TERM LOAN AGREEMENT Dated as of May 25, 2007 among THE BOMBAY COMPANY, INC. EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO, as Borrowers THE LENDERS PARTY HERETO, and GB MERCHANT PARTNERS, LLC as Administrative Agent GE CAPITAL MARKETS, INC. as...
$10,000,000
Dated
as
of May 25, 2007
among
THE
BOMBAY COMPANY, INC.
EACH
OF
ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO,
as
Borrowers
THE
LENDERS PARTY HERETO,
and
GB
MERCHANT PARTNERS, LLC
as
Administrative Agent
♦
♦
♦
GE
CAPITAL MARKETS, INC.
as
Sole
Lead Arranger
Table
of Contents
ARTICLE
I
|
DEFINITIONS,
INTERPRETATION AND ACCOUNTING TERMS
|
2
|
Section
1.1
|
Defined
Terms
|
2
|
Section
1.2
|
UCC
Terms
|
2
|
Section
1.3
|
Accounting
Terms and Principles.
|
2
|
Section
1.4
|
Interpretation.
|
2
|
ARTICLE
II
|
THE
FACILITY
|
2
|
Section
2.1
|
Term
Loan
|
2
|
Section
2.2
|
Joint
and Several Liability.
|
2
|
Section
2.3
|
Repayment
of Term Loan
|
2
|
Section
2.4
|
Optional
Prepayments
|
2
|
Section
2.5
|
Mandatory
Prepayments.
|
2
|
Section
2.6
|
Interest.
|
2
|
Section
2.7
|
Fees.
|
2
|
Section
2.8
|
Application
of Payments
|
2
|
Section
2.9
|
Payments
and Computations
|
2
|
Section
2.10
|
Evidence
of Debt
|
2
|
Section
2.11
|
Breakage
Costs; Increased Costs; Capital Requirements
|
2
|
Section
2.12
|
Taxes.
|
2
|
Section
2.13
|
Substitution
of Lenders
|
2
|
ARTICLE
III
|
CONDITIONS
TO LOANS
|
2
|
Section
3.1
|
Conditions
Precedent to the Term Loan
|
2
|
ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES
|
2
|
Section
4.1
|
No
Encumbrances
|
2
|
Section
4.2
|
Accounts
|
2
|
Section
4.3
|
Inventory
|
2
|
Section
4.4
|
Location
of Inventory
|
2
|
Section
4.5
|
Inventory
Records
|
2
|
Section
4.6
|
Name,
Jurisdiction of Incorporation; Location of Chief Executive Office;
FEIN;
Organizational ID Number
|
2
|
Section
4.7
|
Due
Organization and Qualification; Subsidiaries
|
2
|
Section
4.8
|
Due
Authorization; No Conflict
|
2
|
Section
4.9
|
Litigation
|
2
|
Section
4.10
|
No
Material Adverse Effect
|
2
|
Section
4.11
|
Fraudulent
Transfer
|
2
|
Section
4.12
|
Canadian
Benefit Plans and Canadian Pension Plans
|
2
|
Section
4.13
|
ERISA
|
2
|
Section
4.14
|
Environmental
Condition
|
2
|
i
Section
4.15
|
Brokerage
Fees
|
2
|
Section
4.16
|
Intellectual
Property
|
2
|
Section
4.17
|
Leases
|
2
|
Section
4.18
|
Deposit
Accounts
|
2
|
Section
4.19
|
Complete
Disclosure
|
2
|
Section
4.20
|
Credit
Card Receipts
|
2
|
Section
4.21
|
Holding
Company and Investment Company Acts
|
2
|
Section
4.22
|
Absence
of Financing Statements, etc
|
2
|
Section
4.23
|
Certain
Transactions
|
2
|
Section
4.24
|
Regulations
U and X
|
2
|
Section
4.25
|
Labor
Relations
|
2
|
Section
4.26
|
Indebtedness
|
2
|
Section
4.27
|
Payment
of Taxes
|
2
|
Section
4.28
|
Foreign
Assets Control Regulations, Etc
|
2
|
Section
4.29
|
No
Burdensome Obligations; No Defaults
|
2
|
ARTICLE
V
|
REPORTING
COVENANTS
|
2
|
Section
5.1
|
Accounting
System; Access
|
2
|
Section
5.2
|
Collateral
Reporting.
|
2
|
Section
5.3
|
Financial
Statements, Reports, Business Plan, Certificates
|
2
|
Section
5.4
|
Right
to Inspect; Inventories, Appraisals Audits and
Assessments.
|
2
|
ARTICLE
VI
|
AFFIRMATIVE
COVENANTS
|
2
|
Section
6.1
|
Returns
|
2
|
Section
6.2
|
Maintenance
of Properties.
|
2
|
Section
6.3
|
Taxes
|
2
|
Section
6.4
|
Insurance
|
2
|
Section
6.5
|
Location
of Inventory
|
2
|
Section
6.6
|
Compliance
with Laws, Etc
|
2
|
Section
6.7
|
Leases
|
2
|
Section
6.8
|
Existence
|
2
|
Section
6.9
|
Environmental
|
2
|
Section
6.10
|
Disclosure
Updates
|
2
|
Section
6.11
|
Formation
of Subsidiaries; Further Assurances
|
2
|
Section
6.12
|
Additional
Collateral Covenants
|
2
|
Section
6.13
|
Investment
Proceeds, Etc
|
2
|
Section
6.14
|
Immediate
Notice to the Administrative Agent.
|
2
|
Section
6.15
|
Certain
Subsidiaries
|
2
|
Section
6.16
|
Further
Assurances
|
2
|
Section
6.17
|
Governing
Documents
|
2
|
ii
Section
6.18
|
Deposit
Accounts; Securities Accounts and Cash Collateral
Accounts.
|
2
|
Section
6.19
|
Release
of Eligible Real Property
|
2
|
Section
6.20
|
Store
Closing Sale
|
2
|
Section
6.21
|
Grant
of Non-Exclusive License
|
2
|
Section
6.22
|
Use
of Proceeds
|
2
|
ARTICLE
VII
|
NEGATIVE
COVENANTS
|
2
|
Section
7.1
|
Indebtedness
|
2
|
Section
7.2
|
Liens
|
2
|
Section
7.3
|
Restrictions
on Negative Pledges and Upstream Limitation.
|
2
|
Section
7.4
|
Restrictions
on Fundamental Changes
|
2
|
Section
7.5
|
Disposal
of Assets; Sale and Leaseback
|
2
|
Section
7.6
|
Change
Name; Change Governing Documents
|
2
|
Section
7.7
|
Prepayments
and Amendments
|
2
|
Section
7.8
|
Consignments
|
2
|
Section
7.9
|
Distributions
|
2
|
Section
7.10
|
Accounting
Methods
|
2
|
Section
7.11
|
Investments,
Acquisitions
|
2
|
Section
7.12
|
Transactions
with Affiliates
|
2
|
Section
7.13
|
Suspension
|
2
|
Section
7.14
|
Inventory
with Bailees
|
2
|
Section
7.15
|
Store
Openings and Closings
|
2
|
Section
7.16
|
Securities
Accounts
|
2
|
Section
7.17
|
Deposit
Accounts, Credit Card Agreements, etc
|
2
|
Section
7.18
|
Employee
Benefit Plans.
|
2
|
Section
7.19
|
Margin
Regulations
|
2
|
Section
7.20
|
Amendments
to First Lien Credit Agreement
|
2
|
Section
7.21
|
Acquisition
of First Lien Debt, Notes
|
2
|
Section
7.22
|
Potential
Conflicts of Interest
|
2
|
Section
7.23
|
Financial
Covenants.
|
2
|
ARTICLE
VIII
|
EVENTS
OF DEFAULT
|
2
|
Section
8.1
|
Definition
|
2
|
Section
8.2
|
Remedies
|
2
|
ARTICLE
IX
|
The
Administrative Agent
|
2
|
Section
9.1
|
Appointment
and Duties
|
2
|
Section
9.2
|
Binding
Effect
|
2
|
Section
9.3
|
Use
of Discretion
|
2
|
Section
9.4
|
Delegation
of Rights and Duties
|
2
|
Section
9.5
|
Reliance
and Liability
|
2
|
iii
Section
9.6
|
Agent
Individually
|
2
|
Section
9.7
|
Lender
Credit Decision
|
2
|
Section
9.8
|
Expenses;
Indemnities
|
2
|
Section
9.9
|
Resignation
of Administrative Agent.
|
2
|
Section
9.10
|
Release
of Collateral or Guarantors
|
2
|
Section
9.11
|
Additional
Secured Parties
|
2
|
ARTICLE
X
|
Miscellaneous
|
2
|
Section
10.1
|
Amendments,
Waivers, Etc
|
2
|
Section
10.2
|
Assignments
and Participations; Binding Effect
|
2
|
Section
10.3
|
Costs
and Expenses
|
2
|
Section
10.4
|
Indemnities
|
2
|
Section
10.5
|
Survival
|
2
|
Section
10.6
|
Limitation
of Liability for Certain Damages
|
2
|
Section
10.7
|
Lender-Creditor
Relationship
|
2
|
Section
10.8
|
Right
of Setoff
|
2
|
Section
10.9
|
Sharing
of Payments, Etc
|
2
|
Section
10.10
|
Marshaling;
Payments Set Aside
|
2
|
Section
10.11
|
Notices
|
2
|
Section
10.12
|
Electronic
Transmissions
|
2
|
Section
10.13
|
Governing
Law
|
2
|
Section
10.14
|
Jurisdiction
|
2
|
Section
10.15
|
Waiver
of Jury Trial
|
2
|
Section
10.16
|
Severability
|
2
|
Section
10.17
|
Execution
in Counterparts
|
2
|
Section
10.18
|
Entire
Agreement
|
2
|
Section
10.19
|
Use
of Name
|
2
|
Section
10.20
|
Non-Public
Information; Confidentiality
|
2
|
Section
10.21
|
Judgment
Currency
|
2
|
Section
10.22
|
Patriot
Act Notice
|
2
|
Section
10.23
|
Intercreditor
Agreement
|
2
|
iv
SCHEDULES
Schedule I - Term
Loan
Amount
Schedule
4.7 -
Subsidiaries
Schedule 4.9 - Litigation
Schedule 4.14 - Environmental
Condition
Schedule 4.20 - Credit
Card Receipts
Schedule 5.2 - Collateral
Reporting
Schedule
7.1 - Existing
Indebtedness
Schedule
7.2 - Existing
Liens
Schedule 7.13 - Affiliates
Schedule 7.16 - Scheduled
Store Closings
EXHIBITS
Exhibit A - Form
of
Assignment
Exhibit B - Form
of
Note
Exhibit C - Form
of
Compliance Certificate
Exhibit D - Form
of
Guaranty and Security Agreement
Exhibit E - Form
of
Pledge Agreement
v
This
Term
Loan Agreement, dated as of May 25, 2007, is entered into among THE
BOMBAY COMPANY, INC.,
a
Delaware corporation (the “Parent”),
each
of Parent’s Subsidiaries identified on the signature pages hereof (such
Subsidiaries, together with Parent, are referred to hereinafter each
individually, as a “Borrower”,
and
collectively, as the “Borrowers”),
the
Lenders (as defined below), and GB
MERCHANT PARTNERS, LLC
(“GBMP”),
as
administrative agent and collateral agent for the Lenders (in such capacity,
and
together with its successors and permitted assigns, the
“Administrative
Agent”).
The
parties hereto agree as follows:
ARTICLE
I
DEFINITIONS,
INTERPRETATION AND ACCOUNTING TERMS
Section
1.1 Defined
Terms.
As used
in this Agreement, the following terms have the following meanings:
“Accounts”
means
an “account” (as defined under the UCC) and any and all supporting obligations
in respect thereof.
“Account
Debtor”
means
any Person who is or who may become obligated under, with respect to, or on
account of, an Account.
“Adjusted
Availability”
shall
mean “Adjusted Availability” as such term is defined in the First Lien Credit
Agreement as in effect on the date hereof, including the component definitions
thereof as defined in the First Lien Credit Agreement as in effect on the date
hereof.
“Administrative
Agent”
means
GBMP, solely in its capacity at the administrative agent and collateral agent
for the Lenders.
“Affected
Lender”
has
the
meaning specified in Section 2.18(b).
“Affiliate”
means,
as applied to any Person, any other Person who, directly or indirectly,
controls, is controlled by, or is under common control with, such Person;
provided,
however,
no
Secured Party shall be deemed an Affiliate of the Loan Parties. For purposes
of
this definition, “control” means the possession, directly or indirectly, of the
power to direct the management and policies of a Person, whether through the
ownership of Stock, by contract, or otherwise; provided,
however,
that,
for purposes of Section
7.12
hereof:
(a) any Person which owns directly or indirectly 20% or more of the Voting
Stock
of a Person or 20% or more of the partnership or other ownership interests
of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person; and (b) each director (or comparable manager) of a Person
shall be deemed to be an Affiliate of such Person.
“Aggregate
Borrowing Base”
shall
mean “Aggregate Borrowing Base” as such term is defined in the First Lien Credit
Agreement as in effect on the date hereof, including the component definitions
thereof as defined in the First Lien Credit Agreement as in effect on the date
hereof.
1
“Agreement”
means
this Term Loan Agreement.
“Applicable
Margin”
means
seven percent (7.00%).
“Appraised
Value”
means
the fair market value as determined by an appraisal report conforming to the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended,
in form and substance and from independent appraisers satisfactory to the
Administrative Agent in its Permitted Discretion.
“Approved
Fund”
means,
with respect to any Lender, any Person (other than a natural Person) that (a)
is
or will be engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of
its
business and (b) is advised or managed by (i) such Lender, (ii) any Affiliate
of
such Lender or (iii) any Person (other than an individual) or any Affiliate
of
any Person (other than an individual) that administers or manages such
Lender.
“Approved
Inventory Servicer”
means
RGIS Inventory Specialists, Western Inventory Service, Washington Inventory
Service and any other third parties acceptable to the Administrative Agent
in
its Permitted Discretion (and which may be affiliated with one of the
Lenders).
“Assignment”
means
an assignment agreement entered into by a Lender, as assignor, and any
prospective assignee thereof and accepted by the Administrative Agent, in
substantially the form of Exhibit A.
“Availability”
shall
mean “Availability” as such term is defined in the First Lien Credit Agreement
as in effect on the date hereof, including the component definitions thereof
as
defined in the First Lien Credit Agreement as in effect on the date
hereof.
“Availability
Floor”
shall
mean (i) $10,000,000, during the period from the Closing Date until November
30,
2007, and (ii) $15,000,000 thereafter, provided, that, each Fiscal Year, the
Availability Floor may be adjusted, in the Administrative Agent’s Permitted
Discretion, based upon the Business Plan for such Fiscal Year that has been
accepted by the Administrative Agent in its Permitted Discretion.
“Bailee
Acknowledgment”
means
a
record in form and substance satisfactory to the Administrative Agent
authenticated by any bailee, warehouseman or other third party in possession
of
any inventory acknowledging that it holds possession of the applicable inventory
for the benefit of the Administrative Agent, on behalf of the Secured
Parties.
“Bankruptcy
Code”
means
title 11 of the United States Bankruptcy Code, as in effect from time to
time.
“Benefit
Plan”
means
a
“defined benefit plan” (as defined in Section 3(35) of ERISA) subject to
Title IV of ERISA for which any Borrower or any Subsidiary or ERISA Affiliate
of
any Borrower has been an “employer” (as defined in Section 3(5) of ERISA)
within the past six years.
“Bombay
Canada”
means
The Bombay Furniture Company of Canada Inc., a corporation continued under
the
laws of the Province of Ontario.
2
“Bombay
Kids Inventory”
means
the inventory of the Borrowers’ marketed and sold under the “Bombay Kids”
logo.
“Bombay
Office Complex”
means
Real Property located in Tarrant County, Texas with the legal description known
as Xxx 0, Xxxxx X, Xxxxxx Addition to the City of Fort Worth, Tarrant County,
Texas, according to plat recorded in Cabinet A, Page 10625, Plat Records of
Tarrant County Texas, the office buildings and improvements thereon, the
fixtures thereon and the related equipment.
“Books”
means
all of each Loan Party’s now owned or hereafter acquired books and records
(including all of its Records indicating, summarizing, or evidencing its assets
(including the Collateral) or liabilities, all of each Loan Party’s Records
relating to its or their business operations or financial condition, and all
of
each Loan Party’s goods or general intangibles related to such
information).
“Borrower”
has
the
meaning specified in the preamble.
“Borrowing
Base Certificate”
shall
mean a Borrowing Base Certificate, in the form set forth as Exhibit _ to the
First Lien Credit Agreement, completed with appropriate figures and calculations
for the applicable period covered therein and signed by a Responsible
Officer.
“Business
Day”
means
any day of the year that is not a Saturday, Sunday or a day on which banks
are
required or authorized to close in New York City, New York, the State of Texas
or any day on which dealings in Dollar deposits are carried on in the London
interbank market.
“Business
Plan”
means
the business plan of the Borrowers submitted annually to the Administrative
Agent, in form and substance reasonably acceptable to the Administrative Agent
in its sole Permitted Discretion.
“Canadian
Benefit Plans”
means
any plan, fund, program, or policy, whether oral or written, formal or informal,
funded or unfunded, insured or uninsured, providing employee benefits, including
medical, hospital care, dental, sickness, accident, disability, life insurance,
pension, retirement or savings benefits, under which Bombay Canada has any
liability with respect to any employee or former employee, but excluding any
Canadian Pension Plans.
“Canadian
Pension Plans”
means
each pension plan required to be registered under Canadian federal or provincial
law that is maintained or contributed to by Bombay Canada for its employees
or
former employees, but does not include the Canada Pension Plan or the Quebec
Pension Plan as maintained by the Government of Canada or the Province of
Quebec, respectively.
“Canadian
Security Documents”
means
each of the various Canadian security agreements by and among Bombay Canada
and
the Administrative Agent, and any and all acknowledgments of security, or
similar agreements made in favor of the Administrative Agent by Bombay Canada,
and any agreement delivered on or after the Closing Date (including by way
of
supplement to the foregoing) by any Person granting a Lien on the assets of
such
Person to secure all or any part of the Obligations of, or any bond issued
by,
Bombay Canada to the Administrative Agent, including, without limitation, any
security granted by Bombay Canada pursuant to the laws of the Province of
Quebec, in each case as amended, supplemented or modified from time to time
in
accordance with its terms.
3
“Capital
Lease”
means,
with respect to any Person, any lease of, or other arrangement conveying the
right to use, any property (whether real, personal or mixed) by such Person
as
lessee that has been or should be accounted for as a capital lease on a balance
sheet of such Person prepared in accordance with GAAP.
“Cash
Collateral Account”
means
a
deposit account or securities account in the name of the Borrowers and under
the
control (as defined in the applicable UCC) of the Administrative Agent and
(a)
in the case of a deposit account, from which the Borrower may not make
withdrawals except as permitted by the Administrative Agent and (b) in the
case
of a securities account, with respect to which the Administrative Agent shall
be
the entitlement holder and the only Person authorized to give entitlement orders
with respect thereto.
“Canadian
Agent”
has
the
meaning ascribed to it in the First Lien Credit Agreement, as in effect on
the
date hereof.
“Cash
Dominion Event”
means
(a) the occurrence and continuance of any Event of Default, or (b) the period
commencing with each failure by the Borrowers to maintain Adjusted Availability
in an amount greater than (i) ten percent (10%) of the Aggregate Borrowing
Base
for a period of 5 consecutive Business Days or (ii) five percent (5%) of the
Aggregate Borrowing Base at any time and, in each case, ending with the
occurrence of a Cash Dominion Reversion; provided,
however
that (y)
no more than 2 Cash Dominion Reversions may occur in any 12 month period and
(z)
if an additional Cash Dominion Event occurs during such 12 month period, no
further Cash Dominion Reversions may occur through and including the Maturity
Date.
“Cash
Dominion Reversion”
means
that the Borrowers shall have maintained Adjusted Availability in an amount
of
not less than fifteen percent (15%) of the Aggregate Borrowing Base for a period
of 30 consecutive Business Days as evidenced by a Compliance Certificate
delivered to the Administrative Agent; provided,
however
that (a)
no more than 2 Cash Dominion Reversions may occur in any 12 month period and
(b)
if an additional Cash Dominion Event occurs during such 12 month period, no
further Cash Dominion Reversions may occur through and including the Maturity
Date.
“Canadian
Eligible In-Transit Inventory”
means
inventory of Bombay Canada that does not qualify as Eligible Inventory under
clause
(b)
of the
definition of Eligible Inventory solely because it is not at a location in
Canada set forth on Schedule
4(b)
of the
Perfection Certificate or in transit among such locations in Canada and that
meets the following criteria, which criteria may be revised by the
Administrative Agent in its Permitted Discretion from time to time after the
Closing Date:
(a) the
inventory was the subject of a Qualified Import Letter of Credit, or was paid
for in full by Bombay Canada;
(b) such
inventory currently is in transit (whether by vessel, air, or land) to a
location set forth on Schedule
4(b)
of the
Perfection Certificate in Canada that is the subject of a Bailee Acknowledgment
or a Collateral Access Agreement;
(c) title
to
such inventory has passed to Bombay Canada;
(d) such
inventory is insured against types of loss, damage, hazards, and risks, and
in
amounts, satisfactory to the Administrative Agent in its Permitted
Discretion;
4
(e) Bombay
Canada has provided a certificate to the Canadian Agent that certifies that,
to
the best knowledge of Bombay Canada, such inventory meets all of Bombay Canada’s
representations and warranties contained in the First Lien Credit Documents
concerning Eligible Inventory, that Bombay Canada knows of no reason why such
inventory would not be accepted by Bombay Canada when it arrives in Canada,
and
that the shipment as evidenced by the documents conforms to the related order
documents; and
(f) if
subject to a Qualified Import Letter of Credit, the Underlying Letter of Credit
has been drawn upon and the Underlying Issuer has honored such drawing and
the
Administrative Agent has honored its obligations to the Underlying Issuer under
the applicable Qualified Import Letter of Credit.
“Cash
Equivalents”
means
(a) marketable direct obligations issued or unconditionally guaranteed by the
United States or issued by any agency thereof and backed by the full faith
and
credit of the United States, in each case maturing within 1 year from the date
of acquisition thereof, (b) marketable direct obligations issued by any state
of
the United States or any political subdivision of any such state or any public
instrumentality thereof maturing within 1 year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either S&P or Xxxxx’x, (c) commercial paper maturing no more than 270
days from the date of acquisition thereof and, at the time of acquisition,
having a rating of A-2 or P-2, or better, from S&P or Xxxxx’x, (d)
commercial notes and bonds, or variable rate demand notes issued by any
commercial institution with a rating of not less than A, as determined by
S&P or Xxxxx’x, (e) certificates of deposit or bankers’ acceptances maturing
within 1 year from the date of acquisition thereof either (i) issued by any
bank
organized under the laws of the United States or any state thereof which bank
has a rating of A or A2, or better, from S&P or Xxxxx’x, or (ii)
certificates of deposit less than or equal to $100,000 in the aggregate issued
by any other bank insured by the Federal Deposit Insurance Corporation,
(f) Eurodollar deposits, and (g) money market or other mutual funds
substantially all of whose assets comprise securities of the types described
in
preceding clauses
(a)-(f)
above.
“CERCLA”
means
the United States Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. §§ 9601 et seq.).
“Change
of Control”
means
(a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of
the United States Securities and Exchange Act of 1934, as amended), becomes
the
beneficial owner (as defined in Rule 13d-3 under such Exchange Act), directly
or
indirectly, of 50%, or more, of the Voting Stock of Parent, or (b) a majority
of
the members of the Board of Directors do not constitute Continuing
Directors.
“Closing
Date”
means
May 25, 2007.
“Code”
means
the U.S. Internal Revenue Code of 1986.
“Collateral”
means
all property and interests in property and proceeds thereof now owned or
hereafter acquired by any Loan Party in or upon which a Lien is granted or
purported to be granted pursuant to any Loan Document.
“Collateral
Access Agreement”
means
a
waiver or consent in form and substance satisfactory to the Administrative
Agent
executed by any lessor of Real Property leased by a Borrower (exclusive of
retail store locations) or any other Person having a Lien upon, or having rights
or interests in, the inventory pledged hereunder or a Bailee
Acknowledgment.
5
“Collections”
means
all cash, checks, credit card slips or receipts, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of the Borrowers.
“Compliance
Certificate”
means
a
certificate substantially in the form of Exhibit C.
“Concentration
Account”
means
an account designated as such on Schedule
8
of the
Perfection Certificate.
“Continuing
Director”
means
(a) any member of the Board of Directors who was a director of Parent on the
Closing Date, and (b) any individual who becomes a member of the Board of
Directors after the Closing Date if such individual was appointed or nominated
for election to the Board of Directors by a majority of the then Continuing
Directors.
“Contractual
Obligation”
means,
with respect to any Person, any provision of any Security issued by such Person
or of any document or undertaking (other than a Loan Document) to which such
Person is a party or by which it or any of its property is bound or to which
any
of its property is subject.
“Control
Agreement”
means,
with respect to any deposit account, any securities account, commodity account,
securities entitlement or commodity contract (except for accounts designated
as
“Store Accounts” on Schedule
8
of the
Perfection Certificate), an agreement, in form and substance satisfactory to
the
Administrative Agent, among the Administrative Agent, the financial institution
or other Person at which such account is maintained or with which such
entitlement or contract is carried and the Loan Party maintaining such account,
effective to grant “control” (as defined under the applicable UCC) over such
account to the Administrative Agent.
“Controlled
Deposit Account”
means
each deposit account (including all funds on deposit therein) that is the
subject of an effective Control Agreement and that is maintained by any Loan
Party with a financial institution.
“Controlled
Securities Account”
means
each securities account or commodity account (including all financial assets
held therein and all certificates and instruments, if any, representing or
evidencing such financial assets) that is the subject of an effective Control
Agreement and that is maintained by any Loan Party with a securities
intermediary or commodity intermediary.
“Copyrights”
means
all rights, title and interests (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to copyrights and all mask work,
database and design rights, whether or not registered or published, all
registrations and recordations thereof and all applications in connection
therewith.
“Corporate
Chart”
means
a
document in form reasonably acceptable to the Administrative Agent and setting
forth, as of a date set forth therein, for each Person that is a Loan Party,
that is subject to Section 6.11
or that
is a Subsidiary or joint venture of any of them, (a) the full legal name of
such
Person, (b) the jurisdiction of organization and any organizational number
and
tax identification number of such Person, (c) the location of such Person’s
chief executive office (or, if applicable, sole place of business) and (d)
the
number of shares of each class of Stock of such Person (other than Parent)
authorized, the number outstanding and the number and percentage of such
outstanding shares for each such class owned, directly or indirectly, by any
Loan Party or any Subsidiary of any of them.
6
“Cost”
means
the calculated cost of purchases, as determined from invoices received by a
Borrower, such Borrower’s purchase journal or stock ledger, based upon such
Borrower’s accounting practices known to the Administrative Agent, which
practices are in effect on the date on which this Agreement was executed or
subsequently adopted with the written approval of the Administrative Agent.
“Cost” does not include the value of any capitalized costs unrelated to the
acquisitions of inventory used in the Borrowers’ calculation of cost of goods
sold, but may include other charges used in such Borrower’s determination of
cost of goods sold and bringing goods to market, all within the Administrative
Agent’s Permitted Discretion and in accordance with GAAP.
“Credit
Card Agreements”
means
those certain credit card receipts agreements, each in form and substance
reasonably satisfactory to the Administrative Agent and each of which is among
the Administrative Agent, the applicable Borrower and the applicable Credit
Card
Processors.
“Credit
Card Issuer”
means
collectively (a) MasterCard or Visa bank credit or debit cards or other bank
credit or debit cards issued through MasterCard International, Inc., Visa,
U.S.A., Inc. or Visa International, American Express, Discover, and Diners
Club
(or their respective successors), and (b) private label credit cards of the
Borrowers.
“Credit
Card Processor”
means
any Person that acts as a credit card clearinghouse or processor with respect
to
any sales transactions involving credit card purchases by customers using credit
cards issued by any Credit Card Issuer.
“Default”
means
any Event of Default and any event that, with the passing of time or the giving
of notice or both, would become an Event of Default.
“Disclosure
Documents”
means,
collectively, (a) all confidential information memoranda and related materials
prepared in connection with the syndication of the Facilities and (b) all other
documents filed by any Loan Party with the United States Securities and Exchange
Commission.
“Dollars”
and
the
sign “$”
each
mean the lawful money of the United States of America.
“Domestic
Person”
means
any “United
States person”
under
and as defined in Section 770l(a)(30) of the Code.
“E-Fax”
means
any system used to receive or transmit faxes electronically.
“Electronic
Transmission”
means
each document, instruction, authorization, file, information and any other
communication transmitted, posted or otherwise made or communicated by e-mail
or
E-Fax or other equivalent service.
“Eligible
Assignee”
means
a
bank, insurance company, company, fund or other entity engaged in the business
of making or acquiring commercial loans and/or investments, having assets in
excess of $100,000,000, or any Affiliate of any member of the Lender Group,
or
any Approved Fund of any member of the Lender Group, or any Person to whom
a
Loan Party assigns its rights and obligations under this Agreement as part
of an
assignment and transfer of such Lender Group member’s rights in and to a
material portion of such member of such Lender Group’s portfolio of asset based
credit facilities.
7
“Eligible
Inventory”
means
(a) Eligible In-Transit Inventory, and (b) inventory of the relevant Borrower
consisting of finished goods held for sale in the ordinary course of such
Borrowers’ business located at one of such Borrower’s business locations set
forth on Schedule
4(b)
of the
Perfection Certificate (or in-transit between any such locations), that complies
with each of the representations and warranties respecting Eligible Inventory
made by such Borrower in the Loan Documents, and that is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth below,
which criteria may be fixed and revised from time to time by the Administrative
Agent in its Permitted Discretion to address the results of any audit or
appraisal performed by the Administrative Agent from time to time after the
Closing Date. In determining the value of Eligible Inventory, inventory shall
be
valued at the lower of Cost or market on a basis consistent with the Borrower’s
accounting practices.
An
item
of inventory (that is not Eligible In-Transit Inventory) shall not be included
in Eligible Inventory if:
(a) a
Borrower does not have good, valid and marketable title thereto (including
inventory acquired on consignment);
(b) (i)
in
the case of the U.S. Borrowers, it is not located at one of the locations in
the
United States set forth on Schedule
4(b)
of the
Perfection Certificate or in transit from one such location to another such
location, as such locations are updated by the U.S. Borrowers from time to
time
by written notice to the Administrative Agent, and (ii) in the case of Bombay
Canada, it is not located at one of the locations in Canada set forth on
Schedule
4(b)
of the
Perfection Certificate or in transit from one such location to another such
location, as such locations are updated by Bombay Canada from time to time
by
written notice to the Administrative Agent;
(c) except
with respect to inventory described in clause
(b)
of
Section
6.5,
it is
located at a warehouse, distribution center or other real property (other than
a
retail store location) leased by a Borrower or in a fulfillment center or
contract warehouse, in each case, unless it is subject to a Collateral Access
Agreement executed by the lessor, fulfillment services provider or other
applicable third party;
(d) it
is
located in a contract warehouse or is otherwise stored with a bailee,
warehouseman or similar third party unless it is subject to a Bailee
Acknowledgment executed by the bailee, warehouseman, or other third party,
as
the case may be, and unless it is segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises;
(e) it
is not
subject to a valid and perfected first priority security the Administrative
Agent’s Lien;
(f) it
consists of goods returned or rejected by a Borrower’s customers unless such
goods are repackaged and saleable in the ordinary course of such Borrower’s
business; or
(g) other
than saleable clearance goods arising in the ordinary course of business
consistent with past practice, consists of goods that are obsolete or slow
moving (for example, more than 18 months old), custom items, work-in-process,
raw materials, or goods that constitute spare parts, packaging and shipping
materials, supplies used or consumed in a Borrower’s business, xxxx and hold
goods, defective goods, and “seconds,” or inventory acquired on
consignment.
