsewhere provided in the Agreement, Borrowers hereby agree
to pay and to protect, indemnify, and save harmless Administrative Agent and
each Lender from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including attorneys' fees and allocated
costs of internal counsel) which Administrative Agent or any Lender may incur or
be subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit or guaranty thereof, or (ii) the failure of Administrative
Agent or any Lender seeking indemnification or of any L/C Issuer to honor a
demand for payment under any Letter of Credit or guaranty thereof as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority, in each case other than
to the extent solely as a result of the gross negligence or willful misconduct
of Administrative Agent or such Lender (as finally determined by a court of
competent jurisdiction). No Agent or Lender shall enter into any compromise or
settlement in any action as to which such Person intends to seek indemnification
hereunder without the prior written consent of the Credit Party from whom
indemnification hereunder is sought, which consent shall not be unreasonably
withheld or delayed.
As between Administrative Agent and any Lender and Borrowers, Borrowers
assume all risks of the acts and omissions of, or misuse of any Letter of Credit
by beneficiaries thereof. In furtherance and not in limitation of the
foregoing, to the fullest extent permitted by law neither Administrative Agent
nor any Lender shall be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document issued by any party in
connection with the application for and issuance of any Letter of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of any Letter of Credit to comply fully
with conditions required in order to demand payment under such Letter of Credit
or Eligible Trade L/C; provided that, in the case of any payment by
--------
Administrative Agent or the L/C Issuer if it is a Lender under any Letter of
Credit or guaranty thereof, Administrative Agent or such L/C Issuer shall be
liable to the extent such payment was made solely as a result of its gross
negligence or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of
Credit or guaranty thereof complies on its face with any applicable requirements
for a demand for payment under such Letter of Credit or guaranty thereof; (iv)
for errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not they
be in cipher; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in order
to make a payment under any Letter of Credit or guaranty thereof or of the
proceeds thereof; (vii) for the credit of the proceeds of any drawing under any
Letter of Credit, Eligible Trade L/C or guaranty thereof; and (viii) for any
consequences arising from causes beyond the control of Administrative Agent or
any Lender. None of the above shall affect, impair, or prevent the vesting of
any of Administrative Agent's or any Lender's rights or powers hereunder or
under the Agreement.
Nothing contained herein shall be deemed to limit or to expand any waivers,
covenants or
B-5
indemnities made by Borrowers in favor of any L/C Issuer in any letter of credit
application, reimbursement agreement or similar document, instrument or
agreement between or among Borrowers and such L/C Issuer.
B-6
ANNEX C (Section 1.8)
-----------
to
CREDIT AGREEMENT
----------------
CASH MANAGEMENT SYSTEMS
-----------------------
Each Credit Party shall, and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the Termination Date, each
Borrower shall deposit and cause its Subsidiaries to deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after
the date of receipt thereof, all cash, checks, drafts or other similar items of
payment relating to or constituting payments made in respect of any and all
Collateral (other than payments made in respect of third-party credit card
providers) into bank accounts in such Borrower's name or any such Subsidiary's
name (collectively, the "Borrower Accounts") at banks set forth on Disclosure
----------------- ----------
Schedule (3.19) (each, a "Relationship Bank"). On or before the Closing Date,
--------------- -----------------
Bon-Ton shall have established a concentration account in its name (each a
"Concentration Account" and collectively, the "Concentration Accounts") at the
---------------------- ----------------------
bank or banks which shall be designated as the Concentration Account bank for
each such Borrower on Disclosure Schedule (3.19) (each a "Concentration Account
-------------------------- ---------------------
Bank" and collectively, the "Concentration Account Banks"), which banks shall be
---- ---------------------------
satisfactory to Administrative Agent. At all times after the Closing Date and
until the Termination Date, each Borrower shall deposit or cause its
Subsidiaries to deposit or cause to be deposited, promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all cash,
checks, drafts or other similar it payment relating to or constituting payments
made in respect of, or on account of, any third-party credit card receivables
into the Concentration Account.
