1
Exhibit 10.2
CREDIT AGREEMENT
DATED AS OF JUNE 1, 1997
AMONG
XXXXXXXX-SONOMA, INC.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
2
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS.......................................... 1
1.01 Certain Defined Terms........................................................ 1
---------------------
1.02 Other Interpretive Provisions................................................ 16
-----------------------------
1.03 Accounting Principles........................................................ 17
---------------------
ARTICLE II
THE CREDITS....................................... 17
2.01 Amounts and Terms of Commitment.............................................. 17
-------------------------------
2.02 Extension of Availability.................................................... 18
-------------------------
2.03 Loan Accounts................................................................ 18
-------------
2.04 Procedure for Borrowing...................................................... 18
-----------------------
2.05 Conversion and Continuation Elections........................................ 19
-------------------------------------
2.06 Voluntary Termination or Reduction of Commitments............................ 21
-------------------------------------------------
2.07 Optional Prepayments......................................................... 21
--------------------
2.08 Out of Debt Period........................................................... 21
------------------
2.09 Repayment.................................................................... 22
---------
2.10 Interest..................................................................... 22
--------
2.11 Fees ........................................................................ 23
----
(a) Agency Fees........................................................ 23
(b) Commitment Fees.................................................... 23
2.12 Computation of Fees and Interest............................................. 23
--------------------------------
2.13 Payments by the Company...................................................... 23
-----------------------
2.14 Payments by the Banks to the Agent........................................... 24
----------------------------------
2.15 Sharing of Payments, Etc..................................................... 25
-------------------------
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY...................... 26
3.01 Taxes........................................................................ 26
-----
3.02 Illegality................................................................... 28
----------
3.03 Increased Costs and Reduction of Return...................................... 28
---------------------------------------
3.04 Funding Losses............................................................... 29
--------------
3.05 Inability to Determine Rates................................................. 30
----------------------------
3.06 Certificates of Banks........................................................ 30
---------------------
3.07 Survival..................................................................... 31
--------
ARTICLE IV
CONDITIONS PRECEDENT.................................... 31
4.01 Conditions of Initial Loans.................................................. 31
---------------------------
(a) Credit Agreement................................................ 31
----------------
(b) Guaranties...................................................... 31
----------
(c) Resolutions; Incumbency......................................... 31
-----------------------
(d) Organization Documents; Good Standing........................... 31
-------------------------------------
(e) Legal Opinions.................................................. 31
--------------
(f) Payment of Fees................................................. 32
---------------
(g) Certificate..................................................... 32
-----------
(h) Cancellation of Prior Credit Agreement............................. 32
--------------------------------------
(i) Agreement re: Intercreditor Agreement............................. 32
-------------------------------------
3
Section Page
(j) Other Documents................................................. 32
---------------
4.02 Conditions to All Borrowings................................................. 32
----------------------------
(a) Notice of Borrowing or Conversion/Continuation.................. 32
----------------------------------------------
(b) Continuation of Representations and Warranties.................. 33
----------------------------------------------
(c) No Existing Default............................................. 33
-------------------
ARTICLE V
REPRESENTATIONS AND WARRANTIES............... 33
5.01 Corporate Existence and Power................................................ 33
-----------------------------
5.02 Corporate Authorization; No Contravention.................................... 34
-----------------------------------------
5.03 Governmental Authorization................................................... 34
--------------------------
5.04 Binding Effect............................................................... 34
--------------
5.05 Litigation................................................................... 34
----------
5.06 No Default................................................................... 35
----------
5.07 ERISA Compliance............................................................. 35
----------------
5.08 Use of Proceeds; Margin Regulations.......................................... 36
-----------------------------------
5.09 Title to Properties.......................................................... 36
-------------------
5.10 Taxes........................................................................ 36
-----
5.11 Financial Condition.......................................................... 36
-------------------
5.12 Environmental Matters........................................................ 37
---------------------
5.13 Regulated Entities........................................................... 37
------------------
5.14 No Burdensome Restrictions................................................... 37
--------------------------
5.15 Copyrights, Patents, Trademarks and Licenses, etc............................ 37
-------------------------------------------------
5.16 Subsidiaries................................................................. 37
------------
5.17 Insurance.................................................................... 38
---------
5.18 Swap Obligations............................................................. 38
----------------
5.19 Full Disclosure.............................................................. 38
---------------
ARTICLE VI
AFFIRMATIVE COVENANTS.............................. 38
6.01 Financial Statements......................................................... 38
--------------------
6.02 Certificates; Other Information.............................................. 39
-------------------------------
6.03 Tangible Net Worth........................................................... 40
------------------
6.04 Leverage..................................................................... 40
--------
6.05 Notices...................................................................... 40
-------
6.06 Preservation of Corporate Existence, Etc..................................... 42
----------------------------------------
6.07 Maintenance of Property...................................................... 42
-----------------------
6.08 Insurance.................................................................... 42
---------
6.09 Payment of Obligations....................................................... 43
----------------------
6.10 Compliance with Laws......................................................... 43
--------------------
6.11 Compliance with ERISA........................................................ 43
---------------------
6.12 Inspection of Property and Books and Records................................. 43
--------------------------------------------
6.13 Environmental Laws........................................................... 44
------------------
6.14 Use of Proceeds.............................................................. 44
---------------
ARTICLE VII
NEGATIVE COVENANTS....................................... 44
7.01 Limitation on Liens.......................................................... 44
-------------------
4
Section Page
7.02 Disposition of Assets......................................................... 45
---------------------
7.03 Consolidations and Mergers.................................................... 46
--------------------------
7.04 Loans and Investments......................................................... 46
---------------------
7.05 Limitation on Indebtedness.................................................... 47
--------------------------
7.06 Transactions with Affiliates.................................................. 48
----------------------------
7.07 Contingent Obligations........................................................ 48
----------------------
7.08 Joint Ventures................................................................ 49
--------------
7.09 Lease Obligations............................................................. 49
-----------------
7.10 Restricted Payments........................................................... 49
-------------------
7.11 Prepayments, Amendments, etc.................................................. 50
----------------------------
7.12 ERISA......................................................................... 50
-----
7.13 Change in Business............................................................ 50
------------------
7.14 Accounting Changes............................................................ 50
------------------
ARTICLE VIII
EVENTS OF DEFAULT................................... 50
8.01 Event of Default.............................................................. 50
----------------
(a) Non-Payment...................................................... 50
-----------
(b) Representation or Warranty....................................... 51
--------------------------
(c) Specific Defaults................................................ 51
-----------------
(d) Other Defaults................................................... 51
--------------
(e) Cross-Default.................................................... 51
-------------
(f) Insolvency; Voluntary Proceedings................................ 52
---------------------------------
(g) Involuntary Proceedings.......................................... 52
-----------------------
(h) ERISA............................................................ 52
-----
(i) Monetary Judgments............................................... 52
------------------
(j) Non-Monetary Judgments........................................... 53
----------------------
(k) Adverse Change................................................... 53
--------------
(l) Guarantor Defaults............................................... 53
------------------
(m) Invalidity of Subordination Provisions........................... 53
--------------------------------------
8.02 Remedies...................................................................... 53
--------
8.03 Rights Not Exclusive.......................................................... 54
--------------------
ARTICLE IX
THE AGENT.......................... 54
9.01 Appointment and Authorization; "Agent"........................................ 54
--------------------------------------
9.02 Delegation of Duties.......................................................... 54
--------------------
9.03 Liability of Agent............................................................ 55
------------------
9.04 Reliance by Agent............................................................. 55
-----------------
9.05 Notice of Default............................................................. 56
-----------------
9.06 Credit Decision............................................................... 56
---------------
9.07 Indemnification of Agent...................................................... 57
------------------------
9.08 Agent in Individual Capacity.................................................. 57
----------------------------
9.09 Successor Agent............................................................... 57
---------------
9.10 Withholding Tax............................................................... 58
---------------
ARTICLE X
MISCELLANEOUS................................................ 59
5
10.01 Amendments and Waivers...................................................... 59
----------------------
10.02 Notices..................................................................... 60
-------
10.03 No Waiver; Cumulative Remedies.............................................. 61
------------------------------
10.04 Costs and Expenses.......................................................... 61
------------------
10.05 Company Indemnification..................................................... 62
-----------------------
10.06 Payments Set Aside.......................................................... 62
------------------
10.07 Successors and Assigns...................................................... 63
----------------------
10.08 Assignments, Participations, etc............................................ 63
---------------------------------
10.09 Confidentiality............................................................. 64
---------------
10.10 Set-off..................................................................... 65
-------
10.11 Automatic Debits of Fees.................................................... 65
------------------------
10.12 Notification of Addresses, Lending Offices, Etc............................. 66
------------------------------------------------
10.13 Counterparts................................................................ 66
------------
10.14 Severability................................................................ 66
------------
10.15 No Third Parties Benefited.................................................. 66
--------------------------
10.16 Governing Law and Jurisdiction.............................................. 66
------------------------------
10.17 Waiver of Jury Trial........................................................ 67
--------------------
10.18 Entire Agreement............................................................ 67
----------------
SCHEDULES
Schedule 2.01 Commitments
Schedule 5.16 Subsidiaries and Minority Interests
Schedule 7.04 Investments
Schedule 10.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
6
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of June 1, 1997, among
Xxxxxxxx-Sonoma, Inc. (the "Company"), the several financial institutions from
time to time party to this Agreement (collectively, the "Banks"; individually, a
"Bank"), and Bank of America National Trust and Savings Association, as agent
for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the
following meanings:
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of a
Person, or of any business or division of a Person, (b) the acquisition
of in excess of 50% of the capital stock, partnership interests,
membership interests or equity of any Person, or otherwise causing any
Person to become a Subsidiary, or (c) a merger or consolidation or any
other combination with another Person (other than a Person that is a
Subsidiary) provided that the Company or the Subsidiary is the
surviving entity.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, membership interests, by contract, or
otherwise.
"Agent" means BofA in its capacity as agent for the Banks
hereunder, and any successor agent arising under Section 9.09.
7
"Agent-Related Persons" means BofA and any successor agent
arising under Section 9.09, together with their respective Affiliates,
and the officers, directors, employees, agents and attorneys-in-fact of
such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set
forth on Schedule 10.02 or such other address as the Agent may from
time to time specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means:
(i) with respect to Base Rate Loans, -0-%;
(ii) with respect to London Rate Loans, 0.425% prior
to the Stock Purchase Trigger Date and 0.500% thereafter; and
(iii) with respect to Cayman Rate Loans, 0.425% prior
to the Stock Purchase Trigger Date and 0.500% thereafter.
"Assignee" has the meaning specified in subsection
10.08(a).
"Attorney Costs" means and includes all fees and disbursements
of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory
clause hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform
Act of 1978 (11 U.S.C. Section101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of interest
in effect for such day as publicly announced from time to time by BofA
in San Francisco, California, as its "reference rate." (The "reference
rate" is a rate set by BofA based upon various factors including BofA's
costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate.)