8
“Eligible
In-Transit Inventory”
means
collectively, Canadian Eligible In-Transit Inventory and U.S. Eligible
In-Transit Inventory.
“Eligible
Real Property”
means
the Real Property consisting of the Bombay Office Complex and which is subject
to the Mortgage and a Lien in favor of the Administrative Agent for the benefit
of the relevant Secured Parties and upon which no other Liens exist, other
than
Permitted Liens.
“Environmental
Actions”
means
any complaint, summons, citation, notice, directive, order, claim, litigation,
investigation, judicial or administrative proceeding, judgment, letter, or
other
communication, each, by or from any Governmental Authority, or any third party
involving (x) violations of Environmental Laws or (y) releases of Hazardous
Materials from (a) any assets, properties, or businesses of any Borrower or
any
predecessor in interest, (b) from adjoining properties or businesses, or (c)
from or onto any facilities which received Hazardous Materials generated by
any
Borrower or any predecessor in interest.
“Environmental
Law”
means
any applicable federal, state, provincial, foreign or local statute, law, rule,
regulation, ordinance, code, binding and enforceable guideline, binding and
enforceable written policy or rule of common law now or hereafter in effect
and
in each case as amended, or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, to the extent binding on the Borrowers, relating to the environment,
employee health and safety, or Hazardous Materials, including CERCLA; RCRA;
the
Federal Water Pollution Control Act, 33 USC §1251 et seq.
the
Toxic Substances Control Act, 15 USC §2601 et seq.
the
Clean Air Act, 42 USC §7401 et seq.;
the
Safe Drinking Water Act, 42 USC §3803 et seq.;
the Oil
Pollution Act of 1990, 33 USC §2701 et seq.;
the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC §11001
et seq.;
the
Hazardous Material Transportation Act, 49 USC §1801 et seq.;
and the
Occupational Safety and Health Act, 29 USC §651 et seq.
(to the
extent it regulates occupational exposure to Hazardous Materials); any state
and
local or foreign counterparts or equivalents, in each case as amended from
time
to time.
“Environmental
Liabilities and Costs”
means
all liabilities, monetary obligations, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts,
or consultants, and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand
by any Governmental Authority or any third party, and which relate to any
Environmental Action.
“Environmental
Lien”
means
any Lien in favor of any Governmental Authority for Environmental Liabilities
and Costs.
“ERISA”
means
the United States Employee Retirement Income Security Act of 1974.
“ERISA
Affiliate”
means
any
Person which is
under
common control, or treated
as a
single employer,
with a
Borrower under §414 of the Code.
9
“ERISA
Reportable Event”
means
a
reportable event with respect to a Guaranteed Pension Plan within the meaning
of
§4043 of ERISA and the regulations promulgated thereunder.
“Event
of Default”
has
the
meaning specified in Section 8.1.
“Federal
Reserve Board”
means
the Board of Governors of the United States Federal Reserve System and any
successor thereto.
“Fee
Letter”
means
the letter agreement, dated as of May 25, 2007, addressed to the Parent from
the
Administrative Agent and accepted by the Parent, with respect to certain fees
to
be paid from time to time to the Administrative Agent and its Related
Persons.
“FEIN”
means
Federal Employer Identification Number.
“Financial
Statement”
means
each financial statement delivered pursuant to Sections
4.10
and
5.3.
“First
Lien Agent”
means
General Electric Capital Corporation, in its capacity as Administrative Agent
and Collateral Agent for the First Lien Lenders, or its successors in such
capacities.
“First
Lien Debt”
means
the Debt from time to time outstanding under the First Lien Credit Agreement
and
any other First Lien Credit Documents.
“First
Lien Lenders”
means
the holders of the First Lien Debt.
“First
Lien Credit Agreement”
means
that certain Credit Agreement, dated as of October 24, 2006, among the First
Lien Agent, GE Canada Finance Holding Company, as Canadian Agent, GE Capital
Markets, Inc., as Sole Lead Arranger and Bookrunner, the Borrowers, the facility
guarantors party thereto and the lenders party thereto, as in effect on the
date
hereof and, except where the context otherwise so indicates, as amended,
restated, supplemented, refinanced, replaced or otherwise modified from time
to
time in accordance with the terms of the Intercreditor Agreement.
“First
Lien Credit Documents”
means
the First Lien Credit Agreement, together with all other documents and
agreements contemplated thereunder and executed in connection
therewith.
“Fiscal
Period”
means
one of three fiscal periods in a Fiscal Quarter, the first of such periods
comprised of four weeks, the second of such periods comprised of five weeks,
and
the third of such periods comprised of four weeks, with each of the weeks in
a
Fiscal Quarter ending on the close of business on a Saturday (except that the
last fiscal period in the last Fiscal Quarter of a 53 week year shall be five
weeks). There are twelve Fiscal Periods in a Fiscal Year.
“Fiscal
Quarter”
means
one of four thirteen or fourteen week quarters in a Fiscal Year, with the first
of such quarters beginning on the first day of a Fiscal Year and ending on
the
Saturday of the last week in such quarter.
“Fiscal
Year”
means
the fifty-two or fifty-three week period ending on the Saturday closest to
the
last day of January of any calendar year.
10
“Funding
Date”
shall
mean the date on which the conditions set forth in Sections 3.1 have been
satisfied and the Term Loan is made hereunder.
“GAAP”
means
generally accepted accounting principles in the United States of America, as
in
effect from time to time, set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants, in the statements and pronouncements of the Financial Accounting
Standards Board and in such other statements by such other entity as may be
in
general use by significant segments of the accounting profession that are
applicable to the circumstances as of the date of determination. Subject to
Section 1.3,
all
references to “GAAP”
shall
be to GAAP applied consistently with the principles used in the preparation
of
the Financial Statements described in Sections 4.10
and
5.3.
“Governmental
Authority”
means
any nation, sovereign or government, any state, province or other political
subdivision thereof, any agency, authority or instrumentality thereof and any
entity or authority exercising executive, legislative, taxing, judicial,
regulatory or administrative functions of or pertaining to government, including
any central bank regulatory body, arbitrator, public sector entity,
supra-national entity (including the European Union and the European Central
Bank) and any self-regulatory organization (including the National Association
of Insurance Commissioners).
“Governing
Documents”
means,
with respect to any Person, collectively and, in each case, together with any
modification of any term thereof, (a) the articles of incorporation, certificate
of incorporation, constitution or certificate of formation of such Person,
(b)
the bylaws, operating agreement or joint venture agreement of such Person,
(c)
any other constitutive, organizational or governing document of such Person,
whether or not equivalent, and (d) any other document setting forth the manner
of election or duties of the directors, officers or managing members of such
Person or the designation, amount or relative rights, limitations and
preferences of any Stock of such Person.
“Guaranteed
Pension Plan”
means
any employee pension benefit plan within the meaning of §3(2) of ERISA
maintained or contributed to by any Borrower or any ERISA Affiliate the benefits
of which are guaranteed on termination in full or in part by the PBGC pursuant
to Title IV of ERISA, other than a Multiemployer Plan.
“Guarantor”
means
each Subsidiary of Parent or Borrower party to the Guaranty and Security
Agreement and each other Person that enters into any Guaranty Obligation with
respect to any Obligation of any Loan Party.
“Guaranty
and Security Agreement”
means
a
guaranty and security agreement, in substantially the form of Exhibit D,
among
the Administrative Agent, the Borrowers and other Guarantors from time to time
party thereto.
“Guaranty
Obligation”
means,
as applied to any Person, any direct or indirect liability, contingent or
otherwise, of such Person for any Indebtedness, lease, dividend or other
obligation (the “primary
obligation”)
of
another Person (the “primary
obligor”),
if
the purpose or intent of such Person in incurring such liability, or the
economic effect thereof, is to guarantee such primary obligation or provide
support, assurance or comfort to the holder of such primary obligation or to
protect or indemnify such holder against loss with respect to such primary
obligation, including (a) the direct or indirect guaranty, endorsement (other
than for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of any primary
obligation, (b) the incurrence of reimbursement obligations with respect to
any
letter of credit or bank guarantee in support of any primary obligation, (c)
the
existence of any Lien, or any right, contingent or otherwise, to receive a
Lien,
on the property of such Person securing any part of any primary obligation
and
(d) any liability of such Person for a primary obligation through any
Contractual Obligation (contingent or otherwise) or other arrangement (i) to
purchase, repurchase or otherwise acquire such primary obligation or any
security therefor or to provide funds for the payment or discharge of such
primary obligation (whether in the form of a loan, advance, stock purchase,
capital contribution or otherwise), (ii) to maintain the solvency, working
capital, equity capital or any balance sheet item, level of income or cash
flow,
liquidity or financial condition of any primary obligor, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance
by
any other party to any Contractual Obligation, (iv) to purchase, sell or lease
(as lessor or lessee) any property, or to purchase or sell services, primarily
for the purpose of enabling the primary obligor to satisfy such primary
obligation or to protect the holder of such primary obligation against loss
or
(v) to supply funds to or in any other manner invest in, such primary obligor
(including to pay for property or services irrespective of whether such property
is received or such services are rendered); provided,
however,
that
“Guaranty
Obligations”
shall
not include (x) endorsements for collection or deposit in the ordinary course
of
business and (y) product warranties given in the ordinary course of business.
The outstanding amount of any Guaranty Obligation shall equal the outstanding
amount of the primary obligation so guaranteed or otherwise supported or, if
lower, the stated maximum amount for which such Person may be liable under
such
Guaranty Obligation.
11
“Hazardous
Material”
means
(a) substances that are defined or listed in, or otherwise classified
pursuant to, any applicable laws or regulations as “hazardous substances,”
“hazardous materials,” “hazardous wastes,” “toxic substances,” or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids, synthetic gas,
drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas, or geothermal
resources, (c) any flammable substances or explosives or any radioactive
materials, and (d) asbestos in any form or electrical equipment that contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls
in
excess of 50 parts per million.
“Hedging
Agreement”
means
any Interest Rate Contract, foreign exchange, swap, option or forward contract,
spot, cap, floor or collar transaction, any other derivative instrument and
any
other similar speculative transaction and any other similar agreement or
arrangement designed to alter the risks of any Person arising from fluctuations
in any underlying variable.
“Indebtedness”
means,
as to any Person means, without duplication: (a) all obligations for borrowed
money, (b) all obligations evidenced by bonds, debentures, notes, or other
similar instruments and all reimbursement or other obligations in respect of
letters of credit, bankers acceptances, interest rate swaps, or other financial
products, (c) all obligations as a lessee under Capital Leases, (d) all
obligations or liabilities of others secured by a Lien on any asset of a Person
or its Subsidiaries, irrespective of whether such obligation or liability is
assumed, (e) all obligations to pay the deferred purchase price of assets (other
than trade payables incurred in the ordinary course of business), (f) all
obligations owing under Hedging Agreements or similar agreements, (g) all sales
by such Person of (i) accounts or general intangibles for money due or to become
due, (ii) chattel paper, instruments or documents creating or evidencing a
right
to payment of money, or (iii) other receivables (collectively “receivables”),
whether pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating thereto
or a disposition of defaulted receivables for collection and not as a financing
arrangement, and together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or other
amounts in connection therewith, (h) every obligation of such Person (an “equity
related purchase obligation”) to purchase, redeem, retire or otherwise acquire
for value any shares of Stock issued by such Person or any rights measured
by
the value of such Stock, (i) every obligation in respect of Indebtedness of
any
other entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except to
the extent that the terms of such Indebtedness provide that such Person is
not
liable therefor and such terms are enforceable under applicable law, (j) any
Guaranty Obligation with respect to any Indebtedness described in any of
clauses
(a)
through
(i)
above,
and (k) every obligation of such Person under any Synthetic Lease.
12
“Indemnified
Matter”
has
the
meaning specified in Section 10.4.
“Indemnitee”
has
the
meaning specified in Section 10.4.
“Initial
Projections”
means
those financial projections, dated March 2007 covering the Fiscal Years ending
in January 2007 and January 2008 and delivered to the Administrative Agent
by
the Borrower prior to the date hereof.
“Insolvency
Proceeding”
means
any proceeding commenced by or against any Person under any provision of the
Bankruptcy Code, the Bankruptcy and [Insolvency Act (Canada), the Companies’
Creditors Arrangement Act (Canada), ]or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally or with creditors,
or
proceedings seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, or other similar relief.
“Intellectual
Property”
means
all rights, title and interests in or relating to intellectual property and
industrial property arising under any Requirement of Law and all IP Ancillary
Rights relating thereto, including all Copyrights, Patents, Trademarks, Internet
Domain Names, Trade Secrets and IP Licenses.
“Intercreditor
Agreement”
means
that certain Intercreditor Agreement dated as of even date herewith by and
among
the First Lien Agent, the Administrative Agent and the Loan Parties, as amended
and in effect from time to time.
“Interest
Payment Date”
means
the last day of each Interest Period.
“Interest
Period”
means,
(i) initially, the period commencing on the Funding Date and ending May 31,
2007, and (ii) thereafter, each period commencing on the first day of each
month
and ending on the last day of such month; provided,
however,
that
any Interest Period that would otherwise end after the Maturity Date shall
end
on the Maturity Date.
“Interest
Rate Contracts”
means
all interest rate swap agreements, interest rate cap agreements, interest rate
collar agreements and interest rate insurance.
13
“Internet
Domain Names”
means
all rights, title and interests (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to Internet domain
names.
“Investment”
means,
with respect to any Person, any investment by such Person in any other Person
(including Affiliates) in the form of loans, guarantees, advances, or capital
contributions (excluding (a) commission, travel, and similar advances to
officers and employees of such Person made in the ordinary course of business,
and (b) bona fide Accounts arising in the ordinary course of business consistent
with past practice), purchases or other acquisitions of Indebtedness, Stock,
or
all or substantially all of the assets of such other Person (or of any division
or business line of such other Person), and any other items that are or would
be
classified as investments on a balance sheet prepared in accordance with
GAAP.
“IP
Ancillary Rights”
means,
with respect to any other Intellectual Property, as applicable, all foreign
counterparts to, and all divisionals, reversions, continuations,
continuations-in-part, reissues, reexaminations, renewals and extensions of,
such Intellectual Property and all income, royalties, proceeds and Liabilities
at any time due or payable or asserted under or with respect to any of the
foregoing or otherwise with respect to such Intellectual Property, including
all
rights to xxx or recover at law or in equity for any past, present or future
infringement, misappropriation, dilution, violation or other impairment thereof,
and, in each case, all rights to obtain any other IP Ancillary
Right.
“IP
License”
means
all Contractual Obligations (and all related IP Ancillary Rights), whether
written or oral, granting any right title and interest in or relating to any
Intellectual Property.
“IP
Security Agreement”
means
the Intellectual Property Security Agreement, by the Borrowers in favor of
the
Administrative Agent, dated as of the Closing Date, together with the exhibits
attached thereto.
“ITA”
means
the Income
Tax Act
(Canada).
“Leases”
means
any lease or other agreement, no matter how styled or structured, pursuant
to
which any Borrower is entitled to the use or occupancy of any
space.
“Leaseholds”
means
any lease, leasehold estate or interest of any Borrower in each of the
properties at or upon which any such Borrower conducts business, offers any
inventory for sale, or maintains any of the Collateral, whether or not for
retail sale, together with the Borrower’s interest in any of the improvements
and fixtures located upon or appurtenant to each such estate or interest,
including, without limitation, any rights of any such Borrower to payment,
proceeds or value of any kind or nature realized upon the sale, transfer or
assignment of any such estate or interest, whether or not such sale, assignment
or transfer occurs during any case commenced under the Bankruptcy
Code.
“Lender”
means
any financial institution or other Person that (a) is listed on the
signature pages hereof as a “Lender”
or
(b)
from time to time becomes a party hereto by execution of an Assignment, in
each
case together with its successors.
“Lender
Group”
means
(a) the Lenders, (b) the Administrative Agent and its Affiliates, (c) any other
Person to whom Obligations under this Agreement and the other Loan Documents
are
owing, and (d) the permitted successors and assigns of each of the
foregoing.
14
“Liabilities”
means
all claims, actions, suits, judgments, damages, losses, liabilities,
obligations, responsibilities, fines, penalties, sanctions, costs, fees, taxes,
commissions, charges, disbursements and expenses, in each case of any kind
or
nature (including interest accrued thereon or as a result thereto and fees,
charges and disbursements of financial, legal and other advisors and
consultants), whether joint or several, whether or not indirect, contingent,
consequential, actual, punitive, treble or otherwise.
“LIBOR
Base Rate”
means,
with respect to any Interest Period, the rate determined by the Administrative
Agent to be the offered rate for deposits in Dollars for the applicable Interest
Period appearing in the Wall Street Journal on the second full Business Day
next
preceding the first day of each Interest Period. In the event that such rate
does not appear on the Wall Street Journal at such time, the “LIBOR Base Rate”
shall be determined by reference to such other comparable publicly available
service for displaying the offered rate for deposit in Dollars in the London
interbank market as may be selected by the Administrative Agent and, in the
absence of availability, such other method to determine such offered rate as
may
be selected by the Administrative Agent in its sole discretion.
“Lien”
means
any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit
arrangement, encumbrance, easement, lien (statutory or other), security interest
or other security arrangement and any other preference, priority or preferential
arrangement of any kind or nature whatsoever, including any conditional sale
contract or other title retention agreement, the interest of a lessor under
a
Capital Lease and any synthetic or other financing lease having substantially
the same economic effect as any of the foregoing.
“Loan”
or
“Loans” has the meaning set forth in Section
2.1.
“Loan
Account”
means
the account identified in Section
2.9.
“Loan
Documents”
means,
collectively, this Agreement, the Intercreditor Agreement, the Notes, the
Guaranty and Security Agreement, the Pledge Agreement, the IP Security
Agreement, each Mortgage, the Control Agreements, the Canadian Security
Documents, the Fee Letter, any Perfection Certificates and each document
executed by a Loan Party and delivered to the Administrative Agent or any Lender
in connection with or pursuant to any of the foregoing or the Obligations,
together with any modification of any term, or any waiver with respect to,
any
of the foregoing.
“Loan
Party”
and
“Loan
Parties”
means
(a) the Borrowers and (b) each Guarantor.
“Material
Adverse Effect”
means
(a) a material adverse change in the business, operations, results of
operations, assets, liabilities or financial condition of the Loan Parties
taken
as a whole, (b) a material impairment of a Borrower’s ability to perform its
obligations under the Loan Documents to which it is a party or of the Secured
Parties’ ability to enforce the Obligations or realize upon the Collateral or
(c) a material impairment of the validity, enforceability, attachment,
perfection or priority of Agent’s Liens with respect to the
Collateral.
“Material
Environmental Liabilities”
means
Environmental Liabilities exceeding $7,000,000 in the aggregate.
15
“Maturity
Date”
means
the earliest to occur of (i) October 24, 2011, (ii) the date on which the
maturity of the Obligations is accelerated in accordance with the terms hereof,
or (iii) the date of the occurrence of any Event of Default pursuant to
Section
8.1(e)
or
Section
8.1(f)
hereof.
“Moody’s”
means
Xxxxx’x Investors Service, Inc., or its successor.
“Mortgage”
means
any mortgage, deed of trust or other document executed or required herein to
be
executed by any Loan Party and granting a Lien over Real Property in favor
of
the Administrative Agent as security for the Obligations.
“Mortgage
Supporting Documents”
means,
with respect to any Mortgage, each document (including title policies or
marked-up unconditional insurance binders (in each case, together with copies
of
all documents referred to therein), maps, ALTA (or TLTA, if applicable) as-built
surveys (in form and as to a date that is sufficiently acceptable to the title
insurer issuing title insurance to the Administrative Agent for such title
insurer to deliver endorsements to such title insurance as reasonably requested
by the Administrative Agent), environmental assessments and reports and evidence
regarding recording and payment of fees, insurance premium and taxes) that
the
Administrative Agent may reasonably request, to create, register, perfect,
maintain, evidence the existence, substance, form or validity of or enforce
a
valid Lien on the Eligible Real Property in favor of the Administrative Agent
for the benefit of the Secured Parties, subject only to such Permitted
Liens.
“Multiemployer
Plan”
means
any multiemployer plan within the meaning of §3(37) of ERISA maintained or
contributed to by any Borrower or any ERISA Affiliate.
“Net
Cash Proceeds”
means
proceeds received in cash from (a) any Sale of, or Property Loss Event with
respect to, property, net of (i) the customary out-of-pocket cash costs, fees
and expenses paid or required to be paid in connection therewith, (ii) taxes
paid or reasonably estimated to be payable as a result thereof and
(iii) any amount required to be paid or prepaid on Indebtedness (other than
the Obligations and Indebtedness owing to any Loan Party) secured by the
property subject thereto or (b) any sale or issuance of Stock or incurrence
of
Indebtedness, in each case net of brokers’, advisors’ and investment banking
fees and other customary out-of-pocket underwriting discounts, commissions
and
other customary out-of-pocket cash costs, fees and expenses, in each case
incurred in connection with such transaction; provided,
however,
that
any such proceeds received by any Subsidiary of the Borrower that is not a
Wholly Owned Subsidiary of the Borrower shall constitute “Net
Cash Proceeds”
only
to
the extent of the aggregate direct and indirect beneficial ownership interest
of
the Borrower therein.
“Note”
means
a
promissory note of the Borrower, in substantially the form of Exhibit B, payable
to the order of a Lender in a principal amount equal to the amount of such
Lender’s Loan.
“Obligations”
means,
with respect to any Loan Party, all amounts, obligations, liabilities, covenants
and duties of every type and description owing by such Loan Party to the
Administrative Agent, any Lender, any other Indemnitee, any participant, whether
direct or indirect (regardless of whether acquired by assignment), absolute
or
contingent, due or to become due, whether liquidated or not, now existing or
hereafter arising and however acquired, and whether or not evidenced by any
instrument or for the payment of money, including, without duplication, (a)
the
Term Loan, (b) all interest, whether or not accruing after the filing of any
petition in bankruptcy or the commencement of any insolvency, reorganization
or
similar proceeding, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding, and (c) all other fees, expenses
(including fees, charges and disbursement of counsel), interest, commissions,
charges, costs, disbursements, indemnities and reimbursement of amounts paid
and
other sums chargeable to such Loan Party under any Loan Document.
16
“Parent”
has
the
meaning specified in the preamble.
“Patents”
means
all rights, title and interests (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to letters patent and applications
therefor.
“PBGC”
means
the Pension Benefit Guaranty Corporation created by §4002 of ERISA and any
successor entity or entities having similar responsibilities.
“Perfection
Certificate”
means,
collectively, (a) the Perfection Certificate submitted by the U.S. Borrowers
to
the Administrative Agent on the Closing Date, together with the completed
responses to the inquiries set forth therein, and (b) the Perfection Certificate
submitted by Bombay Canada to the Administrative Agent, together with Bombay
Canada’s completed responses to the inquiries set forth therein, each in form
and substance reasonably satisfactory to the Administrative Agent, together
with
any amendments, modifications or supplements thereto.
“Permitted
Acquisition”
means
acquisitions of all or substantially all of the assets of a Person in or of
any
division or business line of a Person or Stock of a Person; provided,
(a) the
Administrative Agent shall receive at least 3 Business Days prior written notice
of such acquisition, which notice shall include a reasonably detailed
description of such acquisition, (b) such assets are located in the United
States or Canada (except that such location requirement shall not apply to
acquisitions of assets or stores from a licensee or franchisee of any Loan
Party) and are those assets of a business that would comply with Section 6.2(d),
and
which business would not subject the Administrative Agent or any Lender to
regulatory or third party approvals in connection with the exercise of its
rights and remedies under this Agreement or any Loan Documents, (c) no Default
or Event of Default exists prior to or immediately after giving effect to such
acquisition, (d) the Administrative Agent is granted a valid perfected Lien
in
the assets so acquired to the extent and in the manner contemplated by the
Loan
Documents (subject only to Permitted Liens) and the applicable Loan Party shall
have delivered to the Administrative Agent evidence reasonably satisfactory
to
the Administrative Agent that all Liens with respect to the assets so acquired,
other than Permitted Liens, have been discharged in full, (e) the seller of
such
assets or Stock is not an Affiliate of any Loan Party, (f) the terms of such
acquisition are on an arms length basis, (g) Section
6.11
is
complied with at the time of consummation of such acquisition (or concurrently
therewith), (h) the board of directors and (if required by applicable law)
the
shareholders, or the equivalent thereof, of the business to be acquired has
approved such acquisition, (i) the applicable Loan Party shall have delivered
to
Administrative Agent evidence satisfactory to the Administrative Agent that
such
Loan Party has completed such acquisition in accordance with the terms of the
contracts and agreements entered into by such Person in connection with such
acquisition, and (ii) certified copies of all such documents shall have been
delivered to the Administrative Agent, (i) no additional Indebtedness,
contingent obligations or other liabilities shall be incurred assumed or
otherwise be reflected on a consolidated balance sheet of the Borrowers after
giving effect to such acquisition, except, (i) ordinary
course trade payables, accrued expenses and unsecured Indebtedness of the
Borrowers and (ii) Indebtedness otherwise permitted under Section
7.1,
(j)
after giving effect to any such acquisition, Availability shall not be less
than
$25,000,000 and the Parent shall have delivered to the Administrative Agent
a
Compliance Certificate and Projections demonstrating that the Borrowers shall
have Availability of at least $25,000,000 at all times for the two (2) Fiscal
Quarters immediately succeeding such acquisition and (k) such acquisitions
are
contemplated by the Business Plan.
17
“Permitted
Discretion”
means
a
determination made in good faith and in the exercise of reasonable (from the
perspective of a secured asset-based lender) business judgment.
“Permitted
Dispositions”
means
(a) sales or other dispositions by any Loan Party of equipment that is
substantially worn, damaged, or obsolete in the ordinary course of business,
(b)
sales by any Loan Party of inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents by any Loan
Party
in a manner that is not prohibited by the terms of this Agreement or the other
Loan Documents, (d) the licensing by any Loan Party, on a non-exclusive basis,
of Intellectual Property in the ordinary course of business, (e) a disposition
between the Borrowers, (f) the surrender or waiver of contract rights or the
disposition, settlement, release or surrender of contract, tort or other claims
of any kind in the ordinary course of business, for reasonable consideration
negotiated on an arm’s length basis, (g) any disposition of defaulted
receivables that arose in the ordinary course of business for collection, (h)
the entering into of real property leases in respect of any portion of the
Bombay Office Complex in the ordinary course of business, (i) inventory sales
and other dispositions conducted in accordance with Section 6.19, and (j) the
sale of the Eligible Real Property, so long as the Net Cash Proceeds are applied
in accordance with Section
2.5(a).
“Permitted
Investments”
means
(a) Investments in cash and Cash Equivalents, (b) Investments in negotiable
instruments for collection, (c) advances made in connection with purchases
of
goods or services in the ordinary course of business, (d) Investments received
in settlement of amounts due to any Loan Party effected in the ordinary course
of business or owing to a Loan Party as a result of Insolvency Proceedings
involving an Account Debtor or upon the foreclosure or enforcement of any Lien
in favor of any Loan Party, (e) (i) Investments in a Borrower or Guarantor
and
(ii) to the extent otherwise permitted hereunder, Investments in any Person
that, simultaneously with such Investment becomes a Subsidiary of Parent, and
complies with Section
6.11
hereof;
provided,
however,
that
after giving effect to any such Permitted Investments pursuant to clauses
(e) (ii)
above,
Availability shall not be less than $25,000,000 and the Parent shall have
delivered to the Administrative Agent a Compliance Certificate and Projections
demonstrating that Borrowers shall have Availability of at least $25,000,000
at
all times for the two (2) Fiscal Quarters immediately succeeding such Permitted
Investments, (f) Investments in The Bombay Furniture Company, Inc. in an amount
not to exceed $5,000,000 in any Fiscal Year; (g) Investments the net aggregate
book value of which does not at any time exceed the amount of $1,000,000 and
(h)
so long as no First Lien Debt is outstanding, investments in (i) commercial
notes and bonds or variable rate demand notes, issued by any commercial
institution with a rating of not less than A, as determined by S&P or
Xxxxx’x, (ii) Eurodollar deposits, and (iii) money market or other mutual funds
substantially all of whose assets comprise securities of the types described
in
the definition of “Cash Equivalents” or clause
(h)
hereof;
provided,
that no
such Investments permitted under this clause (h) shall be permitted (i) after
the occurrence of a Default or Event of Default, and (ii) unless such
Investments are pledged to the Administrative Agent as additional Collateral
for
the Obligations pursuant to such agreements as may be required by the
Administrative Agent in its Permitted Discretion.
“Permitted
Liens”
means
(a) Liens held by the Administrative Agent for the benefit of the Administrative
Agent and the Lenders, as applicable, (b) Liens for unpaid taxes that
either (i) are not yet delinquent, or (ii) do not constitute an Event
of Default hereunder and are the subject of Permitted Protests, (c) Liens set
forth on Schedule
7.2,
(d) the
interests of lessors under operating leases, (e) Liens in favor of the First
Lien Agent securing the First Lien Debt, (f) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such
Lien
attaches only to the asset purchased or acquired and the proceeds thereof,
(g)
Liens arising by operation of law including those in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred
in
the ordinary course
of
the Borrowers’ business and not in connection with the borrowing of money, and
which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted
18
“Permitted
Office Building Indebtedness”
means,
following the release of the Eligible Real Property in accordance with
Section
6.19,
Indebtedness incurred by a Borrower or any of its Subsidiaries in an aggregate
principal amount at any time outstanding not to exceed 90% of the appraised
value (based upon an independent third-party appraisal) of the portion of the
Bombay Office Complex securing such Indebtedness on terms reasonably acceptable
to the Administrative Agent.
“Permitted
Protest”
means
the right of Parent or any of its Subsidiaries, as applicable, to protest any
Lien (other than any such Lien that secures the Obligations), taxes (other
than
payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment; provided
that (a)
a reserve with respect to such obligation is established on the Books in such
amount as is required under GAAP, (b) any such protest is instituted promptly
and prosecuted diligently by Parent or any of its Subsidiaries, as applicable,
in good faith, and (c) the Administrative Agent is satisfied that, while any
such protest is pending, there will be no impairment of the enforceability,
validity, perfection or priority of any of the Administrative Agent’s
Liens.
“Permitted
Purchase Money Indebtedness”
means,
as of any date of determination, Purchase Money Indebtedness incurred after
the
Closing Date in an aggregate amount outstanding at any one time not in excess
of
$2,000,000. In no event shall Permitted Purchase Money Indebtedness include
Indebtedness incurred for the purpose of financing all or any part of the
acquisition Cost of any inventory.