(b) On or before the Closing Date (or such later date as
Administrative Agent shall consent to in writing), the Concentration Account
Bank and each bank where a Disbursement Account is located, shall have entered
into tri-party blocked account agreements with Administrative Agent, for the
benefit of itself, the other Agent and Lenders, and the applicable Borrower and
Subsidiaries thereof, as applicable, in form and substance acceptable to
Administrative Agent, which shall become operative on or prior to the Closing
Date. Each such blocked account agreement shall provide, among other things,
that (i) all items of payment deposited in such account and proceeds thereof
deposited in the applicable Concentration Account are held by such bank as agent
or bailee-in-possession for Administrative Agent, on behalf of Lenders, (ii) the
bank executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) from and
after the Closing Date with respect to each Concentration Account Bank, such
bank agrees, from and after the receipt of a notice (an "Activation Notice")
-----------------
from Administrative Agent (which Activation Notice may be given by
Administrative Agent at any time at which (1) a Default or Event of Default
shall have occurred and be continuing or (2) Net Borrowing Availability is less
than $12,500,000 (each of the foregoing being referred to herein as an
"Activation Event")), to immediately forward all amounts received in the
-----------------
C-1
applicable Concentration Account to the Collection Account through daily sweeps
from such Concentration Account into the Collection Account. From and after the
date Administrative Agent has delivered an Activation Notice to any bank with
respect to any Disbursement Account(s), no Borrower shall, or shall cause or
permit any Subsidiary thereof to, accumulate or maintain cash in disbursement or
payroll accounts as of any date of determination in excess of checks outstanding
against such accounts as of that date and amounts necessary to meet minimum
balance requirements.
(c) On or before the Closing Date (or such later date as
Administrative Agent shall consent to in writing), each Relationship Bank, shall
have executed and delivered to Administrative Agent, for the benefit of itself,
the other Agent and Lenders, and the applicable Borrower and Subsidiaries
thereof, as applicable, in form and substance acceptable to Administrative
Agent, an agreement which shall become operative on or prior to the Closing
Date. Each such agreement shall provide, among other things, that (i) the
rights of setoff or recoupment or any other claim against such account, as the
case may be, of such Relationship Bank other than for payment of its service
fees and other charges directly related to the administration of such account
and for returned checks or other items of payment shall be subject to the rights
of Administrative Agent to such Borrower Account and the contents thereof, and
(ii) from and after the Closing Date to forward from time to time all amounts in
such Borrower Account to the Concentration Account Bank.
(d) So long as no Default or Event of Default has occurred and is
continuing, Borrowers may amend Disclosure Schedule (3.19) to add or replace a
--------------------------
Relationship Bank or Borrower Account or to replace any Concentration Account or
any Disbursement Account; provided, however, that (i) Administrative Agent shall
-------- ------- ----
have consented in writing in advance to the opening of such account with the
relevant bank and (ii) prior to the time of the opening of such account, the
applicable Borrower and/or the Subsidiaries thereof, as applicable, and such
bank shall have executed and delivered to Administrative Agent a tri-party
blocked account agreement or such other agreement, in form and substance
satisfactory to Administrative Agent. Borrowers shall close any of their
accounts (and establish replacement accounts in accordance with the foregoing
sentence) promptly and in any event within thirty (30) days of notice from
Administrative Agent that the creditworthiness of any bank holding an account is
no longer acceptable in Administrative Agent's reasonable judgment, or as
promptly as practicable and in any event within sixty (60) days of notice from
Administrative Agent that the operating performance, funds transfer and/or
availability procedures or performance with respect to accounts or lockboxes of
the bank holding such accounts or Administrative Agent's liability under any
tri-party blocked account agreement or such other agreement with such bank is no
longer acceptable in Administrative Agent's reasonable judgment.
(e) The Borrower Accounts, Disbursement Accounts and the Concentration
Accounts shall be cash collateral accounts, with all cash, checks and other
similar items of payment in such accounts securing payment of the Loans and all
other Obligations, and in which each Borrower and each Subsidiary thereof shall
have granted a Lien to Administrative Agent, on behalf of itself, the other
Agent and Lenders, pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall be deemed
received by Administrative Agent in accordance with Section 1.10 of the
------------
Agreement and shall be applied (and
C-2
allocated) by Administrative Agent in accordance with Section 1.11 of the
------------
Agreement. In no event shall any amount be so applied unless and until such
amount shall have been credited in immediately available funds to the Collection
Account.