8
Any change in the reference rate announced by BofA shall take
effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the
Base Rate.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of
the same Type made to the Company on the same day by the Banks under
Article II, and, other than in the case of Base Rate Loans, having the
same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs
under Section 2.04.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco
are authorized or required by law to close and, if the applicable
Business Day relates to any London Rate Loan or Cayman Rate Loan, means
such a day on which dealings are carried on in the applicable offshore
dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Cayman Rate" means, for any Interest Period, with respect to
Cayman Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined
by the Agent as follows:
Cayman Rate = IBOR
1.00 - Eurodollar Reserve Percentage
Where,
"IBOR" means the rate of interest per annum
determined by the Agent as the rate at which dollar deposits
in the approximate amount of BofA's Cayman Rate Loan for such
Interest Period would be offered by BofA's Grand Cayman
Branch, Grand Cayman B.W.I. (or such other office as may be
designated for such purpose by BofA), to major banks in the
offshore dollar interbank market at their request at
approximately 9:00
9
a.m. (San Francisco time) on the first day of such
Interest Period.
The Cayman Rate shall be adjusted automatically as to
all Cayman Rate Loans then outstanding as of the effective
date of any change in the Eurodollar Reserve Percentage.
"Cayman Rate Loan" means a Loan that bears interest based on
the Cayman Rate.
"Closing Date" means the date on which all conditions
precedent set forth in Section 4.01 are satisfied or waived by all
Banks (or, in the case of subsection 4.01(e), waived by the Person
entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and regulations promulgated thereunder.
"Commitment", as to each Bank, has the meaning
specified in Section 2.01.
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C.
"Contingent Obligation" means (without duplication), as to any
Person, any direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation
(the "primary obligations") of another Person (the "primary obligor"),
including any obligation of that Person (i) to purchase, repurchase or
otherwise acquire such primary obligations or any security therefor,
(ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (iv) otherwise to assure or
hold harmless the holder of any such primary obligation against loss in
respect thereof (each, a "Guaranty Obligation"); (b) with respect to
any Surety Instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings or
payments; (c) to purchase any materials, supplies or other property
from, or to obtain the services of, another Person if the relevant
10
contract or other related document or obligation requires that payment
for such materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services
are ever performed or tendered, or (d) in respect of any Swap Contract.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or by
which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.05, the Company (a) converts Loans of one Type to another
Type, or (b) continues as Loans of the same Type, but with a new
Interest Period, Loans having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of
the United States.
"Eligible Assignee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $1,000,000,000; (b) a
commercial bank organized under the laws of any other country which is
a member of the Organization for Economic Cooperation and Development
(the "OECD"), or a political subdivision of any such country, and
having a combined capital and surplus of at least $1,000,000,000,
provided that such bank is acting through a branch or agency located in
the United States; and (c) a Person that is primarily engaged in the
business of commercial banking and that is (i) a Subsidiary of a Bank,
(ii) a Subsidiary of a Person of which a Bank is a Subsidiary, or (iii)
a Person of which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability
or responsibility for violation of any Environmental Law, or for
release or injury to the environment.
11
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning
of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of
the Code for purposes of provisions relating to Section 412 of the
Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan or Multiemployer Plan; or
(f) the imposition of any liability under Title IV of ERISA, other than
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon
the Company or any ERISA Affiliate.
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day
(whether or not applicable to any Bank) under regulations issued from
time to time by the FRB for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred
to as "Eurocurrency liabilities").
12
"Event of Default" means any of the events or
circumstances specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Expiration Date" means the earlier of (a) 364 days after the
date of this Agreement, or (b) May 29, 1998.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal
functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City
time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection
2.11(a).
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings or
similar charges (including, without limitation, net income taxes and
franchise taxes), and all liabilities with respect thereto, imposed by
any jurisdiction on account of amounts payable or paid pursuant to
Section 3.01.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the
Closing Date.
13
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantor" means Xxxxxxxx-Sonoma Stores, Inc.; Pottery
Barn East, Inc.; Hold Everything, Inc.; Xxxxxxxx Catalog
Company, Inc.; Gardener's Eden, Inc; and any other present
or future Material Subsidiary.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Indebtedness" of any Person means, without duplication, (a)
all indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary course
of business on ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case
with respect to property acquired by the Person (even though the rights
and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all indebtedness
referred to in clauses (a) through (f) above secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including
accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) above. For all purposes of this Agreement, the
Indebtedness of any Person shall include all recourse Indebtedness of
any partnership or joint venture or limited liability company in which
such Person is a general partner or a joint venturer or a member,
provided such Person is liable for such recourse Indebtedness.
14
"Indemnified Liabilities" has the meaning specified in
Section 10.05.
"Indemnified Person" has the meaning specified in
Section 10.05.
"Independent Auditor" has the meaning specified in
subsection 6.01(a).
"Insolvency Proceeding" means, with respect to any Person, (a)
any case, action or proceeding with respect to such Person before any
court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors,
or other, similar arrangement in respect of its creditors generally or
any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Intercreditor Agreement" means the Intercreditor Agreement
between BofA and the holders of the Private Placement, dated August 1,
1995.
"Interest Payment Date" means, as to any Loan other than a
Base Rate Loan, the last day of each Interest Period applicable to such
Loan and, as to any Base Rate Loan, the last Business Day of each
calendar quarter, provided, however, that if any Interest Period for a
London Rate Loan or Cayman Rate Loan exceeds three months, the date
that falls three months after the beginning of such Interest Period and
after each Interest Payment Date thereafter is also an Interest Payment
Date.
"Interest Period" means, (a) as to any Cayman Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as a Cayman Rate Loan, and ending on any date that is at
least one day, but no more than 364 days, thereafter, as selected by
the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; and (b) as to any London Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as a London Rate Loan, and ending on the date one, two, three
or six months thereafter (and any other period that is 12 months or
less and is consented to by the Majority Banks in the given instance)
as selected by the
15
Company in its Notice of Borrowing or Notice of
Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a
day that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless, in the case of
a London Rate Loan or a Cayman Rate Loan, the result of such
extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end
on the preceding Business Day;
(ii) any Interest Period pertaining to a Cayman Rate
Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend
beyond the Expiration Date or, in the case of Tranche B, the
Tranche B Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Joint Venture" means a partnership, limited liability
company, joint venture or other legal arrangement (whether created by
contract or conducted through a separate legal entity) now or hereafter
formed by the Company or any of its Subsidiaries with another Person in
order to conduct a common venture or enterprise with such Person.
"Lending Office" means, as to any Bank, the office or offices
of such Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, on Schedule
10.02, or such other office or offices as such Bank may from time to
time notify the
Company and the Agent.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale or
other title retention agreement, the interest of a lessor under a
16
capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien relates as
debtor, under the Uniform Commercial Code or any comparable law), but
not including the interest of a lessor under an operating lease.
"Loan" means an extension of credit by a Bank to the Company
under Article II, and may be a Base Rate Loan, London Rate Loan or a
Cayman Rate Loan (each, a "Type" of Loan).
"Loan Documents" means this Agreement, the Fee Letters and all
other documents delivered to the Agent or any Bank in connection
herewith, evidencing, securing or supporting the credit provided in
this Agreement.
"London Rate" means, for any Interest Period, with respect to
London Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined
by the Agent as follows:
London Rate = LIBOR
-------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"LIBOR" means the rate of interest per annum (rounded
upward to the next 1/16th of 1%) notified to the Agent by BofA
as the rate of interest at which dollar deposits in the
approximate amount of the amount of the Loan to be made or
continued as, or converted into, a London Rate Loan by BofA
and having a maturity comparable to such Interest Period would
be offered to major banks in the London interbank market at
their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest
Period.
The London Rate shall be adjusted automatically as to
all London Rate Loans then outstanding as of the effective
date of any change in the Eurodollar Reserve Percentage.
"London Rate Loan" means a Loan that bears interest based on
the London Rate.
"Majority Banks" means at any time at least two Banks then
holding in excess of 50% of the then aggregate unpaid principal amount
of the Loans, or, if no such principal
17
amount is then outstanding, at least two Banks then having in excess of
50% of the Commitments.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of the Company and its Subsidiaries to
perform the Obligations; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the
Company or any Subsidiary of any Loan Document.
"Material Subsidiary" means Xxxxxxxx-Sonoma Stores, Inc.;
Pottery Barn East, Inc.; Hold Everything, Inc.; Xxxxxxxx Catalog
Company, Inc.; Gardener's Eden, Inc; and any other present or future
Subsidiary having at such time either (i) total (gross) revenues for
the preceding four fiscal quarter period in excess of $5,000,000 or
(ii) total assets, as of the last day of the preceding fiscal quarter,
having a net book value in excess of $5,000,000, in each case, based
upon the Company's most recent annual or quarterly financial statements
delivered to the Agent under Section 6.01.
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any
ERISA Affiliate makes, is making, or is obligated to make contributions
or, during the preceding three calendar years, has made, or been
obligated to make, contributions.
"Notice of Borrowing" means a notice in substantially
the form of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document owing
by the Company to any Bank, the Agent, or any Indemnified Person,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter
arising.
"Organization Documents" means, for any corporation,
the certificate or articles of incorporation, the bylaws,
any certificate of determination or instrument relating to
18
the rights of preferred shareholders of such corporation, any
shareholder rights agreement, and all applicable resolutions of the
board of directors (or any committee thereof) of such corporation.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection
10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Pension Plan" or "Plan" means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which the Company
sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any
time during the immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section
7.01.
"Permitted Swap Obligations" means all obligations (contingent
or otherwise) of the Company or any Subsidiary existing or arising
under Swap Contracts, provided that each of the following criteria is
satisfied: (a) such obligations are (or were) entered into by such
Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets
held by such Person, or changes in the value of securities issued by
such Person in conjunction with a securities repurchase program not
otherwise prohibited hereunder, and not for purposes of speculation or
taking a "market view;" and (b) such Swap Contracts do not contain any
provision ("walk-away" provision) exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
19
"Private Placement" has the meaning designated in
Section 7.05(c).
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of such Bank's Commitment divided by the
combined Commitments of all Banks.
"Reportable Event" means, any of the events set forth in
Section 4043(c) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the Chief Executive Officer, the
President, the Chief Administrative Officer, or the Chief Financial
Officer of the Company, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with
financial covenants, the Chief Financial Officer of the Company, or any
other officer having substantially the same authority and
responsibility.
"Revolving Termination Date" means the earlier to occur
of:
(a) the Expiration Date; and
(b) the date on which the Commitments terminate in
accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its
principal functions.
"Stock Purchase Trigger Date" has the meaning defined
in Section 7.10(d).
"Subordinated Notes" has the meaning designated in
Section 7.05(c).
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of
20
the voting stock, membership interests or other equity interests (in
the case of Persons other than corporations), is owned or controlled
directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the
context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Company.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
"Swap Contract" means any agreement relating to any
transaction that is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap or
option, bond, note or xxxx option, interest rate option, forward
foreign exchange transaction, cap, collar or floor transaction,
currency swap, cross-currency rate swap, swaption, currency option or
any other, similar transaction (including any option to enter into any
of the foregoing) or any combination of the foregoing, and, unless the
context otherwise clearly requires, any master agreement relating to or
governing any or all of the foregoing.
"Swap Termination Value" means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (a) for
any date on or after the date such Swap Contracts have been closed out
and termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date referenced
in clause (a) the amount(s) determined as the xxxx-to-market value(s)
for such Swap Contracts, as determined based upon one or more
mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include any Bank).
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the
case of each Bank and the Agent, respectively, taxes imposed on or
measured by its net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Bank or the Agent, as
the case may be, is organized or maintains a lending office.