“Person”
means
any individual, partnership, corporation (including a business trust and a
public benefit corporation), joint stock company, estate, association, firm,
enterprise, trust, limited liability company, unincorporated association, joint
venture and any other entity or Governmental Authority.
19
“Pledge
Agreements”
means
the pledge agreement, in substantially the form of Exhibit E,
dated
as of even date herewith, among the Administrative Agent and certain of the
Borrowers.
“PPSA”
means
the Personal Property Security Act (Ontario), or, where the context requires,
the legislation of other provinces or territories in Canada relating to security
in personal property generally, including Accounts and inventory, as adopted
by
and in effect from time to time in such provinces or territories in Canada,
as
applicable.
“Projections”
means,
collectively, the Initial Projections and any document delivered pursuant to
Section 5.3(c).
“Property
Loss Event”
means,
with respect to any property, any loss of or damage to such property or any
taking of such property or condemnation thereof.
“Pro
Rata Share”
means,
with respect to any Lender as of any date of determination, the percentage
obtained by dividing (a) the sum of the outstanding principal amount of the
Loan
of such Lender on such date by (b) the outstanding principal amount of the
Term
Loan on such date.
“Purchase
Money Indebtedness”
means
Indebtedness (other than the Obligations, but including obligations in respect
of Capital Leases), incurred at the time of, or within 20 days after, the
acquisition of any fixed assets, including, without limitation, software, for
the purpose of financing all or any part of the acquisition cost thereof,
together with any refinancings thereof under Section
7.1(c).
“Qualified
Import Letter of Credit”
has
the
meaning ascribed to it in the First Lien Credit Agreement as in effect on the
date hereof.
“Real
Property”
means
any estates or interests in real property now owned or hereafter acquired by
any
Borrower or a Subsidiary of any Borrower and the improvements
thereto.
“Record”
means
information that is inscribed on a tangible medium or which is stored in an
electronic or other medium and is retrievable in perceivable form.
“Register”
has
the
meaning specified in Section
2.10(b).
“Related
Person”
means,
with respect to any Person, each Affiliate of such Person and each director,
officer, employee, consultant, agent, trustee, representative, attorney,
accountant and each insurance, environmental, legal, financial and other advisor
(including those retained in connection with the satisfaction or attempted
satisfaction of any condition set forth in Article III)
of or
to such Person or any of its Affiliates, together with, if such Person is the
Administrative Agent, each other Person or individual designated, nominated
or
otherwise appointed by or assisting the Administrative Agent pursuant to
Section
9.4
or any
comparable provision of any Loan Document.
“Remedial
Action”
means
all actions taken to (a) clean up, remove, remediate, contain, treat, monitor,
assess, evaluate, or in any way address Hazardous Materials in the indoor or
outdoor environment, (b) prevent or minimize a release or threatened release
of
Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) perform
any
pre-remedial studies, investigations, or post-remedial operation and maintenance
activities, or (d) conduct any other actions authorized by 42 USC
§9601.
20
“Required
Lenders”
means,
at any time, Lenders holding in excess of 51% of the principal amount of the
Term Loan outstanding at such time.
“Requirements
of Law”
means,
with respect to any Person, collectively, the common law and all federal, state,
provincial, local, foreign, multinational or international laws, statutes,
codes, treaties, standards, rules and regulations, guidelines, ordinances,
orders, judgments, writs, injunctions, decrees (including administrative or
judicial precedents or authorities) and the interpretation or administration
thereof by, and other determinations, directives, requirements or requests
of,
any Governmental Authority, in each case whether or not having the force of
law
and that are applicable to or binding upon such Person or any of its property
or
to which such Person or any of its property is subject.
“Responsible
Officer”
means,
with respect to any Person, any of the president, chief executive officer,
chief
financial officer, treasurer, assistant treasurer, controller, managing member
or general partner of such Person but, in any event, with respect to financial
matters, any such officer that is responsible for preparing the Financial
Statements delivered hereunder and, with respect to the Corporate Chart and
other documents delivered pursuant to Section 5.3(h),
documents delivered on the Closing Date or the Funding Date and documents
delivered pursuant to Section 6.10,
the
secretary or assistant secretary of such Person or any other officer responsible
for maintaining the corporate and similar records of such Person.
“S&P”
means
Standard & Poor’s Rating Services, or its successor.
“SEC”
means
the United States Securities and Exchange Commission and any successor
thereto.
“Secured
Parties”
means
the Lenders, the Administrative Agent, each other Indemnitee and any other
holder of any Obligation of any Loan Party.
“Security”
means
all Stock, Stock Equivalents, voting trust certificates, bonds, debentures,
instruments and other evidence of Indebtedness, whether or not secured,
convertible or subordinated, all certificates of interest, share or
participation in, all certificates for the acquisition of, and all warrants,
options and other rights to acquire, any Security.
“Sell”
means,
with respect to any property, to sell, convey, transfer, assign, license, lease
or otherwise dispose of, any interest therein or to permit any Person to acquire
any such interest, including, in each case, through a sale and leaseback
transaction or through a sale, factoring at maturity, collection of or other
disposal, with or without recourse, of any notes or accounts receivable.
Conjugated forms thereof and the noun “Sale”
have
correlative meanings.
“Solvent”
means,
with respect to any Person, as of any date of determination, that, as of such
date, (i) the value of the assets of such Person (both at fair value and present
fair saleable value) is greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person, (ii) such Person is
able to pay all liabilities of such Person as such liabilities mature and (iii)
such Person, as of the Funding Date, does not have unreasonably small capital.
In computing the amount of contingent or unliquidated liabilities at any time,
such liabilities shall be computed at the amount that, in light of all the
facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
21
“Stock”
means
all shares of capital stock (whether denominated as common stock or preferred
stock), equity interests, beneficial, partnership or membership interests,
joint
venture interests, participations or other ownership or profit interests in
or
equivalents (regardless of how designated) of or in a Person (other than an
individual), whether voting or non-voting.
“Stock
Equivalents”
means
all securities convertible into or exchangeable for Stock or any other Stock
Equivalent and all warrants, options or other rights to purchase, subscribe
for
or otherwise acquire any Stock or any other Stock Equivalent, whether or not
presently convertible, exchangeable or exercisable.
“Store
Accounts”
means
an account designated as such on Schedule
8
of the
Perfection Certificate.
Subsidiary”
means,
with respect to any Person, any corporation, partnership, joint venture, limited
liability company, association or other entity, the management of which is,
directly or indirectly, controlled by, or of which an aggregate of more than
50%
of the outstanding Voting Stock is, at the time, owned or controlled directly
or
indirectly by, such Person or one or more Subsidiaries of such
Person.
“Synthetic
Lease”
means
any lease of goods or other property, whether real or personal, which is treated
as an operating lease under GAAP and as a loan or financing for United States
income tax purposes.
“Taxes”
has
the
meaning specified in Section
2.12.
“Term
Loan”
has
the
meaning specified in Section
2.1.
“Title
IV Plan”
means
a
pension plan subject to Title IV of ERISA, other than a Multiemployer Plan,
to
which any ERISA Affiliate incurs or otherwise has any obligation or liability,
contingent or otherwise.
“Trademarks”
means
all rights, title and interests (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade
styles, service marks, logos and other source or business identifiers and,
in
each case, all goodwill associated therewith, all registrations and recordations
thereof and all applications in connection therewith.
“Trade
Secrets”
means
all right, title and interest (and all related IP Ancillary Rights) arising
under any Requirement of Law in or relating to trade secrets.
“UCC”
means
the Uniform Commercial Code of any applicable jurisdiction and, if the
applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform
Commercial Code as in effect in the State of New York.
22
“Underlying
Issuer”
has
the
meaning ascribed to it in the First Lien Credit Agreement as in effect on the
date hereof.
“Underlying
Letter of Credit”
has
the
meaning ascribed to it in the First Lien Credit Agreement as in effect on the
date hereof.
“United
States”
means
the United States of America.
“U.S.
Borrowers”
means
Borrowers other than Bombay Canada.
“U.S.
Eligible In-Transit Inventory”
means
inventory of the U.S. Borrowers that does not qualify as Eligible Inventory
under clause
(b)
of the
definition of Eligible Inventory solely because it is not at a location in
the
United States set forth on Schedule
4(b)
of the
Perfection Certificate or in transit among such locations in the United States
and that meets the following criteria, which criteria may be revised by the
Administrative Agent in its Permitted Discretion from time to time after the
Closing Date:
(a) the
inventory was the subject of a Qualified Import Letter of Credit, or was paid
for in full by a U.S. Borrower;
(b) such
inventory currently is in transit (whether by vessel, air, or land) to a
location set forth on Schedule
4(b)
of the
Perfection Certificate
in the
United States that is the subject of a Bailee Acknowledgment or a Collateral
Access Agreement;
(c) title
to
such inventory has passed to the applicable U.S. Borrower;
(d) such
inventory is insured against types of loss, damage, hazards, and risks, and
in
amounts, satisfactory to the Administrative Agent in its Permitted
Discretion;
(e) the
Parent has provided a certificate to the Administrative Agent that certifies
that, to the best knowledge of the Borrowers, such inventory meets all of the
Borrowers’ representations and warranties contained in the Loan Documents
concerning Eligible Inventory, that the Borrowers know of no reason why such
inventory would not be accepted by the applicable Borrower when it arrives
in
the United States, and that the shipment as evidenced by the documents conforms
to the related order documents; and
(f) if
subject to a Qualified Import Letter of Credit, the Underlying Letter of Credit
has been drawn upon and the Underlying Issuer has honored such drawing and
the
Administrative Agent has honored its obligations to the Underlying Issuer under
the applicable Qualified Import Letter of Credit.
“Voting
Stock”
means
Stock of any Person having ordinary power to vote in the election of members
of
the board of directors, managers, trustees or other controlling Persons, of
such
Person (irrespective of whether, at the time, Stock of any other class or
classes of such entity shall have or might have voting power by reason of the
occurrence of any contingency).
“Wholesale”
means
Bombay International, Inc.
23
“Wholly
Owned Subsidiary”
of
any
Person means any Subsidiary of such Person, all of the Stock of which (other
than nominal holdings and director’s qualifying shares) is owned by such Person,
either directly or through one or more Wholly Owned Subsidiaries of such
Person.
Section
1.2 UCC
Terms.
The
following terms have the meanings given to them in the applicable UCC:
“commodity
account”,
“commodity
contract”,
“commodity
intermediary”,
“deposit
account”,
“entitlement
holder”,
“entitlement
order”,
“equipment”,
“financial
asset”,
“general
intangible”,
“goods”,
“instruments”,
“inventory”,
“securities
account”,
“securities
intermediary”,
“security
entitlement”
and
“supporting
obligations”.
Section
1.3 Accounting
Terms and Principles.
(a) GAAP.
If any
change in any accounting practice is required by GAAP (or any successor of
the
foregoing) in order for such principle or practice to continue as a generally
accepted accounting principle or practice, all reports and financial statements
required hereunder or in connection herewith may be prepared in accordance
with
such change, but all calculations and determinations to be made hereunder may
be
made in accordance with such change only after notice of such change is given
to
each Lender, and the Borrowers, the Required Lenders and the Administrative
Agent agree to such change. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP applied on a consistent basis by
the
accounting entity to which they refer. When used herein, the term “financial
statements” shall include the notes and schedules thereto. Whenever the term
“Borrowers” or the term “Parent” is used in respect of a financial covenant or a
related definition, it shall be understood to mean Parent and its Subsidiaries
on a consolidated basis unless the context clearly requires otherwise. Unless
otherwise expressly provided herein or unless Required Lenders otherwise
consent, all financial statements and reports furnished to the Administrative
Agent or any Lender hereunder shall be prepared, all financial computations
and
determinations pursuant hereto shall be made, and all terms of an accounting
or
financial nature shall be construed, in accordance with GAAP.
Section
1.4 Interpretation.
(a) Certain
Terms.
Except
as set forth in any Loan Document, all accounting terms not specifically defined
herein shall be construed in accordance with GAAP. The terms “herein”,
“hereof”
and
similar terms refer to this Agreement as a whole. In the computation of periods
of time from a specified date to a later specified date in any Loan Document,
the terms “from”
means
“from and including” and the words “to”
and
“until”
each
mean “to but excluding” and the word “through”
means
“to and including.” In any other case, the term “including”
when
used in any Loan Document means “including without limitation.” The term
“documents”
means
all writings, however evidenced and whether in physical or electronic form,
including all documents, instruments, agreements, notices, demands,
certificates, forms, financial statements, opinions and reports. The term
“incur”
means
incur, create, make, issue, assume or otherwise become directly or indirectly
liable in respect of or responsible for, in each case whether directly or
indirectly, and the terms “incurrence” and “incurred” and similar derivatives
shall have correlative meanings.
(b) Certain
References.
Unless
otherwise expressly indicated, references (i) in this Agreement to an
Exhibit, Schedule, Article, Section or clause refer to the appropriate Exhibit
or Schedule to, or Article, Section or clause in, this Agreement and (ii) in
any
Loan Document, to (A) any agreement shall include, without limitation, all
exhibits, schedules, appendixes and annexes to such agreement and, unless the
prior consent of any Secured Party required therefor is not obtained, any
amendment, restatement, amendment and restatement or other modification of
such
agreement, (B) any statute shall be to such statute as amended or otherwise
modified from time to time and to any successor legislation thereto, in each
case as in effect at the time any such reference is operative and (C) any
time of day shall be a reference to New York time. Titles of articles, sections,
clauses, exhibits, schedules and annexes contained in any Loan Document are
without substantive meaning or content of any kind whatsoever and are not a
part
of the agreement between the parties hereto. Unless otherwise expressly
indicated, the meaning of any term defined (including by reference) in any
Loan
Document shall be equally applicable to both the singular and plural forms
of
such term.
24
ARTICLE
II
THE
FACILITY
Section
2.1 Term
Loan.
(a)Each
Lender, severally and not jointly with any other Lender, agrees, upon the terms
and subject to the conditions herein set forth, to make a loan (each, a
“Loan”
and
collectively, the “Term
Loan”)
to the
Borrowers on the Funding Date in the respective original principal amounts
set
forth on Schedule
2.1
hereto;
provided, however, the Funding Date shall have occurred on or before June 4,
2007.
Section
2.2 Joint
and Several Liability.
(a) Notwithstanding
any provision to the contrary in any Loan Document, all Obligations of the
Borrowers under this Agreement are joint and several Obligations of the
Borrowers in consideration of the financial accommodations to be provided by
the
Administrative Agent and Lenders under this Agreement, for the mutual benefit,
directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations. Each Borrower, hereby irrevocably and unconditionally accepts,
not merely as a surety but also as a co-debtor, joint and several liability
with
the other Borrowers, with respect to the payment and performance of all of
the
Obligations.
(b) The
provisions of this Section 2.2(b)
are made
for the benefit of the Secured Parties, and assigns, and may be enforced by
it
or them from time to time against any or all Borrowers as often as occasion
therefore may arise and without requirement on the part of any such Secured
Parties first to marshal any of its or their claims or to exercise any of its
or
their rights against any of the other Borrowers or to exhaust any remedies
available to it or them against any of the other Borrowers or to resort to
any
other source or means of obtaining payment of any of the Obligations hereunder
or to elect any other remedy. The provisions of this Section 2.2(b)
shall
remain in effect until all of the Obligations shall have been indefeasibly
paid
in full or otherwise fully satisfied. If at any time, any payment or any part
thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by Secured Party upon the insolvency,
bankruptcy or reorganization of any of Borrowers, or otherwise, the provisions
of this Section 2.2(b)
will
forthwith be reinstated in effect, as though such payment had not been
made.
25
(c) Each
Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against the Borrowers with respect to any liability
incurred by it hereunder or under any of the other Loan Documents, any payments
made by it to any Secured Party with respect to any of the Obligations or any
collateral security therefore until such time as all of the Obligations have
been paid in full in cash. Any claim which any Borrower may have against any
other Borrower with respect to any payments to any Secured Party hereunder
or
under any other Loan Documents are hereby expressly made subordinate and junior
in right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(i) Each
Borrower hereby agrees that, after the occurrence and during the continuance
of
any Default or Event of Default, the payment of any amounts due with respect
to
the Indebtedness owing by any Borrower to any other Borrower is hereby
subordinated to the prior payment in full in cash of the Obligations. Each
Borrower hereby agrees that after the occurrence and during the continuance
of
any Default or Event of Default, such Borrower will not demand, xxx for or
otherwise attempt to collect any indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been indefeasibly paid in full
in
cash. If, notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced and received by such Borrower as trustee for the
Administrative Agent, and such Borrower shall deliver any such amounts to the
Administrative Agent for application to the Obligations in accordance with
Section 2.8(b).
Section
2.3 Repayment
of Term Loan.
The
Borrowers promise to repay the entire unpaid principal amount of the Term Loan
on the Maturity Date.
Section
2.4 Optional
Prepayments.
(a)
The
Borrowers shall have the right at any time and from time to time to prepay
the
outstanding Term Loan in whole or in part, upon at least two (2) Business Days’
prior written, telex or facsimile notice to the Administrative Agent, prior
to
1:00 p.m., New York time, subject in each case to the following
limitations:
(i) All
prepayments shall be paid to the Administrative Agent for application to the
Loans, pro rata, based upon Pro Rata Shares of the Lenders;
(ii) Each
optional prepayment of the Term Loan shall be in an amount equal to $1,000,000
or in an integral multiple of $100,000 in excess thereof;
(iii) If
such
prepayment shall occur on or prior to the second anniversary of the Funding
Date, such prepayment shall be accompanied by the additional premium required
pursuant to Section
2.7(a);
and
(iv) Each
notice of prepayment shall specify the prepayment date and the principal amount
of the Term Loan to be prepaid. Each notice of prepayment shall be irrevocable
and shall commit the Borrowers to prepay the Term Loan by the amount and on
the
date stated therein. The Administrative Agent shall, promptly after receiving
notice from the Borrowers hereunder, notify each Lender of the principal amount
of the Loan held by such Lender which is to be prepaid, the prepayment date
and
the manner of application of the prepayment.
26
(b) The
Borrowers shall reimburse each Lender on demand for any actual loss incurred
or
to be incurred by such Lender (i) resulting from any prepayment (for any reason
whatsoever, including, without limitation acceleration by virtue of, and after,
the occurrence of an Event of Default) of its Loan required or permitted under
this Agreement, if such Loan is prepaid other than on the last day of the
Interest Period. Such loss shall be the amount (herein, collectively,
“Breakage
Costs”)
as
reasonably determined by such Lender as the excess, if any, of (A) the amount
of
interest which would have accrued to such Lender on the amount so paid at a
rate
of interest equal to the LIBOR Base Rate for such Loan plus the Applicable
Margin, for the period from the date of such payment to the last day other
than
on the last day of the then current Interest Period, over (B) the amount of
interest which would have accrued to such Lender on such amount by placing
such
amount on deposit for a comparable period with leading banks in the London
interbank market. Any Lender demanding reimbursement for such loss shall deliver
to the Borrower from time to time one or more certificates setting forth the
amount of such loss as determined by such Lender and setting forth in reasonable
detail the manner in which such amount was determined.
(c) In
the
event any Borrower fails to prepay any Loan on the date specified in any
prepayment notice delivered pursuant to Section 2.3(a), the Borrowers, on demand
by any Lender, shall pay to the Administrative Agent, for the account of such
Lender, any amounts required to compensate such Lender for any loss incurred
by
such Lender as a result of such failure to prepay, including, without
limitation, any loss, cost or expenses incurred by reason of the acquisition
of
deposits or other funds by such Lender to fulfill deposit obligations incurred
in anticipation of such prepayment. Any Lender demanding such payment shall
deliver to the Borrower from time to time one or more certificates setting
forth
the amount of such loss as determined by such Lender and setting forth in
reasonable detail the manner in which such amount was determined.
Section
2.5 Mandatory
Prepayments.
(a) Asset
Sales and Property Loss Events.
Upon
receipt on or after the Funding Date by any Loan Party or any of its
Subsidiaries of Net Cash Proceeds arising from (i) any Sale of Eligible Real
Property or (ii) and Property Loss Event with respect to Eligible Real Property,
the Borrowers shall immediately, if requested by the Required Lenders after
advance notice thereto, prepay the Term Loan in an amount equal to all such
proceeds, net of amounts used to repay and permanently reduce the First Lien
Debt; provided,
however,
that in
the event of a partial Property Loss Event with respect to the Eligible Real
Property, (i) the Borrowers may in lieu of such prepayment immediately pay
or
cause to be paid the insurance proceeds associated with such loss to a
segregated account over which the Administrative Agent has a valid perfected
Lien for use by the Borrowers solely to repair such loss or damage to property
and (ii) the Borrowers shall not be required to pay or cause such proceeds
to be
paid to the Administrative Agent to the extent (A) the Borrowers reinvest or
commit to reinvest such proceeds within 9 months of the occurrence of the
partial Property Loss Event and (B) the Borrowers diligently pursue repairing
the loss or damage to such Eligible Real Property. The Borrowers shall deliver
to the Administrative Agent within 21 days of such partial Property Loss Event
an updated appraisal with respect to such Eligible Real Property.
27
(b) Application
of Payments.
Any
payments made to the Administrative Agent pursuant to this Section 2.5
shall be
applied to the Obligations in accordance with Section 2.7(b).
Section
2.6 Interest.
(a) Rate. Subject
to Section
2.6,
the
Term Loan shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) at a rate per annum equal to, during
each
Interest Period applicable thereto, the LIBOR Base Rate for such Interest
Period, plus the Applicable Margin.
Accrued
interest on the Term Loan shall be payable in arrears on each Interest Payment
Date, on the Maturity Date (whether by acceleration or otherwise), after such
Maturity Date on demand and upon any repayment or prepayment thereof (on the
amount prepaid).
(b) Payments.
Interest accrued shall be payable in arrears, (i) if accrued on the principal
amount of the Term Loan, at maturity (whether by acceleration or otherwise),
and
on the last day of each Interest Period, and (ii) if accrued on any other
Obligation, on demand from and after the time such Obligation is due and payable
(whether by acceleration or otherwise).
(c) Default
Interest.
Notwithstanding the rates of interest specified in clause (a)
above or
elsewhere in any Loan Document, effective immediately upon (i) the occurrence
of
any Event of Default under Sections 8.1(a),
8.1(e) or 8.1(f)
or (ii)
the delivery of a notice by the Administrative Agent or the Required Lenders
to
the Borrowers during the continuance of any other Event of Default and, in
each
case, for as long as such Event of Default shall be continuing, the principal
balance of all Obligations (including any Obligation that bears interest by
reference to the rate applicable to any other Obligation) then due and payable
shall, [subject to the Interest
Act (Canada)],
bear interest at a rate that is 2% per annum in excess of the interest rate
applicable to such Obligations from time to time, payable on demand or, in
the
absence of demand, on the date that would otherwise be applicable.
(d) Limitation
on Interest.
[If any
provision of this Agreement or of any of the other Loan Documents would obligate
any Borrower or any other Loan Party to make any payment of interest or other
amount payable to any Lender in an amount or calculated at a rate which would
be
prohibited by law or would result in a receipt by such Lender of interest at
a
criminal rate (as such terms are construed under the Criminal
Code
(Canada)) then, notwithstanding such provisions, such amount or rate shall
be
deemed to have been adjusted with retroactive effect to the maximum amount
or
rate of interest, as the case may be, as would not be so prohibited by law
or so
result in a receipt by such Lender of interest at a criminal rate, such
adjustment to be effected, to the extent necessary, as follows: (1) firstly,
by
reducing the amount or rate of interest required to be paid to such Lender
under
this Section
2.6,
and (2)
thereafter, by reducing any fees, commissions, premiums and other amounts
required to be paid to such Lender which would constitute “interest”
for
purposes of Section 347 of the Criminal
Code (Canada).
Notwithstanding the foregoing, and after giving effect to all adjustments
contemplated thereby, if a Lender shall have received an amount in excess of
the
maximum permitted by that section of the Criminal
Code
(Canada), such Borrower shall be entitled, by notice in writing to such Lender,
to obtain reimbursement from such Lender in an amount equal to such excess
and,
pending such reimbursement, such amount shall be deemed to be an amount payable
by such Lender to such Borrower. Any amount or rate of interest referred to
in
this Section
2.6(d)
shall be
determined in accordance with generally accepted actuarial practices and
principles as an effective annual rate of interest over the term that the Term
Loan remains outstanding on the assumption that any charges, fees or expenses
that fall within the meaning of “interest”
(as
defined in the Criminal
Code
(Canada)) shall, if they relate to a specific period of time, be pro-rated
over
that period of time and otherwise be pro-rated over the period from the Funding
Date to the Maturity Date and, in the event of a dispute, a certificate of
a
Fellow of the Canadian Institute of Actuaries appointed by the Administrative
Agent shall be conclusive for the purposes of such determination.]
28
(e) Interest
Act
(Canada).
For
purposes of disclosure pursuant to the Interest
Act
(Canada), the annual rates of interest or fees to which the rates of interest
or
fees provided in this Agreement and the other Loan Documents (and stated herein
or therein, as applicable, to be computed on the basis of a 360 day year or
any
other period of time less than a calendar year) are equivalent are the rates
so
determined multiplied by the actual number of days in the applicable calendar
year and divided by 360 or such other period of time, respectively.
Section
2.7 Fees.
(a) Prepayment
Fee.
In the
event that all or any part of the Term Loan is prepaid or repaid for any reason,
on or before the second anniversary of the Funding Date, the Borrowers shall
pay
to the Administrative Agent, an additional premium (to be paid to the Lenders
pro rata, in accordance with the original principal amount of their respective
Loans, as liquidated damages and compensation for the costs of being prepared
to
make funds available hereunder with respect to the Term Loan) in an amount
equal
to: (i) 2.00% of the amount which is prepaid or repaid, if such repayment or
prepayment occurs on or at any time prior to the first anniversary of the
Funding Date; (ii) 1.50% of the amount which is prepaid or repaid, if such
repayment or prepayment occurs at any time after the first anniversary of the
Funding Date but on or prior to the second anniversary of the Funding Date;
and
(iii) 0% thereafter.
(b)
Other
Fees.
The
Borrower shall pay to the Administrative Agent, on behalf of the Lenders, the
fees set forth in the Fee Letter as and when payment of such fees is due as
therein set forth.
(c)
Fee
Payment.
All
fees shall be paid on the dates due, in immediately available funds, to the
Administrative Agent for the respective accounts of the Administrative Agent
and
other Credit Parties as provided herein. Once due, all fees shall be fully
earned and shall not be refundable under any circumstances.
Section
2.8 Application
of Payments.
(a) Application
of Payments.
Unless
otherwise provided elsewhere in any Loan Document (including the Intercreditor
Agreement), all payments and other amounts received by the Administrative Agent
and all funds on deposit in any Cash Collateral Account and other proceeds
of
the Collateral, shall be applied (i) first,
to pay
Obligations in respect of any cost or expense reimbursements, fees or
indemnities then due to the Administrative Agent, (ii) second,
to pay
Obligations in respect of any cost or expense reimbursements, fees or
indemnities then due to the Lenders, pro rata, in accordance with the amount
of
such costs, expenses, reimbursements, fees or indemnities then payable to the
respective Lenders, (iii) third,
to pay
interest then due and payable in respect of the Obligations, pro rata, in
accordance with the amount of interest payable to the respective Lenders, (iv)
fourth,
to
repay the outstanding principal amounts of the Term Loan, pro rata to the
Lenders, in accordance with the outstanding principal amount of their respective
Loans, and (v) fifth,
to the
ratable payment of all other Obligations, pro rata to the members of the Lender
Groups, in accordance with the amount of such Obligations payable
thereto.
29
Section
2.9 Payments
and Computations.
(a) Procedure.
(i) The
Borrowers shall make each payment under any Loan Document not later than
1:00 p.m. on the day when due to the Administrative Agent by wire transfer
to the following account (the “Loan
Account”)
(or at
such other account or by such other means to such other address as the
Administrative Agent shall have notified the Borrowers in writing within a
reasonable time prior to such payment) in immediately available Dollars and
without setoff or counterclaim:
ABA
No.:
000000000
Account
No.: 4602287049
Name
of
Bank: Xxxx xx Xxxxxxx - Xxxxxx, XX
Account
Name: 1093 OnShore Funding
Reference:
The Bombay Company
The
Administrative Agent shall promptly thereafter cause to be distributed
immediately available funds relating to the payment of principal, interest
or
fees to the Lenders, in accordance with the application of payments set forth
in
Section 2.8.
The
Lenders shall make any payment under any Loan Document in immediately available
Dollars and without setoff or counterclaim.
(b) Computations
of Interests and Fees.
All
computations of interest and of fees shall be made by the Administrative Agent
on the basis of a year of 360 days occurring in the period for which such
interest and fees are payable. Each determination of an interest rate or the
amount of a fee hereunder shall be made by the Administrative Agent and shall
be
conclusive, binding and final for all purposes, absent manifest
error.
(c) Payment
Dates.
Whenever any payment hereunder shall be stated to be due on a day other than
a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day without any increase in such payment as a result of
additional interest or fees; provided,
however,
that
such interest and fees shall continue accruing as a result of such extension
of
time.
(d) Advancing
Payments.
Unless
the Administrative Agent shall have received notice from the Borrowers to the
Lenders prior to the date on which any payment is due hereunder that the
Borrowers will not make such payment in full, the Administrative Agent may
assume that the Borrowers has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent that the
Borrowers shall not have made such payment in full to the Administrative Agent,
each Lender shall repay to the Administrative Agent on demand such amount
distributed to such Lender together with interest thereon for each day from
the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Administrative Agent.
(e) The
Administrative Agent is authorized to, and in its sole discretion may, make
Loans on behalf of each Borrower which the Administrative Agent, in its
Permitted Discretion, deems necessary or desirable (i) to preserve or protect
the Collateral, (ii) to enhance the likelihood of repayment of the Obligations,
(iii) to pay any other amount due under this Agreement or the other Loan
Documents including all fees, costs, charges, expenses and interest owing by
the
Borrowers under this Agreement and the other Loan Documents if and to the extent
the Borrowers fail to pay promptly such amounts as and when due. Amounts
advanced under this Section
2.9(e)
are
payable on demand by the Administrative Agent to the Parent.
30
Section
2.10 Evidence
of Debt.
(a) Records
of Lenders.
Each
Lender shall maintain in accordance with its usual practice accounts evidencing
Indebtedness of the Borrowers to such Lender resulting from the Loan of such
Lender, including the amounts of principal and interest payable and paid to
such
Lender from time to time under this Agreement. In addition, each Lender having
sold a participation in any of its Obligations, acting as agent of the Borrowers
solely for this purpose and solely for tax purposes, shall establish and
maintain at its address referred to in Section 10.11
(or at
such other address as such Lender shall notify the Parent) a record of
ownership, in which such Lender shall register by book entry (i) the name and
address of each such participant (and each change thereto, whether by assignment
or otherwise) and (ii) the rights, interest or obligation of each such
participant in any Obligation and in any right to receive any payment
hereunder.
(b) Records
of the Administrative Agent.