(g) Each Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
-------------------- ---------------------
acceptable to Administrative Agent into which Administrative Agent shall, from
time to time, deposit proceeds of Revolving Credit Advances and Swing Line
Advances made to such Borrower pursuant to Section 1.1 for use by such Borrower
-----------
solely in accordance with the provisions of Section 1.4.
-----------
(h) Each Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with such
Borrower (each a "Related Person") to (i) hold in trust for Administrative
--------------
Agent, for the benefit of itself and Lenders, all checks, cash and other items
of payment received by such Borrower or any such Related Person, and (ii) within
one (1) Business Day after receipt by such Borrower or any such Related Person
of any checks, cash or other items or payment, deposit the same into a Borrower
Account of such Borrower. Each Borrower and each Related Person thereof
acknowledges and agrees that all cash, checks or items of payment constituting
proceeds of Collateral are the property of Administrative Agent and Lenders.
All proceeds of the sale or other disposition of any Collateral, shall be
deposited directly into the applicable Borrower Accounts.
C-3
ANNEX D (Section 2.1(a))
--------------
to
CREDIT AGREEMENT
----------------
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
----------------------------------------
In addition to, and not in limitation of, the conditions described in Section
-------
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
--- --------------
received by Administrative Agent in form and substance satisfactory to Agents on
or prior to the Closing Date (each capitalized term used but not otherwise
defined herein shall have the meaning ascribed thereto in Annex A to the
-------
Agreement):
(A) Appendices. All Appendices to the Agreement, in form and
----------
substance satisfactory to Administrative Agent.
(B) Notes. Duly executed originals of the Revolving Notes and
-----
Swing Line Notes for each applicable Lender, dated the Closing Date.
(C) Security Agreement. Duly executed originals of the Security
------------------
Agreement, dated the Closing Date, and all instruments, documents and agreements
executed pursuant thereto.
(D) Insurance. Satisfactory evidence that the insurance policies
---------
required by Section 5.4 are in full force and effect, together with appropriate
-----------
evidence showing loss payable and/or additional insured clauses or endorsements,
as requested by Administrative Agent, in favor of Administrative Agent, on
behalf of Lenders.
(E) Security Interests and Code Filings. (a) Evidence satisfactory
-----------------------------------
to Administrative Agent that Administrative Agent (for the benefit of itself,
the other Agent and Lenders) has a valid and perfected first priority security
interest in the Collateral, including (i) such documents duly executed by each
Credit Party (including financing statements under the Code and other applicable
documents under the laws of any jurisdiction with respect to the perfection of
Liens) as Administrative Agent may request in order to perfect its security
interests in the Collateral and (ii) copies of Code search reports listing all
effective financing statements that name any Credit Party as debtor, together
with copies of such financing statements, none of which shall cover the
Collateral, except for those relating to the Prior Lender Obligations (all of
which shall be terminated on the Closing Date).
(i) Evidence satisfactory to Administrative Agent, including
copies, of all UCC-1 and other financing statements filed in favor of any Credit
Party with respect to each location, if any, at which Inventory may be
consigned.
(F) Payoff Letter; Termination Statements. Copies of a duly
-------------------------------------
executed payoff letter, in form and substance satisfactory to Administrative
Agent, by and between all parties to the Prior Lender loan documents evidencing
repayment in full of all Prior Lender Obligations, together with (a) UCC-3 or
other appropriate termination statements, in form and substance satisfactory to
D-1
Administrative Agent, manually signed by the Prior Lender releasing all liens of
Prior Lender upon any of the personal property of each Credit Party, (b)
termination of all blocked account agreements, bank agency agreements or other
similar agreements or arrangements or arrangements in favor of Prior Lender or
relating to the Prior Lender Obligations and (c) releases, which are in
recordable form and are in form and substance satisfactory to Agent, manually
signed by the Prior Lender, releasing all existing mortgages upon any of the
Real Estate of Borrowers.
(G) Intellectual Property Security Agreements. Duly executed
-----------------------------------------
originals of Trademark Security Agreements dated the Closing Date and signed by
each Credit Party which owns Trademarks, all in form and substance satisfactory
to Agents, together with all instruments, documents and agreements executed
pursuant thereto.
(H) Guaranty. Duly executed originals of the Guaranty, dated the
--------
Closing Date, and all documents, instruments and agreements executed pursuant
thereto.