"Tangible Net Worth" means the gross book value of the
Company's consolidated assets (excluding Intangibles; monies due from
Affiliates, officers, or directors; or obligations
21
arising from money lent to shareholders of the Company) less total
liabilities, including but not limited to accrued and deferred income
taxes, and any reserves against assets, all determined in accordance
with GAAP. For the purposes of this definition, "Intangibles" means
goodwill, patents, trademarks, favorable lease rights, trade names,
organization expense, treasury stock, unamortized debt discount and
expense, deferred research and development costs, deferred marketing
expenses (not including any prepaid catalog expenses), and other like
intangibles.
"Tranche B Termination Date" means the earlier to occur
of:
(a) January 15, 1998; and
(b) the date on which the Commitments terminate in
accordance with the provisions of this Agreement.
"Type" has the meaning specified in the definition of
"Loan."
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.
"United States" and "U.S." each means the United States
of America.
"Wholly-Owned Subsidiary" means any corporation in which
(other than directors' qualifying shares required by law) 100% of the
capital stock of each class having ordinary voting power, and 100% of
the capital stock of every other class, in each case, at the time as of
which any determination is being made, is owned, beneficially and of
record, by the Company, or by one or more of the other Wholly-Owned
Subsidiaries, or both.
1.02 Other Interpretive Provisions. (a) The meanings of
defined terms are equally applicable to the singular and plural
forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
22
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and
means "including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. Unless otherwise expressly
provided, any reference to any action of the Agent or the Banks by way of
consent, approval or waiver shall be deemed modified by the phrase "in its/their
sole discretion."
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Company and the other parties, and are the products of all parties. Accordingly,
they shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks' involvement in their preparation.
1.03 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
23
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitment.
(a) Each Bank severally agrees, on the terms and
conditions set forth herein, to make loans to the Company from time to
time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate amount not to exceed at any
time outstanding the amount set forth on Schedule 2.01 (such amount, as
the same may be reduced under Section 2.06 or as a result of one or
more assignments under Section 10.08, the Bank's "Commitment");
provided, however, that, after giving effect to any Borrowing, the
aggregate principal amount of all outstanding Loans shall not at any
time exceed the combined Commitments. Within the limits of each Bank's
Commitment, and subject to the other terms and conditions hereof, the
Company may borrow under this section 2.01, prepay under Section 2.07
and reborrow under this section 2.01.
(b) Each Bank's Commitment is divided into two parts:
Tranche A and Tranche B. Tranche A shall be available from the date of
this Agreement through the Revolving Termination Date. Tranche B shall
be available from the date of this Agreement through the Tranche B
Termination Date.
2.02 Extension of Availability. The Company may request an extension of
the Expiration Date for a single period of 364 days. The request shall be made
no sooner than 60 days prior to the Expiration Date and no later than 30 days
prior to the Expiration Date. Any such extension will be subject to the approval
of the Agent and all Banks in their sole discretion.
2.03 Loan Accounts. The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the Agent and
each Bank shall be rebuttable presumptive evidence of the amount of the Loans
made by the Banks to the Company and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay any amount owing
with respect to the Loans.
24
2.04 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Agent in the form of a
Notice of Borrowing, which notice must be received by the Agent (i) prior to
10:00 a.m. San Francisco time three Business Days prior to the requested
Borrowing Date, in the case of London Rate Loans, (ii) prior to 9:00 a.m. San
Francisco time on the requested Borrowing Date, in the case of Cayman Rate
Loans, and (iii) prior to 10:00 a.m. San Francisco time on the requested
Borrowing Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of the following:
(x) for Base Rate Loans: $250,000 or any
multiple of $250,000 in excess thereof;
(y) for London Rate Loans: $5,000,000 or any
multiple of $1,000,000 in excess thereof;
(z) for Cayman Rate Loans: $500,000 for
interest periods of 30 days or longer; for shorter interest
periods, the minimum will be an amount which, when multiplied
by the number of days in the applicable interest period, is
not less than fifteen million (15,000,000) dollar-days.
(B) the requested Borrowing Date, which shall be
a Business Day;
(C) the Type of Loans comprising the Borrowing;
(D) the duration of the Interest Period applicable to
such Loans included in such notice. If the Notice of Borrowing fails to
specify the duration of the Interest Period for any Borrowing comprised
of London Rate Loans or Cayman Rate Loans, the Loans shall be deemed to
be Base Rate Loans; and
(E) a designation of the Tranche under which the
Loans are to be made. If no Tranche is indicated, it shall be presumed
that the Loans will be under Tranche A.
(b) The Agent will promptly notify each Bank of its receipt of
any Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of
each Borrowing available to the Agent for the account of the Company at the
Agent's Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date
requested by the Company in
25
funds immediately available to the Agent. The proceeds of all such Loans will
then be made available to the Company by the Agent at such office by crediting
the account of the Company on the books of BofA with the aggregate of the
amounts made available to the Agent by the Banks and in like funds as received
by the Agent; or by such other means and in such funds as requested by the
Company and acceptable to the Agent.
(d) After giving effect to any Borrowing, unless the Agent
shall otherwise consent, there may not be more than 6 different Interest Periods
in effect.
2.05 Conversion and Continuation Elections. (a) The
Company may, upon irrevocable written notice to the Agent in
accordance with subsection 2.05(b):
(i) elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable Interest
Period, in the case of any other Type of Loans, to convert any such
Loans (or any part thereof in an amount as permitted in 2.04(a) above)
into Loans of any other Type; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Loans having Interest Periods expiring
on such day (or any part thereof in an amount as permitted in 2.04(a)
above);
provided, that if at any time the aggregate amount of London Rate Loans or
Cayman Rate Loans in respect of any Borrowing is reduced, by payment,
prepayment, or conversion of part thereof to
be less than an amount as permitted in 2.04(a) above, such London Rate Loans or
Cayman Rate Loans shall automatically convert into Base Rate Loans.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than the deadlines
specified in section 2.04(a) above, specifying:
(A) the proposed Conversion/Continuation
Date;
(B) the aggregate amount of Loans to be
converted or continued;
(C) the Type of Loans resulting from the
proposed conversion or continuation; and
(D) other than in the case of conversions
into Base Rate Loans, the duration of the requested Interest
Period.
26
(c) If upon the expiration of any Interest Period applicable
to London Rate Loans or Cayman Rate Loans, the Company has failed to select
timely a new Interest Period to be applicable to such London Rate Loans or
Cayman Rate Loans, as the case may be, or if any Event of Default then exists,
the Company shall be deemed to have elected to convert such London Rate Loans or
Cayman Rate Loans into Base Rate Loans effective as of the expiration date of
such Interest Period. The Agent will notify the Company of any such London Rate
Loans or Cayman Rate Loans converted into Base Rate Loans under the preceding
sentence.
(d) The Agent will promptly notify each Bank of its receipt of
a Notice of Conversion/Continuation, or, if no timely notice is provided by the
Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise consent, during the
existence of an Event of Default, the Company may not elect to have a Loan
converted into or continued as a Cayman Rate Loan or a London Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, unless the Agent shall otherwise consent, there may not be more than 6
different Interest Periods in effect.
2.06 Voluntary Termination or Reduction of Commitments. The Company
may, upon not less than five Business Days' prior notice to the Agent, terminate
the Commitments, or permanently reduce the Commitments by an aggregate minimum
amount of $5,000,000 or any multiple of $1,000,000 in excess thereof; unless,
after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, the then-outstanding principal amount of the Loans would
exceed the amount of the combined Commitments then in effect. Once reduced in
accordance with this Section 2.06, the Commitments may not be increased. Any
reduction of the Commitments shall be applied to each Bank according to its Pro
Rata Share. All accrued commitment fees to, but not including the effective date
of any reduction or termination of Commitments (calculated on the amount of such
reduction or termination), shall be paid on the effective date of such reduction
or termination.
2.07 Optional Prepayments. Subject to Section 3.04, the Company may, at
any time or from time to time, upon irrevocable notice to the Agent no later
than the deadlines specified in Section 2.04(a), ratably prepay Loans in whole
or in part, in the
27
following minimum amounts: (a) for Base Rate Loans, $250,000 or any multiple of
$250,000 in excess thereof; and (b) for all other Loans, $1,000,000 or any
multiple of $1,000,000 in excess thereof. Such notice of prepayment shall
specify the date and amount of such prepayment and the Type(s) of Loans to be
prepaid. The Agent will promptly notify each Bank of its receipt of any such
notice, and of such Bank's Pro Rata Share of such prepayment. If such notice is
given by the Company, the Company shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to each such date on the amount prepaid
and any amounts required pursuant to Section 3.04.
2.08 Out of Debt Period. The Company shall repay all Loans and not
obtain any new Loans for a period of at least 30 consecutive days during the
89-day period ending on February 27, 1998, and for a period of at least 30
consecutive days during each subsequent 90-day period ending on the last
Business Day of February of each year after 1998. The Company shall provide to
Agent written notice after completion of each such period, specifying the period
during which it was in compliance with this requirement. Nothing in this
paragraph shall be deemed to be a commitment by the Banks to renew or extend the
term of this Agreement beyond the Expiration Date.
2.09 Repayment. The Company shall repay to the Banks on the Revolving
Termination Date the aggregate principal amount of Loans outstanding on such
date. On the Tranche B Termination Date, the Company shall repay to the Banks a
principal amount equal to the excess of the principal amount outstanding over
the amount of the Tranche A Commitments.
2.10 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the London Rate, the Cayman Rate or the Base Rate, as the case may be
(and subject to the Company's right to convert to other Types of Loans under
Section 2.05), plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the
date of any prepayment of Loans under Section 2.07 for the
portion of the Loans so prepaid and upon payment (including prepayment) in full
thereof and, during the existence of any Event of Default, interest shall be
paid on demand of the Agent at the request or with the consent of the Majority
Banks.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default exists or after acceleration, the Company shall, if required by
Majority Banks, pay interest (after as well as before entry of judgment thereon
to the extent
28
permitted by law) on the principal amount of all outstanding Loans, at a rate
per annum which is determined by adding 2% per annum to the Applicable Margin
then in effect for such Loans and, in the case of Loans not subject to an
Applicable Margin, at a rate per annum equal to the Base Rate plus 2%; provided,
however, that, on and after the expiration of any Interest Period applicable to
any Cayman Rate Loan or London Rate Loan outstanding on the date of occurrence
of such Event of Default or acceleration, the principal amount of such Loan
shall (if required by Majority Banks), during the continuation of such Event of
Default or after acceleration, bear interest at a rate per annum equal to the
Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary to
the provisions of any law applicable to such Bank limiting the highest rate of
interest that may be lawfully contracted for, charged or received by such Bank,
and in such event the Company shall pay such Bank interest at the highest rate
permitted by applicable law.
2.11 Fees. (a) Agency Fees. The Company shall pay an
agency fee to the Agent for the Agent's own account, as required
by the letter agreement ("Fee Letter") between the Company and
Agent dated February 13, 1997.
(b) Commitment Fees. The Company shall pay to the Agent for
the account of each Bank a commitment fee on the amount of such Bank's
Commitment, computed on a quarterly basis in advance on the first Business Day
of each calendar quarter, regardless of usage, equal to fifteen one-hundredths
of one percent (0.15%) per annum. Such commitment fee shall accrue from the
Closing Date to the Revolving Termination Date and shall be due and payable
quarterly in advance on the first Business Day of each quarter, with the first
payment on the Closing Date and with the final payment to be made on the
Revolving Termination Date. The commitment fees provided in this subsection
shall accrue at all times after the above-mentioned commencement date, including
at any time during which one or more conditions in Article IV are not met.