The
Administrative Agent, acting as agent of the Borrower, solely for tax purposes
and solely with respect to the actions described in this Section 2.10,
shall
establish and maintain at its address referred to in Section 10.11
(or at
such other address as the Administrative Agent may notify the Borrowers) (i)
a
record of ownership (the “Register”)
in
which the Administrative Agent agrees to register by book entry the interests
(including any rights to receive payment hereunder) of the Administrative Agent
and each Lender in the Obligations payable under this Agreement, including
each
Loan, and any assignment of such Obligation or Loan, and (ii) accounts in
the Register in accordance with its usual practice in which it shall record
(A)
the names and addresses of the relevant Lenders (and each change thereto
pursuant to Section 2.13
and
Section 10.2),
(B)
the amount of each Loan, (C) the amount of any principal or interest due and
payable or paid, and (D) any other payment received by the Administrative Agent
from the relevant Borrowers and its application to the Obligations.
(c) Registered
Obligations.
Notwithstanding anything to the contrary contained in this Agreement, the Loans
(including any Notes evidencing such Loans) are registered obligations, the
right, title and interest of the Lenders and their assignees in and to such
Loans shall be transferable only upon notation of such transfer in the Register
and no assignment thereof shall be effective until recorded therein. This
Section 2.9
and
Section 10.2
shall be
construed so that the Loans are at all times maintained in “registered
form”
within
the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any
related regulations (and any successor provisions).
(d) Prima
Facie Evidence.
The
entries made in the Register and in the accounts maintained pursuant to
clauses
(a)
and
(b)
above
shall, to the extent permitted by applicable Requirements of Law, be prima
facie
evidence of the existence and amounts of the obligations recorded therein;
provided,
however,
that no
error in such account and no failure of any Lender or the Administrative Agent
to maintain any such account shall affect the obligations of any Loan Party
to
repay the Term Loan in accordance with its terms. In addition, the Loan Parties,
the Administrative Agent, and the Lenders shall treat each Person whose name
is
recorded in the Register as a Lender for all purposes of this Agreement.
Information contained in the Register with respect to any Lender shall be
available for access by the Borrowers, the Administrative Agent, or such Lender
at any reasonable time and from time to time upon reasonable prior notice.
No
Lender shall, in such capacity, have access to or be otherwise permitted to
review any information in the Register other than information with respect
to
such Lender unless otherwise agreed by the Administrative Agent.
31
(e) Notes.
The
Borrowers shall execute and deliver a Note, substantially in the form of
Exhibit B,
to each
Lender in the original principal amount of such Lender’s Loan. Only one Note
shall be issued to any Lender, except (i) to an existing Lender exchanging
existing its Note to reflect changes in the Register relating to such Lender,
in
which case the new Notes delivered to such Lender shall be dated the date of
the
original Note and (ii) in the case of loss, destruction or mutilation of
existing Notes and similar circumstances. Each Note shall only be issued as
means to evidence the right, title or interest of a Lender or a registered
assignee in and to the related Loan, as set forth in the Register, and in no
event shall any Note be considered a bearer instrument or
obligation.
Section
2.11 Breakage
Costs; Increased Costs; Capital Requirements.
(a) Breakage
Costs.
Without
duplication of the compensation required under Section
2.4(b),
the
Borrowers shall compensate each Lender, upon demand from such Lender to Parent
(with copy to the Administrative Agent), for all Liabilities (including, in
each
case, those incurred by reason of the liquidation or reemployment of deposits
or
other funds acquired by such Lender to prepare to fund, to fund or to maintain
the Loan of such Lender to the Borrowers but excluding any loss of the
Applicable Margin on the relevant Loan) that such Lender may incur, to the
extent any Loan is paid (whether through a scheduled, optional or mandatory
prepayment) on a date that is not the last day of the applicable Interest
Period. For purposes of this Section
2.11,
each
Lender shall be deemed to have funded its Loan by using a matching deposit
or
other borrowing in the London interbank market.
(b) Increased
Costs.
If at
any time any Lender determines that, after the date hereof, the adoption of,
or
any change in or in the interpretation, application or administration of, or
compliance with, any Requirement of Law from any Governmental Authority shall
have the effect of (i) increasing the cost to such Lender of maintaining its
Loan, or (ii) imposing any other cost to such Lender with respect to compliance
with its obligations under any Loan Document, then, upon demand by such Lender
(with copy to the Administrative Agent), the Borrowers shall pay to the
Administrative Agent for the account of such Lender amounts sufficient to
compensate such Lender for such increased cost.
(c) Increased
Capital Requirements.
If at
any time any Lender determines that, after the date hereof, the adoption of,
or
any change in or in the interpretation, application or administration of, or
compliance with, any Requirement of Law from any Governmental Authority
regarding capital adequacy, reserves, special deposits, compulsory loans,
insurance charges against property of, deposits with or for the account of,
Obligations owing to, or other credit extended or participated in by, any Lender
or any similar requirement shall have the effect of reducing the rate of return
on the capital of such Lender’s (or any corporation controlling such Lender ) as
a consequence of its obligations under or with respect to any Loan Document
to a
level below that which, taking into account the capital adequacy policies of
such Lender, such Lender could have achieved but for such adoption or change,
then, upon demand from time to time by such Lender (with a copy of such demand
to the Administrative Agent), the Borrowers shall pay to the Administrative
Agent for the account of such Lender amounts sufficient to compensate such
Lender for such reduction.
32
(d) Compensation
Certificate.
Each
demand for compensation under this Section 2.11
shall be
accompanied by a certificate of the Lender claiming such compensation, setting
forth the amounts to be paid hereunder, which certificate shall be conclusive,
binding and final for all purposes, absent manifest error. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.
The Borrowers shall pay such Lender, as the case may be, the amount shown due
on
any such certificate within 10 days after receipt thereof.
Section
2.12 Taxes.
(a) Except
as
otherwise provided herein, all payments made by the Borrowers hereunder or
under
any Note or other Loan Document will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, assessments and all interest, penalties or similar obligations with
respect thereto, but excluding any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein measured by or
based on the net income or net profits of a Lender (including branch profits
taxes) and franchise taxes imposed in lieu of net income taxes, imposed on
any
Lender as a result of a present or former connection between such Lender and
the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than such connection
arising solely from any Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, any Loan Document) and
all
interest, penalties or similar liabilities with respect to such excluded taxes
(all such non-excluded taxes, levies, imposts, duties, assessments or other
charges being referred to collectively as “Taxes”).
If
any Taxes are so levied or imposed, each Borrower agrees to pay the full amount
of such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement or under any Note, including
any
amount paid pursuant to this Section
2.12(a)
after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein; provided,
however,
that
the Borrowers shall not be required to increase any such amounts, but only
to
the extent in excess of the amount that would have been withheld had the Lender
delivered the forms required by clause
(c)
of this
Section
2.12,
payable
to the Administrative Agent or any Lender that is not organized under the laws
of the United States, if such Person fails to comply with the other requirements
of this Section
2.12;
provided,
further,
that
the foregoing proviso shall not apply to Taxes that are imposed on amounts
payable to a Lender or Secured Party at the time such Lender or Secured Party
becomes a party hereto (or designates a new lending office), except to the
extent that such Lender or Secured Party (or its respective assignor, if any)
was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to this Section
2.12.
After a
party hereto learns of the imposition of Taxes, such party will act in good
faith to promptly notify the other parties hereto of their respective
obligations hereunder. The Borrower will furnish to the Administrative Agent
as
promptly as possible after the date the payment of any Taxes are due pursuant
to
applicable law original or certified copies of tax receipts evidencing such
payment by the Borrower.
(b) If
any
Taxes shall be required by law to be deducted or withheld from or in respect
of
any amount payable under any Loan Document to any Secured Party (i) such amount
shall be increased as necessary to ensure that, after all required deductions
or
withholdings for Taxes are made (including deductions applicable to any
increases to any amount under this Section 2.12),
such
Secured Party receives the amount it would have received had no such deductions
or withholdings been made, (ii) the relevant Loan Party shall make such
deductions or withholdings, (iii) the relevant Loan Party shall timely pay
the
full amount deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable Requirements of Law and (iv) within
30 days after such payment is made, the relevant Loan Party shall deliver to
the
Administrative Agent an original or certified copy of a receipt evidencing
such
payment; provided,
however,
the
amount payable shall not be increased hereunder if the Secured Party fails
to
comply with the other requirements of this Section
2.12,
but
only to the extent in excess of the amount that would have been withheld had
the
Lender delivered the forms required by clause
(c)
of this
Section
2.12.
33
(c) If
any
Lender claims exemption from, or a reduction of, U.S. withholding tax, such
Lender agrees with and in favor of the Administrative Agent and the Borrowers,
to deliver to the Administrative Agent and the Parent:
(i) if
such
Lender claims an exemption from withholding tax pursuant to its portfolio
interest exception, (A) a statement of Lender, signed under penalty of perjury,
that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the Code,
(II) a 10% shareholder of a Borrower (within the meaning of Section 871(h)(3)(B)
of the Code), or (III) a controlled foreign corporation related to a Borrower
within the meaning of Section 864(d)(4) of the Code, and (B) two properly
completed and executed copies of IRS Form W-8BEN (or successor form), before
the
first payment of any interest under this Agreement and at any other time
reasonably requested by the Administrative Agent or the Parent;
(ii) if
such
Lender claims an exemption from, or a reduction of, withholding tax under a
United States tax treaty, two properly completed and executed copies of IRS
Form
W-8BEN (or successor form) before the first payment of any interest under this
Agreement and at any other time reasonably requested by the Administrative
Agent
or the Parent;
(iii) if
such
Lender claims that interest paid under this Agreement is exempt from United
States withholding tax because it is effectively connected with a United States
trade or business of such Lender, two properly completed and executed copies
of
IRS Form W-8ECI (or successor form) before the first payment of any interest
is
due under this Agreement and at any other time reasonably requested by the
Administrative Agent or the Parent;
(iv) if
such
Lender claims exemption from backup withholding under the Code, two properly
completed and executed copies of IRS Form W-9 (or successor form) before the
first payment under this Agreement and at any other time reasonably requested
by
the Administrative Agent or the Parent;
(v) such
other form or forms as may be required under the Code or other laws of the
United States as a condition to exemption from, or reduction of, United States
withholding tax.
Such
Lender agrees promptly to notify the Administrative Agent and the Parent of
any
change in circumstances which would modify or render invalid any claimed
exemption or reduction. Each Lender having sold, assigned, granted or otherwise
transferred a participation in any of its Obligations shall collect from such
participant the documents described in this clause
(c)
and
provide them to the Borrowers and the Administrative Agent.
34
(d) If
any
Lender claims exemption from, or reduction of, withholding tax under a United
States tax treaty by providing IRS Form W-8BEN and such Lender sells, assigns,
grants a participation in, or otherwise transfers all or part of the Obligations
of the Borrowers to such Lender, such Lender agrees to notify the Administrative
Agent of the percentage amount in which it is no longer the beneficial owner
of
Obligations of the Borrowers to such Lender. To the extent of such percentage
amount, the Administrative Agent will treat such Lender’s IRS Form W-8BEN as no
longer valid.
(e) If
any
Lender is entitled to a reduction in the applicable withholding tax, the
Administrative Agent may withhold from any interest payment to such Lender
an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by clause
(c)
of this
Section
2.12
are not
delivered to the Administrative Agent, then the Administrative Agent may
withhold from any interest payment to such Lender not providing such forms
or
other documentation an amount equivalent to the applicable withholding tax,
and
neither the Administrative Agent nor any Borrower shall have a duty under this
Section
2.12
to
indemnify the Lender in respect of the Taxes so withheld to the extent that
they
exceed the amount that would have been withheld had the Lender delivered the
forms required by clause
(c)
of this
Section
2.12.
(f) The
Borrowers shall reimburse and indemnify, within 30 days after receipt of demand
therefor (with copy to the Administrative Agent), each Lender for all Taxes
(including any imposed by any jurisdiction on amounts payable under this
Section 2.12)
paid by
such Lender and any Liabilities arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted. A certificate
of
the Lender (or of the Administrative Agent on behalf of such Lender) claiming
any compensation under this clause
(f),
setting
forth the amounts to be paid thereunder and delivered to the Parent with copy
to
the Administrative Agent shall be conclusive, binding and final for all
purposes, absent manifest error. In determining such amount, the Administrative
Agent and such Lender may use any reasonable averaging and attribution
methods.
(g) If
the
IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that the Administrative Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because
the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Administrative Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender shall indemnify and hold the Administrative
Agent harmless for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest,
and
including any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section
2.12,
together with all costs and expenses (including attorneys fees and expenses).
The obligation of the Lenders under this subsection shall survive the payment
of
all Obligations and the resignation or replacement of the Administrative Agent.
No Borrower shall be liable under this Section
2.12
for
amounts paid by Lender pursuant to this clause
(g).
35
(h) Mitigation.
Any
Lender claiming any additional amounts payable pursuant to this Section 2.12
shall
use its reasonable efforts (consistent in its sole discretion with its internal
policies and Requirements of Law) to change the jurisdiction of its lending
office if such a change would reduce any such additional amounts (or any similar
amount that may thereafter accrue) and would not, in the sole determination
of
such Lender, be otherwise disadvantageous to such Lender.
Section
2.13 Substitution
of Lenders.
(a) Designation
of a Different Lending Office.
If any
Lender requests compensation under clause (b) or (c) of Section
2.11,
or
requires the Borrower to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
2.12,
then
such Lender shall use reasonable efforts to designate a different lending office
for funding or booking its Loan hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if,
in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to clause
(b)
or
(c)
of
Section
2.11
or
Section
2.12,
as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to
such
Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or
assignment.
(b) Substitution
Right.
In the
event that any Lender that is not the Administrative Agent or an Affiliate
of
the Administrative Agent (an “Affected
Lender”),
(i)
makes a claim under clause
(b)
or
(c)
of
Section 2.11,
(ii)
makes a claim for payment pursuant to Section 2.12,
or
(iii) does not consent to any amendment, waiver or consent to any Loan Document
for which the consent of the Required Lenders is obtained but that requires
the
consent of other Lenders, the Borrowers may either pay in full such Affected
Lender with respect to amounts due under this Agreement with the consent of
the
Administrative Agent or substitute for such Affected Lender any other Lender
or
any Affiliate or Approved Fund of any Lender or any other Person acceptable
(which acceptance shall not be unreasonably withheld or delayed) to the
Administrative Agent (in each case, a “Substitute
Lender”).
(c) Procedure.
To pay
in full the Obligations owed to such Affected Lender, the Parent shall deliver
a
notice to the Administrative Agent and such Affected Lender. The effectiveness
of such payment or substitution shall be subject to the delivery to the
Administrative Agent by the Borrowers (or, as may be applicable in the case
of a
substitution, by the Substitute Lender) of, in the case of payment in full
of
the Loan of the Affected Lender, (i) payment for the account of such Affected
Lender, of, to the extent accrued through, and outstanding on, the effective
date for such payment, all Obligations owing to such Affected Lender (including
those that will be owed because of such payment and including, without
limitation any prepayment fee payable pursuant to Section 2.7(a)), and (ii)
in
the case of a substitution, (A) payment of the assignment fee set forth in
Section 10.2(c)
and (B)
an assumption agreement in form and substance satisfactory to the Administrative
Agent whereby the Substitute Lender shall, among other things, agree to be
bound
by the terms of the Loan Documents and assume the Loan of the Affected
Lender.
(d) Effectiveness.
Upon
satisfaction of the conditions set forth in clause
(b)
above,
the Administrative Agent shall record such substitution or payment in the
Register, whereupon (A) the Affected Lender shall be relieved of, and, if
applicable, the Substitute Lender shall purchase and assume, all rights and
claims under the Loan Documents with respect to such Loan, except that the
Affected Lender shall retain such rights expressly providing that they survive
the repayment of the Obligations, (B) the Substitute Lender, if applicable,
shall become a “Lender”
hereunder having a Loan in the amount of such Affected Lender’s Loan and (C) the
Affected Lender shall execute and deliver to the Administrative Agent an
Assignment to evidence such substitution and deliver its Note; provided,
however,
that
the failure of any Affected Lender to execute any such Assignment or deliver
such Note shall not render such sale and purchase (or the corresponding
assignment) invalid.
36
ARTICLE
III
CONDITIONS
TO LOANS
Section
3.1 Conditions
Precedent to the Term Loan.
The
obligation of the Lenders to make the Term Loan on the Funding Date is subject
to the satisfaction or due waiver of each of the following conditions precedent
on or before the Funding Date:
(a) Certain
Documents.
The
Administrative Agent shall have received on or prior to the Funding Date each
of
the following, each dated as of the Closing Date or Funding Date (as determined
by the Administrative Agent) unless otherwise agreed by the Administrative
Agent, in form and substance satisfactory to the Administrative Agent and each
Lender:
(i) this
Agreement and Notes conforming to the requirements set forth in Section 2.10(e),
duly
executed by the Borrowers;
(ii) the
Guaranty and Security Agreement and Canadian Security Documents, duly executed
by each Borrower and Guarantor party thereto, together with (A) copies of UCC,
PPSA and other appropriate search reports and of all effective prior filings
listed therein, together with evidence of the termination of such prior filings
and other documents with respect to the priority of the security interest of
the
Administrative Agent in the Collateral, in each case as may be reasonably
requested by the Administrative Agent, and (B) all Control Agreements that,
in
the reasonable judgment of the Administrative Agent, are required for the Loan
Parties to comply with the Loan Documents as of the Funding Date, each duly
executed by, in addition to the applicable Loan Party, the applicable financial
institution;
(iii) the
Pledge Agreement, duly executed by each applicable Borrower, together with
(A)
the original certificates representing the Stock of any Borrower or Subsidiary
pursuant to a Pledge Agreement and (B) a Stock Power (as such term is defined
in
the Pledge Agreement) executed in blank for each certificate of Stock pledged
pursuant to a Pledge Agreement;
(iv) the
IP
Security Agreements, duly executed by the appropriate Borrowers, together with
duly executed exhibits attached thereto for filing with the U.S. Trademark
Office and the U.S. Copyright Office, as appropriate;
(v) The
Intercreditor Agreement, duly executed by the appropriate Borrowers and the
First Lien Agent;
(vi) a
Mortgage for the Eligible Real Property, duly executed by the applicable
Borrowers, together with all Mortgage Supporting Documents relating
thereto;
37
(vii) duly
executed favorable opinions of counsel to the Loan Parties from (a) Xxxxxxx
X.
Xxxxxxxxxxxx, general counsel to the Parent, (b) Xxxxxxxx & Knight LLP,
special U.S. counsel to the Loan Parties, and (c) Fraser
Xxxxxx Casgrain LLP,
special
Canadian counsel to the Loan Parties, each addressed to the Administrative
Agent
and the Lenders and addressing such matters as the Administrative Agent may
reasonably request;
(viii) a
copy of
each Governing Document of each Loan Party that is on file with any Governmental
Authority in any jurisdiction, certified as of a recent date by such
Governmental Authority, together with, if applicable, certificates attesting
to
the good standing of such Loan Party in such jurisdiction and each other
jurisdiction where such Loan Party is qualified to do business as a foreign
entity or where such qualification is necessary (and, if appropriate in any
such
jurisdiction, related tax certificates);
(ix) a
certificate of the secretary or other Responsible Officer of each Loan Party
in
charge of maintaining Books and records of such Loan Party certifying as to
(A)
the names and signatures of each officer of such Loan Party authorized to
execute and deliver any Loan Document, (B) the Governing Documents of such
Loan
Party attached to such certificate are complete and correct copies of such
Governing Documents as in effect on the date of such certification (or, for
any
such Governing Document delivered pursuant to clause
(viii)
above,
that there have been no changes from such Governing Document so delivered)
and
(C) the resolutions of such Loan Party’s board of directors or other appropriate
governing body approving and authorizing the execution, delivery and performance
of each Loan Document to which such Loan Party is a party;
(x) a
certificate of a Responsible Officer of the Parent to the effect that (A) each
condition set forth in Section 3.1(g)
has been
satisfied and (B) each Loan Parties is, and after giving effect to the Term
Loan and the application of the proceeds thereof in accordance with Section 6.22
and the
payment of all estimated legal, accounting and other fees and expenses related
hereto, shall be, Solvent;
(xi) insurance
certificates in form and substance satisfactory to the Administrative Agent
demonstrating that the insurance policies required by Section 6.4
are in
full force and effect and have all endorsements required by such Section 6.4;
(xii) the
Corporate Chart;
(xiii) the
Perfection Certificate;
(xiv) a
Business Plan and Projections for Fiscal Year 2007, in each case in form and
substance acceptable to the Administrative Agent;
(xv) an
inventory appraisal and collateral audit in form and substance acceptable to
the
Administrative Agent, prepared by such auditors as are reasonably acceptable
to
the Administrative Agent;
(xvi) such
other documents and information as any Lender through the Administrative Agent
may reasonably request.
38
(b) Fees
and Expenses.
There
shall have been paid to the Administrative Agent, for the account of the
Administrative Agent, its Related Persons or any Lender, as the case may be,
all
fees and all reimbursements of costs or expenses, in each case due and payable
under any Loan Document on or before the Funding Date.
(c) Consents.
Each
Loan Party shall have received all consents and authorizations required pursuant
to any material Contractual Obligation with any other Person and shall have
obtained all Permits of, and effected all notices to and filings with, any
Governmental Authority, in each case, as may be necessary in connection with
the
consummation of the transactions contemplated in any Loan Document or Related
Document (including the Related Transactions).
(d) Cash
Management.
The
Administrative Agent shall have received evidence that, as of the Funding Date,
the procedures with respect to cash management required by the Loan Documents
have been established and are currently being maintained by each Loan Party,
together with Control Agreements executed by such Loan Party in connection
therewith.
(e) Initial
Appraisals.
The
Administrative Agent shall have received appraisals, conducted by appraisers
retained by the Administrative Agent, of all inventory of the Borrowers and
the
Eligible Real Property, each in form and substance satisfactory to the
Administrative Agent, and shall be satisfied with any review an/or valuation
of
furniture, fixtures and equipment of the Borrowers that may be requested from
the Borrowers or conducted by the Administrative Agent or on its
behalf.
(f) Borrowing
Request.
The
Administrative Agent shall have received a duly executed borrowing request
from
the Borrowers addressed to the Administrative Agent, on behalf of itself and
the
Lenders, with respect to the disbursement of the proceeds of the Term Loan
on
the Funding Date.
(g) Representations
and Warranties; No Defaults.
The
representations and warranties set forth in any Loan Document shall be true
and
correct in all material respects on and as of such date or, to the extent such
representations and warranties expressly relate to an earlier date, on and
as of
such earlier date, and no Default or Event of Default shall be
continuing.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
To
induce
the Lenders and the Administrative Agent to enter into the Loan Documents,
each
Borrower (and, to the extent set forth in any other Loan Document, each other
Loan Party) represents and warrants, in all material respects, to each of them
each of the following on and as of the Closing Date and the Funding
Date:
Section
4.1 No
Encumbrances.
Each
Loan Party (a) has good and valid title to its personal property assets and
good
and marketable title to its owned Real Property (subject to exceptions that
do
not, in the aggregate, materially impair the use of the personal property and
Real Property of Borrowers taken as a whole), and in the case of the Collateral,
free and clear of Liens except for Permitted Liens. All other information set
forth on the Perfection Certificate is accurate and complete. There has been
no
change in any of such information since the date on which the Perfection
Certificate was signed by Borrowers.
39
Section
4.2 Accounts.
The
Accounts are bona fide existing payment obligations of Account Debtors created
by the sale and delivery of inventory or the rendition of services to such
Account Debtors in the ordinary course of Borrowers’ business, owed to Borrowers
without any known defenses, disputes, offsets, counterclaims, or rights of
return or cancellation (other than contingent customer rights of return arising
in the ordinary course of business).
Section
4.3 Inventory.
All
inventory is of good and merchantable quality, free from known defects (other
than saleable clearance goods arising in the ordinary course of business
consistent with past practice).
Section
4.4 Location
of Inventory.
The
inventory of each Loan Party is stored or located only at, or in-transit
between, the locations identified on Schedule
4(a)
of the
Perfection Certificate or is stored with a bailee, warehouseman, or similar
party, subject to a Bailee Acknowledgement or Collateral Access Agreement,
except as otherwise permitted pursuant to Section
6.5
from
September 1 to December 31 of any Fiscal Year.
Section
4.5 Inventory
Records.
Each
Borrower keeps correct and accurate records itemizing and describing the type,
quality, and quantity of its and its Subsidiaries’ inventory and the book value
thereof.
Section
4.6 Name,
Jurisdiction of Incorporation; Location of Chief Executive Office; FEIN;
Organizational ID Number.
(a)
The
legal name and jurisdiction of organization of each Loan Party is set forth
on
the Perfection Certificate.
(b) The
chief
executive office of each Loan Party is located at the address indicated on
the
Perfection Certificate.
(c) Each
Loan
Party’s FEIN and organizational identification number, if any, are identified on
the Perfection Certificate.
(d) Each
Borrower has previously delivered to the Administrative Agent a Perfection
Certificate. Each Borrower represents and warrants to the Lender Group that:
(i)
such Borrower’s exact legal name is that indicated on the applicable Perfection
Certificate and on the signature page hereof; (ii) such Borrower is an
organization of the type, and is organized in the jurisdiction, set forth in
the
applicable Perfection Certificate; (iii) the applicable Perfection Certificate
accurately sets forth such Borrower’s organizational identification number or
accurately states that such Borrower has none; (iv) the applicable Perfection
Certificate accurately sets forth such Borrower’s place of business or, if more
than one, its chief executive office, as well as such Borrower’s mailing
address, if different; (v) all other information set forth on the applicable
Perfection Certificate pertaining to such Borrower is accurate and complete
as
of the date hereof; and (vi) there has been no change in any of such information
since the date on which the applicable Perfection Certificate was signed by
such
Borrower.
Section
4.7 Due
Organization and Qualification; Subsidiaries.
(a)
Each
Borrower (i) is duly organized and existing and in good standing under the
laws
of the jurisdiction of its organization and (ii) has all requisite corporate
(or
the equivalent company) power to own its property and conduct its business
as
now conducted and as presently contemplated and (iii) is qualified to do
business in any state or province where the failure to be so qualified
reasonably could be expected to cause a Material Adverse Effect.
40
(b) Set
forth
on Schedule
4.7
(as such
Schedule may be updated with the written consent of the Administrative Agent),
is a complete and accurate description of the authorized capital Stock of each
Borrower, by class, and, as of the Closing Date a description of the number
of
shares of each such class that are issued and outstanding and, other than with
respect to Parent, the owner of such Stock. Other than as described on
Schedule
4.7
and
except for employee and director stock options and deferred director units
there
are no subscriptions, options, warrants, or calls relating to any shares of
each
Borrower’s capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. No Borrower is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set
forth
on Schedule
4.7
(as such
Schedule may be updated with the written consent of the Administrative Agent),
is a complete and accurate list of each Borrower’s direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their organization; (ii) the
number of shares of each class of common and preferred Stock authorized for
each
of such Subsidiaries; and (iii) the number and the percentage of the outstanding
shares of each such class owned directly or indirectly by the applicable
Borrower. All of the outstanding capital Stock of each such Subsidiary has
been
validly issued and is fully paid and non-assessable.
(d) Except
as
set forth on Schedule
4.7,
there
are no subscriptions, options, warrants, or calls relating to any shares of
any
Borrower’s Subsidiaries’ capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Loan Party
is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of any Borrower’s Subsidiaries’ capital Stock or
any security convertible into or exchangeable for any such capital
Stock.
Section
4.8 Due
Authorization; No Conflict.
(a)
As to
each Borrower, the execution, delivery, and performance by such Borrower of
this
Agreement and the other Loan Documents to which it is a party and the
transactions contemplated hereby and thereby are within the corporate (or the
equivalent) authority of such Borrower and have been duly authorized by all
necessary action on the part of such Borrower.
(b) As
to
each Borrower, the execution, delivery, and performance by such Borrower of
this
Agreement and the other Loan Documents to which it is a party do not and will
not (i) violate any provision of federal, state, or local, statute, law, rule
or
regulation applicable to any Borrower or any order, judgment, decree, writ,
injunction, license or permit of any court or other Governmental Authority
binding on any Borrower unless such violation could not reasonably be expected
to cause a Material Adverse Effect, (ii) violate any provision of the Governing
Documents of any Borrower or require any approval of any Borrower’s interest
holder, (iii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material Contractual
Obligation of any Borrower unless such violation could not reasonably be
expected to cause a Material Adverse Effect or the termination of such contract,
(iv) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of any Borrower, other than Permitted
Liens, or (v) require any approval of any Person under any material Contractual
Obligation of any Borrower, other than consents or approvals that have been
obtained and that are still in force and effect.
41
(c) Other
than the filing of UCC financing statements, PPSA registration statements and
registrations in Quebec, Canada, the execution, delivery, and performance by
each Borrower of this Agreement and the other Loan Documents to which such
Borrower is a party do not and will not require any registration with, consent,
or approval of, or notice to, or other action with or by, any Governmental
Authority, other than consents or approvals that have been obtained and that
are
still in force and effect.
(d) As
to
each Borrower, this Agreement and the other Loan Documents to which such
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by such Borrower will be the legally valid and
binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms, except as enforcement may be limited
by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors’ rights
generally.
(e) The
Administrative Agent’s Liens are validly created, perfected Liens, subject only
to Permitted Liens.
Section
4.9 Litigation.
(a)
Other
than those matters disclosed on Schedule
4.9
and
immaterial matters where the amount in controversy is less than $250,000, there
are no actions, suits, or proceedings or investigations pending or, to the
best
knowledge of Borrowers, threatened against any Loan Party, except for (a)
matters that are fully covered by insurance (subject to customary deductibles),
and (b) matters arising after the Closing Date, that could not reasonably be
expected to result in a Material Adverse Effect.
(b) There
are
no actions, suits, proceedings or investigations pending or, to the best
knowledge of the Borrowers, threatened against any Loan Party that question
the
validity or enforceability of this Agreement or any other Loan Document or
any
action taken or to be taken by the Borrowers in connection
therewith.
Section
4.10 No
Material Adverse Effect.
All
financial statements relating to any Loan Party that have been delivered by
the
Borrowers to the Lender Group have been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to normal year-end audit adjustments not material
in
amount) and present fairly in all material respects, each Loan Party’s financial
condition as of the date thereof and results of operations for the period then
ended. There has not been a Material Adverse Effect with respect to any Loan
Party since the date of the latest financial statements submitted to the Lender
Group on or before the Closing Date.
Section
4.11 Fraudulent
Transfer.
(a)
The
Borrowers, taken as a whole, are Solvent. The Loan Parties, taken as a whole,
are Solvent.
(b) No
transfer of property is being made by any Loan Party and no obligation is being
incurred by any Loan Party in connection with the transactions contemplated
by
this Agreement or the other Loan Documents with the intent to hinder, delay,
or
defraud either present or future creditors of any such Loan Party.
42
Section
4.12 Canadian
Benefit Plans and Canadian Pension Plans.
Bombay
Canada does not maintain or contribute to any Canadian Benefit Plan or Canadian
Pension Plan.
Section
4.13 ERISA.
None of
the Loan Parties or any of their ERISA Affiliates maintains or contributes,
or
in the prior six years has maintained or contributed, to any Benefit
Plan.
Section
4.14 Environmental
Condition.