(I) Initial Borrowing Base Certificate. Duly executed originals
----------------------------------
of an initial Borrowing Base Certificate from each Borrower, dated the Closing
Date, reflecting information concerning Eligible Inventory and Eligible Fixed
Assets of such Borrower.
(J) Initial Notice of Revolving Credit Advance. Duly executed
------------------------------------------
originals of a Notice of Revolving Credit Advance, dated the Closing Date, with
respect to the initial Revolving Credit Advance to be requested by Borrower
Representative on the Closing Date.
(K) Letter of Direction. Duly executed originals of a letter of
-------------------
direction from Borrower Representative addressed to Administrative Agent, on
behalf of itself, the other Agent and Lenders, with respect to the disbursement
on the Closing Date of the proceeds of the initial Revolving Credit Advance.
(L) Cash Management System; Blocked Account Agreements. Evidence
--------------------------------------------------
satisfactory to Administrative Agent that, as of the Closing Date, Cash
Management Systems complying with Annex C to the Agreement have been established
-------
and are currently being maintained in the manner set forth in such Annex C,
-------
together with copies of duly executed tri-party blocked account agreements,
satisfactory to Administrative Agent, with the banks as required by Annex C.
-------
(M) Charter and Good Standing. For each Credit Party, such
-------------------------
Person's (a) charter and all amendments thereto, (b) good standing certificates
(including verification of tax status) in its state of incorporation and (c)
good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Closing Date and certified
by the applicable Secretary of State or other authorized Governmental Authority.
(N) Bylaws and Resolutions. For each Credit Party, (a) such
----------------------
Person's bylaws, together with all amendments thereto and (b) resolutions of
such Person's Board of Directors
D-2
approving and authorizing the execution, delivery and performance of the Loan
Documents to which such Person is a party and the transactions to be consummated
in connection therewith, each certified as of the Closing Date by such Person's
corporate secretary or an assistant secretary as being in full force and effect
without any modification or amendment.
(O) Incumbency Certificates. For each Credit Party, signature and
-----------------------
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.
(P) Opinions of Counsel. Duly executed originals of opinions of
-------------------
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx, counsel for the Credit Parties, together
with any local counsel opinions requested by Agents, each in form and substance
satisfactory to Agents and its counsel, dated the Closing Date, and each
accompanied by a letter addressed to such counsel from the Credit Parties,
authorizing and directing such counsel to address its opinion to Agents, on
behalf of Lenders, and to include in such opinion an express statement to the
effect that Agents and Lenders are authorized to rely on such opinion.
(Q) Pledge Agreement. Duly executed originals of each of the
----------------
Pledge Agreement accompanied by (as applicable) (a) share certificates
representing all of the outstanding Stock being pledged pursuant to such Pledge
Agreement and stock powers for such share certificates executed in blank and (b)
the original Intercompany Notes and other instruments evidencing Indebtedness
being pledged pursuant to such Pledge Agreement, duly endorsed in blank.
(R) Accountants' Letter. A letter authorizing the independent
-------------------
certified public accountants of the Credit Parties to communicate with
Administrative Agent and Lenders in accordance with Section 4.2 and
-----------
acknowledging Lenders' reliance on the auditor's certification of past and
future Financial Statements.
(S) Solvency Certificate. The Borrowers shall deliver to
--------------------
Administrative Agent for the benefit of Agents and Lenders a solvency
certificate of the Chief Financial Officer of Bon-Ton in form and substance
satisfactory to Agents.
(T) Officer's Certificate. Administrative Agent shall have
---------------------
received duly executed originals of a certificate of signed on behalf of such
Borrower by its Chief Executive Officer and Chief Financial Officer of each
Borrower, dated the Closing Date, stating that, since February 3, 1996 (a) no
event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (b) no Litigation has been commenced
which, could reasonably be expected to have a Material Adverse Effect or could
challenge any of the transactions contemplated by the Agreement and the other
Loan Documents; (c) there have been no Restricted Payments made by any Credit
Party; and (d) there has been no material increase in liabilities, liquidated or
contingent, and no material decrease in assets of any Borrower or any of its
Subsidiaries.
(U) Waivers. Administrative Agent, on behalf of Lenders, shall
-------
have received
D-3
landlord waivers and consents, bailee letters and mortgagee agreements in form
and substance satisfactory to Agents, in each case as required pursuant to
Section 5.9.