29
2.12 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such fees are
computed from the first day thereof through the last day thereof.
(b) Each determination of an interest rate by the Agent shall
be conclusive and binding on the Company and the Banks in the absence of
manifest error. The Agent will, at the request of the Company or any Bank,
deliver to the Company or the Bank, as the case may be, a statement showing the
quotations used by the Agent in determining any interest rate and the resulting
interest rate.
2.13 Payments by the Company. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be made
to the Agent for the account of the Banks at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than 10:00
a.m. (San Francisco time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 1:00 p.m. (San Francisco time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Company prior to
the date on which any payment is due to the Banks that the Company will not make
such payment in full as and when required, the Agent may assume that the Company
has made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Agent, each Bank shall repay to the Agent on demand such
30
amount distributed to such Bank, together with interest thereon at the
Federal Funds Rate for each day from the date such amount is distributed to such
Bank until the date repaid.
2.14 Payments by the Banks to the Agent. (a) Unless the Agent receives
notice from a Bank on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date of
such Borrowing, that such Bank will not make available as and when required
hereunder to the Agent for the account of the Company the amount of that Bank's
Pro Rata Share of the Borrowing, the Agent may assume that each Bank has made
such amount available to the Agent in immediately available funds on the
Borrowing Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Agent in immediately available funds and the Agent in such
circumstances has made available to the Company such amount, that Bank shall on
the Business Day following such Borrowing Date make such amount available to the
Agent, together with interest at the Federal Funds Rate for each day during such
period. A notice of the Agent submitted to any Bank with respect to amounts
owing under this subsection (a) shall be conclusive, absent manifest error. If
such amount is so made available, such payment to the Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Agent on the Business Day following the
Borrowing Date, the Agent will notify the Company of such failure to fund and,
upon demand by the Agent, the Company shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing
Date shall not relieve any other Bank of any obligation hereunder to make a Loan
on such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.15 Sharing of Payments, Etc.
(a) If, other than as expressly provided elsewhere
herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or
other share contemplated hereunder), such Bank shall immediately (a)
notify the Agent of such fact, and (b) purchase from the other Banks
such participations in the Loans made by them as shall be
31
necessary to cause such purchasing Bank to share the excess payment pro
rata with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other
Bank shall repay to the purchasing Bank the purchase price paid
therefor, together with an amount equal to such paying Bank's ratable
share (according to the proportion of (i) the amount of such paying
Bank's required repayment to (ii) the total amount so recovered from
the purchasing Bank) of any interest or other amount paid or payable by
the purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from another
Bank may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off, but subject to
Section 10.10) with respect to such participation as fully as if such
Bank were the direct creditor of the Company in the amount of such
participation. The Agent will keep records (which shall be conclusive
and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks
following any such purchases or repayments.
(b) The parties to this Agreement acknowledge that
the sharing of certain payments will be subject to the terms of the
Intercreditor Agreement, as amended, to the extent described in the
Intercreditor Agreement.
(c) BofA has, or is about to, enter into a Letter of
Credit Agreement with the Company (including any amendments, renewals
or replacements, the "L/C Agreement"), providing for the issuance of
commercial and standby letters of credit, as permitted by paragraph
7.05(d). (BofA, acting in this capacity, or any other lender which
becomes a participant or assignee of BofA in this capacity, or any
other Bank member of this syndicate which becomes an issuer of letters
of credit for the account of the Company, shall be referred to as the
"L/C Bank.") The parties acknowledge that the L/C Bank will have a
security interest covering any documents presented in connection with a
drawing under any letter of credit; all goods which are described in
such documents or any letter of credit; and the proceeds thereof (the
"Letter of Credit Collateral"). The parties agree that the L/C Bank may
apply the proceeds of the Letter of Credit Collateral to any
obligations of the Company to the L/C Bank other than the Obligations
under this Agreement, subject, however, to the provisions of the
Intercreditor Agreement, to the extent such agreement is applicable.
32
(d) The parties agree that, after any Event of
Default which has not been cured or waived, any amounts received by
Agent or any Bank, excluding:
(i) voluntary payments by the Company and
other amounts received in the ordinary course of
business;
(ii) amounts covered by the Intercreditor
Agreement;
(iii) proceeds of the Letter of Credit
Collateral; and
(iv) proceeds of the collateral securing the
Standing Loan Agreement (as defined in paragraph
7.05(f));
shall be applied pro rata between the Obligations under this Agreement
and the obligations of the Company to the L/C Bank under the L/C
Agreement (including the undrawn amount of any outstanding letters of
credit), to BofA under the Standing Loan Agreement, and to any Bank
under any Permitted Swap Obligations.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Any and all payments by the Company to each Bank or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for, any Taxes. In addition, the
Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum
payable hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as necessary
so that, after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums
payable under this Section), such Bank or the Agent, as the case may
be, receives and retains an amount equal to the sum it would have
received and retained had no such deductions or withholdings been
made;
(ii) the Company shall make such deductions and
withholdings;
33
(iii) the Company shall pay the full amount deducted
or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to each Bank or the
Agent for the account of such Bank, at the time interest is paid,
Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received
if such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each
Bank and the Agent for the full amount of i) Taxes, ii) Other Taxes, and iii)
Further Taxes in the amount that the respective Bank specifies as necessary to
preserve the after-tax yield the Bank would have received if such Taxes, Other
Taxes or Further Taxes had not been imposed, and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were
correctly or legally asserted. Payment under this indemnification shall be made
within 30 days after the date the Bank or the Agent makes written demand
therefor.
(d) Within 30 days after the date of any payment by the
Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to
each Bank or the Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to such Bank or the
Agent.
(e) If the Company is required to pay any amount to any Bank
or the Agent pursuant to subsection (b) or (c) of this Section, then such Bank
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue, if such change in
the sole judgment of such Bank is not otherwise disadvantageous to such Bank.
3.02 Illegality. (a) If any Bank determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Cayman Rate Loans or London Rate Loans, then, on notice thereof by the Bank to
the Company through the Agent, any obligation of that Bank to make Cayman Rate
Loans or London Rate Loans shall be suspended until the Bank notifies the Agent
and the Company that the circumstances giving rise to such determination no
longer exist.
34
(b) If a Bank determines that it is unlawful to maintain any
Cayman Rate Loan or London Rate Loan, the Company shall, upon its receipt of
notice of such fact and demand from such Bank (with a copy to the Agent), prepay
in full such Cayman Rate Loans or London Rate Loans of that Bank then
outstanding, together with interest accrued thereon and amounts required under
Section 3.04, either on the last day of the Interest Period thereof, if the Bank
may lawfully continue to maintain such Cayman Rate Loans or London Rate Loans to
such day, or immediately, if the Bank may not lawfully continue to maintain such
Cayman Rate Loan or London Rate Loan. If the Company is required to so prepay
any Cayman Rate Loan or London Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Cayman
Rate Loans or London Rate Loans has been so terminated or suspended, the Company
may elect, by giving notice to the Bank through the Agent that all Loans which
would otherwise be made by the Bank as Cayman Rate Loans or London Rate Loans
shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section,
the affected Bank shall designate a different Lending Office with respect to its
Cayman Rate Loans or London Rate Loans if such designation will avoid the need
for giving such notice or making such demand and will not, in the judgment of
the Bank, be illegal or otherwise disadvantageous to the Bank.
3.03 Increased Costs and Reduction of Return. (a) If any Bank
determines that, due to either (i) the introduction of or any change (other than
any change by way of imposition of or increase in reserve requirements included
in the calculation of the London Rate or the Cayman Rate or in respect of the
assessment rate payable by any Bank to the FDIC for insuring U.S. deposits) in
or in the interpretation of any law or regulation or (ii) the compliance by that
Bank with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Bank of agreeing to make or making, funding or maintaining
any Cayman Rate Loans or London Rate Loans, then the Company shall be liable
for, and shall from time to time, upon demand (with a copy of such demand to be
sent to the Agent), pay to the Agent for the account of such Bank, additional
amounts as are sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the
35
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Bank (or its Lending Office)
or any corporation controlling the Bank with any Capital Adequacy Regulation,
affects or would affect the amount of capital required or expected to be
maintained by the Bank or any corporation controlling the Bank and (taking into
consideration such Bank's or such corporation's policies with respect to capital
adequacy and such Bank's desired return on capital) determines that the amount
of such capital is increased as a consequence of its Commitment, loans, credits
or obligations under this Agreement, then, upon demand of such Bank to the
Company through the Agent, the Company shall pay to the Bank, from time to time
as specified by the Bank, additional amounts sufficient to compensate the Bank
for such increase.
3.04 Funding Losses. The Company shall reimburse each Bank and hold
each Bank harmless from any loss or expense which the Bank may sustain or incur
as a consequence of:
(a) the failure of the Company to make on a timely
basis any payment of principal of any Cayman Rate Loan or London
Rate Loan;
(b) the failure of the Company to borrow, continue or convert
a Loan after the Company has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment
in accordance with any notice delivered under Section 2.07;
(d) the prepayment (including pursuant to Section 2.08) or
other payment (including after acceleration thereof) of a Cayman Rate Loan or a
London Rate Loan on a day that is not the last day of the relevant Interest
Period; or
(e) the automatic conversion under Section 2.05 of any Cayman
Rate Loan or London Rate Loan to a Base Rate Loan on a day that is not the last
day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Cayman Rate Loans or London Rate Loans
or from fees payable to terminate the deposits from which such funds were
obtained. For purposes of calculating amounts payable by the Company to the
Banks under this Section and under subsection 3.03(a), each London Rate Loan or
Cayman Rate Loan made by a Bank (and each related reserve, special deposit or
similar requirement) shall be conclusively deemed to have been funded at the
LIBOR or IBOR used in
36
determining the London Rate or Cayman Rate for such London Rate Loan or Cayman
Rate Loan by a matching deposit or other borrowing in the interbank eurodollar
market for a comparable amount and for a comparable period, whether or not such
London Rate Loan or Cayman Rate Loan is in fact so funded.
3.05 Inability to Determine Rates. If the Agent or Majority Banks
determine that for any reason adequate and reasonable means do not exist for
determining the Cayman Rate or the London Rate for any requested Interest Period
with respect to a proposed Cayman Rate Loan or London Rate Loan, or that the
Cayman Rate or the London Rate applicable pursuant to subsection 2.10(a) for any
requested Interest Period with respect to a proposed Cayman Rate Loan or London
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Agent will promptly so notify the Company and each Bank.
Thereafter, the obligation of the Banks to make or maintain London Rate Loans or
Cayman Rate Loans, as the case may be, hereunder shall be suspended until the
notice is revoked in writing. The revocation shall be made by Agent on its own
authority if the Agent made the original determination; or by the Agent upon
instruction of the Majority Banks if the original determination was made by the
Majority Banks. Upon receipt of such notice, the Company may revoke any Notice
of Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Company does not revoke such Notice, the Banks shall make, convert or continue
the Loans, as proposed by the Company, in the amount specified in the applicable
notice submitted by the Company, but such Loans shall be made, converted or
continued as Base Rate Loans instead of London Rate Loans or Cayman Rate Loans,
as the case may be.
3.06 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy to
the Agent), at the time such demand for reimbursement is made, a certificate
setting forth in reasonable detail the amount payable to the Bank hereunder and
such certificate shall be conclusive and binding on the Company in the absence
of manifest error.