Except
as set forth on Schedule
4.14
and
except for other matters that could not reasonably be expected to result in
a
Material Adverse Effect, (a) to the Borrowers’ knowledge, none of the Loan
Parties’ properties or assets has ever been used by any Loan Party, or by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials, where such production,
storage, handling, treatment, release or transport was in violation of any
applicable Environmental Law, (b) to the Borrowers’ knowledge, none of the Loan
Parties’ owned Real Property has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) no Loan Party has received notice that a Lien arising under
any Environmental Law has attached to any revenues or to any Real Property
owned
or operated by any Loan Party, and (d) no Loan Party has received a summons,
citation, notice, or directive from the Environmental Protection Agency or
any
other federal, state or provincial governmental agency concerning any action
or
omission by any Loan Party resulting in the releasing or disposing of Hazardous
Materials into the environment in violation of any applicable Environmental
Law.
Section
4.15 Brokerage
Fees.
No Loan
Party has utilized the services of any broker or finder in connection with
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by any Loan Party in connection
herewith.
Section
4.16 Intellectual
Property.
Each
Loan Party owns, or holds licenses in, all Intellectual Property that is
necessary to the conduct of its business as currently conducted, except where
the failure to do so, in the aggregate, would not result in a Material Adverse
Effect.
Section
4.17 Leases.
Except
where the failure to do so would not cause a Material Adverse Effect, the Loan
Parties enjoy peaceful and undisturbed possession under all leases (including
Capital Leases) material to their business and to which they are a party or
under which they are operating. Except to the extent that such default would
not
cause a Material Adverse Effect, each of such leases is valid and subsisting
and
no material default by any Loan Party exists under such lease.
Section
4.18 Deposit
Accounts.
Set
forth on Schedule
8
to the
Perfection Certificate are all deposit accounts and securities accounts of
each
Loan Party, including, with respect to each bank or securities intermediary
(i)
the name and address of such Person, (ii) the account numbers of the deposit
accounts or securities accounts maintained with such Person and (iii) whether
such account is a “Store Account”, a “Concentration Account” or another account
and if such account is another account, setting forth the purpose of such
account.
Section
4.19 Complete
Disclosure.
All
factual information (taken as a whole) furnished by or on behalf of any Loan
Party in writing to the Administrative Agent or any Lender (including all
information contained in the Schedules hereto or in the other Loan Documents)
for purposes of or in connection with this Agreement, the other Loan Documents
or any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of any Loan
Party in writing to the Administrative Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information
is
dated or certified and not incomplete by omitting to state any fact necessary
to
make such information (taken as a whole) not misleading in any material respect
(other than industry-wide risks normally associated with the types of businesses
conducted by the Loan Partys) at such time in light of the circumstances under
which such information was provided. On the Closing Date and the Funding Date,
the Projections represent, and as of the date on which any other Projections
are
delivered to the Administrative Agent, such additional Projections represent
the
Borrowers’ good faith reasonable estimate of the Loan Parties’ future
performance for the periods covered thereby it being understood that such
Projections as to future events are not to be viewed as facts and that actual
results during the period or period covered by Projections may differ from
the
projected results and no assurance can be given that the Projections will be
realized.
43
Section
4.20 Credit
Card Receipts.
Schedule
4.20
sets
forth each of the Borrowers’ Credit Card Issuers, Credit Card Processors and all
arrangements to which the Borrowers are a party with respect to the payment
to
the Borrowers of the proceeds of all credit card charges for sales by the
Borrowers, including a description of each Credit Card Agreement.
Section
4.21 Holding
Company and Investment Company Acts.
No Loan
Party is a “holding
company”,
or a
“subsidiary
company”
of
a
“holding
company,
or an
“affiliate”
of
a
“holding
company”,
as
such terms are defined in the Public Utility Holding Company Act of 1935; nor
is
it an “investment
company”,
or an
“affiliated
company”
or
a
“principal
underwriter”
of
an
“investment
company”,
as
such terms are defined in the Investment Company Act of 1940.
Section
4.22 Absence
of Financing Statements, etc.
Except
with respect to Permitted Liens, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry or other public office, that purports
to cover, affect or give notice of any present or possible future Lien on any
Collateral.
Section
4.23 Certain
Transactions.
None of
the officers, directors, or employees of any Loan Party is presently a party
to
any transaction with any Loan Party (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real
or personal property to or from, or otherwise requiring payments to or from
any
officer, director or such employee or, to the knowledge of the Borrowers, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
Section
4.24 Regulations
U and X.
No Loan
Party is engaged in principally, or as one of its important activities in,
and
no portion of the proceeds of any Loan is to be used for the purpose of
purchasing or carrying any “margin
security”
or
“margin
stock”
as
such
terms are used in Regulations U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224.
Section
4.25 Labor
Relations.
No
Borrower has been or is presently a party to any collective bargaining or other
labor contract. No event has occurred or circumstance exists which is likely
to
provide the basis for any work stoppage or other labor dispute. The Borrowers
have complied in all material respects with all applicable laws, decrees,
orders, judgments, statutes, laws, rules and regulations relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing including all
applicable provisions of the federal Fair Labor Standards Act, as amended.
There
is not presently pending and, to the Borrowers’ knowledge, there is not
threatened any of the following:
44
(a) any
strike, slowdown, picketing, or work stoppage;
(b) any
proceeding against or affecting the Borrowers relating to the alleged violation
of any applicable law, decree, order, judgment, statute, law, rule or regulation
pertaining to labor relations or before National Labor Relations Board, the
Equal Employment Opportunity Commission, or any comparable governmental body,
organizational activity, or other labor or employment dispute against or
affecting the Borrowers, which, if determined adversely to the Borrowers would
cause a Material Adverse Effect;
(c) any
lockout of any employees by the Borrowers (and no such action is contemplated
by
the Borrowers); or
(d) any
application for the certification of a collective bargaining agent.
Section
4.26 Indebtedness.
Set
forth on Schedule
7.1
is a
true and complete list of all Indebtedness of each Borrower outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Funding Date and such Schedule accurately reflects the aggregate principal
amount of such Indebtedness.
Section
4.27 Payment
of Taxes.
All tax
returns, reports and declarations required to be filed by the Borrowers by
any
jurisdiction to which any of them is subject have been timely filed, except
where the failure to so file could not reasonably be expected to have a Material
Adverse Effect. All taxes and other governmental assessments and charges upon
the Borrowers or their properties, assets, income and franchises (including
real
property taxes and payroll taxes) but not subject of a Permitted Protest have
been paid prior to delinquency except where the failure to so pay could not
reasonably be expected to have a Material Adverse Effect. The Borrowers have
set
aside on their books provisions reasonably adequate for the payment of all
taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed
to
be due by the taxing authority of any jurisdiction, and none of the officers
of
any Borrower know of any basis for any such claim. The Borrowers do not intend
to treat the Term Loan and/or related transactions hereunder as being a
“reportable transaction” (within the meaning of Treasury Regulation Section
1.6011-4).
Section
4.28 Foreign
Assets Control Regulations, Etc.
None of
the requesting or borrowing of the Term Loan or the use of the proceeds of
any
thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as
amended) (the “Trading
With the Enemy Act”)
or any
of the foreign assets control regulations of the United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the “Foreign
Assets Control Regulations”)
or any
enabling legislation or executive order relating thereto (which for the
avoidance of doubt shall include, but shall not be limited to (a) Executive
Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed.
Reg.
49079 (2001)) (the “Executive
Order”)
and
(b) the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)).
Furthermore, none of Loan Parties or any of their Affiliates (a) is or will
become a “blocked person” as described in the Executive Order, the Trading With
the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will
engage in any dealings or transactions, or be otherwise associated, with any
such “blocked person.”
45
Section
4.29 No
Burdensome Obligations; No Defaults.
No Loan
Party is a party to any Contractual Obligation, no Loan Party has Governing
Documents containing obligations, and, to the knowledge of any Loan Party,
there
are no applicable Requirements of Law, in each case the compliance with which
would have, in the aggregate, a Material Adverse Effect. No Loan Party (and,
to
the knowledge of each Loan Party, no other party thereto) is in default under
or
with respect to any Contractual Obligation of any Loan Party, other than those
that would not, in the aggregate, have a Material Adverse Effect.
ARTICLE
V
REPORTING
COVENANTS
Each
Borrower (and, to the extent set forth in any other Loan Document, each other
Loan Party) agrees with the Lenders and the Administrative Agent to each of
the
following, as long as any Obligation remains outstanding, the Borrowers shall
and shall cause each of their respective Subsidiaries to do all of the
following:
Section
5.1 Accounting
System; Access.
Maintain a system of accounting that enables the Borrowers to produce financial
statements in accordance with GAAP and maintain records pertaining to the
Collateral that contain information as from time to time reasonably may be
requested by the Administrative Agent. The Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns,
and
allowances with respect to the inventory. The Borrowers shall further
(a)
maintain
adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and
the
properties of its Subsidiaries, contingencies and other reserves and
(b)
at all
times engage independent certified public accountants satisfactory to the
Administrative Agent as the independent certified public accountants of the
Parent and its Subsidiaries and will not permit more than 90 days to elapse
between the cessation of such firm’s (or any successor firm’s) engagement as the
independent certified public accountants of the Parent and its Subsidiaries
and
the appointment in such capacity of a successor firm registered with the Public
Company Accounting Oversight Board.
Section
5.2 Collateral
Reporting.
(a) Provide
the Administrative Agent (and if so requested by the Administrative Agent,
with
copies for each Lender) the documents set forth on Schedule
5.2
in
accordance with the delivery schedule set forth thereon; and
(b) concurrently
with each delivery of a Compliance Certificate pursuant to Section
5.3(a)(iii),
provide
the Administrative Agent (and if so requested by the Administrative Agent,
with
copies for each Lender) with an updated Perfection Certificate illustrating
all
changes to the information set forth in the Perfection Certificate previously
delivered pursuant to Section
3.1(a)(xiii)
or this
Section
5.2(b)
(including such updates and amendments required by Section
4.4,
4.6,
4.18,
6.5
or
6.18
of this
Agreement or the Guaranty and Security Agreement or any other provision of
any
Loan Document, except if such information is otherwise required to be provided
under this Agreement); provided,
that
delivery of an updated Perfection Certificate shall not cure any Default or
Event of Default occurring as a result of failure of the Loan Parties to give
any prior notice or obtain any consent required under this
Agreement.
46
Section
5.3 Financial
Statements, Reports, Business Plan, Certificates.
Deliver
to the Administrative Agent, with copies to each Lender:
(a) as
soon
as available, but in any event within 45 days after the end of each of the
11
Fiscal Periods during each of Parent’s Fiscal Years,
(i) a
company
prepared consolidated balance sheet, income statement, and statement of cash
flow covering Parent’s and its Subsidiaries’ operations during such period, in
each case setting forth in comparative form the figures for the corresponding
period in the prior Fiscal Year;
(ii) a
certificate signed by the chief financial officer of Parent to the effect
that:
(A) the
financial statements delivered hereunder have been prepared in accordance with
GAAP (except for the lack of footnotes and being subject to year-end audit
adjustments) and fairly present in all material respects the financial condition
of Parent and its Subsidiaries;
(B) the
representations and warranties of the Borrowers contained in this Agreement
and
the other Loan Documents are true and correct in all material respects on and
as
of the date of such certificate, as though made on and as of such date (except
to the extent that such representations and warranties relate solely to an
earlier date); and
(C) there
does not exist any condition or event that constitutes a Default or Event of
Default (or, to the extent of any non-compliance, describing such non-compliance
as to which he or she may have knowledge and what action the Borrowers have
taken, are taking, or propose to take with respect thereto).
(iii) a
Compliance Certificate.
(b) As
soon
as available, but in any event within 90 days after the end of each of Parent’s
Fiscal Years, consolidated financial statements of Parent and its Subsidiaries
for each such Fiscal Year, audited by independent certified public accountants
reasonably acceptable to the Administrative Agent and certified by such
accountants to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income statement, and statement
of cash flow and, a copy of any “final” management letter delivered to Parent,
its board of directors or any committees thereof), together with a certificate
signed by the chief financial officer of Parent certifying as to the matters
set
forth in Section
5.3(a)(ii)(A)-(C)
and a
Compliance Certificate;
(c) as
soon
as available, but in any event within 90 days after the end of each of Parent’s
Fiscal Years, copies of the Borrowers’ Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to the
Administrative Agent, in its sole discretion, for the forthcoming Fiscal Year,
on a month by month basis, certified by the chief financial officer of Parent
as
being such officer’s good faith reasonable estimate of the financial performance
of Parent and its Subsidiaries during the period covered thereby, it being
understood that such Projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any
Projections may differ from the projected results and no assurance can be given
that the Projections will be realized;
47
(d) if
and
when filed by any Borrower,
(i) Form
10-Q
quarterly reports, Form 10-K annual reports, and Form 8-K current
reports;
(ii) any
other
filings made by any Borrower with the SEC;
(iii) upon
request by the Administrative Agent, in its Permitted Discretion, copies of
the
Borrowers’ federal income tax returns, and any amendments thereto, filed with
the Internal Revenue Service; and
(iv) any
other
information that is provided by Parent to its shareholders or by the Borrowers
to the First Lien Agent generally;
provided,
that
for purposes of this clause (d), any information to be delivered hereunder
shall
be deemed to have been delivered when posted on the Parent’s website or
otherwise made available on the website of the SEC;
(e) as
soon
as a Borrower has knowledge of any event or condition that constitutes a Default
or an Event of Default, notice thereof together with a reasonably detailed
description thereof and a statement of the curative action that the Borrowers
propose to take with respect thereto;
(f) promptly
after the commencement thereof, but in any event within 10 Business Days after
the service of process with respect thereto on any Loan Party, notice of all
actions, suits, or proceedings brought by or against any Loan Party before
any
Governmental Authority which, if determined adversely to such Loan Party,
reasonably could be expected to result in a Material Adverse
Effect;
(g) upon
the
request of the Administrative Agent in its Permitted Discretion, any other
report reasonably requested relating to the financial condition of any Loan
Party; provided,
that
such reports shall not be overly burdensome for any Borrower to prepare;
and
(h) as
part
of the Compliance Certificate delivered pursuant to clause (a)(iii) above,
each
in form and substance satisfactory to the Administrative Agent, a certificate
by
the Responsible Officer of the Parent certifying that (i) the Corporate Chart
attached thereto (or the last Corporate Chart delivered pursuant to this
clause
(h))
is
correct and complete as of the date of such Compliance Certificate, (ii) the
Loan Parties have delivered all documents (including an updated Perfection
Certificate as to locations of Collateral) they are required to deliver pursuant
to any Loan Document on or prior to the date of delivery of such Compliance
Certificate and (iii) complete and correct copies of all documents
modifying any term of any Governing Document of any Loan Party or any Subsidiary
or joint venture thereof on or prior to the date of delivery of such Compliance
Certificate have been delivered to the Administrative Agent or are attached
to
such certificate.
48
In
addition to the financial statements referred to above, the Borrowers agree
to
deliver financial statements prepared on both a consolidated and consolidating
basis; provided,
that
(a) only Parent’s consolidated financial statements shall be audited, (b)
consolidating financial statements shall be prepared without footnotes, and
(c)
the Borrowers shall only be required to deliver balance sheets and income
statements on a consolidating basis. Parent agrees to cooperate with the
Administrative Agent to allow the Administrative Agent to consult with its
independent certified public accountants if the Administrative Agent reasonably
requests the right to do so (and the Administrative Agent shall notify Parent
as
to the timing of such consultation and permit Parent to be present thereat
or to
otherwise participate therein) and that, in such connection, their independent
certified public accountants are authorized to communicate with the
Administrative Agent and to release to the Administrative Agent whatever
financial information concerning any Loan Party that the Administrative Agent
reasonably may request.
Section
5.4 Right
to Inspect; Inventories, Appraisals Audits and Assessments.
(a) The
Administrative Agent (through any of its affiliates or any of its or their
respective officers, employees, or agents) shall have the right, from time
to
time hereafter (which shall be at reasonable times following reasonable notice
to Parent, prior to the occurrence of and during the continuation of an Event
of
Default) to (i)
visit
and inspect the property of each Borrower and examine the Books and make copies
or abstracts thereof and to check, test, and appraise the Collateral in order
to
verify the Borrowers’ financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral; (ii)
discuss
the affairs, finances and accounts of each Borrower with the Chief Financial
Officer, the Treasurer or any Assistant Treasurer or any other Persons
designated by such officers and (iii)
communicate directly with any registered certified public accountants (including
the Borrowers’ accountants) of any Borrower, and such accountants shall be
authorized to communicate directly with the Administrative Agent, the Lenders
and their respective affiliates and to disclose to the Administrative Agent,
the
Lenders or their respective affiliates, all financial statements and other
documents and information as they might have and the Administrative Agent or
any
Lender reasonably requests with respect to any Borrower.
(b) Without
limiting the generality of the foregoing:
(i) At
the
Borrowers’ expense, an Approved Inventory Servicer shall conduct physical
inventories at, at least 95% of the Borrowers’ store locations 1 time per Fiscal
Year, and at each of the Borrowers’ distribution centers at least 1 time per
Fiscal Year at such times as shall be determined by the Borrowers with notice
to
the Administrative Agent. The Administrative Agent, at the expense of the
Borrowers, may participate in and/or observe each physical count and/or
inventory of so much of the Collateral as consists of inventory which is
undertaken on behalf of the Borrowers at each of the Borrowers’ distribution
centers and at not more than 10% of the Borrowers’ store locations. The Parent
shall provide the Administrative Agent with the preliminary inventory levels
at
each store of each Borrower within 15 Business Days following the completion
of
such inventory. The Parent, within 45 days following the completion of each
such
physical inventory, in the aggregate, shall provide the Administrative Agent
with an aggregate reconciliation of the results of such inventory and shall
post
such results to Borrowers’ stock ledger and general ledger, as applicable. Prior
to the occurrence of an Event of Default, the Administrative Agent, in its
Permitted Discretion, may (and shall at the Required Lender’s direction), cause
one (1) additional inventory per Fiscal Year to be taken at the expense of
the
Borrowers, provided that the Administrative Agent shall not require any physical
inventories prior to January 1, 2008. Following the occurrence and during the
continuance of an Event of Default, the Administrative Agent, in its Permitted
Discretion, may (and shall at the Required Lender’s direction), cause additional
inventories to be taken at the expense of the Borrowers.
49
(ii) At
the
Borrowers’ expense, at the request of the Administrative Agent, the Borrowers
will obtain and deliver to the Administrative Agent, or, if the Administrative
Agent so elects, will cooperate with the Administrative Agent in the
Administrative Agent’s obtaining, a report of an independent collateral auditor
satisfactory to the Administrative Agent (which may be affiliated with one
of
Lenders) with respect to the Books and Accounts and inventory components
included in the Aggregate Borrowing Base, which report shall indicate whether
or
not the information set forth in the Borrowing Base Certificate most recently
delivered is accurate and complete in all material respects based upon a review
by such auditors of the Accounts (including verification with respect to the
amount, aging, identity and credit of the respective account debtors and the
billing practices of the Borrowers) and inventory (including verification as
to
the value, location and respective types); provided,
however,
that
the Borrowers shall not be obligated to pay for more than 4 commercial finance
exams in any 12 month period; provided,
further,
however,
the
Administrative Agent shall not conduct its own commercial finance audits so
long
as the First Lien Agent conducts such commercial finance audits and furnishes
the Administrative Agent with copies of the results of such audits provided,
further,
however,
that
following the occurrence and during the continuance of an Event of Default,
the
Borrowers shall be obligated to pay for such additional commercial finance
exams
as the Administrative Agent may, in its Permitted Discretion,
require.
(iii) The
Administrative Agent may from time to time obtain inventory appraisals conducted
by such appraisers as are satisfactory to the Administrative Agent or conduct
inventory appraisals (in all events, at the Borrowers’ expense). If the
Administrative Agent determines that there have been changes in markdowns,
inventory mix and composition, accounting methods or any other factors affecting
the value of the Collateral, the Administrative Agent may in its Permitted
Discretion have the inventory reappraised by a qualified appraisal company
selected by the Administrative Agent from time to time after the Closing Date;
provided,
however,
that
the Borrowers shall not be obligated to pay for more than 2 inventory appraisals
in any 12 month period unless the Adjusted Availability is less than 10% of
the
Aggregate Borrowing Base, in which case, the Borrowers shall be obligated to
pay
for 4 inventory appraisals in such 12 month period; provided,
further,
however,
that
Administrative Agent may from time to time in its Permitted Discretion require
“limited scope” appraisals (it being the Administrative Agent’s present
intention to require such “limited scope” appraisals no less than monthly), in
each case at the Borrower’s expense;
provided further,
however,
that
that following the occurrence and during the continuance of an Event of Default,
the Borrowers shall be obligated to pay for such additional appraisals as the
Administrative Agent may, in its Permitted Discretion, require.
50
(iv) At
the
Borrowers’ expense, upon the request of the Administrative Agent, the Borrowers
will obtain and deliver to the Administrative Agent, or, if the Administrative
Agent so elects, will cooperate with the Administrative Agent in the
Administrative Agent’s obtaining, real property appraisals or “desktop” review
of the most recent real estate appraisal as the Administrative Agent may, in
its
Permitted Discretion, require from an independent real estate appraiser
satisfactory to the Administrative Agent (which may be affiliated with one
of
Lenders) with respect to the Eligible Real Property.
(v) Upon
the
request of the Administrative Agent from time to time, the Borrowers shall
furnish statements and schedules further identifying and describing the
Collateral and such other documents in connection with the Collateral as the
Administrative Agent may reasonably request, all in reasonable detail and in
form and reasonably satisfactory to the Administrative Agent.
ARTICLE
VI
AFFIRMATIVE
COVENANTS
Each
Borrower (and, to the extent set forth in any other Loan Document, each other
Loan Party) agrees with the Lenders and the Administrative Agent, as long as
any
Obligation remains outstanding, the Borrowers shall and shall cause each of
their respective Subsidiaries to do each of the following:
Section
6.1 Returns.
Account
for returns of inventory and customer credits and record the effects thereof
on
the general ledger on the same basis and in accordance with the usual and
customary practices of the applicable Borrower, as they exist at the time of
the
execution and delivery of this Agreement except where failure to do so could
not
reasonably be expected to result in a Material Adverse Effect.
Section
6.2 Maintenance
of Properties.
(a) At
all
times preserve and keep in full force and effect each Borrower’s valid existence
and good standing and any rights and franchises material to the Borrowers’
business;
(b) Maintain
and preserve all of their properties which are necessary or useful in the proper
conduct to their business in good working order and condition, ordinary wear
and
tear excepted;
(c) Cause
to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Borrowers may be necessary
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times;
(d) Continue
to engage in the businesses of selling home furnishings at the retail and
wholesale level, and related businesses; and
(e) Comply
at
all times with the provisions of all leases to which it is a party as lessee,
so
as to prevent any loss or forfeiture thereof or thereunder;
provided,
that
nothing in this Section
6.2
shall
prevent the Borrowers from conducting the store closings contemplated by Section
6.19 or from discontinuing the operation and maintenance of any of their
properties or any of those of its Subsidiaries if such discontinuance is, in
the
judgment of the relevant Borrower, desirable in the conduct of its or their
business and do not in the aggregate cause a Material Adverse
Effect.
51
Section
6.3 Taxes.
Cause
all assessments and taxes, whether real, personal, or otherwise, due or payable
by, or imposed, levied, or assessed against the Loan Parties, or any of their
respective assets to be paid in full, before delinquency or before the
expiration of any extension period, as well as all claims for labor materials
or
supplies that if unpaid might by law become a Lien or charge upon its property,
except to the extent that the validity of such assessment or tax shall be the
subject of a Permitted Protest. The Borrowers will and will cause their
Subsidiaries to make timely payment or deposit of all tax payments and
withholding taxes required of them by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish the Administrative Agent with
proof satisfactory to the Administrative Agent indicating that the applicable
Loan Party has made such payments or deposits.
Section
6.4 Insurance.
At the
Borrowers’ expense, maintain in full force and effect all policies of insurance
respecting the Loan Parties’ assets wherever located, covering loss or damage by
fire, theft, explosion, and other hazards and risks and also shall maintain
business interruption, public liability, product liability, property damage,
other casualty, workers’ compensation insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation, all as ordinarily are
insured against by other Persons engaged in the same or similar business and
with financially sound and reputable insurance companies or associations. All
such policies of insurance shall be in such amounts which are customary for
Persons engaged in the same or similar business and with nationally recognized
insurance companies. The Borrowers shall deliver copies of all such policies
to
the Administrative Agent with a satisfactory lender’s loss payable endorsement
(subject to the rights of the First Lien Lender) naming the Administrative
Agent
as loss payee (with respect to the Collateral) or additional insured, as
appropriate. Each such policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
the
Administrative Agent in the event of cancellation of the policy for any reason
whatsoever.
Section
6.5 Location
of Inventory.
Keep
each Loan Party’s inventory (other than Eligible In-Transit Inventory) only at
the locations identified on Schedule
4(b)
of the
Perfection Certificate and their chief executive offices only at the locations
identified on Section
2(b)
of the
Perfection Certificate; provided,
however,
that
(a) Parent may amend Section
2(b)
and
Schedule
4(b)
of the
Perfection Certificate so long as such amendment occurs by written notice to
the
Administrative Agent not less than 30 days prior to the date on which such
inventory is moved to such new location or such chief executive office is
relocated, so long as such new location is within the United States or Canada
(other than Eligible In-Transit Inventory), which amendment shall be included
in
any Perfection Certificate delivered pursuant to Section
5.2,
and so
long as, at the time of such written notification, the applicable Borrower
provides any financing statements or other documents necessary to perfect and
continue the Administrative Agent’s Liens on such assets and also provides a
Collateral Access Agreement with respect thereto if such location is a
warehouse, distribution center, fulfillment center, contract warehouse or other
real property (other than a retail store location) leased by a Borrower, and
(b)
each Loan Party may keep inventory during the period from September 1 to
December 31 of each year at warehouses leased by such Persons or in a
fulfillment center or contract warehouse, to the extent permitted pursuant
to
Section 6.5 of the First Lien Credit Agreement.
52
Section
6.6 Compliance
with Laws, Etc.
Comply
with all Requirements of Law, and orders of any Governmental Authority, and
make
all necessary filings with, and give all appropriate notices to, Governmental
Authorities, including the Fair Labor Standards Act and the Americans With
Disabilities Act, and with all Contractual Obligations and Permits, other than
laws, rules, regulations, orders, Contractual Obligations and Permits the
non-compliance with which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
Section
6.7 Leases.
Pay
when due all rents and other amounts payable under any leases to which any
Loan
Party is a party or by which any Loan Party’s properties and assets are bound,
unless such payments are the subject of a Permitted Protest or unless nonpayment
of such rents and other amounts individually or in the aggregate could not
reasonably be expected to result in a Material Adverse Effect.
Section
6.8 Existence.
At all
times preserve and keep in full force and effect each Loan Party’s valid
existence and good standing and any rights and franchises material to their
businesses except as otherwise permitted pursuant to Section
7.4.
Section
6.9 Environmental.
Except
for such Environmental Liens, failures to comply, releases, Environmental
Actions, notices, citations or orders which individually or in the aggregate
could not reasonably be expected to result in a Material Adverse Effect (a)
keep
any property either owned or operated by any Loan Party free of any
Environmental Liens or post bonds or other financial assurances sufficient
to
satisfy the obligations or liability evidenced by such Environmental Liens,
(b)
comply with all applicable Environmental Laws and provide to the Administrative
Agent documentation of such compliance which the Administrative Agent reasonably
requests, (c) promptly notify the Administrative Agent of any release of a
Hazardous Material of any reportable quantity from or onto property owned or
operated by any Loan Party and take any Remedial Actions required to xxxxx
said
release or otherwise to come into compliance with applicable Environmental
Law,
and (d) promptly, but in any event within 5 days of its receipt thereof, provide
the Administrative Agent with written notice of any of the following: (i) notice
that an Environmental Lien has been filed against any of the real or personal
property of any Loan Party, (ii) commencement of any Environmental Action or
notice that an Environmental Action will be filed against any Loan Party, and
(iii) notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse
Effect.
Section
6.10 Disclosure
Updates.
Promptly and in no event later than 5 Business Days after obtaining knowledge
thereof, notify the Administrative Agent if any written information, exhibit,
or
report furnished to the Lender Group contained any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in any material respect (other
than
industry-wide risks normally associated with the types of businesses conducted
by the Loan Parties) in light of the circumstances in which made; provided,
that
Projections, Perfection Certificates and Schedules furnished to the Lender
Group
shall be deemed to be updated as and when delivered pursuant to and in
accordance with the terms hereof. The foregoing to the contrary notwithstanding,
any notification pursuant to the foregoing provision will not cure or remedy
the
effect of the prior untrue statement of a material fact or omission of any
material fact nor shall any such notification have the affect of amending or
modifying this Agreement, any Perfection Certificate or any of the Schedules
hereto.
53
Section
6.11 Formation
of Subsidiaries; Further Assurances.
(a)
At the
time that any Borrower forms any direct or indirect Subsidiary or acquires
any
direct or indirect Subsidiary after the Closing Date, such Borrower shall (i)
cause such new Subsidiary to provide to the Administrative Agent a joinder
to
this Agreement and the Guaranty and Security Agreement or the Canadian Security
Documents, as applicable, allonges to Notes, and other security documents,
as
well as appropriate UCC-1 financing statements, PPSA or other relevant filings
in such jurisdictions as may be required by the Loan Documents or applicable
Requirements of Law or as the Administrative Agent may otherwise reasonably
request, all in form and substance satisfactory to the Administrative Agent
(including being sufficient to grant the Administrative Agent a Lien, subject
only to Permitted Liens, in and to the assets of such newly formed or acquired
Subsidiary in scope similar to the collateral granted hereunder); and (ii)
provide to the Administrative Agent all other documentation, including one
or
more opinions of counsel satisfactory to the Administrative Agent, which in
its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above. (b)
The
Borrowers shall take all other actions necessary or advisable to ensure the
validity or continuing validity of any guaranty for any Obligation or any Lien
securing any Obligation, to perfect, maintain, evidence or enforce any Lien
securing any Obligation or to ensure such Liens have the same priority as that
of the Liens on similar Collateral set forth in the Loan Documents executed
on
the Closing Date (or, for Collateral located outside the United States, a
similar priority acceptable to the Administrative Agent). Any document,
agreement, or instrument executed or issued pursuant to this Section
6.11
shall be
a Loan Document.
Section
6.12 Additional
Collateral Covenants.
Except
for Permitted Liens, be the owners of the Collateral free from any right or
claim of any other Person or any Lien, and shall defend the same against all
claims and demands of all Persons at any time claiming the same or any interests
therein adverse to the Administrative Agent or any Lender. The Borrowers may
grant such allowances, discounts or other adjustments to the Borrowers’ Account
Debtors as the Borrowers may reasonably deem to accord with sound business
practice pursuant to past practices.
Section
6.13 Investment
Proceeds, Etc.
The
proceeds of any funds received by any Borrower whether or not from ordinary
course business operations (including, without limitation, tax refunds, damage
awards, or insurance or condemnation proceeds) with respect to the Collateral
shall be deposited directly into the Cash Collateral Account to be applied
on
account of the Obligations in accordance with Section
2.8
if a
Cash Dominion Event has occurred and is continuing.
Section
6.14 Immediate
Notice to the Administrative Agent.
(a) The
Parent shall provide the Administrative Agent with written notice promptly
upon
the occurrence of any of the following events, which written notice shall state
with reasonable particularity the facts and circumstances of the event for
which
such notice is being given:
(i) The
completion of any physical count of all or a material portion of the Borrowers’
inventory (together with a copy of the results thereof certified by the
Parent);
54
(ii) Any
failure by the Borrowers to pay rent on a timely basis at 20% or more of any
of
the Borrowers’ locations, and as and when such rent payment is due;
(iii) Any
Material Adverse Effect;
(iv) the
occurrence of any Default or Event of Default, including, without limitation,
the delivery of any notice to the First Lien Agent (or any First Lien Lender)
of
any “defaults” or “events of default” under the First Lien Credit Agreement or
the other First Lien Loan Documents;
(v) The
occurrence of any Cash Dominion Event or Cash Dominion Reversion;
(vi) Any
setoff, claims, withholdings or other defenses to which any of the Collateral,
or the Administrative Agent’s rights with respect to the Collateral, are
subject;
(vii) The
occurrence any Property Loss Event involving Collateral having a fair market
value in excess of $500,000;
(viii) Any
permanent reduction of First Lien Debt; or
(ix) The
obtaining of an organization identification number by any Borrower which did
not
have one on the Closing Date, together with such number.
(b) The
Parent shall:
(i) Provide
the Administrative Agent, when so distributed, with copies of any materials
distributed to the shareholders of any Borrower (provided,
that
for purposes of this clause (i), any materials to be delivered hereunder shall
be deemed to have been delivered when posted on the Parent’s website or
otherwise made available on the website of the SEC);
(ii) Add
the
Administrative Agent as an addressee on all mailing lists maintained by or
for
Borrowers;
(iii) At
the
reasonable request of the Administrative Agent, from time to time, provide
the
Administrative Agent with copies of all requested advertising (including copies
of all print advertising and duplicate tapes of all requested video and radio
advertising);
(iv) At
the
request of the Administrative Agent, provide the Administrative Agent, following
review by the Audit and Finance Committee of the Parent’s Board of Directors,
with a copy of any management letter or similar communications from any
accountant of the Borrowers; and
(v) Provide
the Administrative Agent with details of all credit card arrangements to which
any Loan Party is from time to time a party, including details relating to
such
Loan Party’s compliance with the terms of payment to the applicable Cash
Collateral Account of the proceeds of all credit card charges for sales by
such
Loan Party.
55
(vi) The
Parent shall provide the Administrative Agent with (a) prior written notice
of
any entity’s becoming or ceasing to be a Subsidiary and (b) prompt written
notice of any entity’s becoming or ceasing to be an Affiliate (other than a
Subsidiary).
Section
6.15 Certain
Subsidiaries.
The
Parent shall not permit Xxxxxx Street Trading Company, BMAJ, Inc., and The
Bombay Company de Mexico, S.A. de C.V. to engage in any trade or business or
own
any assets or incur any Indebtedness to any Person. The Bombay Furniture
Company, Inc. shall not engage in any business or activity other than managing
the foreign offices of the Loan Parties and holding immaterial assets incidental
thereto.
Section
6.16 Further
Assurances.
Cooperate with Lenders and the Administrative Agent and execute such further
instruments and documents as Lenders or the Administrative Agent shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Agreement and the other Loan Documents.
Section
6.17 Governing
Documents.
Deliver
to the Administrative Agent complete and correct copies of all documents
modifying any term of any Governing Document of any Loan Party or joint venture
thereof on or prior to the date of delivery of any Compliance Certificate
delivered pursuant to Section
5.3(a)(iii).
Section
6.18 Deposit
Accounts; Securities Accounts and Cash Collateral Accounts.
(a) Subject
to the Intercreditor Agreement, the Borrowers shall (i) establish and maintain
cash management services of a type and on terms satisfactory to the
Administrative Agent at one or more of the banks (a “Cash
Management Bank”)
set
forth on Schedule 8
of the
Perfection Certificate, (ii) promptly, and in any event no later than the first
Business Day after the date of receipt thereof, cause all Collections of
Borrowers or cash proceeds of Accounts of Borrowers to be deposited only into
Store Accounts or Concentration Accounts, each set forth on Schedule 8
of the
Perfection Certificate and (iii) direct all Cash Management Banks with Store
Accounts to (A) so long as no Cash Dominion Event has occurred and is
continuing, cause all Collections of Borrowers in an amount greater than $50,000
to be transferred no less frequently than twice each week, to and only to,
a
Concentration Account or a Cash Collateral Account, and (B) after the occurrence
and during the continuance of a Cash Dominion Event cause all Collections of
Borrowers in an amount greater than $10,000 then held in each such Store Account
to be transferred no less frequently than once each day to, and only to, a
Concentration Account or a Cash Collateral Account. If, notwithstanding the
provisions of this Section 6.18,
after
the occurrence and during the continuance of a Cash Dominion Event, any Borrower
receives or otherwise has dominion over or control of any Collections, such
Borrower shall hold such Collections in trust for the Administrative Agent,
as
the case may be, and shall not commingle such Collections with any of Borrowers’
other funds or deposit such Collections in any account of Borrowers except
as
instructed by the Administrative Agent.
(b) Borrowers
shall establish and maintain Control Agreements with the Administrative Agent,
the First Lien Agent and each Cash Management Bank with respect to each
Concentration Account. Each such Control Agreement shall provide, among other
things, that after the occurrence and during the continuance of a Cash Dominion
Event, (i) upon notice from the Administrative Agent, the Cash Management Bank
will comply with instructions of the Administrative Agent, directing the
disposition of funds in the Concentration Account without further consent by
Borrowers, (ii) the Cash Management Bank has no rights of setoff or recoupment
or any other claim against the applicable Concentration Account, other than
for
payment of its service fees and other charges directly related to the
administration of such Concentration Account and for returned checks or other
items of payment, and (iii) it immediately will forward by daily sweep all
amounts in the applicable Concentration Accounts to a Cash Collateral Account
designated by the Administrative Agent.
56
(c) Borrowers
shall establish and maintain Credit Card Agreements with the Administrative
Agent, the First Lien Agent and each Credit Card Processor. Each such Credit
Card Agreement shall provide, among other things, that each such Credit Card
Processor shall transfer all proceeds due with respect to credit card charges
for sales (net of expenses and chargebacks of the Credit Card Issuer or Credit
Card Processor) by Borrowers received by it (or other amounts payable by such
Credit Card Processor) into a designated Concentration Account on a daily basis.
Borrowers shall not attempt to change any direction or designation set forth
in
the Credit Card Agreements regarding payment of charges without the prior
written consent of the Administrative Agent.
(d) So
long
as no Cash Dominion Event has occurred and is continuing, the Parent may amend
Schedule 8
of the
Perfection Certificate to add or replace a Cash Management Bank or deposit
account; provided,
however,
that
(i) such prospective Cash Management Bank shall be satisfactory to the
Administrative Agent and the Administrative Agent shall have consented in
writing in advance to the opening of such deposit account with the prospective
Cash Management Bank, and (ii) prior to the time of the opening of any
Concentration Account, Borrowers and such prospective Cash Management Bank
shall
have executed and delivered to the Administrative Agent, a Control Agreement
in
accordance with clause
(b)
above.
Borrowers shall close any of their deposit accounts (and establish replacement
cash management accounts in accordance with the foregoing sentence) promptly
and
in any event within 30 days of notice from the Administrative Agent, that the
creditworthiness of any Cash Management Bank is no longer acceptable in the
Administrative Agent’s reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from the Administrative Agent, that the
operating performance, funds transfer, or availability procedures or performance
of the Cash Management Bank with respect to Concentration Accounts or the
Administrative Agent’s liability under any Control Agreement with such Cash
Management Bank is no longer acceptable in the Administrative Agent’s reasonable
judgment. If, notwithstanding the provisions of this Section 6.18,
after
the occurrence and during the continuance of a Cash Dominion Event, any Borrower
receives or otherwise has dominion over or control of any Collections, such
Borrower shall hold such Collections in trust for the Administrative Agent,
and
shall not commingle such Collections with any of the Borrowers’ other funds or
deposit such Collections in any account of the Borrowers except as instructed
by
the Administrative Agent.
(e) After
the
occurrence and during the continuance of a Cash Dominion Event, the deposit
accounts shall be cash collateral accounts, with all cash, checks and similar
items of payment in such accounts securing payment of the Obligations, and
in
which Borrowers have granted a Lien on each deposit account to the
Administrative Agent pursuant to the Loan Documents.
57
(f)
Following the occurrence of a Cash Dominion Event, the Borrowers agree that
they
will not, and will not permit their Subsidiaries to, transfer assets out of
any
of their deposit accounts or securities accounts. Following the occurrence
of a
Cash Dominion Event, the Borrowers agree that they will and will cause their
Subsidiaries to take any or all reasonable steps that the Administrative Agent
requests in order for the Administrative Agent to obtain control in accordance
with the UCC with respect to any of its or their securities accounts, deposit
accounts, electronic chattel paper, investment property, and letter-of-credit
rights. No arrangement contemplated hereby or by any Control Agreement in
respect of any deposit accounts, securities accounts or other investment
property shall be modified by Borrowers without the prior written consent of
the
Administrative Agent. Upon the occurrence and during the continuance of a
Default or Event of Default, the Administrative Agent may notify any bank or
securities intermediary to liquidate the applicable deposit account or
securities account or any related investment property maintained or held thereby
and remit the proceeds thereof to a Cash Collateral Account identified by the
Administrative Agent.
(g) The
Administrative Agent shall have no responsibility for, or bear any risk of
loss
of, any investment or income of any funds in any deposit account. From time
to
time after funds are deposited in any Cash Collateral Account, the
Administrative Agent, may apply funds then held in such Cash Collateral Account
to the payment of Obligations in accordance with Section 2.8.
No Loan
Party and no Person claiming on behalf of or through any Loan Party shall have
any right to demand payment of any funds held in any Cash Collateral Account
at
any time prior to the payment in full of all Obligations.
Section
6.19 Release
of Eligible Real Property.
Following the Parent’s written request therefore, the Administrative Agent shall
release its Lien upon the Eligible Real Property, at the expense of the
Borrowers, so long as (a) Borrowers shall have provided the Administrative
Agent
with fifteen (15) Business Days’ prior notice thereof; (b) Borrowers shall have
complied with Section
2.8(a),
if
applicable; (c) at the time of such request and after giving effect thereto
no
Default or Event of Default shall have occurred and be continuing and (d)
Adjusted Availability at the time of such request and after giving effect
thereto shall be no less than 20% of the Aggregate Borrowing Base on such date
and for the next two Fiscal Periods succeeding the Fiscal Period in which such
release shall occur.
Section
6.20 Store
Closing Sale.
Borrowers shall complete the closure of at least 70% of the stores Borrowers
project to close in the Business Plan by January 31, 2008 (excluding Bombay
Kids
stores operated in a combination format). Borrowers shall conduct such store
closures on a “store closing sale” basis with the assistance of a nationally
recognized liquidator, acceptable to both the First Lien Agent and the
Administrative Agent in their Permitted Discretion, which liquidator shall
be
retained pursuant to an “agency agreement” on terms and conditions acceptable to
the Administrative Agent, in its Permitted Discretion. The Borrowers shall
retain an Affiliate of the Administrative Agent as its agent for the purposes
of
acting as “agent” in connection with the conduct of such store closing sales in
accordance with its Business Plan on a “fee basis” on terms and conditions to be
agreed by Borrowers and such Affiliate, provided, that in the event that
Borrowers intend to conduct a store closing sale involving a simultaneous
closing of 30 or more of its retail locations, then Borrowers shall retain
a
nationally recognized liquidation company, acceptable to, and on such terms
and
conditions acceptable to, the First Lien Agent, in its Permitted Discretion.
In
connection with such store closing sales, Borrowers shall retain an Affiliate
of
the Administrative Agent, on terms and conditions acceptable to the First Lien
Agent in their Permitted Discretion, as its agent for the purposes of acting
as
“agent” in connection with the negotiation for the disposition and/or
termination of the Leases and Leasehold Interests for such store locations.
All
proceeds of such store closing sales and Lease and Leasehold Interest
dispositions shall, subject to the terms of the Intercreditor Agreement, be
remitted to the Administrative Agent for application to the Loan.
58
Section
6.21 Grant
of Non-Exclusive License.
For the
purpose of enabling the Administrative Agent to exercise the Administrative
Agent’s rights and remedies under Section
8
of this
Agreement and Section
6.1
of the
Guaranty and Security Agreement (including, without limitation, in order to
take
possession of, hold, preserve, process, assemble, prepare for sale, market
for
sale, sell or otherwise dispose of the Collateral) at such time as the
Administrative Agent shall be lawfully entitled to exercise such rights and
remedies under Section
8
of this
Agreement and Section
6.1
of the
Guaranty and Security Agreement, each Borrower hereby (a) grants to the
Administrative Agent and its agents, for the benefit of each Secured Party,
a
royalty free, non-exclusive, irrevocable worldwide license, such license being
with respect to the Administrative Agent’s exercise of its rights and remedies
under Section 8
of this
Agreement and Section
6.1
of the
Guaranty and Security Agreement including, without limitation, in connection
with any completion of the manufacture of inventory or any sale or other
disposition of inventory (i) to use, apply, and affix any trademark, trade
name,
logo, or the like in which any Borrower now or hereafter has rights, (ii) to
use, license or sublicense any Intellectual Property or computer software now
owned, held or hereafter acquired by such Borrower, including in such license
access to all media such and to the extent to which any of the licensed items
may be recorded or stored and to all computer software programs such and to
the
extent used for the compilation or print out thereof; provided,
that
the Administrative Agent’s use of the property described in clauses
(i)
and
(ii)
above
will comply with all Requirements of Law, and (iii) to use any and all
furniture, fixtures and equipment contained in any premises owned or occupied
by
any Borrower in connection with the exercise of the Administrative Agent’s
rights and remedies under Section
8
of this
Agreement and Section
6.1
of the
Guaranty and Security Agreement, and (b) agrees to provide the Administrative
Agent and/or its agents with access to, and the right to use, any such premises
owned or occupied by any Borrower.
Section
6.22 Use
of
Proceeds.
Use the
proceeds of the Term Loan solely for the general working capital requirements
of
the Borrowers, including transactional fees, costs, and expenses incurred in
connection with this Agreement and the other Loan Documents and the transactions
contemplated hereby and thereby, and shall not use such proceeds to purchase
or
carry margin stock (within the meaning of Regulation U of the Federal Reserve
Board).
ARTICLE
VII
NEGATIVE
COVENANTS
Each
Borrower (and, to the extent set forth in any other Loan Document, each other
Loan Party) agrees with the Lenders and the Administrative Agent, as long as
any
Obligation remains outstanding, no Borrower shall, nor shall it permit any
Loan
Party to:
Section
7.1 Indebtedness.
Create,
incur, assume, suffer to exist, guarantee, or otherwise become or remain,
directly or indirectly, liable with respect to any Indebtedness,
except:
(a) the
Obligations;
59
(b) Indebtedness
set forth on Schedule
7.1;
(c) Permitted
Purchase Money Indebtedness;
(d) refinancings,
renewals, or extensions of Indebtedness permitted under clauses
(b)
and
(c)
of this
Section
7.1
(and
continuance or renewal of any Permitted Liens associated therewith) so long
as:
(i) the terms and conditions of such refinancings, renewals, or extensions
do
not, in the Administrative Agent’s Permitted Discretion, materially impair the
prospects of repayment of the Obligations by the Borrowers or materially impair
the Borrowers’ creditworthiness, (ii) such refinancings, renewals, or extensions
do not result in an increase in the then extant principal amount of, or interest
rate with respect to, the Indebtedness so refinanced, renewed, or extended
or
add one or more Borrower as liable with respect thereto if such additional
Borrowers were not liable with respect to the original Indebtedness, (iii)
such
refinancings, renewals, or extensions do not result in a shortening of the
average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions, that, taken as a whole, are
materially more burdensome or restrictive to the applicable Borrower, (iv)
if
the Indebtedness that is refinanced, renewed, or extended was subordinated
in
right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include subordination
terms
and conditions that are at least as favorable to the Lender Group as those
that
were applicable to the refinanced, renewed, or extended Indebtedness, and (v)
the Indebtedness that is refinanced, renewed, or extended is not recourse to
any
Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended;
(e) at
any
time following the release of the Eligible Real Property in accordance with
Section
6.19,
Permitted Office Building Indebtedness and all refinancings, renewals, or
extensions thereof (and continuance or renewal or any Permitted Liens associated
therewith);
(f) endorsement
of instruments or other payment items for deposit;
(g) Indebtedness
composing Permitted Investments;
(h) Indebtedness
of a Borrower to another Borrower;
(i) Indebtedness
of a Loan Party in respect of Hedging Agreements entered into by such Person
with the purpose and effect of fixing interest rates on a principal amount
of
Indebtedness of such Person that is accruing interest at a variable rate;
provided,
that
each such contract is with a counterparty or has a guarantor of the obligation
of the counterparty who at the time the contract is made has long-term
obligations rated A or Aa3 or better, respectively, by S&P and
Xxxxx’x;
(j) other
unsecured Indebtedness of any Loan Party, in an aggregate amount not to exceed
at any time $2,000,000; and
(k) First
Lien Debt under the First Lien Credit Agreement.
Section
7.2 Liens.
Create,
incur, assume, or suffer to exist, directly or indirectly, any Lien on or with
respect to any of its assets, of any kind, whether now owned or hereafter
acquired, or any income or profits therefrom, except for Permitted Liens
(including Liens in favor of the First Lien Agent and Liens that are
replacements of Permitted Liens to the extent that the original Indebtedness
is
refinanced, renewed, or extended under Section
7.1(d) or (e)
and so
long as the replacement Liens only encumber those assets that secured the
refinanced, renewed, or extended Indebtedness).
60
Section
7.3 Restrictions
on Negative Pledges and Upstream Limitation.
(a) Enter
into or permit to exist any arrangement or agreement (excluding this Agreement,
the other Loan Documents and the First Lien Credit Documents) which directly
or
indirectly prohibits any Loan Party from creating, assuming or incurring any
Lien upon its properties, revenues or assets or those of any of their
Subsidiaries whether now owned or hereafter acquired; or
(b) Enter
into any agreement, contract or arrangement (excluding this Agreement, the
other
Loan Documents and the First Lien Credit Documents as in effect on the date
hereof) restricting the ability of any Subsidiary of any Borrower to pay or
make
dividends or distributions in cash or kind to the Borrowers, to make loans,
advances or other payments of whatsoever nature to the Borrowers, or to make
transfers or distributions of all or any part of its assets to the
Borrowers;
in
each
case other than (i) restrictions on specific assets which assets are the subject
of Permitted Purchase Money Indebtedness or at any time following the release
of
the Eligible Real Property in accordance with Section
6.19,
Permitted Office Building Indebtedness, (ii) customary anti-assignment
provisions contained in leases and licensing agreements entered into by such
Loan Party in the ordinary course of its business and (iii) customary
restrictions contained in asset sale agreements limiting the transfer of such
assets pending the closing of such sale.
Section
7.4 Restrictions
on Fundamental Changes.
(a)
Enter into any merger or consolidation, (b) liquidate, wind up, or dissolve
itself (or suffer any liquidation or dissolution), or (c) convey, sell, lease,
license, assign, transfer, or otherwise dispose of, in one transaction or a
series of transactions, all or any substantial part of its assets,
except:
(i) any
Borrower may be merged with or into another U.S. Borrower, or be liquidated,
wound up or dissolved, or all or any part of its business, property or assets
may be conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to any U.S. Borrower; provided,
that
(A) at the time of any such event, no Event of Default shall exist or shall
result from such event and (B) in the case of such an event, a U.S. Borrower
shall be the continuing or surviving Person;
(ii) (A)
any
Subsidiary of a Borrower that is a Domestic Person may be merged with or into
another Subsidiary of a Borrower that is a Domestic Person, or be liquidated,
wound up or dissolved, or all or any part of its business, property or assets
may be conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to any Subsidiary of a Borrower that
is
a Domestic Person; provided,
that at
the time of any such event no Event of Default shall exist or shall result
from
such event, and (B) any Subsidiary of a Borrower that is a Domestic Person
may
be merged with and into a Borrower, or be liquidated, wound up or dissolved,
or
all or any part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a series
of
transactions, to any U.S. Borrower; provided,
that
(1) at the time of any such event, no Event of Default shall exist or shall
result from such event, (2) a U.S. Borrower shall be the continuing or surviving
Person, and (3) the Borrowers shall have obtained the Administrative Agent’s
prior written consent;
61
(iii) in
connection with (A) sales or closures of stores or distribution centers in
the
normal course of business, and (B) dispositions of inventory and other assets
located at such locations (or used in connection with the operation thereof)
and
related non-depreciated leasehold interests related thereto, in each case on
reasonable terms consistent with such Person’s usual practice in connection with
such sales or closures; provided,
that
the proceeds of such sales and dispositions of inventory closures are used
to
repay or prepay the Obligations pursuant to Section
2.8;
(iv) the
sale,
in one transaction or a series of transactions, of the Bombay Office
Complex;
(v) dispositions
permitted by Section
7.5;
and
(vi) any
other
disposition of assets in any Fiscal Year for full and fair consideration as
long
as the value of such assets does not exceed $1,000,000.
Section
7.5 Disposal
of Assets; Sale and Leaseback.
Other
than Permitted Dispositions, and dispositions permitted by Section
7.4,
convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of the
assets of any Loan Party. The Borrowers will not, and will not permit any of
their Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby any Loan Party shall sell or transfer any property owned by it in order
then or thereafter to lease such property or lease other property that any
Loan
Party intends to use for substantially the same purpose as the property being
sold or transferred other than (a) sale leaseback transactions (in one
transaction or a series of transactions) in respect of the Bombay Office Complex
and (b) other sale leaseback transactions not to exceed $2,500,000 in the
aggregate at any time.
Section
7.6 Change
Name; Change Governing Documents.
(a)
Change any Loan Party’s name, FEIN, organizational identification number, type
of organization, jurisdiction of organization or other legal structure or
relocate any Loan Party’s chief executive office to a new location, without the
consent of the Administrative Agent (not to be unreasonably withheld so long
as,
at the time of such request for consent, such Loan Party provides any financing
statements necessary to perfect and continue perfected the Administrative
Agent’s Liens or any constitutive documents resulting from such change);
provided,
however,
that a
Loan Party may change its name or chief executive office location upon at least
30 days prior written notice by Parent to the Administrative Agent of such
change and so long as, at the time of such written notification, such Loan
Party
provides any financing statements necessary to perfect and continue perfected
the Administrative Agent’s Liens; provided,
further,
that no
Loan Party shall change its name, identity or corporate or organizational
structure in any manner that might make any financing statement filed in
connection herewith or any other Loan Document materially misleading within
the
meaning of section 46(4) of the PPSA (or any comparable provision then in
effect) except upon prior written notice to the Administrative Agent and after
the Administrative Agent’s written acknowledgement that any reasonable action
requested by the Administrative Agent in connection therewith, including to
continue the perfection of any Liens in favor of the Administrative Agent,
on
behalf of the Lenders; or
62
(b)
Change, waive or otherwise modify any Governing Document of, or otherwise change
the capital structure of, any Loan Party (including the terms of any of their
outstanding Stock or Stock Equivalents), in each case except for those
modifications and waivers that (i) do not elect, or permit the election, to
treat the Stock Equivalents of any limited liability company (or similar entity)
as certificated and (ii) do not materially affect the rights and privileges
of
any Loan Party and do not materially affect the interests of any Secured Party
under the Loan Documents or in the Collateral.
Section
7.7 Prepayments
and Amendments.
Except
in connection with a refinancing permitted by Section
7.1(d),
(a) prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of any Loan
Party, other than the Obligations in accordance with this Agreement or the
prepayment of the First Lien Debt in accordance with the terms of the First
Lien
Credit Agreement as in effect on the date hereof; or
(b) directly
or indirectly, amend, modify, alter, increase, or change any of the terms or
conditions of any agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under Section
7.1(b)
or
(c)
or,
except as permitted pursuant to the Intercreditor Agreement, .
Section
7.8 Consignments.
Consign
any of their inventory or sell any of their inventory on xxxx and hold, sale
or
return, sale on approval, or other conditional terms of sale, except for (a)
consignments of inventory not to exceed the aggregate Cost amount of $1,000,000
at any time, and (b) rights of purchasers to return inventory pursuant to any
Loan Party’s return policy.
Section
7.9 Distributions.
Other
than distributions or declaration and payment of dividends by a Borrower to
another Borrower, make any distribution or declare or pay any dividends (in
cash
or other property, other than common Stock or options or rights with respect
to
common Stock) on, or purchase, acquire, redeem, or retire any of any Borrower’s
Stock, of any class, whether now or hereafter outstanding; provided,
however,
that
(a) the Borrowers may purchase, acquire, redeem or retire any of the Borrowers’
Stock or may pay cash dividends on any Borrowers’ Stock at any time so long as
(i) at the time of such purchase, acquisition redemption, retirement, payment
and after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing, (ii) immediately after giving effect thereto,
Availability shall be at least equal to $25,000,000 and the Parent shall have
delivered to the Administrative Agent a Compliance Certificate and Projections
evidencing the maintenance of Availability of at least $25,000,000 for the
2
Fiscal Quarters then ended immediately prior to such purchase, acquisition,
redemption or retirement of any Borrower’s Stock, and (iii) such distributions
are contemplated by the Business Plan and (b) Borrowers may make distributions
or declare and pay any dividends on and may purchase, acquire, redeem, or retire
any Borrower’s Stock in a substantially contemporaneous exchange for common
Stock or other common equity interests of such Borrower (including as a result
of new issuances of common Stock or common equity interests).
63
Section
7.10 Accounting
Methods.
Modify
or change their Fiscal Year or their method of accounting (other than as may
be
required to conform to GAAP).
Section
7.11 Investments,
Acquisitions.
Except
for Permitted Investments and Permitted Acquisitions, directly or indirectly,
make or acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided,
however,
that
such Investments will be considered Investments permitted by this Section
7.11
only if
all actions have been taken to the satisfaction of the Administrative Agent
to
provide to the Administrative Agent, for the benefit of Lenders and the
Administrative Agent, a perfected security interest in all of such Investments
free of all Liens other than Permitted Liens.
Section
7.12 Transactions
with Affiliates.
Engage
in any transaction with any Affiliate (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real
or personal property to or from, or otherwise requiring payments to or from
any
such Affiliate or, to the knowledge of the Borrowers, any corporation,
partnership, trust or other entity in which any such Affiliate has a substantial
interest or is an officer, director, trustee or partner, on terms more favorable
to such Person than would have been obtainable on an arm’s-length basis in the
ordinary course of business except (a) reasonable and customary fees and other
consideration paid to members of the board of directors of Parent and (b)
compensation and benefit arrangements for officers and other employees of any
Loan Party entered into in the ordinary course of business and (c) transactions
among Parent and its wholly-owned Subsidiaries in the ordinary course of
business consistent with past practices. Each Affiliate of the Borrowers is
listed on Schedule
7.12
(as such
Schedule may be updated from time to time).
Section
7.13 Suspension.
Suspend
or go out of a substantial portion of their business, other than in relation
to
Permitted Dispositions or transactions expressly permitted by Sections
7.4
and
7.5.
Section
7.14 Inventory
with Bailees.
Unless
the Administrative Agent has granted its prior written consent and the Borrowers
have delivered to the Administrative Agent a Bailee Acknowledgment with respect
to the applicable inventory, no inventory shall at any time now or hereafter
be
stored with a bailee, warehouseman, or similar party (other than inventory
located at retail locations).
Section
7.15 Store
Openings.
Except
as otherwise provided in the Borrowers’ Business Plan or Section
6.20
with
respect to the store closings, open any location at which the Borrowers
maintain, offer for sale or store any of the Collateral.
Section
7.16 Securities
Accounts.
Establish or maintain any securities account unless the Administrative Agent
shall have received a Control Agreement in respect of such securities account
in
compliance with Section
6.18.
No
Borrower shall transfer assets out of any securities account; provided,
however,
that,
so long as no Cash Dominion Event has occurred and is continuing or would result
therefrom, the Borrowers may use such assets (and the proceeds thereof) to
the
extent not prohibited by this Agreement.
Section
7.17 Deposit
Accounts, Credit Card Agreements, etc.
(a)
Establish any bank accounts, credit card clearinghouse or processors, other
than
those deposit accounts, securities accounts, Credit Card Agreements and other
accounts, all listed on Schedule 8
of the
Perfection Certificate or Schedule 4.20,
without
providing advance written notice to the Administrative Agent, provided that,
in
the case of securities accounts and deposit accounts, the Borrowers shall
provide the Administrative Agent with Control Agreements simultaneously with
the
opening of such new accounts, (b) violate directly or indirectly any Control
Agreement with respect to a Controlled Deposit Account or a Controlled
Securities Account or other bank agency or lock box agreement in favor of the
Administrative Agent for the benefit of the Lender Group with respect to such
account, (c) deposit into any of the payroll accounts listed on Schedule 8
of the
Perfection Certificate any amounts in excess of amounts necessary to pay current
payroll obligations from such accounts or (d) change any direction or
designation relating to any Credit Card Processor.
64
Section
7.18 Employee
Benefit Plans.
(a) Engage
in
any “prohibited transaction”
within
the meaning of §406 of XXXXX xx §0000 of the Code which could reasonably be
expected to result in a Material Adverse Effect; or
(b) permit
any Guaranteed Pension Plan to incur an “accumulated funding deficiency”,
as
such term is defined in §302 of ERISA, whether or not such deficiency is or may
be waived; or
(c) fail
to
contribute to any Guaranteed Pension Plan to an extent which, or terminate
any
Guaranteed Pension Plan in a manner which, could result in the imposition of
a
lien or encumbrance on the assets of any Loan Party pursuant to §302(f) or §4068
of ERISA; or
(d) amend
any
Guaranteed Pension Plan in circumstances requiring the posting of security
pursuant to §307 of ERISA or §401(a)(29) of the Code; or
(e) establish,
maintain, contribute to, or have any obligation or liability, contingent or
otherwise, with respect to a Benefit Plan, Canadian Benefit Plan or Canadian
Pension Plan; or
(f) permit
or
take any action which would result in the aggregate benefit liabilities (with
the meaning of §4001 of ERISA) of all Guaranteed Pension Plans exceeding the
value of the aggregate assets of such Plans, disregarding for this purpose
the
benefit liabilities and assets of any such Plan with assets in excess of benefit
liabilities, by more than $250,000.
Section
7.19 Margin
Regulations.
Use all
or any portion of the proceeds of the Term Loan or any other credit extended
hereunder to purchase or carry margin stock (within the meaning of Regulation
U
of the Federal Reserve Board) in contravention of Regulation U of the Federal
Reserve Board.
Section
7.20 Amendments
to First Lien Credit Agreement.
The
Borrowers will not agree to any amendment, modification, waiver or supplement
to
the First Lien Credit Agreement or any other agreement executed in connection
therewith which
contravenes the provisions of the Intercreditor Agreement.
Section
7.21 Acquisition
of First Lien Debt, Notes.
The Loan
Parties shall not, and shall not permit any Subsidiary or Affiliate to purchase,
redeem, prepay, tender for or otherwise acquire, directly or indirectly, any
of
the outstanding First Lien Debt except upon the full repurchase or prepayment
of
the Obligations in accordance with the other terms of this Agreement, or the
refinancing, repurchase or repayment of the First Lien Debt in accordance with
the Intercreditor Agreement. The Loan Parties will promptly cancel all Notes
or
First Lien Debt acquired by it or any of its Subsidiaries or Affiliates pursuant
to any purchase, redemption, prepayment or tender for the Notes or First Lien
Debt pursuant to any provision of this Agreement or otherwise and no Notes
or
First Lien Debt may be issued in substitution or exchange for any such Notes
or
First Lien Debt. For
the
avoidance of doubt, this Section 7.21 is not intended and shall not prevent
the
Borrowers from making
any
payments pursuant
to the First Lien Credit Agreement.
65
Section
7.22 Potential
Conflicts of Interest.
No Loan
Party shall own, directly or indirectly, any interest in (excepting passive
holdings for investment purposes of not more than five percent (5%) of the
securities of any publicly held and traded company), or shall be an officer,
director, employee, or consultant of, any Person that is a competitor of any
Loan Party. No officer or director of any Loan Party or any Subsidiary of a
Loan
Party shall own, directly or indirectly, any interest in any tangible or
intangible property used in or necessary to the business of the Loan Parties
or
any Subsidiary of a Loan Party, have any cause of action or other claim
whatsoever against another Loan Party, or owe any amount to any other Loan
Party, except as permitted pursuant to the definition of Permitted
Investments.
Section
7.23 Financial
Covenants.
(a) Minimum
Availability.
The
Borrowers shall not permit or suffer to exist Availability, at all times tested,
of less than the lesser of (i) the Availability Floor then in effect and (ii)
ten percent (10%) of the Aggregate Borrowing Base.
(b) Maximum
Indebtedness.
The
Borrowers shall not permit or suffer to exist the aggregate of (i) all payment
Obligations hereunder, plus
(ii) all
First Lien Debt (including, without limitation, all L/C Obligations as defined
in the First Lien Credit Agreement), to be greater than 60% of the sum of the
Eligible Inventory (valued at Cost) owned by the U.S. Borrowers and Eligible
Inventory (valued at Cost) owned by Bombay Canada, tested as of December 31,
2007.
ARTICLE
VIII
EVENTS
OF
DEFAULT
Section
8.1 Definition.
Each of
the following shall be an Event of Default:
(a) any
Borrower shall fail to pay (i) when due any installment of principal whether
at
the stated date of maturity or any accelerated date of maturity or at any other
date fixed for payment of the Obligations, and (ii) any interest (including
any
interest which, but for the provisions of the Bankruptcy Code, would have
accrued on such amounts), fees under any Loan Document or any other Obligation
not set forth in the preceding clauses (i) or (ii) herein (x) so long as any
Cash Dominion Event shall not have occurred, within 5 days after the date due,
and (y) when the same shall be due and payable at any time any Cash Dominion
Event shall have occurred;
66
(b) (i)
any
Loan Party shall fail to comply with any of the provisions contained in
Sections 5.2
(with
respect to delivery of the Borrowing Base Certificate), 6.8,
6.14(a)(iii),
6.14(a)(iv),
6.18,
or
Article
VII];
(ii)
any Loan Party shall fail to comply with any of the provisions contained in
Sections
5.2
(other
than with respect to delivery of the Borrowing Base Certificate) or 6.4
for 5
Business Days, (iii) any Loan Party shall fail to perform any term, covenant
or
agreement contained herein or in any of the other Loan Documents (other than
those specified elsewhere in this Article VIII)
for 20
days after written notice of such failure has been given to the Parent by the
Administrative Agent; and (iv) any representation or warranty of any Loan Party
in this Agreement or any of the other Loan Documents or any Record or in any
other document or instrument delivered pursuant to or in connection with this
Agreement shall prove to have been false in any material respect upon the date
when made or deemed to have been made or repeated;
(c) if
any
material portion of any Loan Party’s assets is attached, seized, subject to a
writ or distress warrant, levied upon, or comes into the possession of any
third
Person and the same is not discharged for 30 days or more;
(d) if
an
Insolvency Proceeding is commenced by any Loan Party;
(e) if
an
Insolvency Proceeding is commenced against any Loan Party, and any of the
following events occur: (i) the applicable Loan Party consents to the
institution of the Insolvency Proceeding against it, (ii) the petition
commencing the Insolvency Proceeding is not timely controverted, (iii) the
petition commencing the Insolvency Proceeding is not dismissed within 60
calendar days of the date of the filing thereof, (iv) a trustee, custodian,
liquidator, monitor, receiver or receiver manager is appointed to take
possession of all or any substantial portion of the properties or assets of,
or
to operate all or any substantial portion of the business of, any Loan Party,
(v) an order for relief shall have been entered therein, (vi) any Loan Party
shall generally not pay its debts as such debts become due, shall admit in
writing its inability to pay its debts generally or shall make a general
assignment for the benefit of creditors or (vii) any Loan Party shall take
any
corporate or similar action or any other action to authorize any action
described in clause
(i)
or
(vi)
above;
(f) if
any
Loan Party is enjoined, restrained, or in any way prevented by court order
from
continuing to conduct all or any material part of its business
affairs;
(g) if
a
notice of Lien, levy, or assessment is filed of record with respect to any
Loan
Party’s assets by any Governmental Authority, or if any taxes or debts owing at
any time hereafter to any one or more of such entities becomes a Lien, whether
xxxxxx or otherwise, upon any Loan Party’s assets and the same is not paid prior
to becoming delinquent;
(h) if
any
Loan Party suffers the entry against it of a final judgment for the payment
of
money in excess of $1,000,000 (not covered by insurance) and such judgment
is
unstayed and undischarged for a period of thirty consecutive days after the
date
of entry thereof;
(i) if
there
is a default in any material agreement
to which any Loan Party is a party relative to such Person’s Indebtedness
involving an aggregate amount of $5,000,000, or more, and such default (i)
occurs at the final maturity of the obligations thereunder, or (ii) results
in a
right by the other party thereto, irrespective of whether exercised, to
accelerate the maturity of the applicable Loan Party’s obligations thereunder,
or to terminate such agreement;
67
(j) if
any
Loan Party makes any payment on account of Indebtedness that has been
contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of
the
subordination provisions application to such Indebtedness;
(k) if
any of
the Loan Documents shall be cancelled, terminated, revoked or rescinded or
the
Administrative Agent’s Liens on the Collateral with a value in excess of
$250,000 shall cease to be perfected, or shall cease to have the priority
contemplated by the Loan Documents, in each case otherwise than in accordance
with the terms thereof or with the express prior written agreement, consent
or
approval of the Lenders, or any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall be
commenced by or on behalf of any Loan Party or any of their respective
stockholders, or any court or any other governmental or regulatory authority
or
agency of competent jurisdiction shall make a determination that, or issue
a
judgment, order, decree or ruling to the effect that, any one or more of the
Loan Documents is illegal, invalid or unenforceable in accordance with the
terms
thereof;
(l) any
Borrower or any ERISA Affiliate incurs any liability to the PBGC or a Guaranteed
Pension Plan pursuant to Title IV of ERISA in an aggregate amount exceeding
$1,000,000, or any Borrower or any ERISA Affiliate is assessed withdrawal
liability pursuant to Title IV of ERISA by a Multiemployer Plan requiring
aggregate annual payments exceeding $1,000,000, or any of the following occurs
with respect to a Guaranteed Pension Plan: (i) an ERISA Reportable Event, or
a
failure to make a required installment or other payment (within the meaning
of
§ 302(f)(1) of ERISA), provided
that the
Administrative Agent determines in its Permitted Discretion that such event
(x)
could be expected to result in liability of any Borrower or any of its
Subsidiaries to the PBGC or such Guaranteed Pension Plan in an aggregate amount
exceeding $1,000,000 and (y) could constitute grounds for the termination
of such Guaranteed Pension Plan by the PBGC, for the appointment by the
appropriate United States District Court of a trustee to administer such
Guaranteed Pension Plan or for the imposition of a lien in favor of such
Guaranteed Pension Plan; or (ii) the appointment by a United States District
Court of a trustee to administer such Guaranteed Pension Plan; or (iii) the
institution by the PBGC of proceedings to terminate such Guaranteed Pension
Plan;
(m) any
Loan
Party shall be indicted for a state or federal crime, or any civil or criminal
action shall otherwise have been brought or threatened against any Loan Party,
a
punishment for which in any such case could include the forfeiture of any assets
of such Loan Party having a fair market value in excess of
$1,000,000;
(n) a
Change
of Control shall occur; or
(o) any
“Event of Default” under and as defined in the First Lien Credit Agreement shall
have occurred and be continuing.
68
Section
8.2 Remedies.
During
the continuance of any Event of Default, the Administrative Agent may, and,
at
the request of the Required Lenders, shall, in each case by notice to the
Borrowers and in addition to any other right or remedy provided under any Loan
Document or by any applicable Requirement of Law, do each of the following:
declare immediately due and payable all or part of any Obligation (including
any
accrued but unpaid interest thereon), whereupon the same shall become
immediately due and payable, without presentment, demand, protest or further
notice or other requirements of any kind, all of which are hereby expressly
waived by Parent and the Borrowers (and, to the extent provided in any other
Loan Document, other Loan Parties); provided,
however,
that,
effective immediately upon the occurrence of the Events of Default specified
in
Section
8.1(d)
or
Section 8.1(e)(ii),
each
Obligation (including in each case any accrued all accrued but unpaid interest
thereon) shall automatically become and be due and payable, without presentment,
demand, protest or further notice or other requirement of any kind, all of
which
are hereby expressly waived by the Borrowers (and, to the extent provided in
any
other Loan Document, any other Loan Party).
ARTICLE
IX
THE
ADMINISTRATIVE AGENT
Section
9.1 Appointment
and Duties.
(a) Appointment
of Agents.
Each
Lender hereby appoints GB Merchant Partners, LLC (together with any successor
Administrative Agent pursuant to Section 9.9)
as the
Administrative Agent hereunder and authorizes the Administrative Agent to (i)
execute and deliver the Loan Documents and accept delivery thereof on its behalf
from any Loan Party, (ii) take such action on its behalf and to exercise all
rights, powers and remedies and perform the duties as are expressly delegated
to
the Administrative Agent under such Loan Documents and (iii) exercise such
powers as are reasonably incidental thereto.
(b) Duties
as Collateral and Disbursing Agent.
Without
limiting the generality of clause
(a)
above,
the Administrative Agent shall have the sole and exclusive right and authority
(to the exclusion of the Lenders), and are hereby authorized, to (i) act as
the disbursing and collecting agent for the Lenders with respect to all payments
and collections arising in connection with the Loan Documents (including in
any
Insolvency Proceeding described in Section
8.1(d)
or
Section 8.1(e)(ii)
or any
other bankruptcy, insolvency or similar proceeding), and each Person making
any
payment in connection with any Loan Document to any Secured Party is hereby
authorized to make such payment to the Administrative Agent, (ii) file and
prove
claims and file other documents necessary or desirable to allow the claims
of
the Secured Parties with respect to any Obligation in any proceeding described
in Section
8.1(d)
or
Section 8.1(e)(ii)
or any
other bankruptcy, insolvency or similar proceeding (but not to vote, consent
or
otherwise act on behalf of such Secured Party), (iii) act as collateral agent
for each Secured Party for purposes of the perfection of all Liens created
by
such agreements and all other purposes stated therein, (iv) manage, supervise
and otherwise deal with the Collateral, (v) take such other action as is
necessary or desirable to maintain the perfection and priority of the Liens
created or purported to be created by the Loan Documents, (vi) except as may
be
otherwise specified in any Loan Document, exercise all remedies given to the
Administrative Agent and the other Secured Parties with respect to the
Collateral, whether under the Loan Documents, applicable Requirements of Law
or
otherwise and (vii) execute any amendment, consent or waiver under the Loan
Documents on behalf of any Lender that has consented in writing to such
amendment, consent or waiver; provided,
however,
that
the Administrative Agent hereby appoints, authorizes and directs each other
Lender to act as collateral sub-agent for the Administrative Agent and the
Lenders for purposes of the perfection of all Liens with respect to the
Collateral, including any deposit account maintained by a Loan Party with,
and
cash and Cash Equivalents held by, such Lender and may further authorize and
direct each other, the Lenders to take further actions as collateral sub-agents
for purposes of enforcing such Liens or otherwise to transfer the Collateral
subject thereto to the Administrative Agent and each Lender hereby agrees to
take such further actions to the extent, and only to the extent, so authorized
and directed.
69
(c) Limited
Duties.
Under
the Loan Documents, the Administrative Agent (i) is acting solely on behalf
of
the Lenders, with duties that are entirely administrative in nature,
notwithstanding the use of the defined term “Administrative Agent”, and the
terms “agent”, “administrative agent”, and “collateral agent” and similar terms
in any Loan Document to refer to the Administrative Agent, which terms are
used
for title purposes only, (ii) is not assuming any obligation under any Loan
Document other than as expressly set forth therein or any role as agent,
fiduciary or trustee of or for any Lender or any other Secured Party and (iii)
shall have no implied functions, responsibilities, duties, obligations or other
liabilities under any Loan Document, and each Lender hereby waives and agrees
not to assert any claim against the Administrative Agent based on the roles,
duties and legal relationships expressly disclaimed in clauses
(i)
through
(iii)
above.
(d) To
the
extent that any Loan Party now or in the future is required to grant security
pursuant to the laws of the Province of Quebec, each Lender acting for itself
and on behalf of all present and future Related Persons of such Lender that
are
or become Secured Parties, hereby irrevocably authorizes and appoints the
Administrative Agent to act as the holder of an irrevocable power of attorney
(fondé
de pouvoir)
(within
the meaning of Article 2692 of the Civil
Code of Quebec)
in
order to hold any hypothec granted under the laws of the Province of Quebec
as
security for any debenture, bond or other title of indebtedness that may be
issued by a Loan Party pursuant to a deed of hypothec and to exercise such
rights and duties as are conferred upon a fondé
de pouvoir
under
the relevant deed of hypothec and applicable laws (with the power to delegate
any such rights or duties). Moreover, in respect of any pledge by a Loan Party
of any such debenture, bond or other title of indebtedness as security for
any
Obligations, the Administrative Agent shall also be authorized to hold such
debenture, bond or other title of indebtedness as agent and pledgee for the
benefit of the Secured Parties, the whole notwithstanding the provisions of
Section 32 of the An
Act respecting the Special Powers of Legal Persons
(Quebec). The execution prior to the date hereof by the Administrative Agent
of
any deed of hypothec or other security documents made pursuant to the laws
of
the Province of Quebec, is hereby ratified and confirmed. Any person who becomes
a Secured Party shall be deemed to have consented to and ratified the foregoing
appointment of each of the Administrative Agent as fondé
de pouvoir,
agent
and mandatory on behalf of all Secured Parties, including such
person.
For
greater certainty, the Administrative Agent,
acting
as the holder of an irrevocable power of attorney (fondé
de pouvoir),
shall
have the same rights, powers, immunities, indemnities and exclusions from
liability as are prescribed in favor of the Administrative
Agent in this Agreement, which shall apply mutatis
mutandis.
In the
event of the resignation and appointment of a successor Administrative
Agent, such successor Administrative Agent shall also act
as the
holder of an irrevocable power of attorney (fondé
de pouvoir).
Section
9.2 Binding
Effect.
Each
Lender agrees that (i) any action taken by the Administrative Agent or the
Required Lenders (or, if expressly required hereby, a greater proportion of
the
Lenders) in accordance with the provisions of the Loan Documents, (ii) any
action taken by the Administrative Agent in reliance upon the instructions
of
the Required Lenders (or, where so required, such greater proportion) and (iii)
the exercise by the Administrative Agent or the Required Lenders (or, where
so
required, such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall
be
authorized and binding upon all of the Secured Parties.
70
Section
9.3 Use
of
Discretion.
(a) No
Action without Instructions.
The
Administrative Agent shall not be required to exercise any discretion or take,
or to omit to take, any action, including with respect to enforcement or
collection, except any action it is required to take or omit to take
(i) under any Loan Document or (ii) pursuant to instructions from the
Required Lenders.
(b) Right
Not to Follow Certain Instructions.
Notwithstanding clause
(a)
above,
the Administrative Agent shall not be required to take, or to omit to take,
any
action (i) unless, upon demand, the Administrative Agent receives an
indemnification satisfactory to it from the Lenders (or, to the extent
applicable and acceptable to the Administrative Agent, any other Secured Party)
against all Liabilities that, by reason of such action or omission, may be
imposed on, incurred by or asserted against the Administrative Agent or any
Related Person thereof or (ii) that is, in the opinion of the Administrative
Agent or its counsel, contrary to any Loan Document or applicable Requirement
of
Law.
Section
9.4 Delegation
of Rights and Duties.
The
Administrative Agent may, upon any term or condition it specifies, delegate
or
exercise any of its rights, powers and remedies under, and delegate or perform
any of its duties or any other action with respect to, any Loan Document by
or
through any trustee, co-agent, employee, attorney-in-fact and any other Person
(including any Secured Party). Any such Person shall benefit from this
Article IX
to the
extent as the Administrative Agent.
Section
9.5 Reliance
and Liability.
(a)
The
Administrative Agent may, without incurring any liability hereunder, (i) treat
the payee of any Note as its holder until such Note has been assigned in
accordance with Section 10.2,
(ii)
rely on the Register to the extent set forth in Section 2.10
(iii)
consult with any of its Related Persons and, whether or not selected by it,
any
other advisors, accountants and other experts (including advisors to, and
accountants and experts engaged by, any Loan Party) and (iv) rely and act upon
any document and information (including those transmitted by Electronic
Transmission) and any telephone message or conversation, in each case believed
by it to be genuine and transmitted, signed or otherwise authenticated by the
appropriate parties.
(b) Neither
the Administrative Agent nor any Related Person shall be liable for any action
taken or omitted to be taken by any of them under or in connection with any
Loan
Document, and each Lender and the Borrowers hereby waive and shall not assert
(and each of the Borrowers shall cause each other Loan Party to waive and agree
not to assert) any right, claim or cause of action based thereon, except to
the
extent of liabilities resulting primarily from the gross negligence or willful
misconduct of the Administrative Agent or, as the case may be, such Related
Person (each as determined in a final, non-appealable judgment by a court of
competent jurisdiction) in connection with the duties expressly set forth
herein. Without limiting the foregoing, the Administrative Agent:
(i) shall
not
be responsible or otherwise incur liability for any action or omission taken
in
reliance upon the instructions of the Required Lenders or for the actions or
omissions of any of its Related Persons selected with reasonable care (other
than employees, officers and directors of the Administrative Agent, when acting
on behalf of the Administrative Agent);
71
(ii) shall
not
be responsible to any Secured Party for the due execution, legality, validity,
enforceability, effectiveness, genuineness, sufficiency or value of, or the
attachment, perfection or priority of any Lien created or purported to be
created under or in connection with, any Loan Document;
(iii) makes
no
warranty or representation, and shall not be responsible, to any Secured Party
for any statement, document, information, representation or warranty made or
furnished by or on behalf of any Loan Party or any Loan Party’s Related Person
in connection with any Loan Document or any transaction contemplated therein
or
any other document or information with respect to any Loan Party, whether or
not
transmitted or (except for documents expressly required under any Loan Document
to be transmitted to the Lenders) omitted to be transmitted by the
Administrative Agent, including as to completeness, accuracy, scope or adequacy
thereof, or for the scope, nature or results of any due diligence performed
by
the Administrative Agent in connection with the Loan Documents; and
(iv) shall
not
have any duty to ascertain or to inquire as to the performance or observance
of
any provision of any Loan Document, whether any condition set forth in any
Loan
Document is satisfied or waived, as to the financial condition of any Loan
Party
or as to the existence or continuation or possible occurrence or continuation
of
any Default or Event of Default and shall not be deemed to have notice or
knowledge of such occurrence or continuation unless it has received a notice
from the Borrower, any Lender describing such Default or Event of Default
clearly labeled “notice of default” (in which case the Administrative Agent
shall promptly give notice of such receipt to all Lenders);
and,
for
each of the items set forth in clauses (i) through (iv) above, each Lender
and
the Borrowers hereby waives and agrees not to assert (and each of the Borrowers
shall cause each other Loan Party to waive and agree not to assert) any right,
claim or cause of action it might have against the Administrative Agent based
thereon.
Section
9.6 Agent
Individually.
The
Administrative Agent and its Affiliates may make loans and other extensions
of
credit to, acquire Stock and Stock Equivalents of, engage in any kind of
business with, any Loan Party or Affiliate thereof as though it were not acting
as the Administrative Agent and may receive separate fees and other payments
therefor. To the extent the Administrative Agent or any of their Affiliates
makes any Loan or otherwise becomes a Lender hereunder, it shall have and may
exercise the same rights and powers hereunder and shall be subject to the same
obligations and liabilities as any other Lender and the terms “Lender”,
“Required Lender” and any similar terms shall, except where otherwise expressly
provided in any Loan Document, include, without limitation, the Administrative
Agent or such Affiliate, as the case may be, in its individual capacity as
Lender or as one of the Required Lenders, respectively.
Section
9.7 Lender
Credit Decision.
Each
Lender acknowledges that it shall, independently and without reliance upon
the
Administrative Agent, any Lender or any of their Related Persons or upon any
document (including the Disclosure Documents) solely or in part because such
document was transmitted by the Administrative Agent or any of its Related
Persons, conduct its own independent investigation of the financial condition
and affairs of each Loan Party and make and continue to make its own credit
decisions in connection with entering into, and taking or not taking any action
under, any Loan Document or with respect to any transaction contemplated in
any
Loan Document, in each case based on such documents and information as it shall
deem appropriate. Except for documents expressly required by any Loan Document
to be transmitted by the Administrative Agent to the Lenders, the Administrative
Agent shall not have any duty or responsibility to provide any Lender with
any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any Loan Party
or
any Affiliate of any Loan Party that may come in to the possession of either
the
Administrative Agent or any of its Related Persons.
72
Section
9.8 Expenses;
Indemnities.
(a)
Each
Lender agrees to reimburse the Administrative Agent and each of its Related
Persons (to the extent not reimbursed by any Loan Party) promptly upon demand
for such Lender’s Pro Rata Share of any costs and expenses (including fees,
charges and disbursements of financial, legal and other advisors and Taxes
paid
in the name of, or on behalf of, any Loan Party) that may be incurred by the
Administrative Agent or any of their Related Persons in connection with the
preparation, syndication, execution, delivery, administration, modification,
consent, waiver or enforcement (whether through negotiations, through any
work-out, bankruptcy, restructuring or other legal or other proceeding or
otherwise) of, or legal advice in respect of its rights or responsibilities
under, any Loan Document.
(b) Each
Lender further agrees to indemnify the Administrative Agent and each of its
Related Persons (to the extent not reimbursed by any Loan Party), for such
Lender’s Pro Rata Share of any Liabilities (including taxes, interests and
penalties imposed for not properly withholding or backup withholding on payments
made to on or for the account of any Lender) that may be imposed on, incurred
by
or asserted against the Administrative Agent or any of its Related Persons
in
any matter relating to or arising out of, in connection with or as a result
of
any Loan Document, any Related Document or any other act, event or transaction
related, contemplated in or attendant to any such document, or, in each case,
any action taken or omitted to be taken by the Administrative Agent or any
of
its Related Persons under or with respect to any of the foregoing; provided,
however,
that no
Lender shall be liable to the Administrative Agent or any of its Related Persons
to the extent such liability has resulted from the gross negligence or willful
misconduct of the Administrative Agent or, as the case may be, such Related
Person.
Section
9.9 Resignation
of Administrative Agent.
(a) The
Administrative Agent may resign at any time by delivering notice of such
resignation to the Lenders and the Parent, effective on the date set forth
in
such notice (or provided such effective date is at least 30 days after the
date
of such notice). If the Administrative Agent delivers any such notice, the
Required Lenders shall have the right to appoint a successor Administrative
Agent. If, within 30 days after the retiring Administrative Agent has given
notice of resignation, no successor Administrative Agent has been appointed
by
such Lenders that has accepted such appointment, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent from among the relevant Lenders. Each appointment under
this clause
(a)
shall be
subject to the prior consent of the Parent, which may not be unreasonably
withheld, conditioned or delayed but shall not be required during the
continuance of a Default.
73
(b) Effective
immediately upon its resignation, (i) the retiring Administrative Agent shall
be
discharged from its duties and obligations under the Loan Documents, (ii) the
relevant Lenders shall assume and perform all of the duties of such
Administrative Agent until a successor Administrative Agent shall have accepted
a valid appointment hereunder, (iii) the retiring Administrative Agent and
its
Related Persons shall no longer have the benefit of any provision of any Loan
Document other than with respect to any actions taken or omitted to be taken
while such retiring Administrative Agent was, or because such Administrative
Agent had been, validly acting as Administrative Agent, under the Loan Documents
and (iv) subject to its rights under Section 9.3,
the
retiring Administrative Agent shall take such action as may be reasonably
necessary to assign to the successor Administrative Agent its rights as
Administrative Agent under the Loan Documents. Effective immediately upon its
acceptance of a valid appointment as Administrative Agent, a successor
Administrative Agent shall succeed to, and become vested with, all the rights,
powers, privileges and duties of the retiring Administrative Agent under the
Loan Documents.
Section
9.10 Release
of Collateral or Guarantors.
Each
Lender hereby consents to the release and hereby directs the Administrative
Agent to release (or, in the case of clause
(b)(ii)
below,
release or subordinate) the following:
(a) any
Subsidiary of a Borrower from its guaranty of any Obligation of any Loan Party
or any Borrower (other than Parent) if all of the Securities of such Person
owned by any Loan Party are Sold in a Sale permitted under the Loan Documents
(including pursuant to a waiver or consent), to the extent that, after giving
effect to such Sale, such Person would not be required to guaranty any
Obligations pursuant to Section 6.11
or be a Borrower hereunder;
and
(b) any
Lien
held by the Administrative Agent for the benefit of the Secured Parties against
(i) any Collateral that is Sold by a Loan Party in a Sale permitted by the
Loan
Documents (including pursuant to a valid waiver or consent), to the extent
all
Liens required to be granted in such Collateral pursuant to Section 6.11
after
giving effect to such Sale have been granted, and (ii) all of the Collateral
and
all Loan Parties, upon (A) payment and satisfaction in full of the Term Loan
and
all other Obligations that the Administrative Agent has been notified in writing
are then due and payable, (B) deposit of cash collateral with respect to all
contingent Obligations, in amounts and on terms and conditions and with parties
satisfactory to the Administrative Agent and each Indemnitee that is owed such
Obligations and (C) to the extent requested by the Administrative Agent, receipt
by the Secured Parties of liability releases from the Loan Parties each in
form
and substance acceptable to the Administrative Agent.
Each
Lender hereby directs the Administrative Agent, and the Administrative Agent
hereby agrees, upon receipt of reasonable advance notice from the Parent, to
execute and deliver or file such documents and to perform other actions
reasonably necessary to release the guaranties and Liens when and as directed
in
this Section 9.10.
Section
9.11 Additional
Secured Parties.
The
benefit of the provisions of the Loan Documents directly relating to the
Collateral or any Lien granted thereunder shall extend to and be available
to
any Secured Party that is not a Lender as long as, by accepting such benefits,
such Secured Party agrees, as among the Administrative Agent, and all other
Secured Parties, that such Secured Party is bound by (and, if requested by
the
Administrative Agent, shall confirm such agreement in a writing in form and
substance acceptable to the relevant Administrative Agent) this Article IX,
Section 10.8
(Right
of Setoff),
Section 10.9
(Sharing
of Payments)
and
Section 10.20
(Confidentiality)
and the
decisions and actions of the Administrative Agent and the Required Lenders
to
the same extent a Lender is bound; provided,
however,
that,
notwithstanding the foregoing, (a) such Secured Party shall be bound by
Section 9.8
only to
the extent of Liabilities, costs and expenses with respect to or otherwise
relating to the Collateral held for the benefit of such Secured Party, in which
case the obligations of such Secured Party thereunder shall not be limited
by
any concept of Pro Rata Share or similar concept, (b) each of the Administrative
Agent and the Lenders shall be
74
ARTICLE
X
MISCELLANEOUS
Section
10.1 Amendments,
Waivers, Etc.
(a)
No
amendment or waiver of any provision of any Loan Document (other than the Fee
Letter and the Control Agreements) and no consent to any departure by any Loan
Party therefrom shall be effective unless the same shall be in writing and
signed (1) in the case of an amendment, consent or waiver to cure any ambiguity,
omission, defect or inconsistency or granting a new Lien for the benefit of
the
Secured Parties or extending an existing Lien over additional property, by
the
Administrative Agent and the Parent, (2) in the case of any other waiver, or
consent, by the Required Lenders (or by the Administrative Agent with the
consent of the Required Lenders) and (3) in the case of any other amendment,
by
the Required Lenders (or by the Administrative Agent with the consent of the
Required Lenders) and the Borrowers; provided,
however,
that no
amendment, consent or waiver described in clauses (2)
or
(3)
above
shall, unless in writing and signed by each Lender directly affected thereby
(or
by the Administrative Agent with the consent of such Lender), in addition to
any
other Person the signature of which is otherwise required pursuant to any Loan
Document, do any of the following:
(i) waive
any
condition specified in Section 3.1,
except
any condition referring to any other provision of any Loan
Document;
(ii) reduce
(including through release, forgiveness, assignment or otherwise) (A) the
principal amount of, the interest rate on, or any obligation of the Borrower
to
repay (whether or not on a fixed date), any outstanding Loan owing to such
Lender, or (B) any fee or accrued interest payable to such Lender;
(iii) waive
or
postpone any scheduled maturity date or other scheduled date fixed for the
payment, in whole or in part, of principal of or interest on the Term Loan
or
any fee owing to such Lender; provided,
however,
that
this clause
(iv)
does not
apply to any change to mandatory prepayments, including those required under
Section 2.5;
75
(iv) except
as
provided in Section 10.9,
release
all or substantially all of the Collateral or any Borrower or any Guarantor
from
its guaranty of any Obligation of the Borrowers;
(v) reduce
or
increase the proportion of Lenders required for the Lenders (or any subset
thereof) to take any action hereunder or change the definition of the terms
“Required Lenders”, “Pro Rata Share” or “Pro Rata Outstandings”; or
(vi) amend
Section 9.10,
Section 10.9
or this
Section 10.1;
and
provided,
further,
that
(x) no amendment, waiver or consent shall affect the rights or duties under
any
Loan Document of, or any payment to, the Administrative Agent (or otherwise
modify any provision of Article IX
or the
application thereof), and (y) the consent of the Borrowers shall not be required
to change any order of priority set forth in Section 2.12.
(b) Each
waiver or consent under any Loan Document shall be effective only in the
specific instance and for the specific purpose for which it was given. No notice
to or demand on any Loan Party shall entitle any Loan Party to any notice or
demand in the same, similar or other circumstances. No failure on the part
of
any Secured Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of
any such right preclude any other or further exercise thereof or the exercise
of
any other right.
Section
10.2 Assignments
and Participations; Binding Effect.
(a) Binding
Effect.