-----------
(V) Mortgages. Mortgages covering all of the Real Estate listed on
---------
Disclosure Schedule (D-1) (the "Mortgaged Properties") together with: (a) title
------------------------- --------------------
insurance policies, zoning letters and certificates of occupancy, in each case
satisfactory in form and substance to Administrative Agent, in its sole
discretion; (b) evidence that counterparts of the Mortgages have been recorded
in all places to the extent necessary or desirable, in the judgment of
Administrative Agent, to create a valid and enforceable first priority lien
(subject to Permitted Encumbrances) on each Mortgaged Property in favor of
Administrative Agent for the benefit of itself and Lenders (or in favor of such
other trustee as may be required or desired under local law); (c) an opinion of
counsel in each state in which any Mortgaged Property is located in form and
substance and from counsel satisfactory to Administrative Agent and (d) proof of
payment of all title insurance premiums, documentary, stamp or intangible taxes,
recording fees and mortgage taxes payable in connection with the recording of
any of the Loan Documents or the issuance of the title insurance policies.
(W) Subordination and Intercreditor Agreements. Administrative
------------------------------------------
Agent and Lenders shall have received any and all subordination and/or
intercreditor agreements, all in form and substance reasonably satisfactory to
Agents, in their sole discretion, as Agents shall have deemed necessary or
appropriate with respect to any Indebtedness of any Credit Party.
(X) Environmental Reports. Administrative Agent shall have
---------------------
received Phase I Environmental Site Assessment Reports, consistent with American
Society for Testing and Materials (ASTM) Standard E 1527-94 and applicable state
requirements, on all of the Mortgaged Properties, dated no more than 6 months
prior to the Closing Date, prepared by environmental engineers satisfactory to
Administrative Agent, all in form and substance satisfactory to Administrative
Agent, in its sole discretion; and Administrative Agent shall have further
received such environmental review and audit reports, including Phase II
reports, with respect to the Mortgaged Properties as Administrative Agent shall
have requested, and Administrative Agent shall be satisfied, in its sole
discretion, with the contents of all such environmental reports.
(Y) Appraisals. Administrative Agent shall have received
----------
appraisals as to all Equipment, Fixtures and furniture and as to each of the
Mortgaged Properties and Designated Properties, each of which shall be in form
and substance satisfactory to Administrative Agent.
(Z) Audited Financials; Financial Condition. Administrative Agent
---------------------------------------
shall have received Parent's final Financial Statements for their Fiscal Year
ended February 3, 1996, audited by Xxxxxx Xxxxxxxx LLP. Each Borrower shall
have provided Administrative Agent with its current operating statements, a
consolidated and consolidating balance sheet and statement of cash flows,
Projections, and a Borrowing Base Certificate with respect to such Borrower
certified by its Chief Financial Officer, in each case in form and substance
satisfactory to Agents, and Agents shall be satisfied, in its sole discretion,
with all of the foregoing. Administrative Agent shall have further received a
certificate of each Borrower, signed on its behalf by the Chief Executive
Officer and/or the Chief Financial Officer of each Borrower, based on such and
Projections, to the effect that (a) such
D-4
Borrower will be Solvent upon the consummation of the transactions contemplated
herein; and (b) the Projections are based upon estimates and assumptions stated
therein, all of which such Borrower believes to be reasonable and fair in light
of current conditions and current facts known to such Borrower and, as of the
Closing Date, reflect such Borrower's good faith and reasonable estimates of its
future financial performance and of the other information projected therein for
the period set forth therein.
(AA) Other Documents. Such other certificates, documents and
---------------
agreements respecting any Credit Party as Administrative Agent may, in its sole
discretion, request.