3.07 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
37
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans. The obligation of each Bank to make
its initial Loan hereunder is subject to the condition that the Agent shall have
received on or before the Closing Date all of the following, in form and
substance satisfactory to the Agent and each Bank, and in sufficient copies for
each Bank:
(a) Credit Agreement. This Agreement executed by each
party thereto;
(b) Guaranties. Guaranties executed by each
Guarantor;
(c) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of
directors of the Company and each Subsidiary that may become party to a
Loan Document authorizing the transactions contemplated hereby,
certified as of the Closing Date by the Secretary or an Assistant
Secretary of such Person; and
(ii) A certificate of the Secretary or Assistant
Secretary of the Company, and each Subsidiary that may become party to
a Loan Document, certifying the names and true signatures of the
officers of the Company or such Subsidiary authorized to execute,
deliver and perform, as applicable, this Agreement, and all other Loan
Documents to be delivered by it hereunder;
(d) Organization Documents; Good Standing. Each of the
following documents:
(i) the articles or certificate of incorporation and
the bylaws of the Company and each Subsidiary party to any Loan
Document as in effect on the Closing Date, certified by the Secretary
or Assistant Secretary of the Company or such Subsidiary as of the
Closing Date; and
(ii) a good standing certificate for the Company and
each Subsidiary party to any Loan Document from the Secretary of State
of California as of a recent date;
(e) Legal Opinions. An opinion of Irell & Xxxxxxx
LLP, counsel to the Company and addressed to the Agent and the
Banks, in form and substance acceptable to the Agent and the
Banks;
38
(f) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date to the Agent or any Bank, together with Attorney Costs of
BofA to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute BofA's reasonable
estimate of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude final
settling of accounts between the Company and BofA); including any such costs,
fees and expenses arising under or referenced in Sections 2.11 and 10.04;
(g) Certificate. A certificate signed by a
Responsible Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained
in Article V are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Default or Event of Default exists or
would result from the initial Borrowing; and
(iii) there has occurred since February 2, 1997, no
event or circumstance that has resulted or could reasonably be expected
to result in a Material Adverse Effect; and
(h) Cancellation of Prior Credit Agreement. Repayment of all
amounts outstanding under the existing credit agreement between the Company and
BofA dated March 29, 1996; upon such repayment and the effectiveness of this
Agreement, the prior agreement shall automatically be deemed cancelled.
(i) Agreement re: Intercreditor Agreement. An
Agreement re: Intercreditor Agreement acceptable to the Banks.
(j) Other Documents. Such other approvals, opinions,
documents or materials as the Agent or any Bank may request.
4.02 Conditions to All Borrowings. The obligation of each Bank to make
any Loan to be made by it (including its initial Loan) or to continue or convert
any Loan under Section 2.05 is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Conversion/ Continuation
Date:
(a) Notice of Borrowing or Conversion/Continuation.
The Agent shall have received (with, in the case of the initial
Loan only, a copy for each Bank) a Notice of Borrowing or a
Notice of Conversion/Continuation, as applicable;
39
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Conversion/ Continuation Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date; and
(c) No Existing Default. No Default or Event of
Default shall exist or shall result from such Borrowing or
continuation or conversion.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Company hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice and as of each Borrowing Date or
Conversion/Continuation Date, as applicable, that the conditions in this Section
4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that:
5.01 Corporate Existence and Power. The Company and each
of its Subsidiaries:
(a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation;
(b) has the power and authority to execute, deliver,
and perform its obligations under the Loan Documents;
(c) has the power and authority and all governmental
licenses, authorizations, consents and approvals to own its
assets and carry on its business;
(d) is duly qualified as a foreign corporation and is licensed
and in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license; and
(e) is in compliance with all Requirements of Law;
except, in each case referred to in clause (c), clause (d) or clause (e), to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
40
5.02 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company and its Subsidiaries of this Agreement and each
other Loan Document to which such Person is party, have been duly authorized by
all necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's
Organization Documents;
(b) violate or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of the Agreement or any other Loan Document, except for
the filing of this Agreement with the Securities and Exchange Commission.
5.04 Binding Effect. This Agreement and each other Loan Document to
which the Company or any of its Subsidiaries is a party constitute the legal,
valid and binding obligations of the Company and any of its Subsidiaries to the
extent it is a party thereto, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
5.05 Litigation. Except as has been specifically disclosed to the Banks
in writing prior to the date of this Agreement, including in the Company's
financial statements, there are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, or its Subsidiaries or any of their respective
properties which:
(a) purport to affect or pertain to this Agreement or
any other Loan Document, or any of the transactions contemplated
hereby or thereby; or
(b) if determined adversely to the Company or its
Subsidiaries, would reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order
41
or any order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery or
performance of this Agreement or any other Loan Document, or directing that the
transactions provided for herein or therein not be consummated as herein or
therein provided.
5.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company. As of the Closing Date,
neither the Company nor any Subsidiary is in default under or with respect to
any Contractual Obligation in any respect which, individually or together with
all such defaults, could reasonably be expected to have a Material Adverse
Effect, or that would, if such default had occurred after the Closing Date,
create an Event of Default under subsection 8.01(e).
5.07 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the Company, nothing has occurred which would cause the loss of such
qualification. The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither
42
the Company nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section 6.13.
Neither the Company nor any Subsidiary is generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
5.09 Title to Properties. The Company and each Subsidiary have good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
5.10 Taxes. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP, or except where such failure could not reasonably be
expected to have a Material Adverse Effect. The Company and its Subsidiaries
have not received notice of any pending tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.
5.11 Financial Condition. (a) The audited consolidated financial
statements of the Company and its Subsidiaries dated February 2, 1997, and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for the period ended on that date:
(i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, subject to ordinary, good faith year
end audit adjustments;
(ii) fairly present, in accordance with GAAP, the
financial condition of the Company and its Subsidiaries as of the date
thereof and results of operations for the period covered thereby; and
(iii) show, in accordance with GAAP, all material
indebtedness and other liabilities, direct or contingent, of
43
the Company and its consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent Obligations.
(b) Since February 2, 1997, there has been no Material
Adverse Effect.
5.12 Environmental Matters. The Company conducts in the ordinary course
of business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Company has reasonably concluded that such Environmental Laws and
Environmental Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.13 Regulated Entities. None of the Company, any Person controlling
the Company, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
5.14 No Burdensome Restrictions. Neither the Company nor any Subsidiary
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company or
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses (except where failure to have such
rights could not reasonably be expected to result in a Material Adverse Effect)
without conflict with the rights of any other Person, except for conflicts which
could not reasonably be expected to have a Material Adverse Effect. To the best
knowledge of the Company, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any Subsidiary infringes upon any
rights held by any other Person, except for any infringements which could not
reasonably be expected to have a Material Adverse Effect. Except as has been
specifically disclosed to the Banks in writing, no claim or litigation regarding
any of the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Company, proposed, which,
44
in either case, could reasonably be expected to have a Material Adverse Effect.
5.16 Subsidiaries. As of the Closing Date, the Company has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
5.16 hereto and has no equity investments in any other corporation or entity
other than those specifically disclosed in part (b) of Schedule 5.16.
5.17 Insurance. The properties of the Company and its Subsidiaries are
insured with financially sound and reputable insurance companies, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses.
5.18 Swap Obligations. Neither the Company nor any of its Subsidiaries
has incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations. The Company has undertaken its own independent
assessment of its consolidated assets, liabilities and commitments and has
considered appropriate means of mitigating and managing risks associated with
such matters and has not relied on any swap counterparty or any Affiliate of any
swap counterparty in determining whether to enter into any Swap Contract.
5.19 Full Disclosure. None of the representations or warranties made by
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
6.01 Financial Statements. The Company shall deliver to
the Agent, in form and detail satisfactory to the Agent and the
Majority Banks, with sufficient copies for each Bank:
45
(a) As soon as available, but not later than 120 days after
the end of each fiscal year, the Company's annual financial statements. The
financial statements shall include at least the Company's balance sheet,
statement of income and retained earnings and statement of cash flow. These
financial statements must be audited with an opinion of Deloitte & Touche LLP or
another nationally-recognized independent public accounting firm ("Independent
Auditor") which report shall state that such consolidated financial statements
present fairly the financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years. Such opinion shall not
be qualified or limited because of a restricted or limited examination by the
Independent Auditor of any material portion of the Company's or any Subsidiary's
records. The statements shall be prepared on a consolidated basis and shall be
accompanied by unaudited operating statements reflecting the profitability of
each of the Company's and Subsidiaries' business divisions, substantially in the
form previously supplied by the Company to the Agent (the "Operating
Statements"). The statements shall be accompanied by a copy of the Company's
Form 10-K as filed with the Securities and Exchange Commission, and a compliance
certificate substantially in the form set forth on Exhibit C attached hereto,
executed by a Responsible Officer.
(b) Within 60 days after the end of each fiscal quarter of the
Company, except the fourth quarter:
(i) Copies of the Company's Form 10-Q Quarterly
Report; and
(ii) A compliance certificate substantially in the
form set forth on Exhibit C attached hereto, executed by a Responsible
Officer.
(c) Within 30 days of each month's end, the Company's monthly
financial statements. The statements shall be prepared on a consolidated basis
and shall include the Operating Statements.
6.02 Certificates; Other Information. The Company shall
furnish to the Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.01(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) as soon as available, copies of all management
letters or reports and any other reports submitted to the Company
by the Company's Independent Auditor;
46
(c) promptly, copies of all financial statements and reports
that the Company sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports that the Company or any
Subsidiary may make to, or file with, the SEC;
(d) no later than September 30, 1997, information acceptable
to the Banks regarding the Company's plans for capital expenditures to be made
during its fiscal year ending January 31, 1999; and
(e) promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any Subsidiary as the
Agent, at the request of any Bank, may from time to time reasonably request.
6.03 Tangible Net Worth. The Company shall maintain on a
consolidated basis, as of each date indicated below, the sum of
the following:
(a) the Company's Tangible Net Worth;
(b) plus the amount paid by the Company after
February 2, 1997 to purchase, redeem or otherwise acquire the stock of
the Company, as permitted by paragraph 7.10 below;
(c) minus the amount of the proceeds of any stock
sold by the Company after February 2, 1997;
(d) minus the amount of the proceeds of the
conversion of any debt to stock after February 2, 1997;
equal to at least the amounts indicated for each date specified
below:
Date Amount
August 3, 1997 $140,000,000
November 2, 1997 $142,500,000
February 1, 1998
and thereafter $163,000,000
6.04 Leverage. After the Stock Purchase Trigger Date, the Company shall
maintain on a consolidated basis, as of each date indicated below (provided that
date occurs on or after the Stock Purchase Trigger Date), a ratio of total
liabilities to Tangible Net Worth not exceeding the following:
Date Ratio
August 3, 1997 2.50:1.00
47
November 2, 1997 2.95:1.00
February 1, 1998
and thereafter 2.10:1.00
6.05 Notices. The Company shall promptly notify the Agent
and each Bank:
(a) of the occurrence of any Default or Event of
Default;
(b) of any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect, including (i) breach or
non-performance of, or any default under, a Contractual Obligation of the
Company or any Subsidiary, that has resulted or could reasonably be expected to
result in a Material Adverse Effect; (ii) any dispute, litigation,
investigation, proceeding or suspension between the Company or any Subsidiary
and any Governmental Authority, that has resulted or could reasonably be
expected to result in a Material Adverse Effect; or (iii) the commencement of,
or any material and adverse development in, any litigation or proceeding
affecting the Company or any Subsidiary, including pursuant to any applicable
Environmental Laws, where the amount claimed is over Five Million Dollars
($5,000,000);
(c) of the occurrence of any of the following events affecting
the Company or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Agent and each Bank a copy of any notice with respect
to such event that is filed with a Governmental Authority and any notice
delivered by a Governmental Authority to the Company or any ERISA Affiliate with
respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension
Liability of any Pension Plan;
(iii) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the
Code by the Company or any ERISA Affiliate; or
(iv) the adoption of any amendment to a Plan subject
to Section 412 of the Code, if such amendment results in a material
increase in contributions or Unfunded Pension Liability.