This
Agreement shall become effective when it shall have been executed by the
Borrowers, the Lenders and the Administrative Agent. Thereafter, it shall be
binding upon and inure to the benefit of the Borrowers (in each case except
for
Article IX),
the
Administrative Agent and each Lender and, to the extent provided in Section 9.11,
each
other Indemnitee and Secured Party and, in each case, their respective
successors and permitted assigns. None of the Borrowers or the Administrative
Agent (except to a successor Administrative Agent named pursuant to Section 9.9
or
otherwise to facilitate the transaction contemplated in such Section 9.9)
shall
have the right to assign any rights or obligations hereunder or any interest
herein.
(b) Right
to Assign.
Each
Lender may, with the consent of the Administrative Agent, sell, transfer,
negotiate or assign all or a portion of its rights and obligations hereunder
to
(i) any existing Lender, (ii) any Affiliate or Approved Fund of any such Lender,
(iii) any Eligible Assignee, or (iv) any other Person acceptable (which
acceptance shall not be unreasonably withheld or delayed) to the Administrative
Agent; provided,
however,
the
aggregate outstanding principal amount (determined as of the effective date
of
the applicable Assignment) of the Loan subject to any such Sale shall be an
integral multiple of $1,000,000, unless such Sale is made to an existing Lender
or an Affiliate or Approved Fund of any existing Lender, or is of the assignor’s
(together with its Affiliates and Approved Funds) entire interest in the Term
Loan or is made with the prior consent of the Borrowers and the Administrative
Agent.
(c) Procedure.
The
parties to each Sale made in reliance on clause
(b)
above
(other than those described in clause
(e)
or
(f)
below)
shall execute and deliver to the Administrative Agent (which shall keep a copy
thereof) an Assignment, together with any existing Note subject to such Sale
(or
any affidavit of loss therefor acceptable to the Administrative Agent), any
tax
forms required to be delivered pursuant to Section 2.12(a)
and
payment by the assignee of an assignment fee in the amount of $3,500, provided,
that no
such
fee shall be payable in connection with an assignment to any existing Lender
or
any Affiliate of any Lender, or any Approved Fund. Upon receipt of all the
foregoing, and conditioned upon such receipt and upon the Administrative Agent
consenting to such Assignment, from and after the effective date specified
in
such Assignment, the Administrative Agent shall record or cause to be recorded
in the Register the information contained in such Assignment.
76
(d) Effectiveness.
Effective upon the entry of such record in the Register, (i) such assignee
shall become a party hereto and, to the extent that rights and obligations
under
the Loan Documents have been assigned to such assignee pursuant to such
Assignment, shall have the rights and obligations of a Lender, (ii) any
applicable Note shall be transferred to such assignee through such entry and
(iii) the assignor thereunder shall, to the extent that rights and obligations
under this Agreement have been assigned by it pursuant to such Assignment,
relinquish its rights (except for those surviving the payment in full of the
Obligations) and be released from its obligations under the Loan Documents,
other than those relating to events or circumstances occurring prior to such
assignment (and, in the case of an Assignment covering all or the remaining
portion of an assigning Lender’s rights and obligations under the Loan
Documents, such Lender shall cease to be a party hereto except that each Lender
agrees to remain bound by Article IX,
Section 10.8
and
Section 10.9
to the
extent provided in Section 9.11).
(e) Grant
of Security Interests.
In
addition to the other rights provided in this Section 10.2,
each
Lender may grant a security interest in, or otherwise assign as collateral,
any
of its rights under this Agreement, whether now owned or hereafter acquired
(including rights to payments of principal or interest on its Loan), to (A)
any
federal reserve bank (pursuant to Regulation A of the Federal Reserve Board),
without notice to the Administrative Agent or (B) any holder of, or trustee
for the benefit of the holders of, such Lender’s Securities by notice to the
Administrative Agent; provided,
however,
that no
such holder or trustee, whether because of such grant or assignment or any
foreclosure thereon (unless such foreclosure is made through an assignment
in
accordance with clause
(b)
above),
shall be entitled to any rights of such Lender hereunder and no such Lender
shall be relieved of any of its obligations hereunder.
(f) Participants.
In
addition to the other rights provided in this Section 10.2,
each
Lender may without notice to or consent from the Administrative Agent or
the Borrowers, sell participations to one or more Persons in or to all or a
portion of its rights and obligations under the Loan Documents; provided,
however,
that,
whether as a result of any term of any Loan Document or of such grant or
participation, (i) no such participant shall have a commitment, or be deemed
to
have made an offer to commit, to make any Loan hereunder, and, except as
provided in the applicable option agreement, none shall be liable for any
obligation of such Lender hereunder, (ii) such Lender’s rights and obligations,
and the rights and obligations of the Loan Parties and the Secured Parties
towards such Lender, under any Loan Document shall remain unchanged and each
other party hereto shall continue to deal solely with such Lender, which shall
remain the holder of the Obligations in the Register, except that (A) each
such
participant shall be entitled to the benefit of Sections 2.11
and
2.12,
but
only to the extent such participant delivers the tax forms such Lender is
required to collect pursuant to Section 2.12(a)
and then
only to the extent of any amount to which such Lender would be entitled in
the
absence of any such grant or participation; provided,
however,
that in
no case shall such participant have the right to enforce any of the terms of
any
Loan Document, and (iii) the consent of such participant shall not be required
(either directly, as a restraint on such Lender’s ability to consent
hereunder or otherwise) for any amendments, waivers or consents with respect
to
any Loan Document or to exercise or refrain from exercising any powers or rights
such Lender may have under or in respect of the Loan Documents (including the
right to enforce or direct enforcement of the Obligations), except for those
described in clauses (ii)
and
(iii)
of
Section 10.1(a)
with
respect to amounts, or dates fixed for payment of amounts, to which such
participant would otherwise be entitled and, except for those described in
Section 10.1(a)(iv)
(or
amendments, consents and waivers with respect to Section 9.10
to
release all or substantially all of the Collateral).
77
Section
10.3 Costs
and Expenses.
Any
action taken by any Loan Party under or with respect to any Loan Document,
even
if required under any Loan Document or at the request of any Secured Party,
shall be at the expense of such Loan Party, and no Secured Party shall be
required under any Loan Document to reimburse any Loan Party or Loan Party
therefor except as expressly provided therein. In addition, the Borrowers agree
to pay or reimburse upon demand (a) the Administrative Agent for all reasonable
out-of-pocket costs and expenses incurred by it or any of its Related Persons
in
connection with the investigation, development, preparation, negotiation,
syndication, execution, interpretation or administration of, any modification
of
any term of or termination of, any Loan Document, any commitment or proposal
letter therefor, any other document prepared in connection therewith or the
consummation and administration of any transaction contemplated therein
(including periodic audits in connection therewith and environmental audits
and
assessments), in each case including the reasonable fees, charges and
disbursements of legal counsel to the Administrative Agent or such Related
Persons, and fees, charges and disbursements of the auditors, appraisers,
printers and other of their Related Persons retained by or on behalf of any
of
them or any of their Related Persons, (b) the Administrative Agent for all
reasonable costs and expenses incurred by it or any of its Related Persons
in
connection with internal audit reviews, field examinations and Collateral
examinations (which shall be reimbursed, in addition to the out-of-pocket costs
and expenses of such examiners, at the per diem rate per individual charged
by
the Administrative Agent for its examiners) and (c) the Administrative Agent,
its Related Persons, and each Lender for all costs and expenses incurred in
connection with (i) any refinancing or restructuring of the credit arrangements
provided hereunder in the nature of a “work-out”, (ii) the enforcement or
preservation of any right or remedy under any Loan Document, any Obligation,
with respect to the Collateral or any other related right or remedy or (iii)
the
commencement, defense, conduct of, intervention in, or the taking of any other
action with respect to, any proceeding (including any bankruptcy or insolvency
proceeding) related to any Loan Party, Loan Document, Obligation or Related
Transaction (or the response to and preparation for any subpoena or request
for
document production relating thereto), including reasonable fees and
disbursements of counsel (including allocated costs of internal
counsel).
Section
10.4 Indemnities.
(a)
The
Borrowers agree to indemnify, hold harmless and defend the Administrative Agent,
each Lender and each of their respective Related Persons (each such Person
being
an “Indemnitee”)
from
and against all Liabilities (including brokerage commissions, fees and other
compensation) that may be imposed on, incurred by or asserted against any such
Indemnitee in any matter relating to or arising out of, in connection with
or as
a result of (i) any Loan Document, any Related Document, any Disclosure
Document, any Obligation (or the repayment thereof), the use or intended use
of
the proceeds of the Term Loan, or any securities filing of, or with respect
to,
any Loan Party, (ii) any commitment letter, proposal letter or term sheet with
any Person or any Contractual Obligation, arrangement or understanding with
any
broker, finder or consultant, in each case entered into by or on behalf of
the
Borrowers, any Loan Party or any Affiliate of any of them in connection with
any
of the foregoing, (iii) any actual or prospective investigation, litigation
or
other proceeding, whether or not brought by any such Indemnitee or any of its
Related Persons, any holders of Securities or creditors (and including
attorneys’ fees in any case),
78
(b) Without
limiting the foregoing, “Indemnified
Matters”
includes all Environmental Liabilities, including those arising from, or
otherwise involving, any property of any Related Person or any actual, alleged
or prospective damage to property or natural resources or harm or injury alleged
to have resulted from any release of Hazardous Materials on, upon or into such
property or natural resource or any property on or contiguous to any real
property of any Related Person, whether or not, with respect to any such
Environmental Liabilities, any Indemnitee is a mortgagee pursuant to any
leasehold mortgage, a mortgagee in possession, the successor-in-interest to
any
Related Person or the owner, lessee or operator of any property of any Related
Person through any foreclosure action, in each case except to the extent such
Environmental Liabilities (i) are incurred solely following foreclosure by
any
Secured Party or following any Secured Party having become the
successor-in-interest to any Loan Party and (ii) are attributable solely to
acts of such Indemnitee.
Section
10.5 Survival.
Any
indemnification or other protection provided to any Indemnitee pursuant to
any
Loan Document (including pursuant to Section 2.11,
Section 2.12,
Article IX,
Section 10.3,
Section 10.4
or this
Section 10.5)
and all
representations and warranties made in any Loan Document shall (A) survive
the payment in full of other Obligations and (B) inure to the benefit of any
Person that at any time held a right thereunder (as an Indemnitee or otherwise)
and, thereafter, its successors and permitted assigns.
Section
10.6 Limitation
of Liability for Certain Damages.
In no
event shall any Indemnitee be liable on any theory of liability for any special,
indirect, consequential or punitive damages (including any loss of profits,
business or anticipated savings). Each Borrower hereby waives, releases and
agrees (and shall cause each other Loan Party to waive, release and agree)
not
to xxx upon any such claim for any special, indirect, consequential or punitive
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
Section
10.7 Lender-Creditor
Relationship.
The
relationship between the Lenders and the Administrative Agent, on the one hand,
and the Loan Parties, on the other hand, is solely that of lender and creditor.
No Secured Party has any fiduciary relationship or duty to any Loan Party
arising out of or in connection with, and there is no agency, tenancy or joint
venture relationship between the Secured Parties and the Loan Parties by virtue
of, any Loan Document or any transaction contemplated therein.
79
Section
10.8 Right
of Setoff.
The
Administrative Agent, each Lender and each Affiliate (including each branch
office thereof) of any of them is hereby authorized, without notice or demand
(each of which is hereby waived by each Borrower), at any time and from time
to
time during the continuance of any Event of Default and to the fullest extent
permitted by applicable Requirements of Law, to set off and apply any and all
deposits (whether general or special, time or demand, provisional or final)
at
any time held and other Indebtedness, claims or other obligations at any time
owing by the Administrative Agent, such Lender or any of their respective
Affiliates to or for the credit or the account of any Borrower against any
Obligation of any Loan Party now or hereafter existing, whether or not any
demand was made under any Loan Document with respect to such Obligation and
even
though such Obligation may be unmatured. The Administrative Agent and each
Lender agree promptly to notify the Borrowers and the Administrative Agent
after
any such setoff and application made by such Lender or its Affiliates;
provided,
however,
that
the failure to give such notice shall not affect the validity of such setoff
and
application. The rights under this Section 10.8
are in
addition to any other rights and remedies (including other rights of setoff)
that the Administrative Agent, the Lenders and their Affiliates and other
Secured Parties may have.
Section
10.9 Sharing
of Payments, Etc.
If any
Lender, directly or through an Affiliate or branch office thereof, obtains
any
payment of any Obligation of any Loan Party (whether voluntary, involuntary
or
through the exercise of any right of setoff or the receipt of any Collateral
or
“proceeds”
(as
defined under the applicable UCC) of Collateral) other than pursuant to
Sections 2.11,
2.12
and
2.13
and such
payment exceeds the amount such Lender would have been entitled to receive
if
all payments had gone to, and been distributed by, the Administrative Agent
in
accordance with the provisions of the Loan Documents, such Lender shall purchase
for cash from other Secured Parties such participations in their Obligations
as
necessary for such Lender to share such excess payment with such Secured Parties
to ensure such payment is applied as though it had been received by the
Administrative Agent and applied in accordance with this Agreement (or, if
such
application would then be at the discretion of the Borrowers, applied to repay
the Obligations in accordance herewith); provided,
however,
that
(a) if such payment is rescinded or otherwise recovered from such Lender in
whole or in part, such purchase shall be rescinded and the purchase price
therefor shall be returned to such Lender without interest and (b) such Lender
shall, to the fullest extent permitted by applicable Requirements of Law, be
able to exercise all its rights of payment (including the right of setoff)
with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrowers in the amount of such participation.
Section
10.10 Marshaling;
Payments Set Aside.
No
Secured Party shall be under any obligation to marshal any property in favor
of
any Loan Party or any other party or against or in payment of any Obligation.
To
the extent that any Secured Party receives a payment from the Borrowers, from
the proceeds of the Collateral, from the exercise of its rights of setoff,
any
enforcement action or otherwise, and such payment is subsequently, in whole
or
in part, invalidated, declared to be fraudulent or preferential, set aside
or
required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof originally intended
to
be satisfied, and all Liens, rights and remedies therefor, shall be revived
and
continued in full force and effect as if such payment had not
occurred.
80
Section
10.11 Notices.
(a) Addresses.
All
notices, demands, requests, directions and other communications required or
expressly authorized to be made by this Agreement shall, whether or not
specified to be in writing but unless otherwise expressly specified to be given
by any other means, be given (i)
in
writing and addressed to:
(A) if
to
Parent or any Borrower, to:
The
Bombay Company, Inc.
000
Xxxxxx Xxxxxx
Xxxxx
000
Xxxx
Xxxxx, XX 00000
Attention:
Xxxxxx X. Xxxxxxx
Fax:
(000) 000-0000
with
copy
to:
Xxxxxxxx
& Knight LLP
0000
Xxxxxxx Xxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000
Attention:
Xxxx X. Xxxxxx, Esq.
Fax:
(000) 000-0000
(B) if
to the
Administrative Agent, to:
GB
Merchant Partners, LLC
000
Xxxxxxxxxx Xxx., 00xx
Xxxxx
Xxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxx
Tel:
(000) 000-0000
Fax:
(000) 000-0000
with
copy
to:
Proskauer
Rose LLP
Xxx
Xxxxxxxxxxxxx Xxxxx
Xxxxxx,
XX 00000
Attention:
Xxxxx X. Xxxxxxxx, Esq.
Tel:
(000) 000-0000
Fax:
(000) 000-0000
otherwise
to the party to be notified at its address specified on the signature page
of
any applicable Assignment, or (ii) addressed to such other address as shall
be
notified in writing (A) in the case of the Borrowers and the Administrative
Agent, to the other parties hereto and (B) in the case of all other parties,
to
the Borrowers and the Administrative Agent. Transmission by electronic mail
(including E-Fax, even if transmitted to the fax numbers set forth in
clause
(i)
above)
shall not be sufficient or effective to transmit any such notice under this
clause
(a).
(b) Effectiveness.
All
communications described in clause
(a)
above
and all other notices, demands, requests and other communications made in
connection with this Agreement shall be effective and be deemed to have been
received (i) if delivered by hand, upon personal delivery, (ii) if delivered
by
overnight courier service, one Business Day after delivery to such courier
service, (iii) if delivered by mail, when deposited in the mails, and (iv)
if
delivered by facsimile, upon sender’s receipt of confirmation of proper
transmission,; provided,
however,
that no
communications to the Administrative Agent pursuant to Article II
or
Article IX
shall be
effective until received by the Administrative Agent.
81
Section
10.12 Electronic
Transmissions.
(a) Authorization.
Subject
to the provisions of Section 10.11(a),
the
Administrative Agent, the Borrowers, the Lenders and each of their Related
Persons is authorized (but not required) to transmit, post or otherwise make
or
communicate, in its sole discretion, Electronic Transmissions in connection
with
any Loan Document and the transactions contemplated therein. Each Borrower
and
each Secured Party hereby acknowledges and agrees, and each Borrower shall
cause
each other Loan Party to acknowledge and agree, that the use of Electronic
Transmissions is not necessarily secure and that there are risks associated
with
such use, including risks of interception, disclosure and abuse and each
indicates it assumes and accepts such risks by hereby authorizing the
transmission of Electronic Transmissions.
Section
10.13 Governing
Law.
This
Agreement, each other Loan Document that does not expressly set forth its
applicable law, and the rights and obligations of the parties hereto and thereto
shall be governed by, and construed and interpreted in accordance with, the
law
of the State of New York.
Section
10.14 Jurisdiction.
(a) Submission
to Jurisdiction.
Any
legal action or proceeding with respect to any Loan Document may be brought
in
the courts of the State of New York located in the City of New York, Borough
of
Manhattan, or of the United States of America for the Southern District of
New
York and, by execution and delivery of this Agreement, each Borrower hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
(and, to the extent set forth in any other Loan Document, each other Loan Party)
hereby irrevocably waive any objection, including any objection to the laying
of
venue or based on the grounds of forum
non conveniens,
that
any of them may now or hereafter have to the bringing of any such action or
proceeding in such jurisdictions.
(b) Service
of Process.
Each
Borrower (and, to the extent set forth in any other Loan Document, each other
Loan Party) hereby irrevocably waives personal service of any and all legal
process, summons, notices and other documents and other service of process
of
any kind and consents to such service in any suit, action or proceeding brought
in the United States of America with respect to or otherwise arising out of
or
in connection with any Loan Document by any means permitted by applicable
Requirements of Law, including by the mailing thereof (by registered or
certified mail, postage prepaid) to the address of each Borrower specified
in
Section 10.11
(and
shall be effective when such mailing shall be effective, as provided therein).
Each Borrower (and, to the extent set forth in any other Loan Document, each
other Loan Party) agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Bombay Canada hereby
irrevocably appoints CT Corporation System, in New York, New York (the
“Process
Agent”),
with
an office on the date hereof at 000 0xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000,
as its agent and true and lawful attorney-in-fact in its name, place and stead
to accept on behalf of Bombay Canada and its property service of copies of
the
summons and complaint and any other process which may be served in any such
suit, action or proceeding brought in the State of New York. Such appointment
shall be irrevocable as long as the Term Loan is outstanding, except that if
for
any reason the Process Agent appointed hereby ceases to act as such, Bombay
Canada will, by an instrument reasonably satisfactory to the Administrative
Agent, appoint another Person in the Borough of Manhattan, New York as such
Process Agent subject to the approval of the Administrative Agent (not to be
unreasonably withheld). Bombay Canada hereby further irrevocably consents to
the
service of process in any suit, action or proceeding in said courts by the
mailing thereof by the Administrative Agent or any Lender by registered or
certified mail, postage prepaid, at its address set forth beneath its signature
hereto. Bombay Canada covenants and agrees that it shall take any and all
reasonable action, including the execution and filing of any and all documents,
that may be necessary to continue the designation of a Process Agent pursuant
to
this Section
10.14(b)
in full
force and effect and to cause the Process Agent to act as such.
82
(c) Non-Exclusive
Jurisdiction.
Nothing
contained in this Section 10.14
shall
affect the right of the Administrative Agent or any Lender to serve process
in
any other manner permitted by applicable Requirements of Law or commence legal
proceedings or otherwise proceed against any Loan Party in any other
jurisdiction.
Section
10.15 Waiver
of Jury Trial.
Each PARTY
HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH, ANY Loan
Document OR
THE
TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN
CONTRACT, TORT OR ANY OTHER THEORY). Each PARTY
HERETO (A) CERTIFIES THAT NO OTHER PARTY AND NO Related
Person OF
ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THE Loan
Documents,
AS
APPLICABLE, BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 10.15.
Section
10.16 Severability.
Any
provision of any Loan Document being held illegal, invalid or unenforceable
in
any jurisdiction shall not affect any part of such provision not held illegal,
invalid or unenforceable, any other provision of any Loan Document or any part
of such provision in any other jurisdiction.
Section
10.17 Execution
in Counterparts.
This
Agreement may be executed in any number of counterparts and by different parties
in separate counterparts, each of which when so executed shall be deemed to
be
an original and all of which taken together shall constitute one and the same
agreement. Signature pages may be detached from multiple separate counterparts
and attached to a single counterpart. Delivery of an executed signature page
of
this Agreement by facsimile transmission or Electronic Transmission shall be
as
effective as delivery of a manually executed counterpart hereof.
Section
10.18 Entire
Agreement.
The
Loan Documents embody the entire agreement of the parties and supersede all
prior agreements and understandings relating to the subject matter thereof
and
any prior letter of interest, commitment letter, fee letter, confidentiality
and
similar agreements involving any Loan Party and the Administrative Agent, any
Lender or any of their respective Affiliates relating to a financing of
substantially similar form, purpose or effect. In the event of any conflict
between the terms of this Agreement and any other Loan Document, the terms
of
this Agreement shall govern (unless such terms of such other Loan Documents
are
necessary to comply with applicable Requirements of Law, in which case such
terms shall govern to the extent necessary to comply therewith).
83
Section
10.19 Use
of
Name.
Each
Borrower agrees, and shall cause each other Loan Party to agree, that it shall
not, and none of its Affiliates shall, issue any press release or other public
disclosure (other than any document filed with any Governmental Authority
relating to a public offering of the Securities of any Loan Party) using the
name, logo or otherwise referring to GB Merchant Partners, LLC or of any of
its
Affiliates, the Loan Documents or any transaction contemplated therein to which
the Secured Parties are party without at least 2 Business Days’ prior
notice to GB Merchant Partners, LLC and without the prior consent of GB Merchant
Partners, LLC except to the extent required to do so under applicable
Requirements of Law and then, only after consulting with GB Merchant Partners,
LLC prior thereto. The Borrowers hereby consent to the publication (including,
without limitation, by way of press release or other public announcement),
from
time to time, by the Administrative Agent or any Lender of advertising material
relating to the financing transactions contemplated by this Agreement and the
other Loan Documents using any Borrower’s name, product photographs, logo or
trademark, provided such publication shall not occur prior to the earlier of
(i)
the Closing Date and (ii) any Borrower’s public announcement of such financing
transactions.
Section
10.20 Non-Public
Information; Confidentiality.
(a)
Each
Lender acknowledges and agrees that it may receive material non-public
information hereunder concerning the Loan Parties and their Affiliates and
Securities and agrees to use such information in compliance with all relevant
policies, procedures and Contractual Obligations and applicable Requirements
of
Laws (including United States federal and state security laws and
regulations).
(b) Each
Lender and the Administrative Agent agree to use all reasonable efforts to
maintain, in accordance with its customary practices, the confidentiality of
information obtained by it pursuant to any Loan Document and designated in
writing by any Loan Party as confidential, except that such information may
be
disclosed (i) with the Borrowers’ consent, (ii) to Related Persons of such
Lender or the Administrative Agent, (iii) to the extent such information
presently is or hereafter becomes available to such Lender or the Administrative
Agent, as the case may be, on a non-confidential basis from a source other
than
any Loan Party, (iv) to the extent disclosure is required by applicable
Requirements of Law or other legal process or requested or demanded by any
Governmental Authority, (v) to the extent necessary or customary for inclusion
in league table measurements or in any tombstone or other advertising materials
(and the Loan Parties consent to the publication of such tombstone or other
advertising materials by the Administrative Agent, any Lender or any of their
Related Persons), (vi) to the National Association of Insurance
Commissioners or any similar organization, any examiner or any nationally
recognized rating agency or otherwise to the extent consisting of general
portfolio information that does not identify borrowers, (vii) to current or
prospective assignees, grantees of any option described in Section 10.2(f)
or
participants, direct or contractual counterparties to any Hedging Agreement
permitted hereunder and to their respective Related Persons, in each case to
the
extent such assignees, participants, counterparties or Related Persons agree
to
be bound by provisions substantially similar to the provisions of this
Section 10.20
and
(viii) in connection with the exercise of any remedy under any Loan Document.
In
the event of any conflict between the terms of this Section 10.20
and
those of any other Contractual Obligation entered into with any Loan Party
(whether or not a Loan Document), the terms of this Section 10.20
shall
govern.
84
Section
10.21 Judgment
Currency.
If for
the purpose of obtaining judgment in any court it is necessary to convert a
sum
due hereunder in Dollars into another currency (in this Section 10.21
called
the “judgment
currency”),
the
rate of exchange that shall be applied shall be that at which in accordance
with
normal banking procedures the Administrative Agent could purchase such Dollars
in New York, New York with the judgment currency on the Business Day next
preceding the day on which such judgment is rendered. The obligation of the
Borrowers in respect of any such sum due from it to the Administrative Agent
or
any Lender hereunder (in this Section 10.21
called
an “Entitled
Person”)
shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder in
the
judgment currency, such Entitled Person may in accordance with normal banking
procedures purchase and transfer Dollars to New York, New York with the amount
of the judgment currency so adjudged to be due; and the Borrowers hereby, as
a
separate obligation and notwithstanding any such judgment, agrees, to the
fullest extent that it may effectively do so to indemnify such Entitled Person
against, and to pay such Entitled Person on demand, in Dollars, the amount
(if
any) by which the sum originally due to such Entitled Person in Dollars
hereunder exceeds the amount of the Dollars so purchased and transferred. If
the
amount of Dollars so purchased exceeds the sum originally due to the Entitled
Person, such Entitled Person shall remit such excess to the
Borrowers.
Section
10.22 Patriot
Act Notice.
Each
Lender subject to the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq.) hereby
notifies the Borrowers that, pursuant to Section 326 thereof, it is required
to
obtain, verify and record information that identifies the Borrowers, including
the name and address of the Borrowers and other information allowing such Lender
to identify the Borrowers in accordance with such act.
Section
10.23 Intercreditor
Agreement.
In the
event of any conflict between any provision in this Agreement and any provision
in the Intercreditor Agreement, such provision in the Intercreditor Agreement
shall control and such provision of this Agreement shall be deemed to have
been
complied with or satisfied to the extent of such conflict. Without limiting
the
foregoing, so long any First Lien Debt or any obligation of the First Lien
Lenders to extend credit to the Loan Parties pursuant to the First Lien Credit
Agreement shall remain outstanding, any provisions of this Agreement requiring
(or any representation or warranty hereunder to the extent that it would have
the effect of requiring) delivery of, or control over, collateral of any Loan
Party, to be granted in or delivered to the Administrative Agent, shall be
deemed complied with and satisfied (or, in the case of any representation or
warranty hereunder, shall be deemed to be true) if the same is delivered or
granted to the First Lien Agent for itself and on behalf of the First Lien
Lenders.
[SIGNATURE
PAGES FOLLOW]
85
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their respective officers thereunto duly authorized, as of the date first above
written.
THE
BOMBAY COMPANY,
INC.
as
Parent and a
Borrower
By:
|
____________________________ |
Name:
Title:
BBA HOLDINGS, LLC
as a Borrower
By:
|
_____________________________ |
Name:
Title:
BOMBAY INTERNATIONAL, INC.
as a Borrower
By:
|
______________________________ |
Name:
Title:
THE BOMBAY FURNITURE COMPANY OF CANADA INC.
as a Borrower
By:
|
_______________________________ |
Name:
Title:
GB MERCHANT PARTNERS, LLC,
as Administrative Agent
By:
|
____________________________ |
Name:
Title:
1903 ONSHORE FUNDING, LLC,
as a Lender
|
By: GB Merchant Partners, LLC, its Investment
Manager
|
By: _________________________________
Name:
Title:
|
SCHEDULE
I
Term
Loan Amount
Term
Loan:
1903
ONSHORE FUNDING,
LLC $10,000,000
SCHEDULE
4.7
Subsidiaries
See
attached
SCHEDULE
4.9
Litigation
See
attached
SCHEDULE
4.14
Environmental
Condition
See
attached
SCHEDULE
4.20
Credit
Card Receipts
See
attached
SCHEDULE
5.2
Collateral
Reporting
Borrowers
shall provide Administrative Agent (and if so requested by Administrative Agent,
with copies for each Lender) with the following documents at the following
times
in form satisfactory to Administrative Agent:
(a) Weekly
Reports.
(i) Borrowing
Base Certificate.
Parent
shall provide to Administrative Agent, on Wednesday of each week, a signed
Borrowing Base Certificate (in the form of Exhibit
I,
as such
form may be revised from time to time by Administrative Agent), containing
a
weekly roll forward of inventory of the prior week; provided,
however,
that
Parent, may, in its discretion, provide to Administrative Agent a Borrowing
Base
Certificate more frequently than as set forth herein. Such Certificate may
be
sent to Administrative Agent electronically (with an electronic signature)
or by
facsimile transmission; provided,
further,
that in
each case, upon request by Administrative Agent, the original thereof is
forwarded to Administrative Agent on the date of such transmission. No
adjustments to the Borrowing Base Certificate may be made without supporting
documentation and such other documentation as may be reasonably requested by
Administrative Agent from time to time.
(ii) If,
at
any time, Adjusted Availability is less than 20% of the Aggregate Borrowing
Base, a collateral activity summary or “roll forward” inventory
report.
(b) Monthly
Reports. Monthly, Parent shall provide to Administrative Agent original
counterparts of (each in such form as the Administrative Agent from time to
time
may specify):
(i) Within
15
days of the end of each Fiscal Period for the immediately preceding Fiscal
Period or on the next Business Day, in the event the 15th day does not fall
on a
Business Day:
(A) Reserved;
(B) Top
10
Vendor Purchases report;
(C) sales
audit report and inventory summary by location and merchandise
class;
(D) inventory
certificate;
(E) state
of
store activity; and
(F) a
collateral activity summary or “roll forward” inventory report.
(ii) Within
45
days of the end of each Fiscal Period for the immediately preceding Fiscal
Period or on the next Business Day, in the event the 45th day does not fall
on a
Business Day:
(A) reconciliation
of the stock ledger to the general ledger and the calculation of Availability;
and
(B) rent,
tax
and insurance compliance certificate.
(iii) For
purposes of items(c)(i) and (c)(ii) above, the first “preceding month” in
respect of which the items required by that Section shall be provided shall
be
May, 2007.
In
addition, each Borrowers agree to use their commercially reasonable efforts
to
assist Administrative Agent with the facilitation and implementation of a system
of electronic collateral reporting in order to provide electronic reporting
of
each of the items set forth above.
SCHEDULE
7.1
Existing
Indebtedness
See
attached
SCHEDULE
7.2
Existing
Liens
See
attached
SCHEDULE
7.13
Affiliates
See
attached
SCHEDULE
7.16
Scheduled
Store Closings
See
attached