D-5
ANNEX E (Section 4.1(a))
----------------
to
CREDIT AGREEMENT
----------------
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
-------------------------------------------------
Borrowers shall deliver or cause to be delivered to Administrative
Agent or to Administrative Agent and Lenders, as indicated, the following:
(a) Monthly Financials. To Administrative Agent and Lenders,
------------------
within hirty (30) days after the end of each Fiscal Month, financial information
regarding Parent and its Subsidiaries, prepared under the supervision of the
Chief Financial Officer of Borrower Representative, consisting of consolidated
and consolidating (i) unaudited balance sheets as of the close of such Fiscal
Month and the related statements of income and cash flows for that portion of
the Fiscal Year ending as of the close of such Fiscal Month; (ii) unaudited
statements of income and cash flows for such Fiscal Month, setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments); and (iii) a
summary of the outstanding balance of all Intercompany Notes as of the last day
of that Fiscal Month. Such financial information shall be accompanied by the
certification of Borrower Representative signed on its behalf by its Chief
Financial Officer that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the financial
position, results of operations and cash flows of Borrowers and their
Subsidiaries, on a consolidated and consolidating basis, in each case as at the
end of such month and for the period then ended and (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default and
a schedule of store expenses by natural division, reflecting detailed store
expenses for the month and year to date, specifically to include; store payroll,
payroll taxes, advertising, co-op, rent, real estate taxes,
utilities/communication and other store operating exenses;
(b) Quarterly Financials. To Administrative Agent and Lenders,
--------------------
within orty-five (45) days after the end of each Fiscal Quarter, consolidated
and consolidating financial information regarding Parent and its Subsidiaries,
prepared under the supervision of the Chief Financial Officer of Borrower
Representative, including (i) unaudited balance sheets as of the close of such
Fiscal Quarter and the related statements of income and cash flows for that
portion of the Fiscal Year ending as of the close of such Fiscal Quarter and the
period commencing at the end of the previous Fiscal Year and ending on the last
day of such Fiscal Quarter and (ii) unaudited statements of income and cash
flows for such Fiscal Quarter, in each case setting forth in comparative form
the figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments). Such financial information
shall be accompanied by (A) a statement in reasonable detail (each, a
"Compliance Certificate" showing the calculations used in determining compliance
-----------------------
with a Compliance Certificate in respect of each of the
E-1
financial covenants set forth on Annex G which is tested on a quarterly basis
-------
and (B) the certification of the Borrower Representative signed on its behalf by
its Chief Financial Officer that (i) such financial information presents fairly
in accordance with GAAP (subject to normal year-end adjustments) the financial
position, results of operations and cash flows of Borrowers and their
Subsidiaries, on both a consolidated and consolidating basis, as at the end of
such Fiscal Quarter and for the period then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrowers shall deliver to Administrative Agent and Lenders, within
forty-five (45) days after the end of each Fiscal Quarter, a management
discussion and analysis which includes a comparison to budget for that Fiscal
Quarter and a comparison of performance for that Fiscal Quarter to the
corresponding period in the prior year;
(c) Operating Plan. To Administrative Agent and Lenders, as
--------------
soon as available, but not later than forty-five (45) days after the end of each
Fiscal Year, an annual operating plan for each Borrower, approved by the Board
of Directors of such Borrower, for the following year, which will include a
statement of all of the material assumptions on which such plan is based, will
include monthly balance sheets and a monthly budget for the following year and
will integrate sales, gross profits, operating expenses, operating profit, cash
flow projections and Borrowing Availability projections all prepared on the same
basis and in similar detail as that on which operating results are reported.
(d) Annual Audited Financials. To Administrative Agent and
-------------------------
Lenders, within ninety (90) days after the end of each Fiscal Year, audited
Financial Statements for Borrowers and their Subsidiaries on a consolidated and
consolidating basis (which consolidating statements shall be unaudited),
consisting of balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the figures for the
previous Fiscal Year and the figures contained in the Projections for such
Fiscal Year, which consolidated Financial Statements shall be prepared in
accordance with GAAP, certified without qualification as to going concern or
scope of audit matters, by an independent certified public accounting firm of
national standing or otherwise acceptable to Administrative Agent. Such
Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance with
each of the financial covenants set forth on Annex G, (ii) a letter addressed to
-------
Administrative Agent, on behalf of itself and Lenders, in form and substance
reasonably satisfactory to Administrative Agent and subject to standard
qualifications taken by nationally recognized accounting firms, signed by such
accounting firm acknowledging that Administrative Agent and Lenders are entitled
to rely upon such accounting firm's certification of such audited Financial
Statements, (iii) the annual letters to such accountants in connection with
their audit examination detailing contingent liabilities and material litigation
matters, and (iv) the certification of Borrower Representative signed on behalf
of each Borrower by the Chief Executive Officer or Chief Financial Officer of
Borrower Representative that all such Financial
E-2
Statements present fairly in accordance with GAAP the financial position,
results of operations and cash flows of Borrowers and their Subsidiaries on a
consolidated and consolidating basis, as at the end of such year and for the
period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default;
(e) Management Letters. To Administrative Agent and Lenders,
------------------
within five (5) Business Days after receipt thereof by any Credit Party, copies
of all management letters, exception reports or similar letters or reports
received by such Credit Party from its independent certified public accountants;
(f) Default Notices. To Administrative Agent and Lenders, as
---------------
soon as practicable, and in any event within five (5) Business Days after an
executive officer of any Borrower has actual knowledge of the existence of any
Default, Event of Default, material default under any of the leases listed on
Disclosure Schedule (3.6) or other event which has had a Material Adverse
-------------------------
Effect, telephonic or telecopied notice specifying the nature of such Default or
Event of Default or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in writing on the
next Business Day;
(g) SEC Filings and Press Releases. To Administrative Agent and
------------------------------
Lenders, promptly upon their becoming available, copies of: (i) all Financial
Statements, reports, notices and proxy statements made publicly available by any
Credit Party to its security holders; (ii) all regular and periodic reports and
all registration statements and prospectuses, if any, filed by any Credit Party
with any securities exchange or with the Securities and Exchange Commission or
any governmental or private regulatory authority; and (iii) all press releases
and other statements made available by any Credit Party to the public concerning
material adverse changes or developments in the business of any such Person;
(h) To Administrative Agent copies of all material notices received
under or with respect to any Securitization Document;
(i) Supplemental Schedules. To Administrative Agent, supplemental
----------------------
disclosures, if any, required by Section 5.6 of the Agreement;
-----------
(j) Litigation. To Administrative Agent in writing, promptly upon
----------
learning thereof, notice of any Litigation commenced or threatened against any
Credit Party that (i) seeks damages in excess of $1,000,000, (ii) seeks
injunctive relief, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets or against any Credit Party or ERISA Affiliate in
connection with any Plan, (iv) alleges criminal misconduct by any Credit Party,
or (v) alleges the violation of any law
E-3
regarding, or seeks remedies in connection with, any Environmental Liabilities;
(k) Insurance Notices. To Administrative Agent, disclosure of
-----------------
losses or casualties required by Section 5.4 of the Agreement;
-----------
(l) To Administrative Agent, copies of (i) any and all default
notices received under or with respect to any leased location or public
warehouse where Collateral is located, and (ii) such other notices or documents
as Administrative Agent may request in its reasonable discretion; and
(m) Other Documents. To Agents and Lenders, such other financial
---------------
and other information respecting any Credit Party's business or financial
condition as Administrative Agent or any Lender shall, from time to time,
reasonably request.
E-4
ANNEX F (Section 4.1(b))
--------------
to
CREDIT AGREEMENT
----------------
COLLATERAL REPORTS
------------------
1. Borrowers shall deliver or cause to be delivered the following:
(a) To Agents, upon their request, and in no event less frequently
than ten (10) Business Days after the end of each Fiscal Month (together with a
copy of all or any part of such delivery requested by any Lender in writing
after the Closing Date), with respect to each Borrower, a summary of Inventory
by family of business with a supporting perpetual Inventory report, in each case
accompanied by such supporting detail and documentation as shall be requested by
Agents in their reasonable discretion and more specifically as reflected in
Disclosure Schedule (F-1);
-------------------------
(b) To the Agents, no later than Tuesday of each week or less
frequently as may otherwise be requested by Agents, a Borrowing Base Certificate
with respect to each Borrower as of the close of business on the immediately
preceding Saturday, in each case accompanied by such supporting detail and
documentation as shall be requested by Agents in their reasonable discretion;
(c) To Agents, at the time of delivery of each of the monthly
Financial Statements delivered pursuant to Annex E, month-end Inventory reports
-------
of each Borrower to such Borrower's general ledger and monthly Financial
Statements delivered pursuant to such Annex E, in each case accompanied by such
-------
supporting detail and documentation as shall be requested by Agents in their
reasonable discretion;
(d) To the Agents, at the time of delivery of the quarterly
financial statements delivered pursuant to Annex E and store operating expense
summary;
(e) To Agents, at the time of delivery of each of the annual
Financial Statements delivered pursuant to Annex E, a list of any applications
-------
for the registration of any Patent, Trademark or Copyright with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency which any Credit Party thereof has filed in the prior
Fiscal Quarter;
(f) Each Borrower, at its own expense, shall deliver to Agents the
results of each physical verification, if any, which such Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person to
have made on their behalf, of all or any portion of their Inventory and the
Agents, at the Borrowers' expense, will have the right to observe the Borrowers'
physical verification (and, if a Default or an Event of Default shall have
occurred and be continuing, each
F-1
Borrower shall, upon the request of Agents, conduct, and deliver the results of,
such physical verifications as Agents may require);
(g) Such other reports, statements and reconciliations with respect
to the Borrowing Base or Collateral of any or all Credit Parties as Agents shall
from time to time request in their reasonable discretion.
2. During any calendar year Borrowers shall pay for all costs and
expenses of (i) up to three commercial finance field audits conducted by Agents,
(ii) up to two limited-scope Inventory appraisals, conducted by an appraiser
selected by Agents and in form and substance satisfactory to Agents, and (iii)
up to two full-scope Inventory appraisals, conducted by an appraiser selected by
Agents, and in form and substance satisfactory to Agents.
3. At any time after the occurrence and during the continuance of a
Default or an Event of Default or at any such time as Net Borrowing Availability
is less than $15,000,000, Borrowers shall pay all costs and expenses in
connection with all additional Inventory and commercial field audits conducted
by Agents.
F-2
ANNEX G (Section 6.10)
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to
CREDIT AGREEMENT
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FINANCIAL COVENANTS
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Borrowers shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Maximum Capital Expenditures. Borrowers and their Subsidiaries on a
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consolidated basis shall not make Capital Expenditures during the following
periods that exceed in the aggregate the amounts set forth opposite each of such
periods:
Period Maximum Capital Expenditures per Period
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Fiscal Year 1997 $15,000,000
Fiscal Year 1998 $18,000,000
Fiscal Year 1999 and thereafter $21,000,000
provided, however, that the amount of permitted Capital Expenditures referenced
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above will be increased in any Fiscal Year by the positive amount equal to the
lesser of (a) 50% of the amount of permitted Capital Expenditures for the
immediately prior Fiscal Year, and (b) the amount (if any), equal to the
difference obtained by taking the Capital Expenditures limit specified above for
the immediately prior Fiscal Year minus the actual amount of any Capital
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Expenditures expended during such prior Fiscal Year (the "Carry Over Amount"),
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and for purposes of measuring compliance herewith, the Carry Over Amount shall
be deemed to be the first amount spent on Capital Expenditures in that
succeeding Fiscal Year.
(b) Minimum Fixed Charge Coverage Ratio. Parent and its Subsidiaries
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shall maintain, on a consolidated basis at the end of each Fiscal Quarter of
Parent a Fixed Charge Coverage Ratio for the 12-month period then ended of not
less than 1.0:1.0.
(c) Minimum Trade Support. Borrowers and their Subsidiaries shall
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maintain, on a consolidated basis at all times a ratio of accrued expenses,
expense payables and trade payables to inventory, not less than .25:1.0.
Unless otherwise specifically provided herein, any accounting term used in
the Agreement shall have the meaning customarily given such term in accordance
with GAAP, and all financial
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computations hereunder shall be computed in accordance with GAAP consistently
applied. That certain items or computations are explicitly modified by the
phrase "in accordance with GAAP" shall in no way be construed to limit the
foregoing. If any "Accounting Changes" (as defined below) occur and such changes
result in a change in the calculation of the financial covenants, standards or
terms used in the Agreement or any other Loan Document, then Borrowers,
Administrative Agent and Lenders agree to enter into negotiations in order to
amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrowers' and their Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (a) changes in accounting principles required by the
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promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (b)
changes in accounting principles concurred in by any Borrower's certified public
accountants; (c) purchase accounting adjustments under A.P.B. 16 and/or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (d) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If
Administrative Agent, Borrowers and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Administrative Agent, Borrowers and Requisite Lenders cannot agree upon the
required amendments within thirty (30) days following the date of implementation
of any Accounting Change, then all Financial Statements delivered and all
calculations of financial covenants and other standards and terms in accordance
with the Agreement and the other Loan Documents shall be prepared, delivered and
made without regard to the underlying Accounting Change.
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