(d) of any material change in accounting policies or
financial reporting practices by the Company or any of its
consolidated Subsidiaries;
48
(e) upon the request from time to time of the Agent, the Swap
Termination Values, together with a description of the method by which such
values were determined, relating to any then-outstanding Swap Contracts to which
the Company or any of its Subsidiaries is party.
Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Company or any
affected Subsidiary proposes to take with respect thereto and at what time. Each
notice under subsection 6.04(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document that have been
(or foreseeably will be) breached or violated.
6.06 Preservation of Corporate Existence, Etc. The Company
shall, and shall cause each Material Subsidiary to:
(a) preserve and maintain in full force and effect its
corporate existence, except as permitted by paragraph 7.03 below;
(b) preserve and maintain its good standing under the
laws of its state or jurisdiction of incorporation;
(c) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, the
non-preservation of which could reasonably be expected to have a Material
Adverse Effect;
(d) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill, the
non-preservation of which could reasonably be expected to have a Material
Adverse Effect; and
(e) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
6.07 Maintenance of Property. The Company shall maintain, and shall
cause each Material Subsidiary to maintain, and preserve all its property which
is used or useful in its business in good working order and condition, ordinary
wear and tear excepted and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, except as permitted by Section 7.02.
The Company and each Material Subsidiary shall use the standard of care typical
in the industry in the operation and maintenance of its facilities.
49
6.08 Insurance. The Company shall maintain, and shall cause each
Material Subsidiary to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons.
6.09 Payment of Obligations. The Company shall, and shall cause each
Material Subsidiary to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, where the failure to pay or
discharge such claims could reasonably be expected to have a Material Adverse
Effect, unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by the Company or such Subsidiary; and
(b) all lawful claims which, if unpaid, would by law become a
Lien upon its property, other than a Permitted Lien.
6.10 Compliance with Laws. The Company shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist, or where
such failure to comply could not reasonably be expected to have a Material
Adverse Effect.
6.11 Compliance with ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
6.12 Inspection of Property and Books and Records. The Company shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit, representatives
and independent contractors of the Agent or any Bank to visit and inspect any of
their respective properties, to
50
examine their respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public
accountants, all at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Company, and without unduly interfering with the operations of the Company;
provided, however, when an Event of Default exists the Agent or any Bank may do
any of the foregoing at the expense of the Company at any time during normal
business hours and without advance notice.
6.13 Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, to the extent a failure to do so would
result in a Material Adverse Effect.
6.14 Use of Proceeds. The Company shall use the proceeds of the Loans
for the following purposes, so long as the use of the proceeds is not for
purposes of undertaking an Acquisition and not in contravention of any
Requirement of Law or of any Loan Document:
(a) For Tranche A: for working capital purposes and to
finance the Company's capital expenditures program.
(b) For Tranche B: to finance the purchase of the
Company's stock, as permitted by this Agreement.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
7.01 Limitation on Liens. The Company shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, make, create, incur, assume
or suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following types of Liens
on property other than inventory ("Permitted Liens"):
(a) any Lien existing on property of the Company or any
Subsidiary on the Closing Date and disclosed in writing to the Banks (including,
without limitation, any disclosure in the financial statements of the Company),
securing Indebtedness outstanding on such date;
51
(b) any Lien created under any Loan Document;
(c) Liens for taxes not yet delinquent.
(d) Cash collateral and security deposits provided in
connection with operating lease obligations incurred to finance the acquisition
of fixed assets (excluding real property and excluding security deposits with
utility companies); provided that the amount of such collateral and security
deposits must not exceed Three Million Dollars ($3,000,000) at any time.
(e) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is not at the time delinquent.
(f) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have expired, or in
respect of which Company or a Guarantor shall at the time in good faith be
prosecuting an appeal or proceeding for a review and in respect of which a stay
of execution pending such appeal or proceeding for review shall have been
secured within 30 days after the entry of such judgment or award.
(g) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in connection with worker's
compensation, unemployment insurance and other like laws, warehousemen's and
attorneys' liens and statutory landlords' liens) and Liens to secure the
performance of bids, tenders or trade contracts, or to secure statutory
obligations, surety or appeal bonds or other Liens of like general nature and
not incurred in connection with the borrowing of money, provided in each case,
the obligation secured is not overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings.
(h) survey and title exceptions, encumbrances, easements,
encroachments, covenants or reservations, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other restrictions as to the
use of real properties, which do not in any event materially impair their use in
the operation of the business of the Company and the Guarantors.
(i) unperfected Liens arising by operation of law under
Article 2 of the Uniform Commercial Code in favor of unpaid sellers or prepaying
buyers of goods relating to amounts that are not past due in accordance with
their respective terms of sale.
(j) Liens securing an Indebtedness which has been paid in full
and the Lien has inadvertently not yet been removed.
52
(k) the Letter of Credit Collateral.
7.02 Disposition of Assets. The Company shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(a) dispositions of inventory, or used, worn-out, obsolete or
surplus equipment (or equipment no longer used or useful in the Company's and
the Subsidiaries' business), all in the ordinary course of business;
(b) the sale of equipment used or useful in the Company's or
the Subsidiaries' business, to the extent that such equipment is exchanged for
credit against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied to the purchase price of
such replacement equipment;
(c) dispositions of assets and relinquishment of rights in
connection with store closings in accordance with the business plans of the
Company and its Subsidiaries, so long as the aggregate book value of all such
assets disposed and rights relinquished after the date of this Agreement does
not exceed $3,000,000 per fiscal year.
(d) dispositions not otherwise permitted hereunder which are
made for fair market value; provided, that (i) at the time of any disposition,
no Event of Default shall exist or shall result from such disposition, (ii) the
aggregate sales price from such disposition shall be paid in cash or by a note
receivable, and (iii) the aggregate value of all assets so sold by the Company
and its Subsidiaries, together, shall not exceed in any fiscal year $5,000,000.
7.03 Consolidations and Mergers. The Company shall not, and shall not
suffer or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that
the Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a
53
Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be the
continuing or surviving corporation; and
(b) any Subsidiary may sell all or substantially all of
its assets (upon voluntary liquidation or otherwise), to the Company or another
Wholly-Owned Subsidiary.
7.04 Loans and Investments. The Company shall not purchase or acquire,
or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of the Company (together, "Investments"), except for:
(a) Investments listed on Schedule 7.04 to this
Agreement;
(b) Investments held by the Company or Subsidiary in
the form of cash equivalents or short term marketable securities;
(c) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(d) Investments by the Company in any of its Wholly-Owned
Subsidiaries or by any of its Wholly-Owned Subsidiaries in another of its
Wholly-Owned Subsidiaries, provided that if, after giving effect to such
Investment, the Subsidiary will become a Material Subsidiary, then the
Subsidiary must also be a Guarantor;
(e) Investments constituting Permitted Swap Obligations
or payments or advances under Swap Contracts relating to Permitted Swap
Obligations;
(f) Investments in joint ventures or other entities for the
purpose of conducting business in Japan, provided such business is either (i)
consistent in magnitude and scope with the business as currently conducted and
the business plans of the Company and its Subsidiaries as previously provided to
the Banks; or (ii) is in accordance with revised business plans of the Company
and its Subsidiaries, which plans have been discussed with the Banks;
(g) notes receivable arising from dispositions of assets as
permitted by paragraph 7.02(d) above.
7.05 Limitation on Indebtedness. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur,
54
assume, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 7.07;
(c) Indebtedness existing on the Closing Date and disclosed in
writing to the Banks, including, without limitation, any disclosure in the
financial statements of the Company; including the existing privately placed
unsecured senior term loan in the initial principal amount of up to Forty
Million Dollars ($40,000,000), due August 8, 2005 (the "Private Placement"); and
including the existing privately placed unsecured convertible subordinated notes
in the initial principal amount of up to Forty Million Dollars ($40,000,000),
due August 15, 2003 (the "Subordinated Notes").
(d) Indebtedness to BofA (or another replacement lender) in
connection with commercial and standby letters of credit issued for the account
of the Company in a principal amount not to exceed Forty Five Million Dollars
($45,000,000) outstanding at any one time;
(e) Indebtedness incurred in connection with leases
permitted pursuant to Section 7.09;
(f) That certain real estate secured loan with BofA in the
approximate principal balance of $6,800,000, under the Standing Loan Agreement
dated March 9, 1994, as amended from time to time.
7.06 Transactions with Affiliates. The Company shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary.
7.07 Contingent Obligations. The Company shall not, and
shall not suffer or permit any Subsidiary to, create, incur,
assume or suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) Permitted Swap Obligations;
55
(c) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and disclosed in writing to the Banks,
including, without limitation, any disclosure in the financial statements of the
Company; and including guaranties by Xxxxxxxx-Sonoma Stores, Inc.; The Pottery
Barn East, Inc.; Gardener's Eden, Inc.; Hold Everything, Inc.; and Xxxxxxxx
Catalog Company, Inc., of the obligations of the Company under the Subordinated
Notes or the Private Placement;
(d) Contingent Obligations with respect to Surety Instruments
incurred in the ordinary course of business and not exceeding at any time
$7,000,000 in the aggregate in respect of the Company and its Subsidiaries
together;
(e) Guaranties by the Company of obligations of the
Subsidiaries, which obligations are otherwise permitted by this Agreement.
7.08 Joint Ventures. The Company shall not, and shall not suffer or
permit any Subsidiary to enter into any Joint Venture, other than in the
ordinary course of business and other than as permitted in paragraph 7.04(f).
7.09 Lease Obligations. The Company shall not, and shall not suffer or
permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except for:
(a) leases of the Company and of Subsidiaries in
existence on the Closing Date and any renewal, extension or
refinancing thereof;
(b) operating leases entered into by the Company or
any Subsidiary after the Closing Date in the ordinary course of
business;
(c) leases entered into by the Company or any Subsidiary after
the Closing Date pursuant to sale-leaseback transactions in an aggregate amount
not to exceed Five Million Dollars ($5,000,000) per fiscal year;
(d) capital leases in an aggregate amount not
exceeding Seven Million Five Hundred Thousand Dollars
($7,500,000) outstanding at any one time.
7.10 Restricted Payments. The Company shall not declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its capital
stock, or purchase, redeem or otherwise acquire for value any shares of its
capital stock or
56
any warrants, rights or options to acquire such shares, now or hereafter
outstanding; except that the Company may:
(a) declare and make dividend payments or other
distributions payable solely in its common stock;
(b) purchase, redeem or otherwise acquire shares of its common
stock or warrants or options to acquire any such shares with the proceeds
received from the substantially concurrent issue of new shares of its common
stock;
(c) purchase stock from its employees for a
consideration not exceeding Three Million Dollars ($3,000,000) in
the aggregate during any fiscal year; and
(d) so long as no Default has occurred and has not been cured
or waived: purchase, redeem or otherwise acquire shares of its common stock or
warrants or options to acquire any such shares, provided all such transactions
after the date of this Agreement (other than those permitted in the preceding
subparagraphs) shall be for a consideration not to exceed Thirty Million Dollars
($30,000,000) in the aggregate. The date which is the earlier of (i) the date as
of which the first transaction covered by this subparagraph (d) is consummated,
or (ii) the first advance under Tranche B, is referred to as the "Stock Purchase
Trigger Date." The Company shall notify the Agent of the occurrence of the Stock
Purchase Trigger Date.
7.11 Prepayments, Amendments, etc. The Company shall not make any
prepayment, defeasement, redemption or other payment prior to maturity under the
Subordinated Notes or the Private Placement (including any such prepayment by
reason of a change in control of the Company) except with the consent of the
Banks; or agree to any material amendment of the Subordinated Notes or the
Private Placement.
7.12 ERISA. The Company shall not, and shall not suffer or permit any
of its ERISA Affiliates to: (a) engage in a prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably be expected to result in a Material Adverse Effect;
or (b) engage in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA.
7.13 Change in Business. The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Company and its
Subsidiaries on the date hereof.
57
7.14 Accounting Changes. The Company shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Company or of any Subsidiary.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall
constitute an "Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan, or (ii) within
5 days after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty
by the Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is false in any material respect on or as of the date made or deemed
made; or
(c) Specific Defaults. The Company fails to perform
or observe any term, covenant or agreement contained in any of
Section 2.08, 6.03, 6.04, 6.06(a), or 6.14 or in Article VII; or
(d) Other Defaults. The Company or any Subsidiary party
thereto fails to perform or observe any other term or covenant contained in this
Agreement or any other Loan Document, and such default shall continue unremedied
for a period of 30 days after the earlier of (i) the date upon which a
Responsible Officer knew or reasonably should have known of such failure or (ii)
the date upon which written notice thereof is given to the Company by the Agent
or any Bank; or
(e) Cross-Default. (i) The Company or any Subsidiary (A) fails
to make any payment in respect of any Indebtedness or Contingent Obligation
(other than in respect of Swap Contracts), when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) where the
total amount of all such Indebtedness and Contingent Obligations (included any
unfunded commitments) is Five Million Dollars ($5,000,000) or more, and such
failure continues after the applicable grace or notice period, if any, specified
in the relevant document on the date of such failure; or (B) fails to perform or
observe any
58
other condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness or
Contingent Obligation (where the total amount of such Indebtedness or Contingent
Obligation is Five Million Dollars ($5,000,000) or more), and such failure
continues after the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure, if the effect of such failure,
event or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause such Indebtedness to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation to become payable or cash collateral in
respect thereof to be demanded; or (ii) there occurs under any Swap Contract an
Early Termination Date (as defined in such Swap Contract) resulting from (1) any
event of default under such Swap Contract as to which the Company or any
Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any
Termination Event (as so defined) as to which the Company or any Subsidiary is
an Affected Party (as so defined), and, in either event, the Swap Termination
Value owed by the Company or such Subsidiary as a result thereof is greater than
$3,000,000; or
(f) Insolvency; Voluntary Proceedings. The Company or any
Material Subsidiary (i) ceases or fails to be solvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Material Subsidiary,
or any writ, judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of the Company's or any Material
Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company or any Material Subsidiary admits
the material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non- U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company or any Material Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other similar
59
Person for itself or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect; (ii) any Pension Plan shall at
any time be determined to have a material "accumulated funding deficiency" as
that term is defined in Section 302 of ERISA and the result is a Material
Adverse Effect; or (iii) the Company or any ERISA Affiliate shall fail to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of $5,000,000; or
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a liability (to
the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $5,000,000 or more, and the same shall
remain unsatisfied, unvacated and unstayed pending appeal for a period of 10
days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) Adverse Change. There occurs a Material Adverse
Effect; or
(l) Guarantor Defaults. Any Guarantor fails in any material
respect to perform or observe any term, covenant or agreement in its guaranty;
or such guaranty is for any reason partially (including with respect to future
advances) or wholly revoked or invalidated, or otherwise ceases to be in full
force and effect, or any Guarantor or any other Person contests in any manner
the validity or enforceability thereof or denies that it has any further
liability or obligation thereunder; or any event described at subsections (f) or
(g) of this Section occurs with respect to any Guarantor; or
(m) Invalidity of Subordination Provisions. The subordination
provisions of the Subordinated Notes or any agreement or instrument governing
any other subordinated debt is
60
for any reason revoked or invalidated, or otherwise cease to be in full force
and effect, any Person contests in any manner the validity or enforceability
thereof or denies that it has any further liability or obligation thereunder, or
the Indebtedness hereunder is for any reason subordinated or does not have the
priority contemplated by this Agreement or such subordination provisions.
8.02 Remedies. If any Event of Default occurs, the Agent
shall, at the request of, or may, with the consent of, the
Majority Banks,
(a) declare the commitment of each Bank to make Loans
to be terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all
rights and remedies available to it and the Banks under the Loan
Documents or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 8.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent or any
Bank.
8.03 Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
61
ARTICLE IX
THE AGENT
9.01 Appointment and Authorization; "Agent". Each Bank hereby
irrevocably (subject to Section 9.09) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
9.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any
62
obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company or any of the Company's Subsidiaries or Affiliates.
9.04 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Majority Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
9.05 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Majority Banks in accordance with Article
VIII; provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from
63
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Banks.
9.06 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and credit worthiness of the
Company and its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and credit worthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or credit
worthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
9.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each Bank
shall reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
64
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
9.08 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that, pursuant
to such activities, BofA or its Affiliates may receive information regarding the
Company or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to its Loans, BofA shall have the same rights
and powers under this Agreement as any other Bank and may exercise the same as
though it were not the Agent, and the terms "Bank" and "Banks" include BofA in
its individual capacity.
9.09 Successor Agent. The Agent may, and at the request of the Majority
Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent
resigns under this Agreement, the Majority Banks shall appoint from among the
Banks a successor agent for the Banks. If no successor agent is appointed prior
to the effective date of the resignation of the Agent, the Agent may appoint,
after consulting with the Banks and the Company, a successor agent from among
the Banks. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above.
9.10 Withholding Tax. (a) If any Bank is a "foreign
corporation, partnership or trust" within the meaning of the Code
65
and such Bank claims exemption from, or a reduction of, U.S. withholding tax
under Sections 1441 or 1442 of the Code, such Bank agrees with and in favor of
the Agent, to deliver to the Agent:
(i) if such Bank 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 1001 before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank 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
Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of
such Bank and in each succeeding taxable year of such Bank during which
interest may be paid under this Agreement; and
(iii) 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 Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of
such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any
66
interest payment to such Bank an amount equivalent to the applicable withholding
tax after taking into account such reduction. However, if the forms or other
documentation required by subsection (a) of this Section are not delivered to
the Agent, then the Agent may withhold from any interest payment to such Bank
not providing such forms or other documentation an amount equivalent to the
applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Agent fully for all amounts
paid, directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Banks under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Agent.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Agent at the written request of the Majority Banks) and the Company
and acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Banks and the Company and acknowledged
by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 8.02);
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document;
67
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required
for the Banks or any of them to take any action hereunder;
(e) release the guaranty provided by any Guarantor; or
(f) amend this Section, or Section 2.15, or any
provision herein providing for consent or other action by all
Banks;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letters may be amended,
or rights or privileges thereunder waived, in a writing executed by the parties
thereto. The Company shall pay the Agent, for its own account, a fee of $1,000
for each amendment or waiver requested under this Agreement, after the first two
such amendments or waivers.
10.02 Notices. (a) All notices, requests, consents, approvals, waivers
and other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile shall be immediately confirmed by
a telephone call to the recipient at the number specified on Schedule 10.02) and
mailed, faxed or delivered, to the address or facsimile number specified for
notices on Schedule 10.02; or, as directed to the Company or the Agent, to such
other address as shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company and the
Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX to the Agent shall not be effective until
actually received by the Agent.
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for
68
the convenience and at the request of the Company. The Agent and the Banks shall
be entitled to rely on the authority of any Person purporting to be a Person
authorized by the Company to give such notice and the Agent and the Banks shall
not have any liability to the Company or other Person on account of any action
taken or not taken by the Agent or the Banks in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans shall not be
affected in any way or to any extent by any failure by the Agent and the Banks
to receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Banks of a confirmation which is at variance with
the terms understood by the Agent and the Banks to be contained in the
telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
10.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand (subject to subsection 4.01(f)) for all costs
and expenses incurred by BofA (including in its capacity as Agent) in connection
with the development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including reasonable Attorney
Costs incurred by BofA (including in its capacity as Agent) with respect
thereto; and
(b) pay or reimburse the Agent and each Bank within five
Business Days after demand (subject to subsection 4.01(e)) for all costs and
expenses (including Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document during the existence of an Event
of Default or after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding).
10.05 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company
69
shall indemnify, defend and hold the Agent-Related Persons, and each Bank and
each of its respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever which may at any time (including at any
time following repayment of the Loans and the termination, resignation or
replacement of the Agent or replacement of any Bank) be imposed on, incurred by
or asserted against any such Person in any way relating to or arising out of
this Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement
or the Loans or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Company shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities resulting from
the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
10.06 Payments Set Aside. To the extent that the Company makes a
payment to the Agent or the Banks, or the Agent or the Banks exercise their
right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Bank severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.
10.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank.
70
10.08 Assignments, Participations, etc. (a) Any Bank may, with the
written consent of the Company (at all times other than during the existence of
an Event of Default) and the Agent, which consent shall not be unreasonably
withheld, at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company or the Agent shall be required
in connection with any assignment and delegation by a Bank to an Eligible
Assignee that is an Affiliate of such Bank) (each an "Assignee") all, or any
ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Bank hereunder, in a minimum amount of $10,000,000;
provided, however, that the Company and the Agent may continue to deal solely
and directly with such Bank in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Company and the Agent by such Bank and the
Assignee; (ii) such Bank and its Assignee shall have delivered to the Company
and the Agent an Assignment and Acceptance in the form of Exhibit D ("Assignment
and Acceptance") and (iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $2,500.
(b) From and after the date that the Agent notifies the
assignor Bank that it has received (and provided its consent with respect to) an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Company (a "Participant")
participating interests in any Loans, the Commitment of that Bank and the other
interests of that Bank (the "originating Bank") hereunder and under the other
Loan Documents; provided, however, that (i) the originating Bank's obligations
71
under this Agreement shall remain unchanged, (ii) the originating Bank shall
remain solely responsible for the performance of such obligations, (iii) the
Company and the Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of the Banks as
described in the first proviso to Section 10.01. In the case of any such
participation, the Participant shall not have any rights under this Agreement,
or any of the other Loan Documents, and all amounts payable by the Company
hereunder shall be determined as if such Bank had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
10.09 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company and provided to it by the Company or any Subsidiary, or
by the Agent on the Company's or such Subsidiary's behalf, under this Agreement
or any other Loan Document, and neither it nor any of its Affiliates shall use
any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Company or any Subsidiary; except
to the extent such information (i) was or becomes generally available to the
public other than as a result of disclosure by the Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality agreement with the
Company known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or
72
pursuant to any requirement of any Governmental Authority to which the Bank is
subject or in connection with an examination of such Bank by any such authority;
(B) pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (D) to the
extent reasonably required in connection with any litigation or proceeding to
which the Agent, any Bank or their respective Affiliates may be party; (E) to
the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (F) to such Bank's independent
auditors and other professional advisors; (G) to any Participant or Assignee,
actual or potential, provided that such Person agrees in writing to keep such
information confidential to the same extent required of the Banks hereunder; (H)
as to any Bank or its Affiliate, as expressly permitted under the terms of any
other document or agreement regarding confidentiality to which the Company or
any Subsidiary is party or is deemed party with such Bank or such Affiliate; and
(I) to its Affiliates.
10.10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Company and the Agent after any such set-off and application made by
such Bank; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application.
10.11 Automatic Debits of Fees. With respect to any commitment fee or
other fee, or any other cost or expense (including Attorney Costs) due and
payable to the Agent or BofA under the Loan Documents, the Company hereby
irrevocably authorizes BofA to debit a deposit account of the Company with BofA
in an amount such that the aggregate amount debited from all such deposit
accounts does not exceed such fee or other cost or expense. The Company shall
notify the Agent from time to time of the account number which it wishes to have
debited. If there are insufficient funds in such deposit accounts to cover the
amount of the fee or other cost or expense then due, such debits will be
reversed (in whole or in part, in BofA's sole discretion) and such amount not
debited shall be deemed to be unpaid. No such debit under this Section shall be
deemed a set-off.
73
10.12 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
10.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.14 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Banks, the
Agent and the Agent-Related Persons, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
10.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT, THE BANKS AND THE COMPANY SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT
AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND
THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.
10.17 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR
74
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.18 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in San Francisco, California, by their proper and
duly authorized officers as of the day and year first above written.
BANK OF AMERICA NATIONAL XXXXXXXX-SONOMA, INC.
TRUST AND SAVINGS ASSOCIATION,
as Agent
By /s/ Xxxxxxx X. Xxxxxxx By /s/ W. Xxxxxx Xxxxxx
----------------------- ----------------------
Xxxxxxx X. Xxxxxxx W. Xxxxxx Xxxxxx
Vice President Chairman and Chief
Executive Officer
BANK OF AMERICA NATIONAL NATIONSBANK OF TEXAS, N. A.
TRUST AND SAVINGS ASSOCIATION,
as a Bank
By /s/ Xxxxx X. Xxxxxxxxxxx By /s/ Xxxxxxx Xxxxxxxx
-------------------------- ----------------------
Xxxxx X. Xxxxxxxxxxx Xxxxxxx Xxxxxxxx
Vice President Senior Vice President
75
EXHIBIT A
NOTICE OF BORROWING
Date: ________________, 199
To: Bank of America National Trust and Savings Association as Agent for the
Banks parties to the Credit Agreement dated as of June 1, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
Agreement") among Xxxxxxxx-Sonoma, Inc., certain Banks which are
signatories thereto and Bank of America National Trust and Savings
Association, as Agent
Ladies and Gentlemen:
The undersigned, Xxxxxxxx-Sonoma, Inc. (the "Company"), refers to the
Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.04 of
the Credit Agreement, of the Borrowing specified below:
1. The Business Day of the proposed Borrowing is
_____________, 19______.
2. The aggregate amount of the proposed Borrowing is
$_________________________.
3. The Borrowing is to be comprised of $___________of
[Base Rate] [London Rate] [Cayman Rate] Loans.
4. The duration of the Interest Period for the [London
Rate Loans] [Cayman Rate Loans] included in the Borrowing
shall be _____ months.
5. The Loans shall be made under Tranche __.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company
contained in Article V of the Credit Agreement are true and correct as
though made on and as of such date (except to the extent such
representations and warranties relate to an earlier date, in which case
they are true and correct as of such date);
76
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing;
and
(c) The proposed Borrowing will not cause the aggregate
principal amount of all outstanding Loans to exceed the combined
Commitments of the Banks.
XXXXXXXX-SONOMA, INC.
By:_________________________
Title:______________________
By:_________________________
Title:______________________
77
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION
Date:___________________, 199
To: Bank of America National Trust and Savings Association, as Agent for
the Banks parties to the Credit Agreement dated as of June 1, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
Agreement") among Xxxxxxxx-Sonoma, Inc., certain Banks which are
signatories thereto and Bank of America National Trust and Savings
Association, as Agent
Ladies and Gentlemen:
The undersigned, Xxxxxxxx-Sonoma, Inc. (the "Company"), refers to the
Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.05 of
the Credit Agreement, of the [conversion] [continuation] of the Loans specified
herein, that:
1. The Conversion/Continuation Date is _______________,
19_____.
2. The aggregate amount of the Loans to be [converted]
[continued] is $____________.
3. The Loans are to be [converted into] [continued as]
[London Rate] [Cayman Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest
Period for the Loans included in the [conversion]
[continuation] shall be _____ months.
XXXXXXXX-SONOMA, INC.
By:_________________________________
Title:
By:_________________________________
Title:
78
EXHIBIT C
XXXXXXXX-SONOMA, INC.
COMPLIANCE CERTIFICATE
Date:______________, 199___
Reference is made to that certain Credit Agreement dated as of June 1,
1997 (as extended, renewed, amended or restated from time to time, the "Credit
Agreement") among Xxxxxxxx-Sonoma, Inc. (the "Company"), the several financial
institutions from time to time parties to this Credit Agreement (the "Banks")
and Bank of America National Trust and Savings Association, as agent for the
Banks (in such capacity, the "Agent"). Unless otherwise defined herein,
capitalized terms used herein have the respective meanings assigned to them in
the Credit Agreement.
The undersigned Responsible Officer of the Company, hereby certifies as
of the date hereof that he/she is the _________________of the Company, and that,
as such, he/she is authorized to execute and deliver this Certificate to the
Banks and the Agent on behalf of the Company and its consolidated Subsidiaries,
and that:
1. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made, a detailed review of
the transactions and conditions (financial or otherwise) of the Company during
the quarterly accounting period ending __________.
2. To the best of the undersigned's knowledge, the Company, during such
period, has observed, performed or satisfied all of its covenants and other
agreements, and satisfied every condition in the Credit Agreement to be
observed, performed or satisfied by the Company, and the undersigned has no
knowledge of any Default or Event of Default.
3. The following financial covenant analyses and information set forth
on Schedule 1 attached hereto are true and accurate on and as of the date of
this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________________________, 199 .
XXXXXXXX-SONOMA, INC.
By:________________________
Title:_____________________
79
EXHIBIT D
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of __________, 199__ is made between
______________________________ (the "Assignor") and __________________________
(the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Credit
Agreement dated as of June 1, 1997 (as amended, amended and restated, modified,
supplemented or renewed, the "Credit Agreement") among Xxxxxxxx-Sonoma, Inc.
(the "Company"), the several financial institutions from time to time party
thereto (including the Assignor, the "Banks"), and Bank of America National
Trust and Savings Association, as agent for the Banks (the "Agent"). Any terms
defined in the Credit Agreement and not defined in this Assignment and
Acceptance are used herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor
has committed to making Loans (the "Committed Loans") to the Company in an
aggregate amount not to exceed $__________ (the "Commitment");
WHEREAS, [the Assignor has made Committed Loans in the
aggregate principal amount of $__________ to the Company] [no Committed Loans
are outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part
of the] [all] rights and obligations of the Assignor under the Credit Agreement
in respect of its Commitment, in an amount equal to $__________ (the "Assigned
Amount") on the terms and subject to the conditions set forth herein and the
Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __%
80
(the "Assignee's Percentage Share") of (A) the Commitment [and the Committed
Loans] of the Assignor and (B) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Credit Agreement and the Loan Documents.
[If appropriate, add paragraph specifying payment
to Assignor by Assignee of outstanding principal of, accrued
interest on, and fees with respect to, Committed Loans
assigned.]
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Bank under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
Sections __ and __ of the Credit Agreement to the extent such rights relate to
the time prior to the Effective Date.
(c) After giving effect to the assignment and
assumption set forth herein, on the Effective Date the
Assignee's Commitment will be $__________.
(d) After giving effect to the assignment and
assumption set forth herein, on the Effective Date the
Assignor's Commitment will be $__________.
2. Payments.
(a) As consideration for the sale, assignment and
transfer contemplated in Section 1 hereof, the Assignee
shall pay to the Assignor on the Effective Date in immediately available funds
an amount equal to $__________, representing the Assignee's Pro Rata Share of
the principal amount of all Committed Loans.
(b) The [Assignor] [Assignee] further agrees to
pay to the Agent a processing fee in the amount specified in
Section 10.08(a) of the Credit Agreement.
81
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment[,] [and] Committed Loans shall be for the account
of the Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Amount shall be for the account of
the Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in the Credit Agreement, and such
other documents and information as it has deemed appropriate to make its own
credit and legal analysis and decision to enter into this Assignment and
Acceptance; and (b) agrees that it will, independently and without reliance upon
the Assignor, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under the Credit
Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance shall be __________, 199__ (the
"Effective Date"); provided that the following conditions precedent have been
satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be
executed and delivered by the Assignor and the Assignee;
(ii) the consent of the Company and the Agent
required for an effective assignment of the Assigned Amount by the Assignor to
the Assignee under the Credit Agreement shall have been duly obtained and shall
be in full force and effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor
all amounts due to the Assignor under this Assignment and
Acceptance;
(iv) the processing fee referred to in
Section 2(b) hereof and in Section 10.08(a) of the Credit Agreement shall have
been paid to the Agent; and
82
(v) the Assignor shall have assigned and the
Assignee shall have assumed a percentage equal to the Assignee's Percentage
Share of the rights and obligations of the Assignor under the Credit Agreement
(if such agreement exists).
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Company and the Agent for
acknowledgement by the Agent, a Notice of Assignment substantially in the form
attached hereto as Schedule 1.
6. Agent.
(a) The Assignee hereby appoints and authorizes the Assignor
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the Banks pursuant to the
terms of the Credit Agreement.
[(b) The Assignee shall assume no duties or obligations held
by the Assignor in its capacity as Agent under the Credit Agreement.] [INCLUDE
ONLY IF ASSIGNOR IS AGENT]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Bank, the Agent and the
Company that under applicable law and treaties no tax will be required to be
withheld by the Bank with respect to any payments to be made to the Assignee
hereunder, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to the Agent and
the Company prior to the time that the Agent or Company is required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a
tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.
83
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any Lien or other adverse claim; (ii) it
is duly organized and existing and it has the full power and authority to take,
and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto. The Assignor makes no representation or warranty in connection with,
and assumes no responsibility with respect to, the solvency, financial condition
or statements of the Company, or the performance or observance by the Company,
of any of its respective obligations under the Credit Agreement or any other
instrument or document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit
84
Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance; (iii) this
Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee, enforceable
against the Assignee in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles; and (iv) it is an Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made
without any set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. The Assignor
and the Assignee each irrevocably submits to the non-exclusive jurisdiction of
any State or Federal court sitting in California over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all
85
claims in respect of such action or proceeding may be heard and determined in
such California State or Federal court. Each party to this Assignment and
Acceptance hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Credit Agreement.]
86
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:____________________________________
Title:_________________________________
By:____________________________________
Title:_________________________________
Address:
[ASSIGNEE]
By:____________________________________
Title:_________________________________
By:____________________________________
Title:_________________________________
Address:
