EXHIBIT 10.1
CREDIT AGREEMENT
dated as of
April 16, 2003
among
NEW ENGLAND AUDIO CO., INC.
as Lead Borrower for:
NEW ENGLAND AUDIO CO., INC.
SOUND ADVICE OF ARIZONA INC.
NEA DELAWARE, INC.
THEG USA, L.P.
HILLCREST HIGH FIDELITY, INC.
SOUND ADVICE, INC.
As Borrowers
The LENDERS Party Hereto,
FLEET NATIONAL BANK
as Administrative Agent and Issuing Bank
FLEET RETAIL FINANCE INC.
FLEET NATIONAL BANK
as Collateral Agents
and
FLEET SECURITIES INC.
as Arranger
---------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions.......................................................................... 1
SECTION 1.01 Defined Terms............................................................... 1
SECTION 1.02 Terms Generally............................................................. 26
SECTION 1.03 Accounting Terms; GAAP...................................................... 27
ARTICLE II Amount and Terms of Credit........................................................... 27
SECTION 2.01 Commitment of the Lenders................................................... 27
SECTION 2.02 Reserves; Changes to Reserves............................................... 27
SECTION 2.03 Making of Loans............................................................. 28
SECTION 2.04 Overadvances................................................................ 30
SECTION 2.05 Swingline Loans............................................................. 30
SECTION 2.06 Letters of Credit........................................................... 30
SECTION 2.07 Settlements Amongst Lenders ................................................ 34
SECTION 2.08 Notes; Repayment of Loans................................................... 35
SECTION 2.09 Interest on Loans........................................................... 35
SECTION 2.10 Default Interest............................................................ 36
SECTION 2.11 Certain Fees................................................................ 36
SECTION 2.12 Unused Commitment Fee....................................................... 36
SECTION 2.13 Letter of Credit Fees....................................................... 36
SECTION 2.14 Early Termination Fees...................................................... 37
SECTION 2.15 Nature of Fees.............................................................. 37
SECTION 2.16 Termination or Reduction of Commitments..................................... 37
SECTION 2.17 Alternate Rate of Interest.................................................. 38
SECTION 2.18 Conversion and Continuation of Loans........................................ 38
SECTION 2.19 Mandatory Prepayment; Commitment Termination; Cash Collateral............... 39
SECTION 2.20 Optional Prepayment of Loans; Reimbursement of Lenders...................... 40
SECTION 2.21 Maintenance of Loan Account; Statements of Account.......................... 41
SECTION 2.22 Cash Receipts............................................................... 42
SECTION 2.23 Application of Payments..................................................... 43
SECTION 2.24 Increased Costs............................................................. 44
SECTION 2.25 Change in Legality.......................................................... 45
SECTION 2.26 Payments; Sharing of Setoff................................................. 45
SECTION 2.27 Taxes....................................................................... 47
SECTION 2.28 Security and Mortgage Interests in Collateral............................... 48
SECTION 2.29 Mitigation Obligations; Replacement of Lenders.............................. 48
ARTICLE III Representations and Warranties....................................................... 49
SECTION 3.01 Organization; Powers........................................................ 49
SECTION 3.02 Authorization; Enforceability............................................... 49
SECTION 3.03 Governmental Approvals; No Conflicts........................................ 50
SECTION 3.04 Financial Condition......................................................... 50
SECTION 3.05 Properties.................................................................. 50
(ii)
SECTION 3.06 Litigation and Environmental Matters........................................ 50
SECTION 3.07 Compliance with Laws and Agreements......................................... 51
SECTION 3.08 Investment and Holding Company Status....................................... 51
SECTION 3.09 Taxes....................................................................... 51
SECTION 3.10 ERISA....................................................................... 51
SECTION 3.11 Disclosure.................................................................. 51
SECTION 3.12 Subsidiaries................................................................ 52
SECTION 3.13 Insurance................................................................... 52
SECTION 3.14 Labor Matters............................................................... 52
SECTION 3.15 Security Documents.......................................................... 52
SECTION 3.16 Federal Reserve Regulations................................................. 52
SECTION 3.17 Solvency.................................................................... 53
ARTICLE IV Conditions........................................................................... 53
SECTION 4.01 Closing Date................................................................ 53
SECTION 4.02 Conditions Precedent to Each Loan and Each Letter of Credit................. 55
ARTICLE V Affirmative Covenants................................................................ 56
SECTION 5.01 Financial Statements and Other Information.................................. 56
SECTION 5.02 Notices of Material Events.................................................. 58
SECTION 5.03 Information Regarding Collateral............................................ 59
SECTION 5.04 Existence; Conduct of Business.............................................. 59
SECTION 5.05 Payment of Obligations...................................................... 60
SECTION 5.06 Maintenance of Properties................................................... 60
SECTION 5.07 Insurance................................................................... 60
SECTION 5.08 Casualty and Condemnation................................................... 61
SECTION 5.09 Books and Records; Inspection and Audit Rights.............................. 61
SECTION 5.10 Physical Inventories........................................................ 62
SECTION 5.11 Compliance with Laws........................................................ 62
SECTION 5.12 Use of Proceeds and Letters of Credit....................................... 62
SECTION 5.13 Additional Subsidiaries..................................................... 62
SECTION 5.14 Further Assurances.......................................................... 63
ARTICLE VI Negative Covenants................................................................... 63
SECTION 6.01 Indebtedness and Other Obligations.......................................... 64
SECTION 6.02 Liens....................................................................... 65
SECTION 6.03 Fundamental Changes......................................................... 65
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions................... 66
SECTION 6.05 Asset Sales................................................................. 67
SECTION 6.06 Restricted Payments; Certain Payments of Indebtedness....................... 67
SECTION 6.07 Transactions with Affiliates................................................ 68
SECTION 6.08 Restrictive Agreements...................................................... 68
SECTION 6.09 Amendment of Material Documents............................................. 68
SECTION 6.10 Additional Subsidiaries..................................................... 68
SECTION 6.11 Fixed Charge Coverage Ratio................................................. 69
SECTION 6.12 Fiscal Year................................................................. 69
SECTION 6.13 Environmental Laws.......................................................... 69
(iii)
SECTION 6.14 Store Openings and Closings................................................. 70
SECTION 6.15 Tivoli Agreement............................................................ 70
ARTICLE VII Events of Default.................................................................... 70
SECTION 7.01 Events of Default........................................................... 70
SECTION 7.02 When Continuing............................................................. 72
SECTION 7.03 Remedies on Default......................................................... 73
SECTION 7.04 Application of Proceeds..................................................... 73
ARTICLE VIII The Agents........................................................................... 73
SECTION 8.01 Administration by Administrative Agent...................................... 73
SECTION 8.02 The Collateral Agents....................................................... 73
SECTION 8.03 Sharing of Excess Payments.................................................. 74
SECTION 8.04 Agreement of Required Lenders............................................... 74
SECTION 8.05 Liability of Agents......................................................... 75
SECTION 8.06 Notice of Default........................................................... 76
SECTION 8.07 Lenders' Credit Decisions................................................... 76
SECTION 8.08 Reimbursement and Indemnification........................................... 76
SECTION 8.09 Rights of Agents............................................................ 77
SECTION 8.10 Independent Lenders and Issuing Bank........................................ 77
SECTION 8.11 Notice of Transfer.......................................................... 77
SECTION 8.12 Successor Agent............................................................. 77
SECTION 8.13 Reports and Financial Statements............................................ 78
SECTION 8.14 Delinquent Lender........................................................... 78
SECTION 8.15 Arranger.................................................................... 79
ARTICLE IX Miscellaneous........................................................................ 79
SECTION 9.01 Notices..................................................................... 79
SECTION 9.02 Waivers; Amendments......................................................... 79
SECTION 9.03 Expenses; Indemnity; Damage Waiver.......................................... 81
SECTION 9.04 Designation of Lead Borrower as Borrowers' Agent............................ 82
SECTION 9.05 Successors and Assigns...................................................... 84
SECTION 9.06 Survival.................................................................... 86
SECTION 9.07 Counterparts; Integration; Effectiveness.................................... 86
SECTION 9.08 Severability................................................................ 87
SECTION 9.09 Right of Setoff............................................................. 87
SECTION 9.10 Governing Law; Jurisdiction; Consent to Service of Process.................. 87
SECTION 9.11 WAIVER OF JURY TRIAL........................................................ 87
SECTION 9.12 Headings.................................................................... 88
SECTION 9.13 Interest Rate Limitation.................................................... 88
SECTION 9.14 Additional Waivers.......................................................... 88
(iv)
EXHIBITS
A. Assignment and Acceptance
B-1. Revolving Notes
B-2 Swingline Note
C Opinion of Counsel to Loan Parties
D. Form of Compliance Certificate
E. Borrowing Base Certificate
(v)
SCHEDULES
1.1 Lenders and Commitments
2.22(a) DDAs
2.22(b) Credit Card Arrangements
2.22(c) Blocked Accounts
2.22(f) Disbursement Accounts
3.05(c)(i) Title to Properties; Real Estate Owned
3.05(c)(ii) Leased Properties
3.06 Disclosed Matters
3.12 Subsidiaries
3.13 Insurance
5.01(j) Financial Reporting Requirements
6.01 Indebtedness
6.02 Liens
6.04 Investments
6.07 Affiliate Transactions
(vi)
CREDIT AGREEMENT dated as of April 16, 2003 among
NEW ENGLAND AUDIO CO., INC., a Massachusetts corporation, having its
principal place of business at 00 Xxxxxx Xxx, Xxxxxx, Xxxxxxxxxxxxx
00000, as Lead Borrower for the Borrowers, being
said NEW ENGLAND AUDIO CO., INC., and
SOUND ADVICE OF ARIZONA INC., a Florida corporation, having a
mailing address at 00 Xxxxxx Xxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
and
NEA DELAWARE, INC., a Delaware corporation, having a mailing
address at 00 Xxxxxx Xxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and
THEG USA, L.P., a Delaware limited partnership, having a
mailing address at 00 Xxxxxx Xxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
and
HILLCREST HIGH FIDELITY, INC., a Texas corporation, having a
mailing address at 00 Xxxxxx Xxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
and
SOUND ADVICE, INC., a Florida corporation, having a mailing
address at 00 Xxxxxx Xxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and
the LENDERS party hereto; and
FLEET NATIONAL BANK, a national banking association having a place of
business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, as Issuing
Bank; and
FLEET NATIONAL BANK, a national banking association having a place of
business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, as
Administrative Agent for the Lenders; and
FLEET NATIONAL BANK, a national banking association having a place of
business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and FLEET
RETAIL FINANCE INC., a Delaware corporation, having its principal place
of business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, as
Collateral Agents for the Lenders
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
ARTICLE I
Definitions
SECTION 1.01 Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ACH" shall mean automated clearing house transfers.
"Account" shall mean "accounts" as defined in the UCC, and also all:
accounts, accounts receivable, receivables, and rights to payment (whether or
not earned by performance) for:
1
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of; services rendered or to be rendered; a policy of
insurance issued or to be issued; a secondary obligation incurred or to be
incurred; or arising out of the use of a credit or charge card or information
contained on or used with that card.
"Adjusted LIBO Rate" means, with respect to any LIBO Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period divided
by (b) a percentage equal to 100% minus the Statutory Reserve Rate.
"Administrative Agent" means Fleet, in its capacity as administrative
agent for the Lenders hereunder.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified or is a
director or officer of such Person.
"Agents" shall mean collectively, the Administrative Agent and the
Collateral Agents.
"Agreement" means this Credit Agreement, as modified, amended,
supplemented or restated, and in effect from time to time.
"Applicable Law" means as to any Person: (i) all statutes, rules,
regulations, orders, or other requirements having the force of law and
applicable to such Person, and (ii) all court orders and injunctions, and/or
similar rulings and applicable to such Person, in each instance ((i) and (ii))
of or by any Governmental Authority, or court, or tribunal which has
jurisdiction over such Person, or any property of such Person.
"Applicable Margin" means initially, the rates for Prime Rate Loans and
LIBO Loans, set forth in Level 3, below:
Level Performance Criteria Prime Rate Loans LIBO Loans
------------------------------------------------------------------
1 Average Excess 0% 2.00%
Availability greater
than $27,000,000
------------------------------------------------------------------
2 Average Excess 0% 2.25%
Availability greater
than $17,500,000
but less than or equal
to $27,000,000
------------------------------------------------------------------
3 Average Excess 0.25% 2.50%
Availability less than
or equal to
$17,500,000
------------------------------------------------------------------
2
Except as provided in the following sentence, the Applicable Margin shall be
adjusted quarterly as of the first day of each calendar quarter, based upon the
average Excess Availability for the immediately preceding calendar quarter. In
no event shall the Applicable Margin be set at Xxxxx 0 prior to the first
anniversary of the Closing Date (even if the Excess Availability requirements
for Level 1 have been met). Upon the occurrence, and during the continuance, of
an Event of Default, at the option of the Administrative Agent or upon the
direction of the Required Lenders, the Applicable Margin shall be immediately
increased to the percentages set forth in Level 3 (even if the Excess
Availability requirements for another Level have been met) and interest shall be
determined in the manner set forth in Section 2.10.
" Appraisal Percentage" shall mean 85%.
"Appraised Value" means the net appraised liquidation value of the
Borrowers' Inventory as set forth in the Borrowers' stock ledger as reasonably
determined from time to time by the Administrative Agent in accordance with its
standard procedures and with the assistance of an independent appraiser
satisfactory to the Administrative Agent.
"Arranger" means FSI.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.05), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Availability Reserves" means such reserves as the Administrative Agent
from time to time determines in the Administrative Agent's reasonable discretion
(after consultation with the Lead Borrower (whose consent to any Availability
Reserve shall not be required)) as being appropriate to reflect the impediments
to the Agents' ability to realize upon the Collateral. Without limiting the
generality of the foregoing, Availability Reserves may include (but are not
limited to) reserves based on (i) rent; (ii) Gift Certificates and Merchandise
Credit Liability; (iii) minimum Excess Availability; (iv) customs, duties, and
other costs to release Inventory which is being imported into the United States;
(v) outstanding customer deposits and liabilities of the Borrowers on account of
layaways; (vi) liabilities related to or arising from frequent shoppers'
programs; and (vii) outstanding taxes and other governmental charges, including,
ad valorem, real estate, personal property, and other taxes which might have
priority over the interests of the Collateral Agents in the Collateral.
Availability Reserves shall be established and calculated in a manner and
methodology consistent with the Administrative Agent's practices as of the
Closing Date with other similarly situated borrowers.
"Blocked Account Agreements" has the meaning set forth in Section
2.22(c).
"Blocked Account Banks" shall mean the banks with whom the Borrowers
have entered into Blocked Account Agreements.
"Blocked Accounts" shall have the meaning set forth in Section 2.22(c).
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
3
"Borrowers" means collectively, New England Audio Co., Inc., Sound
Advice of Arizona, Inc., NEA Delaware, Inc., THEG USA, L.P., Hillcrest High
Fidelity, Inc., and Sound Advice, Inc..
"Borrowing" shall mean (a) the incurrence of Loans of a single Type, on
a single date and having, in the case of LIBO Loans, a single Interest Period,
or (b) a Swingline Loan.
"Borrowing Base" means, at any time of calculation, an amount equal to
(a) the lesser of (i) the Receivables Advance Rate multiplied by
the face amount of Eligible Credit Card Receivables, or (ii)
$12,000,000, plus
(b) the lesser of (i) (A) the Appraisal Percentage multiplied by
(B) the Appraised Value of Eligible Inventory (net of Inventory
Reserves), or (ii) (A) the Inventory Advance Rate multiplied by (B)the
Cost of Eligible Inventory (net of Inventory Reserves); plus
(c) the lesser of (i) 60% of the FLV of Eligible Real Estate less
Realty Reserves, or (ii) $7,000,000; minus
(d) the then amount of all Availability Reserves.
"Borrowing Base Certificate" has the meaning assigned to such term in
Section 5.01(f).
"Borrowing Request" means a request by the Lead Borrower on behalf of
the Borrowers for a Borrowing in accordance with Section 2.03.
"Breakage Costs" shall have the meaning set forth in Section 2.20(b).
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in Boston, Massachusetts are authorized or
required by law to remain closed, provided that, when used in connection with a
LIBO Loan, the term "Business Day" shall also exclude any day on which banks are
not open for dealings in dollar deposits in the London interbank market. Except
as otherwise provided herein, if any day on which a payment is due is not a
Business Day, then the payment shall be due on the next day following which is a
Business Day and such extension of time shall be included in computing interest
and fees in connection with such payment.
"Capital Expenditures" means, for any period, (a) all expenditures made
or costs incurred (whether made in the form of cash or other property) for the
acquisition, maintenance or repair of fixed or capital assets of the Parent and
its Subsidiaries (including, without limitation, Permitted Acquisitions of fixed
or capital assets), in each case that are (or would be) set forth in a
Consolidated statement of cash flows of the Parent and its Subsidiaries for such
period prepared in accordance with GAAP as capital expenditures, and (b) Capital
Lease Obligations incurred by the Parent and its Subsidiaries during such
period.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
4
"Cash Collateral Account" shall mean an interest-bearing account
established by the Borrowers with the Collateral Agents at Fleet under the sole
and exclusive dominion and control of the Collateral Agents designated as the
"Tweeter Cash Collateral Account".
"Cash Dominion Release Event" shall mean that, and only as long as,
each of the following have been satisfied: (i) average Excess Availability for
the immediately preceding calendar quarter is greater than $27,000,000, and (ii)
the Fixed Charge Coverage Ratio calculated as of the end of the immediately
preceding fiscal quarter is at least equal to 1.10:1.00, and (iii) no Default or
Event of Default then exists, and (iv) the Lead Borrower has notified the
Administrative Agent in writing of its election to terminate the sweep of Cash
Receipts as set forth in Section 2.22 hereof to the FRF Concentration Account,
provided however, a Cash Dominion Release Event shall, at the Administrative
Agent's option, be deemed not to exist (even if conditions set forth in clauses
(i), (ii), (iii) and (iv) have been satisfied) if a Cash Dominion Release Event
has occurred and thereafter has been discontinued due to the failure of the
Borrowers to satisfy the conditions set forth in clauses (i), (ii), (iii) and
(iv) above.
"Cash Receipts" has the meaning provided therefor in Section 2.22(c).
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 et seq.
"Change in Control" means, at any time, (a) occupation of a majority of
the seats (other than vacant seats) on the board of directors of the Parent by
Persons who were neither (i) nominated by the board of directors of the Parent
nor (ii) appointed by directors so nominated; or (b) any person (within the
meaning of the Securities and Exchange Act of 1934, as amended) is or becomes
the beneficial owner (within the meaning of Rule 13d-3 and 13d-5 of the
Securities and Exchange Act of 1934, as amended, except that such person shall
be deemed to have "beneficial ownership" of all shares that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time) directly or indirectly of forty percent (40%) or more of
the total voting power of the Voting Stock of the Parent on a fully diluted
basis, whether as a result of the issuance of securities of the Parent, any
merger, consolidation, liquidation or dissolution of the Parent, any direct or
indirect transfers of securities or otherwise, or (c) the failure of the Parent
to own, directly or indirectly, 100% of the capital stock or other equity
interests of all of the Borrowers.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.24(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority that has become effective and is made or issued after the
date of this Agreement.
"Charges" has the meaning provided therefor in Section 9.13.
"Closing Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
5
"CMLTD" means current maturities of long term Indebtedness of the
Parent and its Sub sidiaries, as determined in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended from time to time.
"Collateral" means any and all "Collateral" as defined in any
applicable Security Document.
"Collateral Agents" means Fleet and FRF, in their capacity as
collateral agents under the Security Documents.
"Commercial Letter of Credit" means any Letter of Credit issued for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by the Borrowers in the ordinary
course of business of the Borrowers.
"Commitment" shall mean, with respect to each Lender, the aggregate
commitment of such Lender hereunder in the amount set forth opposite its name on
SCHEDULE 1.1 hereto or as may subsequently be set forth in the Register from
time to time, as the same may be reduced from time to time pursuant to Section
2.16.
"Commitment Fee" has the meaning provided therefor in Section 2.12.
"Commitment Percentage" shall mean, with respect to each Lender, that
percentage of the Commitments of all Lenders hereunder in the amount set forth
opposite its name on SCHEDULE 1.1 hereto or as may subsequently be set forth in
the Register from time to time, as the same may be reduced from time to time
pursuant to Section 2.16.
"Consent" means actual consent given by a Lender from whom such consent
is sought; or the passage of fifteen (15) Business Days from receipt of written
notice to a Lender from the Administrative Agent of a proposed course of action
to be followed by the Administrative Agent without such Lender's giving the
Administrative Agent written notice of that Revolving Credit Lender's objection
to such course of action.
"Consolidated" means, when used to modify a financial term, test,
statement, or report of a Person, refers to the application or preparation of
such term, test, statement or report (as applicable) based upon the
consolidation, in accordance with GAAP, of the financial condition or operating
results of such Person and its Subsidiaries.
"Consolidated EBITDA" means for any period, the result for such period
of (i) Consolidated Net Income, less (ii) depreciation, amortization and all
other non-cash charges that were deducted in arriving at Consolidated Net Income
for such period less (iii) provisions for taxes based on income that were
deducted in arriving at Consolidated Net Income for such period, less (iv)
Consolidated Interest Expense, plus (v) losses on sales of assets (excluding
sales in the ordinary course of business) and other extraordinary losses that
were deducted in arriving at Consolidated Net Income for such period, less (vi)
the amount for such period of gains on sales of assets (excluding sales in the
ordinary course of business ) and other extraordinary gains that were included
in arriving at Consolidated Net Income for such period, all as determined on a
Consolidated basis in accordance with GAAP.
6
"Consolidated Interest Expense" means, for any period for any Person,
total interest expense (including that attributable to Capital Lease Obligations
in accordance with GAAP) of such Person and its Subsidiaries on a Consolidated
basis with respect to all outstanding Indebtedness of such Person and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Hedging Agreements.
"Consolidated Net Income" means, for any period with respect to any
Person, the net income (or loss) of such Person and its Subsidiaries on a
Consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP, provided that there shall be excluded (i)
the income (or loss) of any Person (other than Subsidiaries of the Parent) in
which any other Person (other than the Parent or any of its Subsidiaries) has a
joint interest, except to the extent of the amount of dividends or other
distributions actually paid to the Parent or any of its Subsidiaries by such
Person during such period, (ii) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary of the Parent or any of its Subsidiaries or
is merged into or consolidated with the Parent or any of its Subsidiaries or
that Person's assets are acquired by the Parent or any of its Subsidiaries, and
(iii) the income of any direct or indirect Subsidiary of the Parent to the
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary.
"Control" means the possession, directly or indirectly, of the power
(a) to vote 10% or more of the securities having ordinary voting power for the
election of directors of a Person, or (b) to direct or cause the direction of
the management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. The terms "Controlling" and "Controlled"
have meanings correlative thereto.
"Cost" means the lesser of (a) the cost of purchases, as reported on
the Borrowers' stock ledger, based upon the Borrowers' accounting practices
which are in effect on the date of this Agreement, and (b) the cost equivalent
of the lowest ticketed price at which the subject Inventory is offered for sale
to the public after all xxxx-xxxxx (whether or not such price is then reflected
on the Borrowers' accounting system), which cost equivalent is determined in
accordance with the retail method of accounting reflecting the Borrowers'
historical business practices. "Cost" does not include inventory capitalization
costs or other non-purchase price charges (such as freight) used in the
Borrowers' calculation of cost of goods sold.
"Credit Card Notifications" has the meaning provided therefor in
Section 2.22(c).
"Credit Extensions" as of any day, shall be equal to the sum of (a) the
principal balance of all Loans then outstanding, and (b) the then amount of the
Letter of Credit Outstandings.
"DDAs" means any checking or other demand deposit account maintained by
any Borrower.
"DDA Notification" has the meaning provided therefor in Section
2.22(c).
"Default" means any event or condition that constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
7
"Delinquent Lender" has the meaning therefor provided in Section 8.14.
"dollars" or "$" refers to lawful money of the United States of
America.
"Early Termination Fee" has the meaning provided therefor in Section
2.14.
"Eligible Assignee" means a bank, insurance company, or company engaged
in the business of making commercial loans having a combined capital and surplus
in excess of $500,000,000 or any Affiliate of any Lender, or any Person to whom
a Lender assigns its rights and obligations under this Agreement as part of a
programmed assignment and transfer of such Lender's rights in and to a material
portion of such Lender's portfolio of asset based credit facilities.
"Eligible Credit Card Receivables means Accounts due to a Borrower on a
non-recourse basis from Visa, Mastercard, American Express Co., and other major
credit card processors reasonably acceptable to the Administrative Agent as
arise in the ordinary course of business, which have been earned by performance
and are deemed by the Administrative Agent in its reasonable discretion to be
eligible for inclusion in the calculation of the Borrowing Base. Without
limiting the foregoing, unless otherwise approved in writing by the
Administrative Agent, none of the following shall be deemed to be Eligible
Credit Card Receivables:
(a) Accounts that have been outstanding for more than five (5)
Business Days from the date of sale;
(b) Accounts with respect to which a Borrower does not have
good, valid and marketable title thereto, free and clear of
any Encumbrance (other than Encumbrances granted to the
Collateral Agents, for their benefit and the ratable benefit
of the Secured Parties, pursuant to the Security Documents);
(c) Accounts that are not subject to a first priority security
interest in favor of the Collateral Agents, for the benefit
of themselves and the Secured Parties, subject to Permitted
Encumbrances of the type described in clause (a) of such
definition only (it being the intent that chargebacks in the
ordinary course by the credit card processors shall not be
deemed violative of this clause);
(d) Accounts which are disputed, are with recourse, or with
respect to which a claim, counterclaim, offset or chargeback
has been asserted (to the extent of such claim,
counterclaim, offset or chargeback);
(e) Accounts which the Administrative Agent determines in its
reasonable discretion to be uncertain of collection.
"Eligible In-Transit Inventory" shall mean, as of the date of
determination thereof, without duplication of other Eligible Inventory,
Inventory (a) which has been shipped from a foreign location for receipt by a
Borrower within 25 days of the date of determination, but which has not yet been
delivered to a Borrower, (b) for which payment has been made by a Borrower and
title has passed to a Borrower, (c) for which the document of title reflects a
Borrower as consignee (along with delivery to a Borrower of the documents of
title with respect thereto), (d)
8
as to which the Collateral Agents have control over the documents of title which
evidence ownership of the subject Inventory (such as by the delivery of a
customs broker agency agreement, satisfactory to the Collateral Agents), and (e)
which otherwise would constitute Eligible Inventory.
"Eligible Inventory" shall mean, as of the date of determination
thereof, (a) Eligible In- Transit Inventory, (b) Eligible L/C Inventory, and (c)
items of Inventory of the Borrowers that are finished goods, merchantable and
readily saleable to the public in the ordinary course deemed by the
Administrative Agent in its reasonable discretion to be eligible for inclusion
in the calculation of the Borrowing Base. Without limiting the foregoing, unless
otherwise approved in writing by the Administrative Agent, none of the following
shall be deemed to be Eligible Inventory:
(a) Inventory that is not owned solely by the Borrowers,
or is leased or on consignment (as defined in Section 9-102 of the
Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts) or the Borrowers do not have good and valid title
thereto;
(b) Inventory (including any portion thereof in transit
from vendors, other than Eligible In-Transit Inventory and Eligible L/C
Inventory) that is not located at a warehouse facility used by a
Borrower in the ordinary course or at a property that is owned or
leased by a Borrower;
(c) Inventory that represents (i) goods damaged,
defective or otherwise unmerchantable, (ii) goods that do not conform
in all material respects to the representations and warranties
contained in this Agreement or any of the Security Documents, or (iii)
goods to be returned to the vendor;
(d) Inventory that is not located in the United States of
America (excluding territories and possessions thereof) other than
Eligible In-Transit Inventory and Eligible L/C Inventory;
(e) Inventory that is not subject to a perfected
first-priority security interest in favor of the Collateral Agents for
the benefit of the Secured Parties, subject to Permitted Encumbrances
of the type described in clauses (a) and (b) of such definition only;
(f) Inventory which consists of salesman's samples,
labels, bags, packaging, installation inventory, and other similar
non-merchandise categories.
(g) Inventory as to which insurance in compliance with
the provisions of Section 5.07 hereof is not in effect.
(h) Inventory which is acquired in a Permitted
Acquisition unless and until the Collateral Agents have completed an
appraisal of such Inventory, established an Inventory Advance Rate and
Inventory Reserves (if applicable) therefor, and otherwise agreed that
such Inventory shall be deemed Eligible Inventory.
"Eligible L/C Inventory" shall mean, as of the date of determination
thereof, without duplication of other Eligible Inventory, Inventory (a) not yet
delivered to the Borrowers, (b) the purchase of which is supported by a
Commercial Letter of Credit having an expiry within twenty- five (25) days of
such date of determination, (c) for which the document of title reflects a
9
Borrower or the Issuing Bank as consignee (along with delivery to a Borrower or
the Issuing Bank, as applicable, of the documents of title with respect
thereto), (d) as to which the Collateral Agents have control over the documents
of title which evidence ownership of the subject Inventory (such as by the
delivery of a customs broker agency agreement, satisfactory to the Collateral
Agents), and (e) which otherwise would constitute Eligible Inventory.
"Eligible Real Estate" means the Real Estate located at 10 and 00
Xxxxxx Xxx, Xxxxxx, Xxxxxxxxxxxxx, but only if such Real Estate satisfies each
of the following conditions:
(a) a Borrower owns fee title thereto and is occupying
such Real Estate for offices and/or as a distribution center; and
(b) the applicable Borrower has executed and delivered to
the Collateral Agents such Mortgages and other documents as the
Collateral Agents may reasonably request; and
(c) the applicable Borrower shall have delivered to the
Collateral Agents title insurance, environmental studies, and other
real estate items, as reasonably required by, and reasonably
satisfactory to, the Collateral Agents, including, but not limited to,
those items required by FIRREA; and
(d) the Collateral Agents have a perfected first-priority
lien in such Real Estate for the benefit of the Secured Parties,
subject to Permitted Encumbrances of the type described in clauses (a)
and (f) of such definition only; and
(e) such Real Estate has been appraised by a third party
appraiser acceptable to the Collateral Agents; and
(f) as to which the mortgagor is in compliance with the
representations, warranties and covenants set forth in the Mortgage
relating to such property, unless the Administrative Agent, in its
discretion, otherwise determines to waive this requirement in the
determination of Eligible Real Estate.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, handling, treatment, storage, disposal, Release or
threatened Release of any Hazardous Material or to health matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties or
indemnities), of any Person directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
10
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Parent, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Parent or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Parent or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Parent or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Parent or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Parent or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Event of Default" has the meaning assigned to such term in Section
7.01. An "Event of Default" shall be deemed to have occurred and to be
continuing unless and until that Event of Default has been duly waived by the
Administrative Agent in writing or cured to the reasonable satisfaction of the
Administrative Agent.
"Excess Availability" means, as of any date of determination, the
excess, if any, of (a) the lesser of the Borrowing Base (calculated, for
purposes of this definition, without giving effect to any Excess Availability
Reserve then existing) or the aggregate Commitments, over (b) the sum of (i) the
outstanding Credit Extensions, and (ii) all then held checks, accounts payable
which are beyond credit terms then accorded the Borrowers, and overdrafts.
"Excluded Taxes" means, with respect to the Agents, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrowers hereunder, (a) income or franchise taxes
imposed on (or measured by) its gross or net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which any Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by a Borrower
under Section 2.29(b)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.27(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to
Section 2.27(a).
11
"Existing Financing Agreement" means the Credit Agreement dated as of
June 29, 2001 among New England Audio Co., Inc. and NEA Delaware, Inc., as
Borrowers, Tweeter Home Entertainment Group, Inc., Tweeter Home Entertainment
Group Financing Trust Company, THEG USA, L.P., Tweeter of California, Inc., TWT
Acquisition Corp., The Video Scene Inc., as Guarantors, the Lenders party
thereto and Fleet National Bank, as Agent for the Lenders, as amended and in
effect.
"FLV" means, as to any Eligible Real Estate, the forced liquidation
value of such Eligible Real Estate determined in accordance with an independent
appraisal acceptable to the Administrative Agent, which appraisal shall assume,
among other things, a marketing time of not greater than six (6) months.
"FRF" means Fleet Retail Finance Inc., a Delaware corporation.
"FRF Concentration Account" shall have the meaning set forth in Section
2.22(c).
"FSI" means Fleet Securities, Inc., a Massachusetts corporation.
"Facility Guarantee" means the Guarantee executed by the Facility
Guarantors in favor of the Agents, the Issuing Bank and the Lenders.
"Facility Guarantors" means the Parent and each of its Subsidiaries,
now existing or hereafter created, other than Foreign Subsidiaries.
"Facility Guarantors Collateral Documents" means all security
agreements, mortgages, pledge agreements, deeds of trust, and other instruments,
documents or agreements executed and delivered by any Facility Guarantor to
secure the Facility Guarantee.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fee Letter" means the letter entitled "Fee Letter" among the Borrowers
and the Administrative Agent dated January 29, 2003, as such letter may from
time to time be amended.
"Financial Officer" means, with respect to any Borrower, the chief
financial officer, vice president of finance, director of finance, controller or
assistant controller of such Borrower.
"FIRREA" means The Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, and the rules and regulations adopted
pursuant thereto.
"Fixed Charge Coverage Ratio" means, as to the Parent and its
Subsidiaries, for any period, the ratio of (a) Consolidated EBITDA to (b) the
sum of (i) Capital Expenditures incurred during such period plus (ii) income
taxes paid in cash during such period, plus (iii) Consolidated Interest Expense
for such period, plus (iv) CMLTD during such period, plus (v) Restricted
12
Payments made in cash during such period, all as determined in accordance with
GAAP. The Fixed Charge Coverage Ratio shall be calculated (a) for each fiscal
month ending March, 2003 through and including August, 2003, on a cumulative
basis for the period from October, 2002 through the end of the month of such
calculation, and (b) thereafter, commencing with the fiscal month ending
September, 2003, on a trailing four quarters basis.
"Fleet" means Fleet National Bank, a national banking association.
"Fleet Disbursement Accounts" has the meaning provided therefor in
Section 2.22(f).
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or the
District of Columbia.
"Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"Fronting Fee" has the meaning assigned to such term in Section
2.13(b).
"Future Commitment" has the meaning therefor provided in Section 8.14.
"GAAP" means principles which are (a) consistent with those promulgated
or adopted by the Financial Accounting Standards Board and its predecessors (or
successors) in effect and applicable to that accounting period in respect of
which reference to GAAP is being made, and (b) consistently applied with past
financial statements of the Parent and its Subsidiaries adopting the same
principles.
"Gift Certificates and Merchandise Credit Liability" means, at any
time, the aggregate face value at such time of (a) outstanding gift certificates
and gift cards of the Borrowers entitling the holder thereof to use all or a
portion of the certificate to pay all or a portion of the purchase price for any
Inventory, and (b) outstanding merchandise credits of the Borrowers.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government, in each case having jurisdiction over one or more of the Loan
Parties.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty
13
issued to support such Indebtedness or obligation, provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.
"Hedging Agreement" means any interest rate protection agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, foreign currency exchange agreement, commodity price protection
agreement, or other interest or currency exchange rate or commodity price
hedging arrangement designed to hedge against fluctuations in interest rates or
foreign exchange rates.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money (including any obligations which
are without recourse to the credit of such Person) or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others (including, without limitation, under any Synthetic
Leases), (h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances, (k) all Hedging
Agreements, and (l) the principal and interest portions of all rental
obligations of such Person under any Synthetic Lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP. The Indebtedness of
any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning provided therefor in Section 9.03(b).
"Interest Payment Date" means (a) with respect to any Prime Rate Loan
(including a Swingline Loan), the first day of each calendar month, and (b) with
respect to any LIBO Loan, the first day of each calendar quarter and the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part.
14
"Interest Period" means, with respect to any LIBO Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Lead Borrower may elect by notice to the Administrative Agent
in accordance with the provisions of this Agreement, provided that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, and (b) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month during which such Interest Period ends) shall end on the last
Business Day of the calendar month of such Interest Period, (c) any Interest
Period which would otherwise end after the Termination Date shall end on the
Termination Date, and (d) notwithstanding the provisions of clause (c), no
Interest Period shall have a duration of less than one month, and if any
Interest Period applicable to a LIBO Borrowing would be for a shorter period,
such Interest Period shall not be available hereunder. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Inventory" has the meaning assigned to such term in the Security
Agreement.
"Inventory Advance Rate" means the following percentages for the
periods indicated:
PERIOD INVENTORY ADVANCE RATE
---------------------------------------------------
December 15 of each year 62.5%
through September 30 of
the following year
---------------------------------------------------
October 1 through 65%
December 14 of each year
---------------------------------------------------
"Inventory Reserves" means such reserves as may be established from
time to time by the Administrative Agent in the Administrative Agent's
reasonable discretion (after consultation with the Lead Borrower (whose consent
to any Inventory Reserve shall not be required)) with respect to the
determination of the saleability, at retail, of the Eligible Inventory or which
reflect such other factors as affect the market value of the Eligible Inventory
and are not already taken into consideration in the determination of Eligible
Inventory. Without limiting the generality of the foregoing, Inventory Reserves
may include (but are not limited to) reserves based on (i) obsolescence; (ii)
seasonality; (iii) Shrink; (iv) imbalance; (v) change in Inventory character;
(vi) change in Inventory composition; (vii) change in Inventory mix; (viii)
markdowns (both permanent and point of sale); (ix) retail markons and markups
inconsistent with prior period practice and performance; industry standards;
current business plans; or advertising calendar and planned advertising events.
Inventory Reserves shall be established and calculated in a manner and
methodology consistent with the Administrative Agent's practices as of the
Closing Date with other similarly situated borrowers.
"Investment" means (a) any stock, evidence of Indebtedness or other
security of another Person, (b) any loan, advance, contribution to capital,
extension of credit (except for current trade and customer accounts receivable
for inventory sold or services rendered in the ordinary course
15
of business and payable in accordance with customary trade terms) to another
Person, (c) any purchase of (i) stock or other securities of another Person, or
(ii) any business or undertaking of any Person (whether by purchase of assets or
securities), (d) any commitment or option to make any such purchase, or (e) any
other investment, in all cases whether now existing or hereafter made.
"Issuing Bank" means Fleet, in its capacity as the issuer of Letters of
Credit hereunder, and any successor to Fleet in such capacity (which may only be
a Lender selected by the Administrative Agent in its discretion and reasonably
satisfactory to the Lead Borrower). The Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term "Issuing Bank" shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.
"L/C Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"Lead Borrower" means New England Audio Co., Inc., a Massachusetts
corporation.
"Lease" means any agreement, whether written or oral, no matter how
styled or structured, pursuant to which a Borrower is entitled to the use or
occupancy of any space in a structure, land, improvements or premises for any
period of time.
"Lenders" shall mean the Persons identified on SCHEDULE 1.1 hereto and
each assignee that becomes a party to this Agreement as set forth in Section
9.05(b).
"Letter of Credit" shall mean a letter of credit that is (i) issued
pursuant to this Agreement for the account of any Borrower, (ii) a Standby
Letter of Credit or Commercial Letter of Credit, (iii) issued in connection with
the purchase of Inventory by any Borrower and for other purposes for which a
Borrower has historically obtained letters of credit, or for any other purpose
set forth in Section 5.12 hereof or that is reasonably acceptable to the
Administrative Agent, and (iv) in form and substance reasonably satisfactory to
the Issuing Bank. All letters of credit issued under the Existing Financing
Agreement and outstanding on the Closing Date shall be deemed to have been
issued hereunder and shall for all purposes be deemed to be "Letters of Credit"
hereunder.
"Letter of Credit Fees" shall mean the fees payable in respect of
Letters of Credit pursuant to Section 2.13.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (a)
with respect to Letters of Credit outstanding at such time, the aggregate
maximum amount that then is or at any time thereafter may become available for
drawing or payment thereunder plus (b) all amounts theretofore drawn or paid
under Letters of Credit for which the Issuing Bank has not then been reimbursed.
"LIBO Borrowing" shall mean a Borrowing comprised of LIBO Loans.
"LIBO Loan" shall mean any Loan bearing interest at a rate determined
by reference to the Adjusted LIBO Rate in accordance with the provisions of
Article II.
"LIBO Rate" means, with respect to any LIBO Borrowing for any Interest
Period, the rate per annum as determined on the basis of the offered rates for
deposits in dollars, for a period of
16
time comparable to such Interest Period which appears on the "Telerate Page
3750" as of 11:00 a.m. London time on the day that is two (2) Business Days
preceding the first day of such Interest Period; provided, however, if the rate
described above does not appear on the Telerate System on any applicable
interest determination date, the LIBO Rate shall be the rate (rounded upward, if
necessary, to the nearest 1/100 of 1%), determined on the basis of the offered
rates for deposits in dollars for a period of time comparable to such Interest
Period which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is two (2) Business Days
preceding the first day of such Interest Period as selected by Administrative
Agent. The principal London office of each of the four major London banks will
be requested to provide a quotation of its dollar deposit offered rate. If at
least two (2) such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations. If fewer than two (2) quotations are provided
as requested, the rate for that date will be determined on the basis of the
rates quoted for loans in dollars to leading European banks for a period of time
comparable to such Interest Period offered by major banks in New York City at
approximately 11:00 a.m. New York City time, on the day that is two (2) Business
Days preceding the first of such Interest Period. In the event that the
Administrative Agent is unable to obtain any such quotation as provided above,
it will be deemed that a LIBO Rate pursuant to a LIBO Borrowing cannot be
obtained.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Line Fee" means a fee equal to 0.375% per annum (on the basis of
actual days elapsed in a year of 360 days) of the average daily balance of the
difference between (x) each Lender's Commitment and (y) the sum of (i) such
Lender's Commitment Percentage of the principal amount of Revolving Loans then
outstanding, and (ii) such Lender's Commitment Percentage of the then Letter of
Credit Outstandings for each day commencing on the date hereof and ending on but
excluding the Termination Date.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit, the Fee Letter, all Borrowing Base Certificates, the Blocked Account
Agreements, the DDA Notifications, the Credit Card Notifications, the Security
Documents, the Facility Guarantee, and any other instrument or agreement now or
hereafter executed and delivered in connection herewith, or in connection with
any transaction which arising out of any cash management, depository,
investment, letter of credit, Hedging Agreement, equipment leasing or other
banking or financial services provided by the Administrative Agent, the
Collateral Agents or any of their respective Affiliates, each as amended and in
effect from time to time.
"Loan Party" or "Loan Parties" means the Borrowers and the Facility
Guarantors.
"Loans" shall mean all loans at any time made to the Borrowers or for
account of the Borrowers pursuant to this Agreement.
"Margin Stock" has the meaning assigned to such term in Regulation U.
17
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, assets, or condition, financial or otherwise, of
the Parent and its Subsidiaries taken as a whole, (b) the ability of the Loan
Parties to perform any material obligation or to pay any Obligations under this
Agreement or any of the other Loan Documents, or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or any of
the material rights or remedies of the Administrative Agent, the Collateral
Agents or the Lenders hereunder or thereunder. In determining whether any
individual event would result in a Material Adverse Effect, notwithstanding that
such event in and of itself does not have such effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event and all
other then existing events would result in a Material Adverse Effect.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of the Borrowers in an aggregate principal
amount exceeding $250,000. For purposes of determining the amount of Material
Indebtedness at any time, the "principal amount" of the obligations in respect
of any Hedging Agreement at such time shall be the maximum aggregate amount that
a Borrower would be required to pay if such Hedging Agreement were terminated at
that time.
"Maturity Date" means April 1, 2006.
"Maximum Rate" has the meaning provided therefor in Section 9.13.
"Minority Lenders" has the meaning provided therefor in Section
9.02(d).
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgages" means the Mortgages/Deeds of Trust, Security Agreements and
Assignments between the Borrower owning the Real Estate encumbered thereby and
the Collateral Agents for the benefit of the Secured Parties.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Parent or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within the preceding five
plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Parent
or any of its Subsidiaries or any ERISA Affiliate and at least one Person other
than the Parent, any Subsidiary or the ERISA Affiliate or (b) was so maintained
and in respect of which the Parent, any Subsidiary or any ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the event such plan has
been or were to be terminated.
"Net Proceeds" means, with respect to any event, (a) the cash proceeds
received in respect of such event, including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, in each case net of (b) the sum
of (i) all reasonable fees and out-of-pocket expenses (including appraisals, and
brokerage, legal, title and recording tax expenses and commissions) paid by any
Loan Party to third parties (other than Affiliates) in connection with such
event, and (ii) in the case of a sale or other disposition of an asset
(including pursuant to a casualty or condemnation), the amount of
18
all payments required to be made by any Loan Party as a result of such event to
repay (or to establish an escrow for the repayment of) Indebtedness (other than
Loans) which is secured by such asset and constitutes a Permitted Encumbrance
that is senior to the Lien of the Collateral Agents.
"Notes" shall mean (i) the promissory notes of the Borrowers
substantially in the form of Exhibit B-1, each payable to the order of a Lender,
evidencing the Revolving Loans, and (ii) the promissory note of the Borrowers
substantially in the form of Exhibit B-2, payable to the Swingline Lender,
evidencing the Swingline Loans.
"Obligations" means (a) the due and punctual payment by the Loan
Parties of (i) the principal of, and interest (including all interest that
accrues after the commencement of any case or proceeding by or against any Loan
Party under any federal or state bankruptcy, insolvency, receivership or similar
law, whether or not allowed in such case or proceeding) on, the Loans, when and
as due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by the Loan
Parties under the Credit Agreement in respect of any Letter of Credit, when and
as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise, of the Loan Parties
to the Secured Parties under the Credit Agreement and the other Loan Documents,
and (b) the due and punctual payment and performance of all the covenants,
agreements, obligations and liabilities of each Loan Party under or pursuant to
this Agreement, and the other Loan Documents, (c) any Hedging Agreements which
are permitted pursuant to Section 6.01(a)(vii) hereof, and (d) any transaction
with FRF or Fleet, or any of their respective Affiliates, which arises out of
any cash management, depository, investment, letter of credit, Hedging
Agreement, equipment leasing or other banking or financial services provided by
any such Person.
"Other Taxes" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Overadvance" means, at any time of calculation, a circumstance in
which the Credit Extensions exceed the lesser of (a) the Commitments or (b) the
Borrowing Base.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Parent" means Tweeter Home Entertainment Group, Inc., a Delaware
corporation.
"Payment Conditions" means, at the time of determination, that (a) no
Default or Event of Default then exists or would arise as a result of the making
of the subject payment, and (b) for the three months prior to, as of, and, on a
pro forma twelve months basis after giving effect to, the subject payment,
average Excess Availability shall be equal to or greater than $15,000,000.
"Perfection Certificate" means a certificate in the form of Annex 1 to
the Security Agreement or any other form approved by the Collateral Agents.
19
"Permitted Acquisition" means either (a) the acquisition of raw land or
developed real estate upon which a Borrower will construct or redevelop a store
or a distribution center or warehouse in support of the Loan Parties' business
which satisfies each of the following conditions:
(i) Prior to and after giving effect to the acquisition,
no Default or Event of Default will exist or will arise
therefrom; and
(ii) The aggregate cost for the acquisition of all such
land and the construction of all such improvements thereon
shall not exceed $20,000,000 in the aggregate after the
Closing Date; and
(iii) The applicable Borrower shall take such steps as are
necessary to grant to the Collateral Agents, for the benefit
of the Secured Parties, a legal, valid and enforceable first
priority Lien on the Real Estate (including the improvements)
which is the subject of the acquisition, subject to Permitted
Encumbrances, (A) if the cost of the acquisition is equal to
or greater than $2,000,000, or (B) if the Collateral Agents,
in their discretion, so requests provided that, in either
case, the Loan Parties shall not be required to furnish a
survey, an environmental site assessment, a mortgagee's title
insurance policy or other due diligence with respect to such
Real Estate, as such Real Estate shall not constitute Eligible
Real Estate hereunder;
or
(b) an Investment in, a purchase of stock in, a purchase of all or
a substantial part of the assets or properties of any Person, any exchange of
securities with any Person, any transaction, merger or consolidation or
acquisition of all or a substantial portion of the assets of any Person, or any
acquisition of any retail store locations of any Person (each of the foregoing
an "Acquisition") which satisfies each of the following conditions:
(i) The Acquisition is of a business permitted to be
conducted by the Borrowers pursuant to Section 6.03(b) hereof
and the Person to be acquired, or whose assets are to be
acquired, shall be a United States or Canadian company; and
(ii) Prior to and after giving effect to the Acquisition,
no Default or Event of Default will exist or will arise
therefrom; and
(iii) The Person making the Acquisition must be a Loan
Party or a Subsidiary which will become a Loan Party in
accordance with Section 5.13 hereof; and
(iv) If the Parent or its Subsidiary shall merge with such
other Person, such Parent or Subsidiary shall be the surviving
party of such merger; and
(v) If such Person becomes a Subsidiary of a Loan Party,
such Person shall become a Loan Party in accordance with
Section 5.13 hereof and the Loan Parties (including such
Person) shall take such steps as are necessary to grant to the
Collateral Agents, for the benefit of the Secured Parties, a
legal, valid and enforceable first priority security interest
in all of the assets (including capital
20
stock) acquired in connection with such acquisition, subject
to Permitted Encumbrances; and
(vi) For each of the ten (10) Business Days prior to, and
on a pro forma basis, after giving effect to such Acquisition,
for each of the ten (10) Business Days after, the Acquisition,
Excess Availability shall be at least $10,000,000; and
(vii) Such Acquisition shall have been approved by a
majority of the Board of Directors (or the equivalent
governing body) of the Person which is the subject of such
Acquisition and such Person shall not have announced that it
will oppose such Acquisition or shall not have commenced any
action which alleges that such Acquisition will violate
Applicable Law; and
(viii) The Administrative Agent shall be reasonably
satisfied that the Borrowers shall be in compliance with the
Fixed Charge Coverage Ratio set forth in Section 6.11 hereof
on a pro forma basis for the twelve months subsequent to, and
after giving effect to, the Acquisition.
(ix) Such Acquisition shall not have been consummated
until after the first anniversary of the Closing Date unless
the Administrative Agent shall have otherwise agreed in
writing.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due
or are being contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 60 days or are being contested in compliance with
Section 5.05;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under Section 7.01(k); and
(f) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations
and do not materially detract from the value of the affected property
or interfere with the ordinary conduct of business of the Borrowers or
any Subsidiary.
21
provided that, except as provided in any one or more of clauses (a) through (f)
above, the term "Permitted Encumbrances" shall not include any Lien securing
Indebtedness.
"Permitted Investments" means each of the following:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date
of acquisition thereof;
(b) Investments in commercial paper maturing within 270
days from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) Investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and demand
deposit and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the
United States of America or any State thereof that has a combined
capital and surplus and undivided profits of not less than
$500,000,000; and
(d) fully collateralized repurchase agreements with a
term of not more than 30 days for securities described in clause (a)
above (without regard to the limitation on maturity contained in such
clause) and entered into with a financial institution satisfying the
criteria described in clause (c) above or with any primary dealer.
provided that, notwithstanding the foregoing, no such Investments shall be
permitted unless (i) no Loans are then outstanding on the date such Investment
is made, and (b) such Investments are pledged to the Administrative Agent as
additional collateral for the Obligations pursuant to such agreements as may be
reasonably required by the Administrative Agent.
"Permitted Overadvance" means an Overadvance determined by the
Administrative Agent, in its reasonable discretion, (a) which is made to
maintain, protect or preserve the Collateral and/or the Lenders' rights under
the Loan Documents, or (b) which is otherwise in the Lenders' interests;
provided that Permitted Overadvances shall not (i) exceed five percent (5%) of
the then Borrowing Base in the aggregate outstanding at any time or (ii) remain
outstanding for more than thirty (30) consecutive Business Days, unless in case
of clause (ii), the Required Supermajority Lenders otherwise agree; and provided
further that the foregoing shall not (1) modify or abrogate any of the
provisions of Section 2.06(f) hereof regarding the Lender's obligations with
respect to L/C Disbursements, or (2) result in any claim or liability against
the Administrative Agent (regardless of the amount of any Overadvance) for
"inadvertent Overadvances" (i.e. where an Overadvance results from changed
circumstances beyond the control of the Administrative Agent (such as a
reduction in the collateral value)), and further provided that in no event shall
the Administrative Agent make an Overadvance, if after giving effect thereto,
the principal amount of the Credit Extensions would exceed the Commitments.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
22
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledge Agreement" means the Pledge Agreements dated as of April 16,
2003 among the Loan Parties and the Collateral Agents for the benefit of the
Secured Parties, as amended and in effect from time to time.
"Prime Rate" shall mean, for any day, the higher of (a) the variable
annual rate of interest then most recently announced by Fleet at its head office
in Boston, Massachusetts as its "Prime Rate" and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1% (0.50%) per annum. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate being
charged to any customer. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations thereof in accordance with the terms hereof, the Prime
Rate shall be determined without regard to clause (b) of the first sentence of
this definition, until the circumstances giving rise to such inability no longer
exist. Any change in the Prime Rate due to a change in Fleet's Prime Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in Fleet's Prime Rate or the Federal Funds Effective Rate, respectively.
"Prime Rate Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Prime Rate in accordance with the provisions of
Article II.
"Real Estate" means all land, together with the buildings, structures,
parking areas, and other improvements thereon, now or hereafter owned by any
Loan Party, including all easements, rights-of-way, and similar rights relating
thereto and all leases, tenancies, and occupancies thereof.
"Realty Reserves" means such reserves as the Administrative Agent from
time to time determines in the Administrative Agent's reasonable discretion in
good faith (after consultation with the Lead Borrower (whose consent to any
Realty Reserve shall not be required)) as being appropriate to reflect the
impediments to the Agents' ability to realize upon any Eligible Real Estate.
Without limiting the generality of the foregoing, Realty Reserves may include
(but are not limited to) reserves for (i) environmental remediation, (ii)
municipal taxes and assessments, (iii) repairs and (iv) remediation of title
defects. Realty Reserves shall be established and calculated in a manner and
methodology consistent with the Administrative Agent's practices as of the
Closing Date with other similarly situated borrowers.
"Receivables Advance Rate" means 85%.
"Register" has the meaning set forth in Section 9.05(c).
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
23
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" has the meaning set forth in Section 101(22) of CERCLA.
"Required Lenders" shall mean, at any time, Lenders having Commitments
at least equal to 51% of the Total Commitments, or if the Commitments have been
terminated, Lenders whose percentage of the outstanding Obligations (after
settlement and repayment of all Swingline Loans by the Lenders) aggregate not
less than 51% of all such Obligations.
"Required Supermajority Lenders" shall mean, at any time, Lenders
having Commitments outstanding representing at least 66 2/3% of the Total
Commitments outstanding or if the Commitments have been terminated, Lenders
whose percentage of the outstanding Obligations (after settlement and repayment
of all Swingline Loans by the Lenders) aggregate not less than 66 2/3% of all
such Obligations.
"Reserves" means all (if any) Realty Reserves, Inventory Reserves, and
Availability Reserves.
"Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of any Loan Party or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of any Loan
Party or any Subsidiary or any option, warrant or other right to acquire any
such shares of capital stock of any Loan Party or any Subsidiary. Without
limiting the foregoing, "Restricted Payments" with respect to any Person shall
also include all payments made by such Person with respect to any stock
appreciation rights, plans, equity incentive or achievement plans or any similar
plans and all proceeds of a dissolution or liquidation of such Person.
"Revolving Loans" means all Loans at any time made by a Lender pursuant
to Section 2.01.
"S&P" means Standard & Poor's.
"SEC" means the Securities and Exchange Commission.
"Secured Parties" has the meaning assigned to such term in the Security
Agreement.
"Security Agreement" means the Security Agreement dated as of April 16,
2003 among the Loan Parties and the Collateral Agents for the benefit of the
Secured Parties, as amended and in effect from time to time.
"Security Documents" means the Security Agreement, the Pledge
Agreement, the Mortgages, the Facility Guarantors Collateral Documents, and each
other security agreement or other instrument or document executed and delivered
pursuant to Section 5.13 to secure any of the Obligations.
24
"Service Center Inventory" means Inventory which is damaged or
defective and is in the process of being repaired or is designated as Location
#75 in the Borrowers' stock ledger.
"Settlement Date" has the meaning provided in Section 2.07(b) hereof.
"Shrink" means Inventory which has been lost, misplaced, stolen, or is
otherwise unaccounted for.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Parent
or any of its Subsidiaries or any ERISA Affiliate and no Person other than the
Parent, its Subsidiaries or the ERISA Affiliate or (b) was so maintained and in
respect of which the Parent, any Subsidiary or any ERISA Affiliate could have
liability under Section 4069 of ERISA in the event such plan has been or were to
be terminated.
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in a business or a transaction, and is not about to engage in a business or
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged.
"Standby Letter of Credit" means any Letter of Credit other than a
Commercial Letter of Credit.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D. LIBO
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's Consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than
25
50% of the general partnership interests are, as of such date, owned, controlled
or held, or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Swingline Lender" means FRF, in its capacity as lender of Swingline
Loans hereunder.
"Swingline Loan" shall mean a Loan made by the Swingline Lender to the
Borrowers pursuant to Section 2.05 hereof.
"Synthetic Lease" means any lease or other agreement for the use or
possession of property creating obligations which do not appear as Indebtedness
on the balance sheet of the lessee thereunder but which, upon the insolvency or
bankruptcy of such Person, may be characterized as Indebtedness of such lessee
without regard to the accounting treatment.
"Taxes" means any and all current or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Termination Date" shall mean the earliest to occur of (i) the Maturity
Date, or (ii) the date on which the maturity of the Loans are accelerated and
the Commitments are terminated, or (iii) the date of the occurrence of any Event
of Default pursuant to Section 7.01(h) or 7.01(i) hereof.
"Tivoli" shall mean Tivoli Audio LLC, a Delaware limited liability
company.
"Tivoli Agreement" shall mean the Amended and Restated Limited
Liability Company Agreement dated as of February 15, 2001 among Xxx XxXxxxx,
Xxxxx Xxxxx and the Parent, as in effect on the Closing Date.
"Total Commitment" shall mean, at any time, the sum of the Commitments
at such time. As of the Closing Date, the Total Commitments aggregate
$110,000,000.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Prime
Rate.
"Unused Commitment" shall mean, on any day, (a) the then Total
Commitments minus (b) the sum of (i) the principal amount of Loans then
outstanding (including the principal amount of Swingline Loans then outstanding)
and (ii) the then Letter of Credit Outstandings.
"Voting Stock" means, with respect to any corporation, the outstanding
stock of all classes (or equivalent interests) which ordinarily, in the absence
of contingencies, entitles holders thereof to vote for the election of directors
(or Persons performing similar functions) of such corporation, even though the
right so to vote has been suspended by the happening of such contingency.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
26
SECTION 1.02 Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.03 Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect on the Closing Date, provided
that, if the Borrowers notify the Administrative Agent that the Borrowers
request an amendment to any provision hereof to reflect the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrowers that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such provision shall have
been amended in accordance herewith.
ARTICLE II
Amount and Terms of Credit
SECTION 2.01 Commitment of the Lenders.
(a) Each Lender severally and not jointly with any other Lender,
agrees, upon the terms and subject to the conditions herein set forth, to extend
credit to the Borrowers on a revolving basis, in the form of Revolving Loans and
Letters of Credit and in an amount not to exceed the lesser of such Lender's
Commitment or such Lender's Commitment Percentage of the Borrowing Base, subject
to the following limitations:
(i) The aggregate outstanding amount of the Credit
Extensions and Swingline Loans shall not at any time exceed
the lower of (i) $110,000,000 or, in each case, any lesser
amount to which the Commitments have then been reduced by the
Borrowers pursuant to Section 2.16, and (ii) the then amount
of the Borrowing Base.
(ii) No Lender shall be obligated to issue any Letter
of Credit, and Letters of Credit shall be available from the
Issuing Bank, subject to the ratable participation of all
Lenders, as set forth in Section 2.06. The Borrowers will not
at
27
any time permit the aggregate Letter of Credit Outstandings to
exceed $15,000,000.
(iii) Subject to all of the other provisions of this
Agreement, Revolving Loans that are repaid may be reborrowed
prior to the Termination Date. No new Credit Extension,
however, shall be made to the Borrowers after the Termination
Date.
(b) Each Borrowing of Revolving Loans (other than Swingline Loans)
shall be made by the Lenders pro rata in accordance with their respective
Commitment Percentages. The failure of any Lender to make any Loan shall neither
relieve any other Lender of its obligation to fund its Loan in accordance with
the provisions of this Agreement nor increase the obligation of any such other
Lender.
SECTION 2.02 Reserves; Changes to Reserves.
(a) The initial Reserves as of the date of this Agreement are the
following:
(i) Service Center Inventory (an Inventory Reserve):
In an amount equal to the Cost of the Borrowers' Service
Center Inventory.
(ii) Reserve for rents (an Availability Reserve): In
an amount equal to two months rent for all locations in
Pennsylvania and Virginia as to which a landlord's waiver
reasonably satisfactory to the Collateral Agents has not been
delivered.
(iii) Gift Certificate and Merchandise Credit
Liability (an Availability Reserve): In an amount equal to 65%
of the outstanding amount thereof from time to time.
(iv) Excess Availability (an Availability Reserve):
In an amount equal to Five Million Dollars ($5,000,000.00).
(v) Shrink (an Inventory Reserve): The amount of
Shrink posted from time to time in the Borrowers' stock ledger
plus an amount equal to one-half of one percent (0.50%) of the
gross sales of the Borrowers since the date of the Borrowers'
last physical inventory.
(vi) Customer deposit and layaway liabilities (an
Availability Reserve): In an amount equal to 65% of the
outstanding amount thereof from time to time.
(b) The Administrative Agent may hereafter establish additional
Reserves or change any of the foregoing Reserves, in the exercise of the
reasonable judgment of the Administrative Agent, after furnishing five (5) days
prior notice to the Lead Borrower and subject to any other limitations contained
in the respective definitions of Availability Reserves, Inventory Reserves and
Realty Reserves; provided, however, that in no event shall the Administrative
Agent establish new Reserves in any fifteen (15) calendar day period in an
aggregate amount in excess of ten percent (10%) of the Borrowing Base (as set
forth in the most recent Borrowing Base Certificate delivered to the
Administrative Agent under Section 5.01(f) of this Agreement), and provided
further, that in no event shall the Administrative Agent increase the initial
Excess
28
Availability Reserve described in Section 2.02(a)(iv) above in an amount in
excess of ten percent (10%) of the Borrowing Base (as set forth in the most
recent Borrowing Base Certificate delivered to the Administrative Agent under
Section 5.01(f) of this Agreement).
(c) The initial Excess Availability Reserve described in Section
2.02(a)(iv) above shall be eliminated in the event that the Loan Parties achieve
and maintain a Fixed Charge Coverage Ratio at least equal to 1.00:1.00 for three
(3) consecutive fiscal months. Nothing contained herein shall limit the
Administrative Agent from reinstituting an Excess Availability Reserve in the
event that the Fixed Charge Coverage Ratio is thereafter less than 1.00:1.00,
subject, however, to the other limitations of Section 2.02(b).
SECTION 2.03 Making of Loans.
(a) Except as set forth in Sections 2.17 and 2.25, Loans (other
than Swingline Loans) by the Lenders shall be either Prime Rate Loans or LIBO
Loans as the Lead Borrower on behalf of the Borrowers may request subject to and
in accordance with this Section 2.03, provided that all Swingline Loans shall be
only Prime Rate Loans. All Loans made pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, be Loans of the same Type. Each
Lender may fulfill its Commitment with respect to any Loan by causing any
lending office of such Lender to make such Loan; but any such use of a lending
office shall not affect the obligation of the Borrowers to repay such Loan in
accordance with the terms of the applicable Note. Each Lender shall, subject to
its overall policy considerations, use reasonable efforts (but shall not be
obligated) to select a lending office which will not result in the payment of
increased costs by the Borrowers pursuant to Section 2.24. Subject to the other
provisions of this Section 2.03 and the provisions of Section 2.25, Borrowings
of Loans of more than one Type may be incurred at the same time, but no more
than six (6) Borrowings of LIBO Loans may be outstanding at any time.
(b) The Lead Borrower shall give the Administrative Agent three
Business Days' prior telephonic notice (thereafter confirmed in writing) of each
Borrowing of LIBO Loans and notice of each Borrowing of Prime Rate Loans on the
proposed day of each Borrowing. Any such notice, to be effective, must be
received by the Administrative Agent not later than 11:00 a.m., Boston time, on
the third Business Day in the case of LIBO Loans prior to the date on which, and
on the Business Day in the case of Prime Rate Loans that, such Borrowing is to
be made. Such notice shall be irrevocable and shall specify the amount of the
proposed Borrowing (which shall be in an integral multiple of $500,000, but not
less than $1,000,000 in the case of LIBO Loans and not less than $100,000 in the
case of Prime Rate Loans) and the date thereof (which shall be a Business Day)
and shall contain disbursement instructions. Such notice shall specify whether
the Borrowing then being requested is to be a Borrowing of Prime Rate Loans or
LIBO Loans and, if LIBO Loans, the Interest Period with respect thereto. If no
election of Interest Period is specified in any such notice for a Borrowing of
LIBO Loans, such notice shall be deemed a request for an Interest Period of one
month. If no election is made as to the Type of Loan, such notice shall be
deemed a request for Borrowing of Prime Rate Loans. The Administrative Agent
shall promptly notify each Lender of its proportionate share of such Borrowing,
the date of such Borrowing, the Type of Borrowing being requested and the
Interest Period or Interest Periods applicable thereto, as appropriate. On the
borrowing date specified in such notice, each Lender shall make its share of the
Borrowing available at the office of the Administrative Agent at 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, no later than 1:00 p.m., Boston time, in
immediately available funds. Unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such
Lender will not make available to
29
the Administrative Agent such Lender's share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with this Section and may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrowers severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrowers to but excluding the
date of payment to the Administrative Agent, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrowers, the interest rate applicable
to Prime Rate Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing. Upon receipt of the funds made available by the Lenders to fund any
Borrowing hereunder, the Administrative Agent shall disburse such funds into a
Fleet Disbursement Account or otherwise in the manner specified in the notice of
borrowing delivered by the Lead Borrower and shall use reasonable efforts to
make the funds so received from the Lenders available to the Borrowers no later
than 4:00 p.m., Boston time.
(c) The Agent, without the request of the Lead Borrower, may
advance any interest, fee, service charge, or other payment to which any Agent
or their Affiliates or any Lender is entitled from any Borrower pursuant hereto
or any other Loan Document and may charge the same to the Loan Account
notwithstanding that an Overadvance may result thereby. The Administrative Agent
shall advise the Lead Borrower of any such advance or charge promptly after the
making thereof and will endeavor, but not be obligated, to furnish one Business
Day's notice prior to making any such advance or charge. Such action on the part
of the Administrative Agent shall not constitute a waiver of the Administrative
Agent's rights and each Borrower's obligations under Section 2.19(a). Any amount
which is added to the principal balance of the Loan Account as provided in this
Section 2.03(c) shall bear interest at the interest rate then and thereafter
applicable to Prime Rate Loans.
SECTION 2.04 Overadvances. The Agents and the Lenders have no
obligation to make any Loan or to provide any Letter of Credit if an Overadvance
would result. The Administrative Agent may, in its discretion, make Permitted
Overadvances without the Consent of the Lenders and each Lender shall be bound
thereby. Any Permitted Overadvances may constitute Swingline Loans. The making
of any Permitted Overadvance is for the benefit of the Borrowers; such Permitted
Overadvances constitute Revolving Loans and Obligations. The making of any such
Permitted Overadvances on any one occasion shall not obligate the Administrative
Agent or any Lender to make or permit any Permitted Overadvances on any other
occasion or to permit such Permitted Overadvances to remain outstanding.
SECTION 2.05 Swingline Loans.
(a) The Swingline Lender is authorized by the Lenders, but is not
obligated, to make Swingline Loans up to (i) $10,000,000 plus (ii) the Permitted
Overadvance, in the aggregate outstanding at any time, consisting only of Prime
Rate Loans, upon a notice of Borrowing received by the Administrative Agent and
the Swingline Lender (which notice, at the Swingline Lender's discretion, may be
submitted prior to 1:00 p.m., Boston time, on the Business Day on which such
Swingline Loan is requested). Swingline Loans shall be subject to periodic
settlement with the Lenders under Section 2.07 below.
30
(b) Swingline Loans may be made only in the following
circumstances: (A) for administrative convenience, the Swingline Lender may, but
is not obligated to, make Swingline Loans in reliance upon the Borrowers' actual
or deemed representations under Section 4.02, that the applicable conditions for
borrowing are satisfied or (B) for Permitted Overadvances. If the conditions for
borrowing under Section 4.02 cannot be fulfilled, the Required Lenders may
direct the Swingline Lender to, and the Swingline Lender thereupon shall, cease
making Swingline Loans (other than Permitted Overadvances) until such conditions
can be satisfied or are waived in accordance with Section 9.02 hereof. Unless
the Required Lenders so direct the Swingline Lender, the Swingline Lender may,
but is not obligated to, continue to make Swingline Loans notwithstanding that
the conditions for borrowing under Section 4.02 cannot be fulfilled. No
Swingline Loans shall be made pursuant to this subsection (b) (other than
Permitted Overadvances) if the aggregate outstanding amount of the Credit
Extensions and Swingline Loans would exceed the lower of (i) $110,000,000 or any
lesser amount to which the Commitments have then been reduced by the Borrowers
pursuant to Section 2.16, and (ii) the then amount of the Borrowing Base.
SECTION 2.06 Letters of Credit.
(a) Upon the terms and subject to the conditions herein set forth,
the Lead Borrower on behalf of the Borrowers may request the Issuing Bank, at
any time and from time to time after the date hereof and prior to the
Termination Date, to issue, and subject to the terms and conditions contained
herein, the Issuing Bank shall issue, for the account of the Borrowers one or
more Letters of Credit; provided that no Letter of Credit shall be issued if
after giving effect to such issuance (i) the aggregate Letter of Credit
Outstandings shall exceed $15,000,000, or (ii) the aggregate Credit Extensions
(including Swingline Loans) would exceed the limitation set forth in Section
2.01(a)(i); and provided, further, that no Letter of Credit shall be issued if
the Issuing Bank shall have received notice from the Administrative Agent or the
Required Lenders that the conditions to such issuance have not been met.
(b) Each Standby Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date, provided that each Standby Letter
of Credit may, upon the request of the Lead Borrower, include a provision
whereby such Letter of Credit shall be renewed automatically for additional
consecutive periods of 12 months or less (but not beyond the date that is five
Business Days prior to the Maturity Date) unless the Issuing Bank notifies the
beneficiary thereof at least 30 days prior to the then-applicable expiration
date that such Letter of Credit will not be renewed.
(c) Each Commercial Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date 120 days after the date of
the issuance of such Commercial Letter of Credit and (ii) the date that is five
Business Days prior to the Maturity Date.
(d) Drafts drawn under each Letter of Credit shall be reimbursed
by the Borrowers in dollars by paying to the Administrative Agent an amount
equal to such drawing not later than 12:00 noon, Boston time, on (i) the date
that the Borrowers shall have received notice of such drawing, if such notice is
received prior to 10:00 a.m., Boston time, on such date, or (ii) the Business
Day immediately following the day that the Borrowers receive such notice, if
such notice is received after 10:00 a.m., Boston time on the day of drawing,
provided that the Lead
31
Borrower may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 that such payment be financed with a Revolving
Loan consisting of a Prime Rate Loan or Swingline Loan in an equivalent amount
and, to the extent so financed, the Borrowers' obligation to make such payment
shall be discharged and replaced by the resulting Prime Rate Loan or Swingline
Loan. The Issuing Bank shall, promptly following its receipt thereof, examine
all documents purporting to represent a demand for payment under a Letter of
Credit. The Issuing Bank shall promptly notify the Administrative Agent and the
Borrowers by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make payment thereunder, provided that
any failure to give or delay in giving such notice shall not relieve the
Borrowers of their obligation to reimburse the Issuing Bank and the Lenders with
respect to any such payment.
(e) If the Issuing Bank shall make any L/C Disbursement, then,
unless the Borrowers shall reimburse the Issuing Bank in full on the date such
payment is made, the unpaid amount thereof shall bear interest, for each day
from and including the date such payment is made to but excluding the date that
the Borrowers reimburse the Issuing Bank therefor, at the rate per annum then
applicable to Prime Rate Loans, provided that, if the Borrowers fail to
reimburse such Issuing Bank when due pursuant to paragraph (d) of this Section,
then Section 2.10 shall apply. Interest accrued pursuant to this paragraph shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to paragraph (g) of this
Section to reimburse the Issuing Bank shall be for the account of such Lender to
the extent of such payment.
(f) Immediately upon the issuance of any Letter of Credit by the
Issuing Bank (or the amendment of a Letter of Credit increasing the amount
thereof), and without any further action on the part of the Issuing Bank, the
Issuing Bank shall be deemed to have sold to each Lender, and each such Lender
shall be deemed unconditionally and irrevocably to have purchased from the
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Commitment Percentage, in such
Letter of Credit, each drawing thereunder and the obligations of the Borrowers
under this Agreement and the other Loan Documents with respect thereto. Upon any
change in the Commitments pursuant to Section 9.05, it is hereby agreed that
with respect to all Letter of Credit Outstandings, there shall be an automatic
adjustment to the participations hereby created to reflect the new Commitment
Percentages of the assigning and assignee Lenders. Any action taken or omitted
by the Issuing Bank under or in connection with a Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
create for the Issuing Bank any resulting liability to any Lender.
(g) In the event that the Issuing Bank makes any L/C Disbursement
and the Borrowers shall not have reimbursed such amount in full to the Issuing
Bank pursuant to this Section 2.06, the Issuing Bank shall promptly notify the
Administrative Agent, which shall promptly notify each Lender of such failure,
and each Lender shall promptly and unconditionally pay to the Administrative
Agent for the account of the Issuing Bank the amount of such Lender's Commitment
Percentage of such unreimbursed payment in dollars and in same day funds. If the
Issuing Bank so notifies the Administrative Agent, and the Administrative Agent
so notifies the Lenders prior to 11:00 a.m., Boston time, on any Business Day,
each such Lender shall make available to the Issuing Bank such Lender's
Commitment Percentage of the amount of such payment on such Business Day in same
day funds (or if such notice is received by the Lenders after 11:00 a.m., Boston
time on the day of receipt, payment shall be made on the immediately following
Business Day). If and to the extent such Lender shall not have so made its
32
Commitment Percentage of the amount of such payment available to the Issuing
Bank, such Lender agrees to pay to the Issuing Bank, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Administrative Agent for the account of the
Issuing Bank at the Federal Funds Effective Rate. Each Lender agrees to fund its
Commitment Percentage of such unreimbursed payment notwithstanding a failure to
satisfy any applicable lending conditions or the provisions of Sections 2.01 or
2.06, or the occurrence of the Termination Date. The failure of any Lender to
make available to the Issuing Bank its Commitment Percentage of any payment
under any Letter of Credit shall neither relieve any Lender of its obligation
hereunder to make available to the Issuing Bank its Commitment Percentage of any
payment under any Letter of Credit on the date required, as specified above, nor
increase the obligation of such other Lender. Whenever any Lender has made
payments to the Issuing Bank in respect of any reimbursement obligation for any
Letter of Credit, such Lender shall be entitled to share ratably, based on its
Commitment Percentage, in all payments and collections thereafter received on
account of such reimbursement obligation.
(h) Whenever the Borrowers desire that the Issuing Bank issue a
Letter of Credit (or the amendment, renewal or extension of an outstanding
Letter of Credit), the Lead Borrower shall give to the Issuing Bank and the
Administrative Agent at least two Business Days' prior written (including
telegraphic, telex, facsimile or cable communication) notice (or such shorter
period as may be agreed upon in writing by the Issuing Bank and the Lead
Borrower) specifying the date on which the proposed Letter of Credit is to be
issued, amended, renewed or extended (which shall be a Business Day), the stated
amount of the Letter of Credit so requested, the expiration date of such Letter
of Credit, the name and address of the beneficiary thereof, and the provisions
thereof. If requested by the Issuing Bank, the Borrowers shall also submit a
letter of credit application on the Issuing Bank's standard form in connection
with any request for the issuance, amendment, renewal or extension of a Letter
of Credit.
(i) The obligations of the Borrowers to reimburse the Issuing Bank
for any L/C Disbursement shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, setoff,
defense or other right which the Borrowers may have at any time against a
beneficiary of any Letter of Credit or against the Issuing Bank or any of the
Lenders, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction; (iii) any draft, demand,
certificate or other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; (iv) payment by the Issuing
Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; (v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, the Borrowers' obligations hereunder; or (vi) the fact that any
Event of Default shall have occurred and be continuing. None of the
Administrative Agent, the Lenders, the Issuing Bank or any of their Affiliates
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the
33
control of the Issuing Bank, provided that the foregoing provisions of this
subparagraph (i) shall not be construed to excuse the Issuing Bank from
liability to the Borrowers to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrowers to the extent permitted by Applicable Law) suffered by the Borrowers
that are caused by the Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall
be deemed to have exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented that appear on their face to be in
compliance with the terms of a Letter of Credit, the Issuing Bank may, in its
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(j) If any Event of Default shall occur and be continuing, on the
Business Day that the Borrowers receive notice from the Administrative Agent or
the Required Lenders demanding the deposit of cash collateral pursuant to this
paragraph, the Borrowers shall deposit in the Cash Collateral Account an amount
in cash equal to 105% of the Letter of Credit Outstandings as of such date plus
any accrued and unpaid interest thereon. Each such deposit shall be held by the
Collateral Agents as collateral for the payment and performance of the
Obligations of the Borrowers under this Agreement. The Collateral Agents shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such Cash Collateral Account. Other than any interest earned on
the investment of such deposits, which investments shall be made at the option
and sole discretion of the Collateral Agents at the request of the Borrowers and
at the Borrowers' risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such Cash Collateral Account shall be applied by the
Collateral Agents to reimburse the Issuing Bank for payments on account of
drawings under Letters of Credit for which it has not been reimbursed and, to
the extent not so applied, shall be held first for the satisfaction of the
reimbursement obligations of the Borrowers for the Letter of Credit Outstandings
at such time and thereafter be applied to satisfy other Obligations of the
Borrowers under this Agreement.
SECTION 2.07 Settlements Amongst Lenders
(a) The Swingline Lender may (but shall not be obligated to), at
any time, on behalf of the Borrowers (which hereby authorize the Swingline
Lender to act on their behalf in that regard) request the Administrative Agent
to cause the Lenders to make a Revolving Loan (which shall be a Prime Rate Loan)
in an amount equal to such Lender's Commitment Percentage of the outstanding
amount of Swingline Loans made in accordance with Section 2.05, which request
may be made regardless of whether the conditions set forth in Article IV have
been satisfied. Upon such request, each Lender shall make available to the
Administrative Agent the proceeds of such Revolving Loan for the account of the
Swingline Lender. If the Swingline Lender requires a Revolving Loan to be made
by the Lenders and the request therefor is received prior to 12:00 Noon, Boston
time, on a Business Day, such transfers shall be made in immediately available
funds no later than 3:00 p.m., Boston time, that day; and, if the request
therefor is received after 12:00 Noon, Boston time, then no later than 3:00
p.m., Boston time, on the next Business Day. The obligation of each Lender to
transfer such funds is irrevocable, unconditional and without recourse to or
warranty by the Administrative Agent or the Swingline Lender. If and to the
extent
34
any Lender shall not have so made its transfer to the Administrative Agent, such
Lender agrees to pay to the Administrative Agent, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Administrative Agent at the Federal Funds
Effective Rate.
(b) The amount of each Lender's Commitment Percentage of
outstanding Revolving Loans (excluding Swingline Loans) shall be computed weekly
(or more frequently in the Administrative Agent's discretion) and shall be
adjusted upward or downward based on all Revolving Loans (excluding Swingline
Loans) and repayments of Revolving Loans (excluding Swingline Loans) received by
the Administrative Agent as of 3:00 p.m., Boston time, on the first Business Day
following the end of the period specified by the Administrative Agent (such
date, the "Settlement Date").
(c) The Administrative Agent shall deliver to each of the Lenders
promptly after the Settlement Date a summary statement of the amount of
outstanding Revolving Loans (excluding Swingline Loans) for the period and the
amount of repayments received for the period. As reflected on the summary
statement, each Lender shall transfer to the Administrative Agent (as provided
below), or the Administrative Agent shall transfer to each Lender, such amounts
as are necessary to insure that, after giving effect to all such transfers, the
amount of Revolving Loans made by each Lender with respect to Revolving Loans
(excluding Swingline Loans) shall be equal to such Lender's applicable
Commitment Percentage of Revolving Loans (excluding Swingline Loans) outstanding
as of such Settlement Date. If the summary statement requires transfers to be
made to the Administrative Agent by the Lenders and is received prior to 12:00
Noon, Boston time, on a Business Day, such transfers shall be made in
immediately available funds no later than 3:00 p.m., Boston time, that day; and,
if received after 12:00 Noon, Boston time, then no later than 3:00 p.m., Boston
time, on the next Business Day. The obligation of each Lender to transfer such
funds is irrevocable, unconditional and without recourse to or warranty by the
Administrative Agent. If and to the extent any Lender shall not have so made its
transfer to the Administrative Agent, such Lender agrees to pay to the
Administrative Agent, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Administrative Agent at the Federal Funds Effective Rate.
SECTION 2.08 Notes; Repayment of Loans.
(a) The Loans made by each Lender (and to the Swingline Lender,
with respect to Swingline Loans) shall be evidenced by a Note duly executed on
behalf of the Borrowers, dated the Closing Date, in substantially the form
attached hereto as Exhibit B-1 or B-2, as applicable, payable to the order of
each such Lender (or the Swingline Lender, as applicable) in an aggregate
principal amount equal to such Lender's Commitment (or, in the case of the Note
evidencing the Swingline Loans, $10,000,000).
(b) The outstanding principal balance of all Swingline Loans shall
be repaid on the earlier of the Termination Date or, on the date otherwise
requested by the Swingline Lender in accordance with the provisions of Section
2.07(a). The outstanding principal balance of all other Obligations shall be
payable on the Termination Date (subject to earlier repayment as provided
below). Each Note shall bear interest from the date thereof on the outstanding
principal balance thereof as set forth in this Article II. Each Lender is hereby
authorized by the Borrowers to endorse on a schedule attached to each Note
delivered to such Lender (or on a continuation of such schedule attached to such
Note and made a part thereof), or otherwise to record in such Lender's internal
records, an appropriate notation evidencing the date and amount of each Loan
35
from such Lender, each payment and prepayment of principal of any such Loan,
each payment of interest on any such Loan and the other information provided for
on such schedule; provided, however, that the failure of any Lender to make such
a notation or any error therein shall not affect the obligation of the Borrowers
to repay the Loans made by such Lender in accordance with the terms of this
Agreement and the applicable Notes.
(c) Upon receipt of an affidavit of a Lender as to the loss,
theft, destruction or mutilation of such Lender's Note (which affidavit shall
include an indemnity in favor of the Borrowers) and upon cancellation of such
Note, The Borrowers will issue, in lieu thereof, a replacement Note in favor of
such Lender, in the same principal amount thereof and otherwise of like tenor.
SECTION 2.09 Interest on Loans.
(a) Subject to Section 2.10, each Prime Rate Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as applicable) at a rate per annum that shall be equal to
the then Prime Rate, plus the Applicable Margin for Prime Rate Loans.
(b) Subject to Section 2.10, each LIBO Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal, during each Interest Period applicable thereto,
to the Adjusted LIBO Rate for such Interest Period, plus the Applicable Margin
for LIBO Loans.
(c) Accrued interest on all Loans shall be payable in arrears on
each Interest Payment Date applicable thereto, at maturity (whether by
acceleration or otherwise), after such maturity on demand and (with respect to
LIBO Loans) upon any repayment or prepayment thereof (on the amount prepaid).
SECTION 2.10 Default Interest.
Effective upon the occurrence of any Event of Default and at all times
thereafter while such Event of Default is continuing, at the option of the
Administrative Agent or upon the direction of the Required Lenders, interest
shall accrue on all outstanding Loans (including Swingline Loans) (after as well
as before judgment, as and to the extent permitted by law) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the rate (including the Applicable Margin for Loans) in effect
from time to time plus 3.00% per annum, and such interest shall be payable on
demand.
SECTION 2.11 Certain Fees.
The Borrowers shall pay to the Administrative Agent, for the account of
the Administrative Agent, the fees set forth in the Fee Letter as and when
payment of such fees is due as therein set forth.
SECTION 2.12 Unused Commitment Fee.
Each Lender shall be paid the Line Fee at the times and in the manner
set forth below. The Borrowers shall pay to the Administrative Agent for the
account of the Lenders, a commitment fee (the "Commitment Fee") equal to 0.375%
per annum (on the basis of actual
36
days elapsed in a year of 360 days) of the average daily balance of the Unused
Commitment for each day commencing on and including the Closing Date and ending
on but excluding the Termination Date. The Commitment Fee so accrued in any
calendar quarter shall be payable on the first Business Day of the immediately
succeeding calendar quarter, except that all Commitment Fees so accrued as of
the Termination Date shall be payable on the Termination Date. If the Commitment
Fee actually paid by the Borrowers is insufficient to pay the Line Fee due the
Lenders, the deficiency shall be paid to the Lenders by the Swingline Lender
from its own funds (and the Borrowers shall have no liability with respect
thereto). The Administrative Agent shall pay the Commitment Fee (and any amounts
payable by the Swingline Lender hereunder) to the Lenders based upon their
Commitment Percentage of the aggregate Line Fee due to all Lenders; provided
that for purposes of calculating the share of any Person which is both the
Swingline Lender and a Lender, such Person's share shall be equal to the
difference between (i) such Person's Commitment, and (ii) the sum of (A) such
Person's Commitment Percentage of the principal amount of Revolving Loans then
outstanding (including the principal amount of Swingline Loans then
outstanding), and (B) such Person's Commitment Percentage of the then Letter of
Credit Outstandings.
SECTION 2.13 Letter of Credit Fees.
(a) The Borrowers shall pay the Administrative Agent, for the
account of the Lenders, on the first day of each calendar quarter, in arrears, a
fee (each, a "Letter of Credit Fee") equal to the following per annum
percentages of the average face amount of the following categories of Letters of
Credit outstanding during the subject quarter:
(i) Standby Letters of Credit: At a per annum
rate equal to the then Applicable Margin for LIBO Loans.
(ii) Commercial Letters of Credit: At a per annum
rate equal to the then Applicable Margin for LIBO Loans minus
0.50%.
(iii) After the occurrence and during the
continuance of an Event of Default, at the option of the
Administrative Agent or upon the direction of the Required
Lenders, the Letter of Credit Fee shall be increased by an
amount equal to three percent (3%) per annum.
(b) The Borrowers shall pay to the Administrative Agent, for the
account of the Issuing Bank, and in addition to all Letter of Credit Fees
otherwise provided for hereunder, fronting fees in an amount equal to 0.125% of
the face amount of each Letter of Credit (each, a "Fronting Fee") and such other
fees and charges in connection with the issuance, negotiation, settlement,
amendment and processing of each Letter of Credit issued by the Issuing Bank as
are customarily imposed by the Issuing Bank from time to time in connection with
letter of credit transactions.
(c) All Letter of Credit Fees shall be calculated on the basis of
a 360-day year and actual days elapsed.
SECTION 2.14 Early Termination Fees.
In the event that the Termination Date occurs, for any reason, prior to
the Maturity Date, (other than by virtue of the Borrowers' refinancing of the
Obligations with Fleet, FRF or any of
37
their Affiliates), the Borrowers shall pay to the Administrative Agent, for the
benefit of the Lenders, a fee (the "Early Termination Fee") in an amount equal
to (a) one percent (1%) of the then Total Commitments (but in no event less than
$90,000,000) if such Termination Date occurs on or before September 30, 2004,
and (b) one-half of percent (0.50%) of the then Total Commitments (but in no
event less than $90,000,000) if such Termination Date occurs after September 30,
2004.
SECTION 2.15 Nature of Fees.
All fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent, for the respective accounts of the
Administrative Agent, the Issuing Bank, and the Lenders, as provided herein. All
fees shall be fully earned on the date when due and shall not be refundable
under any circumstances.
SECTION 2.16 Termination or Reduction of Commitments.
Upon at least two (2) Business Days' prior written notice to the
Administrative Agent, the Borrowers may permanently terminate in whole, or from
time to time in part permanently reduce, the Commitments, provided that the
aggregate of all partial reductions of the Commitments from and after the
Closing Date may not exceed $20,000,000. Each such reduction shall be in the
principal amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof. Each such reduction or termination shall (i) be applied ratably to the
Commitments of each Lender and (ii) be irrevocable when given. At the effective
time of each such reduction or termination, the Borrowers shall pay to the
Administrative Agent for application as provided herein (i) all Commitment Fees
accrued on the amount of the Commitments so terminated or reduced through the
date thereof, and (ii) any amount by which the Credit Extensions outstanding on
such date exceed the amount to which the Commitments are to be reduced effective
on such date, in each case pro rata based on the amount prepaid, and (c) any
Early Termination Fee which may be due on account of such reduction.
SECTION 2.17 Alternate Rate of Interest.
If prior to the commencement of any Interest Period for a LIBO
Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders
that the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their Loans
included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Borrowing
Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a LIBO Borrowing shall be ineffective and (ii) if any Borrowing
Request requests a LIBO Borrowing, such Borrowing shall be made as a Borrowing
of Prime Rate Loans.
38
SECTION 2.18 Conversion and Continuation of Loans.
The Lead Borrower on behalf of the Borrowers shall have the right at
any time, on three Business Days' prior irrevocable notice to the Administrative
Agent (which notice, to be effective, must be received by the Administrative
Agent not later than 11:00 a.m., Boston time, on the third Business Day
preceding the date of any conversion), (x) to convert any outstanding Borrowings
of Loans (but in no event Swingline Loans) of one Type (or a portion thereof) to
a Borrowing of Loans of the other Type or (y) to continue an outstanding
Borrowing of LIBO Loans for an additional Interest Period, subject to the
following:
(a) no Borrowing of Loans may be converted into, or continued as,
LIBO Loans at any time when an Event of Default has occurred and is continuing;
(b) if less than a full Borrowing of Loans is converted, such
conversion shall be made pro rata among the Lenders, based upon their Commitment
Percentages, in accordance with the respective principal amounts of the Loans
comprising such Borrowing held by such Lenders immediately prior to such
refinancing;
(c) the aggregate principal amount of Loans being converted into
or continued as LIBO Loans shall be in an integral of $500,000 and at least
$1,000,000;
(d) each Lender shall effect each conversion by applying the
proceeds of its new LIBO Loan or Prime Rate Loan, as the case may be, to its
Loan being so converted;
(e) the Interest Period with respect to a Borrowing of LIBO Loans
effected by a conversion or in respect to the Borrowing of LIBO Loans being
continued as LIBO Loans shall commence on the date of conversion or the
expiration of the current Interest Period applicable to such continuing
Borrowing, as the case may be;
(f) a Borrowing of LIBO Loans may be converted only on the last
day of an Interest Period applicable thereto;
(g) each request for a conversion or continuation of a Borrowing
of LIBO Loans which fails to state an applicable Interest Period shall be deemed
to be a request for an Interest Period of one month; and
(h) no more than six (6) Borrowings of LIBO Loans may be
outstanding at any time.
If the Lead Borrower does not give notice to convert any Borrowing of LIBO
Loans, or does not give notice to continue, or does not have the right to
continue, any Borrowing as LIBO Loans, in each case as provided above, such
Borrowing shall automatically be converted to a Borrowing of Prime Rate Loans at
the expiration of the then-current Interest Period. The Administrative Agent
shall, after it receives notice from the Lead Borrower, promptly give each
Lender notice of any conversion, in whole or part, of any Loan made by such
Lender.
SECTION 2.19 Mandatory Prepayment; Commitment Termination;
Cash Collateral.
The outstanding Obligations shall be subject to mandatory prepayment as
follows:
39
(a) If at any time the amount of the Credit Extensions exceeds the
lower of (i) the then amount of the Commitments and (ii) the then amount of the
Borrowing Base, the Borrowers will immediately upon notice from the
Administrative Agent (A) prepay the Loans in an amount necessary to eliminate
such excess, and (B) if, after giving effect to the prepayment in full of all
outstanding Loans such excess has not been eliminated, deposit cash into the
Cash Collateral Account in an amount equal to 105% of the Letters of Credit
Outstanding.
(b) The Revolving Loans shall be repaid daily in accordance with
the provisions of Section 2.23 hereof.
(c) Subject to the provisions of Sections 2.19(a) and 2.19(b),
outstanding Prime Rate Loans shall be prepaid before outstanding LIBO Loans are
prepaid. Each partial prepayment of LIBO Loans shall be in an integral multiple
of $500,000. Any prepayment of LIBO Loans made pursuant to this Section 2.19
other than on the last day of an Interest Period applicable thereto shall be
accompanied by a payment by the Borrowers of all "Breakage Costs" (as defined in
Section 2.20(b) below) associated therewith. In order to avoid such Breakage
Costs, as long as no Event of Default has occurred and is continuing, unless
otherwise requested by the Lead Borrower, the Administrative Agent shall hold
all amounts required to be applied to LIBO Loans in the Cash Collateral Account
(or, at the Lead Borrower's option, in Permitted Investments in which the
Collateral Agents have a first perfected Lien) and will apply such funds to the
applicable LIBO Loans at the end of the then pending Interest Period therefor
(provided that the foregoing shall in no way limit or restrict the Agents'
rights upon the subsequent occurrence of an Event of Default). No partial
prepayment of a Borrowing of LIBO Loans shall result in the aggregate principal
amount of the LIBO Loans remaining outstanding pursuant to such Borrowing being
less than $1,000,000. Any prepayment of the Revolving Loans shall not
permanently reduce the Commitments.
(d) All amounts required to be applied to all Loans hereunder
(other than Swingline Loans) shall be applied ratably in accordance with each
Lender's Commitment Percentage.
(e) Upon the Termination Date, the credit facility provided
hereunder shall be terminated in full and the Borrowers shall pay, in full and
in cash, all outstanding Loans and all other outstanding Obligations. Upon such
payment, the Notes shall be cancelled and the Collateral Agents shall release
and terminate their Liens in the Collateral.
SECTION 2.20 Optional Prepayment of Loans; Reimbursement of
Lenders.
(a) The Borrowers shall have the right at any time and from time
to time to prepay outstanding Loans in whole or in part, (x) with respect to
LIBO Loans, upon at least two (2) Business Days' prior written, telex or
facsimile notice to the Administrative Agent prior to 11:00 a.m., Boston time,
and (y) with respect to Prime Rate Loans, on the same Business Day if written,
telex or facsimile notice is received by the Administrative Agent prior to 1:00
p.m., Boston time, subject to the following limitations:
(i) Subject to Section 2.19, all prepayments
shall be paid to the Administrative Agent for application,
first, to the prepayment of outstanding Swingline Loans,
second, to the prepayment of other outstanding Loans ratably
in accordance with each Lender's Commitment Percentage, and
third, to the funding of a cash collateral deposit in the Cash
Collateral Account in an amount equal to 105% of all Letter of
Credit Outstandings.
40
(ii) Subject to the foregoing, outstanding Prime
Rate Loans shall be prepaid before outstanding LIBO Loans are
prepaid. Each partial prepayment of LIBO Loans shall be in an
integral multiple of $500,000. No prepayment of LIBO Loans
shall be permitted pursuant to this Section 2.20 other than on
the last day of an Interest Period applicable thereto, unless
the Borrowers simultaneously reimburse the Lenders for all
"Breakage Costs" (as defined in Section 2.20(b) below)
associated therewith. No partial prepayment of a Borrowing of
LIBO Loans shall result in the aggregate principal amount of
the LIBO Loans remaining outstanding pursuant to such
Borrowing being less than $1,000,000.
(iii) Each notice of prepayment shall specify the
prepayment date, the principal amount and Type of the Loans to
be prepaid and, in the case of LIBO Loans, the Borrowing or
Borrowings pursuant to which such Loans were made. Each notice
of prepayment shall be irrevocable and shall commit the
Borrowers to prepay such Loan by the amount and on the date
stated therein. The Administrative Agent shall, promptly after
receiving notice from the Borrowers hereunder, notify each
Lender of the principal amount and Type of the Loans held by
such Lender which are to be prepaid, the prepayment date and
the manner of application of the prepayment.
(b) The Borrowers shall reimburse each Lender on demand for any
loss incurred or to be incurred by it in the reemployment of the funds released
(i) resulting from any prepayment (for any reason whatsoever, including, without
limitation, conversion to Prime Rate Loans or acceleration by virtue of, and
after, the occurrence of an Event of Default) of any LIBO Loan required or
permitted under this Agreement, if such Loan is prepaid other than on the last
day of the Interest Period for such Loan or (ii) in the event that after the
Lead Borrower delivers a notice of borrowing under Section 2.03 in respect of
LIBO Loans, such Loans are not made on the first day of the Interest Period
specified in such notice of borrowing for any reason other than a breach by such
Lender of its obligations hereunder or the delivery of any notice pursuant to
Section 2.17. Such loss shall be the amount as reasonably determined by such
Lender as the excess, if any, of (A) the amount of interest which would have
accrued to such Lender on the amount so paid or not borrowed at a rate of
interest equal to the Adjusted LIBO Rate for such Loan, for the period from the
date of such payment or failure to borrow to the last day (x) in the case of a
payment or refinancing with Prime Rate Loans other than on the last day of the
Interest Period for such Loan, of the then current Interest Period for such Loan
or (y) in the case of such failure to borrow, of the Interest Period for such
Loan which would have commenced on the date of such failure to borrow, over (B)
the amount of interest which would have accrued to such Lender on such amount by
investing such amount in United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a maturity date
closest to the last day of the applicable Interest Period (collectively,
"Breakage Costs"). Any Lender demanding reimbursement for such loss shall
deliver to the Borrowers from time to time one or more certificates setting
forth the amount of such loss as determined by such Lender and setting forth in
reasonable detail the manner in which such amount was determined.
(c) In the event the Borrowers fail to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.20(a), the
Borrowers on demand by any Lender shall pay to the Administrative Agent for the
account of such Lender any amounts required to compensate such Lender for any
loss incurred by such Lender as a result of such failure to prepay, including,
without limitation, any loss, cost or expenses incurred by reason of the
acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in
41
anticipation of such prepayment. Any Lender demanding such payment shall deliver
to the Borrowers from time to time one or more certificates setting forth the
amount of such loss as determined by such Lender and setting forth in reasonable
detail the manner in which such amount was determined.
(d) Whenever any partial prepayment of Loans are to be applied to
LIBO Loans, such LIBO Loans shall be prepaid in the chronological order of their
Interest Payment Dates.
SECTION 2.21 Maintenance of Loan Account; Statements of Account.
(a) The Administrative Agent shall maintain an account on its
books in the name of the Borrowers (the "Loan Account") which will reflect (i)
all Swingline Loans, all Revolving Loans and other advances made by the Lenders
to the Borrowers or for the Borrowers' account, (ii) all L/C Disbursements, fees
and interest that have become payable as herein set forth, and (iii) any and all
other Obligations that have become payable.
(b) The Loan Account will be credited with all amounts received by
the Administrative Agent from the Borrowers or otherwise for the Borrowers'
account, including all amounts received in the FRF Concentration Account from
the Blocked Account Banks, and the amounts so credited shall be applied as set
forth in Sections 2.23(a) and (b). After the end of each month, the
Administrative Agent shall send to the Borrowers a statement accounting for the
charges, loans, advances and other transactions occurring among and between the
Administrative Agent, the Lenders and the Borrowers during that month. The
monthly statements shall, absent manifest error, be an account stated, which is
final, conclusive and binding on the Borrowers.
SECTION 2.22 Cash Receipts.
(a) Annexed hereto as Schedule 2.22(a) is a list of all present
DDAs, which Schedule includes, with respect to each depository (i) the name and
address of that depository; (ii) the account number(s) maintained with such
depository; and (iii) to the extent known, a contact person at such depository.
(b) Annexed hereto as Schedule 2.22(b) is a list describing all
arrangements to which any Borrower is a party with respect to the payment to any
Borrower of the proceeds of all credit card charges for sales by any Borrower.
(c) On or prior to the Closing Date, the Borrowers shall (i)
deliver to the Administrative Agent notifications executed on behalf of the
Borrowers to each depository institution with which any DDA is maintained in
form satisfactory to the Administrative Agent, of the Administrative Agent's
interest in such DDA (each, a "DDA Notification"), and (ii) deliver to the
Administrative Agent notifications executed on behalf of the Borrowers to each
of the Borrower's credit card clearinghouses and processors of notice in form
satisfactory to the Administrative Agent, (each, a "Credit Card Notification")
(and the Borrowers shall use commercially reasonable efforts to cause each such
Credit Card Notification (or another form reasonably acceptable to the
Administrative Agent) to be signed, acknowledged and agreed to by the applicable
credit card clearinghouses and processors within fifteen (15) days after the
Closing Date), and (iii) enter into agency agreements with the banks maintaining
the deposit accounts identified on Schedule 2.22(c) (collectively, the "Blocked
Accounts"), which agreements (the "Blocked Account Agreements") shall be in form
and substance satisfactory to the Administrative Agent. The DDA Notifications,
Credit Card Notifications and Blocked Account
42
Agreements shall require, unless a Cash Dominion Release Event has occurred and
is continuing, the sweep on each Business Day of all available cash receipts
from the sale of Inventory and other assets, all collections of Accounts, and
all other cash payments received by the Borrowers from any Person or from any
source or on account of any sale or other transaction or event (including,
without limitation, any casualty and condemnation proceeds and proceeds from any
equity issuances) (all such cash receipts and collections, "Cash Receipts"), to
a concentration account maintained by the Collateral Agents at Fleet (the "FRF
Concentration Account"). In that regard, unless a Cash Dominion Release Event
has occurred and is continuing, the Borrowers shall cause the ACH or wire
transfer to a Blocked Account or to the FRF Concentration Account, no less
frequently than daily (and whether or not there is then an outstanding balance
in the Loan Account) of (A) the then contents of each DDA, each such transfer to
be net of any minimum balance, not to exceed (1) $20,000 with respect to the
Borrowers' xxxxx cash accounts described on Schedule 2.22(a) as "Regional
Checking Accounts" and (2) $5,000 with respect to any other DDA; and (B) the
proceeds of all credit card charges not otherwise provided for pursuant hereto.
Further, whether or not any Obligations are then outstanding, unless a Cash
Dominion Release Event has occurred and is continuing, the Borrowers shall cause
the ACH or wire transfer to the FRF Concentration Account, no less frequently
than daily, of the then entire ledger balance of each Blocked Account, net of
such minimum balance, not to exceed $2,500, as may be required to be maintained
in the subject Blocked Account by the bank at which such Blocked Account is
maintained. In the event that, notwithstanding the provisions of this Section
2.22, the Borrowers receive or otherwise have dominion and control of any such
proceeds or collections, unless a Cash Dominion Release Event has occurred and
is continuing, such proceeds and collections shall be held in trust by the
Borrowers for the Administrative Agent and shall not be commingled with any of
the Borrowers' other funds or deposited in any account of any Borrower other
than as instructed by the Administrative Agent.
(d) The Borrowers shall accurately report to the Administrative
Agent all amounts deposited in the Blocked Accounts to ensure the proper
transfer of funds as set forth above. If at any time, other than during the
continuance of a Cash Dominion Release Event, any cash or cash equivalents owned
by the Borrowers are deposited to any account, or held or invested in any
manner, otherwise than in a Blocked Account that is subject to a Blocked Account
Agreement, the Administrative Agent shall require the Borrowers to close such
account and have all funds therein transferred to an account maintained by the
Administrative Agent at Fleet and all future deposits made to a Blocked Account
which is subject to a Blocked Account Agreement. Without limiting the foregoing,
unless a Cash Dominion Release Event has occurred and is continuing, the
Borrowers shall cause all proceeds from the sale, transfer or other disposition
of any of their assets, all casualty and condemnation proceeds, all proceeds
from equity issuances and the incurrence of Indebtedness for borrowed money
(excluding Indebtedness permitted under Section 6.01(a) (other than Sections
6.01(a)(x) and 6.01(a)(xi)) to be deposited into a Blocked Account as and when
received.
(e) The Borrowers may close DDAs or Blocked Accounts and/or open
new DDAs or Blocked Accounts, subject to the execution and delivery to the
Administrative Agent of appropriate DDA Notifications or Blocked Account
Agreements (unless expressly waived by the Administrative Agent) consistent with
the provisions of this Section 2.22 and otherwise satisfactory to the
Administrative Agent. Unless consented to in writing by the Administrative
Agent, the Borrowers may not maintain any bank accounts or enter into any
agreements with credit card processors other than the ones expressly
contemplated herein.
43
(f) The Borrowers may also maintain with the Administrative Agent
at Fleet one or more disbursement accounts (the "Fleet Disbursement Accounts")
to be used by the Borrowers for disbursements and payments (including payroll)
in the ordinary course of business or as otherwise permitted hereunder. The only
Disbursement Accounts as of the Closing Date are those described in Schedule
2.22(f).
(g) The FRF Concentration Account is, and shall remain, under the
sole dominion and control of the Collateral Agents. Each Borrower acknowledges
and agrees that (i) such Borrower has no right of withdrawal from the FRF
Concentration Account, (ii) the funds on deposit in the FRF Concentration
Account shall continue to be collateral security for all of the Obligations and
(iii) the funds on deposit in the FRF Concentration Account shall be applied as
provided in Section 2.23(a).
SECTION 2.23 Application of Payments.
(a) As long as the Obligations have not been accelerated, all
amounts received in the FRF Concentration Account from any source, including the
Blocked Account Banks, shall be applied, on the day immediately following
receipt, in the following order: first, to pay interest due and payable on
Credit Extensions and to pay fees and expense reimbursements and indemnification
then due and payable to the Administrative Agent, FSI, the Issuing Bank, the
Collateral Agents, and the Lenders; second to repay outstanding Swingline Loans;
third, to repay other outstanding Revolving Loans that are Prime Rate Loans and
all outstanding reimbursement obligations under Letters of Credit; fourth, if no
Event of Default has occurred and is then continuing, to fund a cash collateral
deposit to the Cash Collateral Account (or, at the Lead Borrower's option, to
make Permitted Investments in which the Collateral Agents have a first perfected
Lien) sufficient to pay, and with direction to pay, all such outstanding
Revolving Loans that are LIBO Loans on the last day of the then-pending Interest
Period therefor, or if an Event of Default then exists, to repay outstanding
Revolving Loans that are LIBO Loans and all Breakage Costs due in respect of
such repayment; fifth if an Event of Default exists and during the continuance
thereof, to fund a cash collateral deposit in the Cash Collateral Account in an
amount equal to 105% of all Letter of Credit Outstandings; sixth, to pay all
other Obligations that are then outstanding and then due and payable. If all
Obligations are paid, any excess amounts shall be deposited in a separate cash
collateral account, and as long as no Event of Default then exists, shall be
released to the Borrowers and utilized by the Borrowers prior to any further
Revolving Loans being made. Any other amounts received by the Administrative
Agent, the Issuing Bank, the Collateral Agents, or any Lender as contemplated by
Section 2.22 shall also be applied in the order set forth above in this Section
2.23.
(b) All credits against the Obligations shall be conditioned upon
final payment to the Administrative Agent of the items giving rise to such
credits and shall be subject to one Business Day's clearance and collection. If
any item deposited to the FRF Concentration Account and credited to the Loan
Account is dishonored or returned unpaid for any reason, whether or not such
return is rightful or timely, the Administrative Agent shall have the right to
reverse such credit and charge the amount of such item to the Loan Account and
the Borrowers shall indemnify the Administrative Agent, the Collateral Agents,
the Issuing Bank and the Lenders against all claims and losses resulting from
such dishonor or return.
44
SECTION 2.24 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender
or any holding company of any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank;
or
(ii) impose on any Lender or the Issuing Bank or
the London interbank market any other condition affecting this
Agreement or LIBO Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBO Loan (or of maintaining its obligation
to make any such Loan) or to increase the cost to such Lender or the Issuing
Bank of participating in, issuing or maintaining any Letter of Credit or to
reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then, as
long as the Borrowers are treated in the same manner as all similarly situated
customers, the Borrowers will pay to such Lender or the Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or
the Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or the Issuing Bank reasonably
determines in good faith that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender's or
the Issuing Bank's capital or on the capital of such Lender's or the Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender, or the
Letters of Credit issued by the Issuing Bank, to a level below that which such
Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding
company could have achieved but for such Change in Law (taking into
consideration such Lender's or the Issuing Bank's policies and the policies of
such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then, as long as the Borrowers are treated in the same manner as all
similarly situated customers, from time to time the Borrowers will pay to such
Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank or such Lender's or
the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section and setting forth in reasonable detail the manner in
which such amount or amounts were determined shall be delivered to the Borrowers
and shall be conclusive absent manifest error. The Borrowers shall pay such
Lender or the Issuing Bank, as the case may be, the amount shown as due on any
such certificate within ten (10) Business Days after receipt thereof.
(d) Failure or delay on the part of any Lender or the
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or the Issuing Bank's right to demand such
compensation, provided that no compensation shall be required to be paid for any
amounts incurred more than 180 days prior to the date of such demand.
45
SECTION 2.25 Change in Legality.
(a) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (x) any Change in Law shall make it unlawful for
a Lender to make or maintain a LIBO Loan or to give effect to its obligations as
contemplated hereby with respect to a LIBO Loan or (y) at any time any Lender
determines that the making or continuance of any of its LIBO Loans has become
impracticable as a result of a contingency occurring after the date hereof which
adversely affects the London interbank market or the position of such Lender in
the London interbank market, then, by written notice to the Borrowers, such
Lender may (i) declare that LIBO Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrowers for a LIBO Borrowing
shall, as to such Lender only, be deemed a request for an Prime Rate Loan unless
such declaration shall be subsequently withdrawn; and (ii) require that all
outstanding LIBO Loans made by it be converted to Prime Rate Loans, in which
event all such LIBO Loans shall be automatically converted to Prime Rate Loans
as of the effective date of such notice as provided in paragraph (b) below. In
the event any Lender shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to repay the LIBO Loans that would have been made by such
Lender or the converted LIBO Loans of such Lender shall instead be applied to
repay the Prime Rate Loans made by such Lender in lieu of, or resulting from the
conversion of, such LIBO Loans.
(b) For purposes of this Section 2.25, a notice to the
Borrowers by any Lender pursuant to paragraph (a) above shall be effective, if
any LIBO Loans shall then be outstanding, on the last day of the applicable
then-current Interest Period; and otherwise such notice shall be effective on
the date of receipt by the Borrowers.
SECTION 2.26 Payments; Sharing of Setoff.
(a) The Borrowers shall make each payment required to be
made by them hereunder or under any other Loan Document (whether of principal,
interest, fees or reimbursement of drawings under Letters of Credit, or of
amounts payable under Sections 2.20(b), 2.24 or 2.27, or otherwise) prior to
12:00 noon, Boston time, on the date when due, in immediately available funds,
without setoff or counterclaim. Any amounts received after such time on any date
may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, except payments to be
made directly to the Issuing Bank or Swingline Lender as expressly provided
herein and except that payments pursuant to Sections 2.20(b), 2.24, 2.27 and
9.03 shall be made directly to the Persons entitled thereto and payments
pursuant to other Loan Documents shall be made to the Persons specified therein.
The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, except with respect to LIBO Borrowings, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made in
dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed drawings under Letters of Credit, interest and fees then due
hereunder, such funds shall be applied (i) first, towards
46
payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due to
such parties, and (ii) second, towards payment of principal and unreimbursed
drawings under Letters of Credit then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed
drawings under Letters of Credit then due to such parties.
(c) If any Lender shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of its Loans or participations in drawings under Letters
of Credit or Swingline Loans resulting in such Lender's receiving payment of a
greater proportion of the aggregate amount of its Loans and participations in
drawings under Letters of Credit and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in drawings under Letters of
Credit and Swingline Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in drawings under Letters of Credit
and Swingline Loans, provided that (i) if any such participations are purchased
and all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrowers pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in drawings under Letters of
Credit to any assignee or participant, other than to the Borrowers or any
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrowers consent to the foregoing and agree, to the extent they may
effectively do so under Applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrowers rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrowers in the amount
of such participation.
(d) Unless the Administrative Agent shall have received
notice from the Borrowers prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrowers have not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required
to be made by it pursuant to this Agreement, then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
47
SECTION 2.27 Taxes.
(a) Any and all payments by or on account of any
obligation of the Borrowers hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes, provided that if the Borrowers shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Agents, such Lender or the Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrowers shall make such deductions, and (iii) the Borrowers shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with Applicable Law.
(b) In addition, the Borrowers shall pay any Other Taxes
to the relevant Governmental Authority in accordance with Applicable Law.
(c) The Borrowers shall indemnify the Agents, each Lender
and the Issuing Bank, within 15 Business Days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the Agents, such
Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrowers hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrowers by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of an Agent, a Lender or the Issuing Bank setting forth
in reasonable detail the manner in which such amount was determined, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrowers to a Governmental Authority,
the Borrowers shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption
from or reduction in withholding tax shall deliver to the Borrowers and the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Foreign Lender's claiming exemption
from or reduction in U.S. Federal withholding tax under Section 871(h) or 881(c)
of the Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Foreign Lender
delivers a Form W-8, a certificate representing that such Foreign Lender is not
a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrowers and is not a controlled foreign corporation related to the Borrowers
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Foreign Lender claiming complete exemption from or reduced
rate of, U.S. Federal withholding tax on payments by the Borrowers under this
Agreement and the other Loan Documents. Such forms shall be delivered by each
Foreign Lender on or before the date it becomes a party to this Agreement (or,
in the case of a transferee that is a participation holder, on
48
or before the date such participation holder becomes a transferee hereunder) and
on or before the date, if any, such Foreign Lender changes its applicable
lending office by designating a different lending office (a "New Lending
Office"). In addition, each Foreign Lender shall deliver such forms promptly
upon the obsolescence or invalidity of any form previously delivered by such
Foreign Lender. Notwithstanding any other provision of this Section 2.27(e), a
Foreign Lender shall not be required to deliver any form pursuant to this
2.27(e) that such Foreign Lender is not legally able to deliver.
(f) The Borrowers shall not be required to indemnify any
Foreign Lender or to pay any additional amounts to any Foreign Lender in respect
of U.S. Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that the obligation to pay such additional amounts would not have arisen
but for a failure by such Foreign Lender to comply with the provisions of
paragraph (e) above. Should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrowers shall, at such
Lender's expense, take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.
SECTION 2.28 Security and Mortgage Interests in Collateral.
To secure their Obligations under this Agreement and the other Loan
Documents, the Loan Parties shall grant to the Collateral Agents, for their
benefit and the ratable benefit of the other Secured Parties, a first-priority
security and mortgage interest in all of the Collateral pursuant hereto and to
the Security Documents.
SECTION 2.29 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section
2.24, or if the Borrowers are required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.27, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.24 or 2.27,
as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment;
provided, however, that the Borrowers shall not be liable for such costs and
expenses of a Lender requesting compensation if (i) such Lender becomes a party
to this Agreement on a date after the Closing Date and (ii) the relevant Change
in Law occurs on a date prior to the date such Lender becomes a party hereto.
(b) If any Lender requests compensation under Section
2.24, or if the Borrowers are required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.27, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Borrowers may, at their sole expense and effort, upon notice
to such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.05), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that (i) the
Borrowers shall have received the prior written consent of the Administrative
Agent, the Issuing Bank and Swingline Lender, which consent shall not unrea -
49
sonably be withheld, (ii) such Lender shall have received payment of an amount
equal to the outstanding principal of its Loans and participations in
unreimbursed drawings under Letters of Credit and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder
(provided that such Lender shall not be entitled to receive any Early
Termination Fees), from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrowers (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.24 or payments required to be made
pursuant to Section 2.27, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrowers to require such
assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
Each Loan Party represents and warrants to the Agents and the Lenders
that:
SECTION 3.01 Organization; Powers. Each Loan Party is duly
organized,validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every juris diction where such qualification is required.
SECTION 3.02 Authorization; Enforceability. The transactions
contemplated hereby and by the other Loan Documents to be entered into by each
Loan Party are within such Loan Party's corporate, partnership and other powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
Loan Party that is a party hereto and constitutes, and each other Loan Document
to which any Loan Party is a party, when executed and delivered by such Loan
Party will constitute, a legal, valid and binding obligation of such Loan Party
(as the case may be), enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03 Governmental Approvals; No Conflicts. The
transactions to be entered into contemplated by the Loan Documents (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except for such as have been obtained or
made and are in full force and effect and except filings and recordings
necessary to perfect Liens created under the Loan Documents, (b) will not
violate any Applicable Law or the charter, by-laws or other organizational
documents of any Loan Party, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon any Loan Party or its
assets, or give rise to a right thereunder to require any payment to be made by
any Loan Party, and (d) will not result in the creation or imposition of any
Lien on any asset of any Loan Party, except Liens created under the Loan
Documents.
50
SECTION 3.04 Financial Condition. The Parent has heretofore
furnished to the Agents the Consolidated balance sheet, and statements of
income, stockholders' equity, and cash flows for the Parent and its Subsidiaries
as of and for the fiscal year ending September 30, 2002 and as of and for the
fiscal month ending February, 2003, certified by a Financial Officer of the
Borrowers. Such financial statements present fairly, in all material respects,
the financial position, results of operations and cash flows of the Parent and
its Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year end audit adjustments and the absence of footnotes. Since the
date of such financial statements, there have been no changes in the assets,
liabilities, financial condition, or business of the Parent and its Subsidiaries
other than changes in the ordinary course of business, the effect of which has
not had a Material Adverse Effect.
SECTION 3.05 Properties. (a) Except as disclosed in Schedules
3.05(c)(i) and 3.05(c)(ii), each Loan Party has good title to, or valid
leasehold interests in, all its real and personal property material to its
business, except for defects which could not reasonably be expected to have a
Material Adverse Effect.
(b) Each Loan Party owns, or is licensed to use, all
trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Loan Parties does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
(c) Schedule 3.05(c)(i) sets forth the address (including
county) of all Real Estate that is owned by the Loan Parties, together with a
list of the holders of any mortgage or other Lien thereon (other than Permitted
Encumbrances). Schedule 3.05(c)(ii) sets forth the address (including county) of
all Leases of the Loan Parties, together with a list of the holders of any
mortgage or other Lien on the Borrowers' interest in such Lease. To the
knowledge of the Loan Parties, each of such Leases is in full force and effect
and the Loan Parties are not in default of the terms thereof.
SECTION 3.06 Litigation and Environmental Matters. (a) There
are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Borrower, threatened
against or affecting any Loan Party (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than those set forth on Schedule 3.06) or (ii)
that involve any of the Loan Documents.
(b) Except for the matters set forth on Schedule 3.06 and
except with respect to any other matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, no Loan
Party (i) has failed to comply with any Environmental Law or to obtain, maintain
or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no
change in the status of the matters set forth on Schedule 3.06 that,
individually or in the aggregate, has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
51
SECTION 3.07 Compliance with Laws and Agreements. Each Loan
Party is in compliance with all Applicable Law and all indentures, material
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08 Investment and Holding Company Status. No Loan
Party is (a) an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940 or (b) a "holding company" as defined
in, or subject to regulation under, the Public Utility Holding Company Act of
1935.
SECTION 3.09 Taxes. Each Loan Party has timely filed or caused to
be filed all tax returns and reports required to have been filed and has paid or
caused to be paid all taxes required to have been paid by it, except (a) taxes
that are being contested in good faith by appropriate proceedings, for which
such Loan Party has set aside on its books adequate reserves, and as to which no
Lien has been filed, or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10 ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of such Plan, and the present value
of all accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans.
SECTION 3.11 Disclosure. The Borrowers have disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
any Loan Party is subject, and all other matters known to any of them, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of any of the reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or any other Loan Document or delivered hereunder or thereunder
(as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading in any material respect.
SECTION 3.12 Subsidiaries.
(a) Schedule 3.12 sets forth the name of, and the ownership
interest of each Loan Party in each Subsidiary. There is no other capital stock
or ownership interest of any class outstanding. The Loan Parties are not party
to any joint venture, general or limited partnership, or limited liability
company, agreements or any other business ventures or entities.
(b) The Parent and its Subsidiaries have received the
consideration for which the capital stock and other ownership interests was
authorized to be issued and have otherwise
52
complied with all legal requirements relating to the authorization and issuance
of shares of stock and other ownership interests, and all such shares and
ownership interests are validly issued, fully paid, and non-assessable.
SECTION 3.13 Insurance. Schedule 3.13 sets forth a description of
all insurance maintained by or on behalf of the Borrowers and their
Subsidiaries. Each of such policies is in full force and effect. All premiums in
respect of such insurance that are due and payable have been paid.
SECTION 3.14 Labor Matters. There are no strikes, lockouts or
slowdowns against any Loan Party pending or, to the knowledge of the Borrowers,
threatened. The hours worked by and payments made to employees of the Loan
Parties have not been in violation of the Fair Labor Standards Act or any other
applicable federal, state, local or foreign law dealing with such matters to the
extent that any such violation could reasonably be expected to have a Material
Adverse Effect. All payments due from any Loan Party, or for which any claim may
be made against any Loan Party, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of such member. The consummation of the transactions contemplated
by the Loan Documents will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which any Loan Party is bound.
SECTION 3.15 Security Documents. The Security Documents create in
favor of the Collateral Agents, for the ratable benefit of the Secured Parties,
a legal, valid and enforceable security or mortgage interest in the Collateral,
as applicable, and the Security Documents constitute the creation of a fully
perfected (upon filing of any financing statements and mortgages with applicable
Governmental Authorities) first priority Lien on, and security or mortgage
interest, as applicable, in, all right, title and interest of the Loan Parties
thereunder in such Collateral, in each case prior and superior in right to any
other Person, other than holders of Permitted Encumbrances having priority over
the Lien of the Collateral Agents by operation of law.
SECTION 3.16 Federal Reserve Regulations. (a) No Loan Party is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of
Credit will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) except as permitted under Section 6.06(a)(iii)
hereof, to buy or carry Margin Stock or to extend credit to others for the
purpose of buying or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose or (ii) for any purpose that entails a violation of,
or that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or X.
(c) Less than 1% of the assets of the Borrowers on a
Consolidated basis consist of Margin Stock.
SECTION 3.17 Solvency. The Loan Parties, on a Consolidated basis,
are Solvent. No transfer of property is being made by any Loan Party and no
obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of any
Loan Party.
53
ARTICLE IV
Conditions
SECTION 4.01 Closing Date. The obligation of the Lenders to make
each Loan and of the Issuing Bank to issue each Letter of Credit, including the
initial Loan and the initial Letter of Credit, is subject to the following
conditions precedent:
(a) The Agents (or their counsel) shall have received from each
party hereto other than the Lenders either (i) a counterpart of this Agreement
and all other Loan Documents signed on behalf of such party or (ii) written
evidence satisfactory to the Agents (which may include telecopy transmission of
a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement and all other Loan Documents.
(b) The Agents shall have received a favorable written opinion
(addressed to each Agent and the Lenders and dated the Closing Date) of Goulston
& Storrs, P.C., counsel for the Loan Parties substantially in the form of
Exhibit C, and covering such other matters relating to the Loan Parties, the
Loan Documents or the transactions contemplated thereby as the Required Lenders
shall reasonably request. The Borrowers hereby request such counsel to deliver
such opinion.
(c) The Agents shall have received such documents and certificates
as the Agents or their counsel may reasonably request relating to the
organization, existence and good standing of each Loan Party, the authorization
of the transactions contemplated by the Loan Documents and any other legal
matters relating to the Loan Parties, the Loan Documents or the transactions
contemplated thereby, all in form and substance satisfactory to the Agents and
their counsel.
(d) After giving effect to the first funding under the Loans; any
charges to the Loan Account made in connection with the establishment of the
credit facility contemplated hereby; and all Letters of Credit to be issued at,
or immediately subsequent to, such establishment, Excess Availability shall be
not less than $12,000,000. The Agents shall have received a Borrowing Base
Certificate dated the Closing Date, relating to the week ended on April 12,
2003, and executed by a Financial Officer of the Lead Borrower.
(e) The Agents shall have received a certificate, reasonably
satisfactory in form and substance to the Agents, (i) stating that the
Borrowers, on a Consolidated basis, are Solvent as of the Closing Date, and (ii)
certifying that, as of the Closing Date, the representations and warranties made
by the Loan Parties in the Loan Documents (including any disclosure schedules
thereto) are true and complete and that no Default or Event of Default exists.
(f) The consummation of the transactions contemplated hereby shall
not (a) violate any Applicable Law, statute, rule or regulation or (b) conflict
with, or result in a default or event of default under, any material agreement
of any Loan Party.
(g) All necessary consents and approvals to the transactions
contemplated hereby shall have been obtained and shall be satisfactory to the
Agents.
(h) The Collateral Agents shall have received (a) appraisals of
the Collateral consisting of Inventory and Real Estate by a third party
appraiser acceptable to the Collateral Agents, the results of which are
reasonably satisfactory to the Collateral Agents; (b) a written
54
report regarding the results of a commercial finance examination of the Loan
Parties, which shall be reasonably satisfactory to the Collateral Agents; and
(c) title insurance (with such endorsements as the Collateral Agents may
reasonably require), environmental site assessments, and other real estate
requirements, as may be reasonably requested by the Collateral Agents,
including, but not limited to, those items required by FIRREA.
(i) The Agents shall be reasonably satisfied that any financial
statements delivered to them fairly present the business and financial condition
of the Parent and its Subsidiaries, and that there has been no material adverse
change in the assets, business, financial condition, or income of the Parent and
its Subsidiaries since the date of the most recent financial information
delivered to the Agents.
(j) The Administrative Agent shall have received and be satisfied
with (a) monthly detailed one-year financial projections and business
assumptions for the Parent and its Subsidiaries, and (b) such other information
(financial or otherwise) reasonably requested by the Administrative Agent.
(k) There shall not be pending any litigation or other proceeding,
the result of which could reasonably be expected to have a Material Adverse
Effect.
(l) There shall not have occurred any default of any material
contract or agreement of any Loan Party.
(m) The Collateral Agents shall have received results of searches
or other evidence reasonably satisfactory to the Collateral Agents (in each case
dated as of a date reasonably satisfactory to the Collateral Agents) indicating
the absence of Liens on the assets of the Loan Parties, except for Permitted
Encumbrances and liens for which termination statements and releases or
subordination agreements reasonably satisfactory to the Collateral Agents are
being tendered concurrently with such extension of credit.
(n) The Collateral Agents shall have received all documents and
instruments, including Uniform Commercial Code financing statements and
mortgages, required by law or reasonably requested by the Collateral Agents to
be filed, registered or recorded to create or perfect the first priority Liens
intended to be created under the Loan Documents and all such documents and
instruments shall have been so filed, registered or recorded to the satisfaction
of the Collateral Agents.
(o) The Collateral Agents shall have received (or otherwise have
become the beneficiary of ) subordination agreements from all vendors having
Liens on any assets of the Loan Parties, which Liens constitute Permitted
Encumbrances and are to remain outstanding after the Closing Date, such
agreements to be reasonably satisfactory to the Collateral Agents.
(p) The Collateral Agents shall have received, and be satisfied
with, evidence of the Loan Parties' insurance, together with such endorsements
as are required by the Loan Documents.
(q) All fees due at or immediately after the Closing Date and all
reasonable costs and expenses incurred by the Agents in connection with the
establishment of the credit facility contemplated hereby (including the fees and
expenses of counsel to the Agents) shall have been paid in full.
55
(r) The consummation of the transactions contemplated hereby shall
not (a) violate any Applicable Law or (b) conflict with, or result in a default
or event of default under, any material agreement of any Loan Party (and the
Agents and the Lenders shall receive a satisfactory opinion of Loan Parties'
counsel to that effect). No event shall exist which is, or solely with the
passage of time, the giving of notice or both, would be a default under any
material agreement of any Loan Party.
(s) No material changes in governmental regulations or policies
affecting the Loan Parties, the Agents, the Arranger or any Lender involved in
this transaction shall have occurred prior to the Closing Date.
(t) There shall not have occurred any disruption or material
adverse change in the financial or capital markets in general that would, in the
reasonable opinion of the Agents, have a material adverse effect on the market
for loan syndications or adversely affecting the syndication of the Loans.
(u) There shall have been delivered to the Administrative Agent
such additional instruments and documents as the Agents or counsel to the Agents
reasonably may require or request.
The Administrative Agent shall notify the Borrowers and the Lenders of the
Closing Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived by the Administrative Agent
in writing) at or prior to 12:00 noon, Boston time, on April 18, 2003 (and, in
the event such conditions are not so satisfied or waived, this Agreement shall
terminate at such time).
SECTION 4.02 Conditions Precedent to Each Loan and Each Letter of
Credit.
In addition to those conditions described in Section 4.01, the
obligation of the Lenders to make each Revolving Loan and of the Issuing Bank to
issue each Letter of Credit, is subject to the following conditions precedent:
(a) Notice. The Administrative Agent shall have received a notice
with respect to such Borrowing or issuance, as the case may be, as required by
Article II.
(b) Representations and Warranties. All representations and
warranties contained in this Agreement and the other Loan Documents or otherwise
made in writing in connection herewith or therewith shall be true and correct in
all material respects on and as of the date of each Borrowing or the issuance of
each Letter of Credit hereunder with the same effect as if made on and as of
such date, other than representations and warranties that relate solely to an
earlier date.
(c) No Default. On the date of each Borrowing hereunder and the
issuance of each Letter of Credit, the Loan Parties shall be in compliance with
all of the terms and provisions set forth herein and in the other Loan Documents
to be observed or performed and no Default or Event of Default shall have
occurred and be continuing.
56
(d) Borrowing Base Certificate. The Administrative Agent shall
have received the timely delivery of the most recently required Borrowing Base
Certificate, with each such Borrowing Base Certificate including schedules as
required by the Administrative Agent.
The request by the Borrowers for, and the acceptance by the Borrowers of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this Section 4.02
have been satisfied at that time and that after giving effect to such extension
of credit the Borrowers shall continue to be in compliance with the Borrowing
Base. The conditions set forth in this Section 4.02 are for the sole benefit of
the Administrative Agent and each Lender and may be waived by the Administrative
Agent, in whole or in part, without prejudice to the Administrative Agent or any
Lender.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all L/C
Disbursements shall have been reimbursed, each Loan Party covenants and agrees
with the Agents and the Lenders that:
SECTION 5.01 Financial Statements and Other Information. The
Borrowers will furnish to the Agents:
(a) within ninety (90) days after the end of each fiscal year of
the Parent, its Consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all audited (in the case of such Consolidated statements) and reported on by
independent public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without a qualification or
exception as to the scope of such audit) to the effect that such Consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Parent and its Subsidiaries on a
Consolidated basis in accordance with GAAP consistently applied;
(b) within forty-five (45) days after the end of each fiscal
quarter of the Parent, its Consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows, and a summary of all Capital
Expenditures, as of the end of and for such fiscal quarter and the elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year and the figures as set forth in the
projections delivered pursuant to Section 5.01(e) hereof, all certified by one
of its Financial Officers as presenting in all material respects the financial
condition and results of operations of the Parent and its Subsidiaries on a
Consolidated basis in accordance with GAAP consistently applied, subject to
normal year end audit adjustments and the absence of footnotes;
(c) within thirty (30) days after the end of each fiscal month of
the Parent (other than the months of September and October), and within
forty-five (45) days after the end of each September and October, its
Consolidated balance sheet and related statements of operations, stockholders'
equity and cash flows, and a summary of all Capital Expenditures, as of the end
of and for such fiscal month and the elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year
and the figures as set forth in the
57
projections delivered pursuant to Section 5.01(e) hereof, all certified by one
of its Financial Officers as presenting in all material respects the financial
condition and results of operations of the Parent and its Subsidiaries on a
Consolidated basis in accordance with GAAP consistently applied, subject to
normal year end audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a), (b), or (c) above, a certificate of a Financial Officer of the Lead
Borrower in the form of Exhibit D (i) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, and (ii) setting
forth reasonably detailed calculations (A) with respect to the average Excess
Availability for such period, and (B) demonstrating compliance with Section
6.11, and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the Parent's audited financial statements
referred to in Section 3.04 and, if any such change has occurred, specifying the
effect of such change on the financial statements accompanying such certificate;
(e) prior to the commencement of each fiscal year of the Parent
(but in no event sooner than thirty days prior to the commencement of any fiscal
year), a detailed Consolidated budget by month for such fiscal year (including a
projected Consolidated balance sheet and related statements of projected
operations and cash flow as of the end of and for such fiscal year) and,
promptly when available, any significant revisions of such budget;
(f) on Wednesday of each week, a certificate in the form of
Exhibit E (a "Borrowing Base Certificate") showing the Borrowing Base as of the
close of business on the last day of the immediately preceding Saturday, each
such Certificate to be certified as complete and correct on behalf of the
Borrowers by a Financial Officer of the Lead Borrower;
(g) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed by
any Loan Party with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, as the case may be;
(h) promptly upon receipt thereof, copies of all reports submitted
to any Loan Party by independent certified public accountants in connection with
each annual, interim or special audit of the books of the Loan Parties or any of
their Subsidiaries made by such accountants, including any management letter
commenting on the Loan Parties' internal controls submitted by such accountants
to management in connection with their annual audit;
(i) promptly upon receipt, copies of all financial statements and
other material information delivered to the Parent with respect to Tivoli,
whether pursuant to Section 11(b) of the Tivoli Agreement or otherwise;
(j) the financial and collateral reports described on Schedule
5.01(j) hereto, at the times set forth in such Schedule;
(k) notice of any intended store openings or closings at least
thirty (30) days prior to each such store opening or closing;
(l) notice of any intended Permitted Acquisition, at least fifteen
(15) Business Days prior to the consummation thereof, together with (i) copies
of the most recent audited, and if later, unaudited financial statements of the
Person which is the subject of the Permitted
58
Acquisition, (ii) a description of the proposed Permitted Acquisition in such
detail as the Administrative Agent may reasonably request, including copies of
letters of intent and draft and final purchase and sale agreements or other
material acquisition documents to be executed in connection with the proposed
Permitted Acquisition, (iii) an unaudited pro forma Consolidated balance sheet
and income statement of the Parent and its Subsidiaries as of the end of the
most recently completed fiscal quarter but prepared as though the Permitted
Acquisition had occurred on or prior to such date and related pro forma
calculations, based on trailing four-quarter operating performance, indicating
compliance on a pro forma basis as of such date and for the periods then ended
with the provisions of Section 6.11 hereof, and (iv) unaudited projections of
balance sheets and income statements and related calculations for the following
four quarters, assuming the Permitted Acquisition has closed, and indicating
compliance, on a projected basis, for such periods with the provisions of
Section 6.11 hereof;
(m) notice of any intended sale or other disposition of assets of
any Loan Party permitted hereunder or incurrence of any Indebtedness permitted
hereunder at least ten (10) Business Days prior to the date of consummation such
sale or disposition or incurrence of such Indebtedness; and
(n) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of any Loan Party, or compliance with the terms of any Loan Document, as the
Agents or any Lender may reasonably request.
SECTION 5.02 Notices of Material Events. The Borrowers will
furnish to the Agents prompt written notice of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting any
Loan Party or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect;
(e) any change in any Loan Party's executive officers;
(f) any failure by any Loan Party to pay rent at any of such Loan
Party's locations, which failure continues for more than ten (10) days following
the day on which such rent first came due;
(g) the discharge by any Loan Party of its present independent
accountants or any withdrawal or resignation by such independent accountants;
(h) any material adverse change in the business, operations, or
financial affairs of any Loan Party;
59
(i) any collective bargaining agreement or other labor contract to
which a Loan Party becomes a party, or the application for the certification of
a collective bargaining agent; and
(j) the filing of any Lien for unpaid taxes against any Loan
Party.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Lead Borrower setting
forth the details of the event or development requiring such notice and, if
applicable, any action taken or proposed to be taken with respect thereto.
SECTION 5.03 Information Regarding Collateral. (a) The Lead
Borrower will furnish to the Agents prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's corporate structure or jurisdiction of organization,
or (iv) in any Loan Party's Federal Taxpayer Identification Number or
organizational identification number assigned to it by its state of
organization. The Lead Borrower also agrees promptly to notify the Agents if any
material portion of the Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual
financial statements with respect to the preceding fiscal year pursuant to
clause (a) of Section 5.01, the Lead Borrower shall deliver to the Agents a
certificate of a Financial Officer of the Lead Borrower setting forth the
information required pursuant to Section 2 of the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Closing Date or the date of the most
recent certificate delivered pursuant to this Section.
SECTION 5.04 Existence; Conduct of Business. Each Loan Party will,
and will cause each of the Subsidiaries to, do or cause to be done all things
necessary to comply with its respective charter, certificate of incorporation,
articles of organization, and/or other organizational documents, as applicable;
and by-laws and/or other instruments which deal with corporate governance, and
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business, provided
that the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.
SECTION 5.05 Payment of Obligations. Each Loan Party will, and
will cause each of the Subsidiaries to, pay its Indebtedness and other
obligations, including tax liabilities, and claims for labor, materials, or
supplies, before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) such Loan Party or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP, (c)
such contest effectively suspends collection of the contested obligation and
enforcement of any Lien securing such obligation, (d) no Lien has been filed
with respect thereto, and (e) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect. Nothing
contained herein shall be deemed to limit the rights of the Administrative Agent
under Section 2.02(b) hereof.
60
SECTION 5.06 Maintenance of Properties. Each Loan Party will, and
will cause each of the Subsidiaries to, keep and maintain all property material
to the conduct of its business in good working order and condition, ordinary
wear and tear excepted and with the exception of storing closings and asset
dispositions permitted hereunder.
SECTION 5.07 Insurance. (a) Each Loan Party shall (i) maintain
insurance with financially sound and reputable insurers reasonably acceptable to
the Administrative Agent (or, to the extent consistent with prudent business
practice, a program of self-insurance for xxxxxxx'x compensation insurance the
terms of which have been disclosed to and approved by the Administrative Agent)
on such of its property and in at least such amounts and against at least such
risks as is customary with companies in the same or similar businesses operating
in the same or similar locations, including public liability insurance against
claims for personal injury or death occurring upon, in or about or in connection
with the use of any properties owned, occupied or controlled by it (including
the insurance required pursuant to the Security Documents); (ii) maintain such
other insurance as may be required by law; and (iii) furnish to the
Administrative Agent, upon written request, full information as to the insurance
carried.
(b) Fire and extended coverage policies maintained with
respect to any Collateral shall be endorsed or otherwise amended to include (i)
a non-contributing mortgage clause (regarding improvements to real property) and
lenders' loss payable clause (regarding personal property), in form and
substance satisfactory to the Collateral Agents, which endorsements or
amendments shall provide that the insurer shall pay all proceeds otherwise
payable to the Loan Parties under the policies directly to the Collateral
Agents, (ii) a provision to the effect that none of the Loan Parties, the
Administrative Agent, the Collateral Agents, or any other party shall be a
coinsurer and (iii) such other provisions as the Collateral Agents may
reasonably require from time to time to protect the interests of the Lenders.
Commercial general liability policies shall be endorsed to name the Collateral
Agents as additional insureds. Business interruption policies shall name the
Collateral Agents as loss payees and shall be endorsed or amended to include (i)
a provision that, from and after the Closing Date, the insurer shall pay all
proceeds otherwise payable to the Loan Parties under the policies directly to
the Administrative Agent or the Collateral Agents, (ii) a provision to the
effect that none of the Loan Parties, the Administrative Agent, the Collateral
Agents or any other party shall be a co-insurer and (iii) such other provisions
as the Collateral Agents may reasonably require from time to time to protect the
interests of the Lenders. Each such policy referred to in this paragraph also
shall provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium except upon not less than 30 days' prior written
notice thereof by the insurer to the Collateral Agents (giving the Collateral
Agents the right to cure defaults in the payment of premiums) or (ii) for any
other reason except upon not less than 60 days' prior written notice thereof by
the insurer to the Collateral Agents. The Borrowers shall deliver to the
Collateral Agents, prior to the cancellation, modification or nonrenewal of any
such policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Collateral Agents)
together with evidence satisfactory to the Collateral Agents of payment of the
premium therefor.
SECTION 5.08 Casualty and Condemnation. Each Borrower will furnish
to the Agents and the Lenders prompt written notice of any casualty or other
insured damage to any material portion of the Collateral or the commencement of
any action or proceeding for the taking of any material portion of the
Collateral or any part thereof or interest therein under power of eminent domain
or by condemnation or similar proceeding.
61
SECTION 5.09 Books and Records; Inspection and Audit Rights;
Appraisals; Accountants. (a) Each Loan Party will, and will cause each of the
Subsidiaries to, keep proper books of record and account consistent with past
practices previously disclosed to the Administrative Agent and in which full,
true and correct entries are made of all dealings and transactions in relation
to its business and activities. Each Loan Party will, and will cause each of the
Subsidiaries to, permit any representatives designated by any Agent, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.
(b) Each Loan Party will, and will cause each of the
Subsidiaries to, from time to time upon the request of the Collateral Agents or
the Required Lenders through the Administrative Agent, permit any Agent or
professionals (including investment bankers, consultants, accountants, lawyers
and appraisers) retained by the Agents to conduct appraisals, commercial finance
examinations and other evaluations, including, without limitation, of (i) the
Borrowers' practices in the computation of the Borrowing Base and (ii) the
assets included in the Borrowing Base and related financial information such as,
but not limited to, sales, gross margins, payables, accruals and reserves, and
pay the reasonable fees and expenses of the Agents or such professionals with
respect to such evaluations and appraisals. Without limiting the foregoing, the
Loan Parties acknowledge that the Agents intend to undertake at least three (3)
inventory appraisals and three (3) commercial finance examinations each fiscal
year, and one real estate appraisal after the Closing Date, at the Loan Parties'
expense. Notwithstanding the foregoing, the Agents may cause additional
appraisals and commercial finance examinations to be undertaken as they in their
discretion deem necessary or appropriate, or as may be required by Applicable
Law, provided that the Loan Parties shall not be obligated to pay for any such
additional appraisals and commercial finance examinations unless an Event of
Default has occurred and is continuing.
(c) The Loan Parties shall, at all times, retain
independent certified public accountants who are reasonably satisfactory to the
Administrative Agent and instruct such accountants to cooperate with, and be
available to, the Administrative Agent or its representatives to discuss the
Loan Parties' financial performance, financial condition, operating results,
controls, and such other matters, within the scope of the retention of such
accountants, as may be raised by the Administrative Agent. The Administrative
Agent agrees that the retention of any of the "big four" national accounting
firms is satisfactory to the Administrative Agent.
SECTION 5.10 Physical Inventories.
(a) The Collateral Agents, at the expense of the Loan Parties, may
participate in and/or observe each physical count and/or inventory of so much of
the Collateral as consists of Inventory which is undertaken on behalf of any
Borrower so long as such participation does not disrupt the normal inventory
schedule or process.
(b) The Borrowers, at their own expense, shall cause (i) not less
than three (3) physical inventories to be undertaken in each twelve (12) month
period during which this Agreement is in effect, and (ii) periodic cycle counts
consistent with past practices, each of the foregoing using practices consistent
with practices in effect on the date hereof.
62
(c) The Lead Borrower shall provide the Collateral Agents with the
preliminary Inventory levels at each of the Borrowers' stores within ten (10)
days following the completion of such inventory.
(d) The Lead Borrower, within forty-five (45) days following the
completion of such inventory, shall provide the Collateral Agents with a
reconciliation of the results of each such inventory (as well as of any other
physical inventory undertaken by any Borrower) and shall post such results to
the Borrowers' stock ledger and, as applicable to the Borrowers' other financial
books and records.
(e) The Collateral Agents, in their discretion, if any Default
exists, may cause such additional inventories to be taken as the Collateral
Agents determine (each, at the expense of the Borrowers). The Collateral Agents
shall use their best efforts to schedule any such inventories so as to not
unreasonably disrupt the operation of the Borrowers' business.
SECTION 5.11 Compliance with Laws. Each Loan Party will, and will
cause each of the Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.12 Use of Proceeds and Letters of Credit. The proceeds
of Loans made hereunder and Letters of Credit issued hereunder will be used only
(a) to refinance the Indebtedness under the Existing Financing Agreement, (b) to
finance the acquisition of working capital assets of the Borrowers, including
the purchase of inventory and equipment, in each case in the ordinary course of
business, (c) to finance Capital Expenditures of the Borrowers, and (d) for
general corporate purposes, including stock repurchases and Permitted
Acquisitions, all to the extent permitted herein. No part of the proceeds of any
Loan will be used, whether directly or indirectly, for any purpose that entails
a violation of any of the Regulations of the Board, including Regulations U and
X.
SECTION 5.13 Additional Subsidiaries. If any additional Subsidiary
of any Loan Party is formed or acquired after the Closing Date, the Lead
Borrower will notify the Agents and the Lenders thereof and (a) if such
Subsidiary is not a Foreign Subsidiary, the Borrowers will cause such Subsidiary
to become a Loan Party hereunder and under each applicable Security Document in
the manner provided therein within ten (10) Business Days after such Subsidiary
is formed or acquired and promptly take such actions to create and perfect Liens
on such Subsidiary's assets to secure the Obligations as any Agent or the
Required Lenders shall reasonably request and (b) if any shares of capital stock
or Indebtedness of such Subsidiary are owned by or on behalf of any Loan Party,
the Borrowers will cause such shares and promissory notes evidencing such
Indebtedness to be pledged within ten (10) Business Days after such Subsidiary
is formed or acquired (except that, if such Subsidiary is a Foreign Subsidiary,
shares of stock of such Subsidiary to be pledged may be limited to 65% of the
outstanding shares of Voting Stock of such Subsidiary).
SECTION 5.14 Further Assurances. Each Loan Party will execute any
and all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements and other documents), that may be required under any Applicable Law,
or which any Agent or the Required Lenders may reasonably request, to effectuate
the transactions contemplated by the Loan Documents or to grant, preserve,
protect or perfect the Liens created or intended to be created by the Security
Documents or the
63
validity or priority of any such Lien, all at the expense of the Loan Parties.
The Loan Parties also agree to provide to the Agents, from time to time upon
request, evidence reasonably satisfactory to the Agents as to the perfection and
priority of the Liens created or intended to be created by the Security
Documents.
(b) If any material assets are acquired by any Loan Party
after the Closing Date (other than assets constituting Collateral under the
Security Agreement that become subject to the Lien of the Security Agreement
upon acquisition thereof), the Lead Borrower will notify the Agents and the
Lenders thereof, and the Loan Parties will cause such assets to be subjected to
a Lien securing the Obligations and will take such actions as shall be necessary
or reasonably requested by any Agent or the Required Lenders to grant and
perfect such Liens, including actions described in paragraph (a) of this
Section, all at the expense of the Loan Parties.
(c) Upon the request of the Administrative Agent, the
Borrowers shall cause each of its customs brokers to deliver an agreement to the
Administrative Agent covering such matters and in such form as the
Administrative Agent may reasonably require.
(d) Within thirty (30) days after the Closing Date, the
Collateral Agents shall have received a subordination agreement and waiver of
Liens (or other agreement reasonably satisfactory to the Collateral Agents) from
Global Sports Interactive, Inc. with respect to the Loan Parties' Louisville,
Kentucky fulfillment centers reasonably satisfactory in form and substance to
the Collateral Agents.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all L/C Disbursements
shall have been reimbursed, each Loan Party covenants and agrees with the Agents
and the Lenders that:
SECTION 6.01 Indebtedness and Other Obligations. (a) The Loan
Parties will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness set forth in Schedule 6.01;
(iii) Indebtedness of any Loan Party to any other Loan
Party;
(iv) Guarantees by any Loan Party of Indebtedness of any
Borrower;
(v) Indebtedness of any Loan Party to finance the
acquisition of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity
date or decreased weighted average life thereof, provided that the
64
aggregate principal amount of Indebtedness permitted by this clause (v)
shall not exceed $1,500,000 at any time outstanding;
(vi) Indebtedness incurred to refinance any Real Estate
owned by any Loan Party or incurred in connection with sale-leaseback
transactions permitted hereunder, provided that (A) the terms of such
Indebtedness are reasonably acceptable to the Administrative Agent, and
(B) with respect to any Eligible Real Estate, the proceeds therefrom
are at least equal to the amounts then available to be borrowed with
respect thereto under clause (c) of the definition of Borrowing Base;
(vii) Indebtedness under Hedging Agreements with Fleet or
an Affiliate of Fleet, provided that at no time shall the notional
amount of such Hedging Agreements exceed $25,000,000 in the aggregate;
(viii) Indebtedness under Hedging Agreements with Persons
other than Fleet or an Affiliate of Fleet, provided that at no time
shall the notional amount of such Hedging Agreements exceed $20,000,000
in the aggregate.
(ix) Contingent liabilities under surety bonds or similar
instruments incurred in the ordinary course of business in connection
with the construction or improvement of stores in an aggregate amount
not to exceed $2,000,000;
(x) Indebtedness to Fleet, FRF or any of their Affiliates
in such amounts, on such terms, and subject to such intercreditor
provisions as may be reasonably acceptable to the Required
Supermajority Lenders; and
(xi) other unsecured Indebtedness in an aggregate
principal amount not exceeding $500,000 at any time outstanding,
provided that the terms of such Indebtedness are reasonably acceptable
to the Administrative Agent.
(b) None of the Loan Parties will, nor will they permit
any Subsidiary to, issue any preferred stock (except for preferred stock (A)(i)
all dividends in respect of which are to be paid (and all other payments in
respect of which are to be made) in additional shares of such preferred stock,
in lieu of cash, until all Obligations have been repaid in full and all
Commitments terminated, (ii) that is not subject to redemption other than
redemption at the option of the Loan Party issuing such preferred stock and
(iii) all payments in respect of which are expressly subordinated to the
Obligations), or (B) issued pursuant to the Parent's Shareholder Rights
Agreement dated as of July 21, 1998 as in effect on the Closing Date, or be or
become liable in respect of any obligation (contingent or otherwise) to
purchase, redeem, retire, acquire or make any other payment in respect of (i)
any shares of capital stock of any Loan Party or (ii) any option, warrant or
other right to acquire any such shares of capital stock.
SECTION 6.02 Liens. The Loan Parties will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
65
(c) any Lien on any property or asset of any Loan Party set forth
in Schedule 6.02, provided that (i) such Lien shall not apply to any other
property or asset of any Loan Party and (ii) such Lien shall secure only those
obligations that it secures as of the Closing Date, and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
(d) Liens on fixed or capital assets acquired by any Loan Party,
provided that (i) such Liens secure Indebtedness permitted by clause (v) of
Section 6.01(a), (ii) such Liens and the Indebtedness secured thereby are
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement, (iii) the Indebtedness secured thereby does
not exceed 100% of the cost of acquiring such fixed or capital assets and (iv)
such Liens shall not extend to any other property or assets of the Loan Parties;
(e) Liens in favor of vendors of the Loan Parties which are
subordinated to the Liens of the Collateral Agents and as to which a
subordination agreement reasonably satisfactory in form and substance to the
Collateral Agents have been executed and delivered in favor of the Collateral
Agents by such vendors;
(f) Liens to secure Indebtedness permitted by clause (vi) of
Section 6.01(a) provided that such Liens shall not apply to any property or
assets of the Loan Parties other than the Real Estate so refinanced or which is
the subject of a sale-leaseback transaction; and
(g) Liens to secure Indebtedness permitted by clause (x) of
Section 6.01(a).
SECTION 6.03 Fundamental Changes. (a) The Loan Parties will not
merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or liquidate or dissolve, except that, if at
the time thereof and immediately after giving effect thereto no Default or Event
of Default shall have occurred and be continuing, (i) any Subsidiary may merge
into or consolidate with a Borrower in a transaction in which a Borrower is the
surviving corporation, (ii) any Subsidiary that is not a Borrower may merge into
or consolidate with any Subsidiary that is not a Borrower or into the Parent,
(iii) mergers or consolidations may take place in connection with Permitted
Acquisitions, provided that any such merger involving a Person that is not a
wholly owned Subsidiary immediately prior to such merger shall not be permitted
unless also permitted by Section 6.04, and (iv) any Loan Party (other than a
Borrower or the Parent) may be dissolved or liquidated pursuant to a vote of
such Loan Party's board of directors as long as the assets of such Loan Party
are transferred to a Borrower.
(b) The Loan Parties will not engage to any material
extent in any business other than businesses of the type conducted by the Loan
Parties on the date of execution of this Agreement and businesses reasonably
related thereto.
SECTION 6.04 Investments, Loans, Advances, Guarantees and
Acquisitions. The Loan Parties will not purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly owned Subsidiary
prior to such merger) any capital stock, evidences of Indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, guarantee any
obligations of, or make or permit to exist any Investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, except:
66
(a) Permitted Investments;
(b) Investments existing on the Closing Date, and set forth on
Schedule 6.04;
(c) (i) Existing Investments in Tivoli, (ii) unsecured loans to
Tivoli required in accordance with the Tivoli Agreement, (iii) additional equity
Investments in Tivoli in an amount not to exceed $500,000, and (iv) other
Investments in Tivoli as to which the Administrative Agent has furnished its
prior written consent;
(d) loans, advances or Investments made by any Loan Party to or in
any other Loan Party;
(e) Guarantees constituting Indebtedness permitted by Section
6.01;
(f) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(g) loans or advances to employees for the purpose of travel,
entertainment or relocation in the ordinary course of business in an amount not
to exceed $200,000 in the aggregate at any time outstanding, provided that no
such loans or advances shall be made if a Default or Event of Default exists or
would arise therefrom;
(h) Wholly owned Subsidiaries of the Loan Parties, the formation
or acquisition of which is otherwise permitted hereunder and as to which the
provisions of Section 5.13 hereof have been satisfied;
(i) Permitted Acquisitions; and
(j) other Investments not to exceed $500,000 in the aggregate at
any time outstanding, provided that no such Investments shall be made if a
Default or Event of Default exists or would arise therefrom.
SECTION 6.05 Asset Sales. The Loan Parties will not, and will not
permit any of the Subsidiaries to, sell, transfer, lease or otherwise dispose of
any asset, including any capital stock, nor will the Loan Parties permit any of
the Subsidiaries to issue any additional shares of its capital stock or other
ownership interest in such Subsidiary, except:
(a) (i) sales of Inventory in the ordinary course of business, or
(ii) sales of used or surplus equipment, or (iii) Permitted Investments, in each
case in the ordinary course of business;
(b) sales, transfers and dispositions among the Loan Parties and
their Subsidiaries, provided that any such sales, transfers or dispositions
involving a Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.07;
(c) sale-leaseback transactions involving any Borrower's Real
Estate as long as, (i) with respect to any Eligible Real Estate, the net cash
proceeds therefrom are at least equal to the amounts then available to be
borrowed with respect thereto under clause (c) of the definition of Borrowing
Base, and (ii) if the Administrative Agent so requests, the Administrative Agent
shall
67
have received an intercreditor agreement executed by the purchaser of such Real
Estate on terms and conditions reasonably satisfactory to the Administrative
Agent;
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than sales, transfers and other disposition permitted under clause
(b)) shall be made at arm's length and for fair value (other than (x) sales,
transfers and other dispositions permitted under clause (b)); and further
provided that the authority granted under clauses (a)(ii), (a)(iii) and (c)
hereof may be terminated in whole or in part by the Agents upon the occurrence
and during the continuance of any Event of Default.
SECTION 6.06 Restricted Payments; Certain Payments of
Indebtedness. (a) The Loan Parties will not, and will not permit any Subsidiary
to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, except as long as no Default or Event of Default exists or
would arise therefrom (i) the Loan Parties may declare and pay dividends with
respect to their capital stock payable solely in additional shares of their
common stock, (ii) the Subsidiaries of the Lead Borrower may declare and pay
cash dividends with respect to their capital stock, (iii) only if the Payment
Conditions are then satisfied, (x) the Parent may repurchase its capital stock
and/or declare and pay cash dividends to its shareholders, and (y) the direct
Subsidiaries of the Parent may declare and pay cash dividends to the Parent,
(iv) the Parent may make payments to its employees or directors upon termination
of their employment pursuant to the Parent's Stock Option Plan (and agreements
entered into thereunder), provided that such payments do not exceed $400,000 in
the aggregate in any fiscal year, and (v) the Parent may make payments not to
exceed $75,000 in any fiscal year to repurchase shares of the Parent's capital
stock from employees in connection with the termination of their employment with
the Parent.
(b) The Loan Parties will not, and will not permit any
Subsidiary to, make or agree to pay or make, directly or indirectly, any payment
or other distribution (whether in cash securities or other property) of or in
respect of principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness,
except:
(i) payment of regularly scheduled interest,
principal payments and other charges, as and when due in respect of any
Indebtedness permitted hereunder; and
(ii) refinancings of Indebtedness described in clause
(i), above, to the extent permitted by Section 6.01.
SECTION 6.07 Transactions with Affiliates. The Loan Parties will
not, and will not permit any Subsidiary to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business that are
at prices and on terms and conditions not less favorable to the Loan Parties or
such Subsidiary than could be obtained on an arm's-length basis from unrelated
third parties, (b) licensing agreements between the Borrowers and NEA Delaware,
Inc. for the licensing and use of intellectual property, (c) salaries, fees and
bonuses to the directors, officers and employees of the Parent and its
Subsidiaries as are usual and customary in their businesses, including, without
limitation, any change in control payments to any of Xxxx Xxxxx, Xxxxxx XxXxxxx
and
68
Xxxxx Xxxxxxxxx, (d) unsecured loans to, and purchases of goods from, Tivoli in
accordance with the Tivoli Agreement, and (e) those described on Schedule 6.07
hereto.
SECTION 6.08 Restrictive Agreements. The Loan Parties will not,
and will not permit any Subsidiary to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of the Loan Parties or any
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Loan Parties or any other Subsidiary or to
guarantee Indebtedness of the Loan Parties or any other Subsidiary, provided
that (i) the foregoing shall not apply to restrictions and conditions imposed by
law or by any Loan Document, (ii) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (iii) clause
(a) of the foregoing shall not apply to customary provisions in leases
restricting the assignment or subleasing thereof.
SECTION 6.09 Amendment of Material Documents. The Loan Parties
will not, and will not permit any Subsidiary to, amend, modify or waive any of
its rights under (a) its certificate of incorporation, by-laws or other
organizational documents, (b) any Leases, or (c) any other instruments,
documents or agreements, in each case to the extent that such amendment,
modification or waiver would be adverse to the interests of the Lenders.
SECTION 6.10 Additional Subsidiaries. The Loan Parties will not,
and will not permit any Subsidiary to, create any additional Subsidiary unless
the requirements of Section 5.13 are satisfied contemporaneously therewith.
SECTION 6.11 Fixed Charge Coverage Ratio. The Loan Parties shall
maintain a Fixed Charge Coverage Ratio as of the end of each of the Loan
Parties' fiscal months at least equal to the following:
Period Minimum Ratio
------ -------------
Fiscal Month ending March, 2003 0.70: 1.00
---------------------------------------------------
Fiscal Month ending April, 2003 0.67: 1.00
---------------------------------------------------
Fiscal Month ending May, 2003 0.71: 1.00
---------------------------------------------------
Fiscal Month ending June, 2003 0.68: 1.00
---------------------------------------------------
Fiscal Month ending July, 2003 0.65: 1.00
---------------------------------------------------
Fiscal Month ending August, 2003 0.60: 1.00
---------------------------------------------------
69
Fiscal Month ending September, 2003 0.65:1.00
---------------------------------------------------------------------------
Fiscal Months ending October, November, and December, 2003 0.80:1.00
---------------------------------------------------------------------------
Fiscal Months ending January, February, and March, 2004 0.90:1.00
---------------------------------------------------------------------------
Fiscal Months ending April, May, and June, 2004 1.00:1.00
---------------------------------------------------------------------------
Each Fiscal Month ending thereafter 1.10:1.00
---------------------------------------------------------------------------
SECTION 6.12 Fiscal Year. The Parent and its Subsidiaries shall
not change their fiscal year without furnishing prior written notice to the
Administrative Agent.
SECTION 6.13 Environmental Laws. The Loan Parties shall not (a)
fail to comply with any Environmental Law or to obtain, maintain or comply with
any permit, license or other approval required under any Environmental Law, or
(b) become subject to any Environmental Liability, which, in either event, is
reasonably likely to have a Material Adverse Effect.
SECTION 6.14 Store Openings and Closings. No Loan Party will
commit to open or open any location at which any Loan Party maintains, offers
for sale or stores any of its Inventory or other Collateral, except that the
Borrowers may expand by opening up to (a) three new locations from the Closing
Date until the end of its fiscal year 2003, (b) ten new locations in its fiscal
year 2004, and (c) twenty new locations in its fiscal year 2005. To the extent
that the Loan Parties fail to open any stores permitted hereunder in any fiscal
year, the Loan Parties may not carry over any such unutilized store openings to
any subsequent fiscal year, without first obtaining the Administrative Agent's
prior written consent, which consent shall not be unreasonably withheld or
delayed.
SECTION 6.15 Tivoli Agreement. The Loan Parties shall not modify
or amend the Tivoli Agreement (a) to extend the time period for the Loan
Parties' commitment, or increase the Loan Parties' commitment, to make loans and
advances to Tivoli, or (b) in a manner adverse to the Lenders' interests, in
each case without the prior written consent of the Administrative Agent, which
consent shall not be unreasonably withheld or delayed.
ARTICLE VII
Events of Default
SECTION 7.01 Events of Default. If any of the following events
("Events of Default") shall occur:
70
(a) the Loan Parties shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any L/C Disbursement when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Loan Parties shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Loan Document, when and
as the same shall become due and payable and such failure continues for five
days;
(c) any representation or warranty made or deemed made by or on
behalf of any Loan Party in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) the Loan Parties shall fail to observe or perform any
covenant, condition or agreement contained in Sections 2.22, 5.01(f), 5.07,
5.09, or 5.12, or in Article VI (other than Sections 6.12 and 6.13);
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b), (c), or (d) of this Article), and such failure
shall continue unremedied for a period of 20 days after notice thereof from the
Administrative Agent to the Lead Borrower;
(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness when and as the same shall become due and payable (after giving
effect to the expiration of any grace or cure period set forth therein);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any such Material Indebtedness or any trustee or agent on
its or their behalf to cause any such Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of any Loan Party or its debts, or of a substantial part of its
assets, under any federal or state bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any Loan
Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(i) any Loan Party shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under
any federal or state bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in clause
(h) of this Section 7.01, (iii) apply for or consent to the appointment of a
receiver, trustee,
71
custodian, sequestrator, conservator or similar official for any Loan Party or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) any Loan Party shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $500,000 shall be rendered against any Loan Party or any
combination thereof and the same shall remain undischarged for a period of 45
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
material assets of any Loan Party to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Loan
Parties in an aggregate amount exceeding $250,000;
(m) (i) any challenge by or on behalf of any Loan Party to
the validity of any Loan Document or the applicability or enforceability of any
Loan Document strictly in accordance with the subject Loan Document's terms or
which seeks to void, avoid, limit, or otherwise adversely affect any security
interest created by or in any Loan Document or any payment made pursuant
thereto;
(ii) any challenge by or on behalf of any other Person to
the validity of any Loan Document or the applicability or enforceability of any
Loan Document strictly in accordance with the subject Loan Document's terms or
which directly seeks to void, avoid, limit, or otherwise adversely affect any
security interest created by or in any Loan Document or any payment made
pursuant thereto;
(iii) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral, with the priority required by the
applicable Security Document, except as a result of the sale or other
disposition of the applicable Collateral in a transaction permitted under the
Loan Documents;
(n) a Change in Control shall occur;
(o) the occurrence of any uninsured loss to any material portion
of the Collateral;
(p) the indictment of, or institution of any legal process or
proceeding against, any Loan Party, under any federal, state, municipal, and
other civil or criminal statute, rule, regulation, order, or other requirement
having the force of law where the relief, penalties, or remedies sought or
available include the forfeiture of any material property of any Loan Party
and/or the imposition of any stay or other order, the effect of which could
reasonably be to restrain in any material way the conduct by the Loan Parties,
taken as a whole, of their business in the ordinary course or could reasonably
be likely to have a Material Adverse Effect;
(q) except to the extent expressly permitted under this Agreement,
the determination by any Borrower, whether by vote of such Borrower's board of
directors or otherwise to: suspend
72
the operation of such Borrower's business in the ordinary course, liquidate all
or a material portion of such Borrower's assets or store locations, or employ an
agent or other third party to conduct any so-called store closing, store
liquidation or "Going-Out-Of-Business" sales with respect to a substantial
number of stores; or
then, and in every such event (other than an event with respect to any Loan
Party described in clause (h) or (i) of this Section 7.01), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Lead
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then outstanding to be due and
payable in whole (or in part, in which case any principal not so declared to be
due and payable may thereafter be declared to be due and payable), and thereupon
the principal of the Loans so declared to be due and payable, together with
accrued interest thereon and all fees and other obligations of the Borrowers
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Loan Parties; and in case of any event with respect to any
Loan Party described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Loan Parties, to the extent permitted under Applicable Law.
SECTION 7.02 When Continuing.
For all purposes under this Agreement, each Default and Event of
Default that has occurred shall be deemed to be continuing at all times
thereafter unless it either (a) is cured or corrected to the reasonable written
satisfaction of that percentage of the Lenders as is required by Section 9.02,
or (b) is waived in writing by that percentage of the Lenders as is required by
Section 9.02.
SECTION 7.03 Remedies on Default
In case any one or more of the Events of Default shall have occurred
and be continuing, and whether or not the maturity of the Loans shall have been
accelerated pursuant hereto, the Administrative Agent may proceed to protect and
enforce its rights and remedies under this Agreement, the Notes or any of the
other Loan Documents by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations are evidenced, and, if such amount shall have
become due, by declaration or otherwise, proceed to enforce the payment thereof
or any other legal or equitable right of the Agents or the Lenders. No remedy
herein is intended to be exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or any
other provision of law.
SECTION 7.04 Application of Proceeds
After the occurrence of an Event of Default and acceleration of the
Obligations, all proceeds realized from any Loan Party or on account of any
Collateral shall be applied in the
73
manner set forth in Section 6.02 of the Security Agreement. All amounts required
to be applied to Loans hereunder (other than Swingline Loans) shall be applied
ratably in accordance with each Lender's Commitment Percentage.
ARTICLE VIII
The Agents
SECTION 8.01 Administration by Administrative Agent.
Each Lender, the Collateral Agents and the Issuing Bank hereby
irrevocably designate Fleet as Administrative Agent under this Agreement and the
other Loan Documents. The general administration of the Loan Documents shall be
by the Administrative Agent. The Lenders, the Collateral Agents and the Issuing
Bank each hereby irrevocably authorizes the Administrative Agent (i) to enter
into the Loan Documents to which it is a party and (ii) at its discretion, to
take or refrain from taking such actions as agent on its behalf and to exercise
or refrain from exercising such powers under the Loan Documents and the Notes as
are delegated by the terms hereof or thereof, as appropriate, together with all
powers reasonably incidental thereto. The Administrative Agent shall have no
duties or responsibilities except as set forth in this Agreement and the
remaining Loan Documents, nor shall it have any fiduciary relationship with any
Lender, and no implied covenants, responsibilities, duties, obligations, or
liabilities shall be read into the Loan Documents or otherwise exist against the
Administrative Agent.
SECTION 8.02 The Collateral Agents.
Each Lender, the Administrative Agent and the Issuing Bank hereby
irrevocably (i) designate Fleet and FRF as Collateral Agents under this
Agreement and the other Loan Documents, (ii) authorize the Collateral Agents to
enter into the Collateral Documents and the other Loan Documents to which it is
a party and to perform its duties and obligations thereunder, together with all
powers reasonably incidental thereto, and (iii) agree and consent to all of the
provisions of the Security Documents. All Collateral shall be held or
administered by the Collateral Agents (or their duly-appointed agent) for their
benefit and for the ratable benefit of the other Secured Parties. Any proceeds
received by the Collateral Agents from the foreclosure, sale, lease or other
disposition of any of the Collateral and any other proceeds received pursuant to
the terms of the Security Documents or the other Loan Documents shall be paid
over to the Administrative Agent for application as provided in Sections 2.19,
2.23, or 7.04, as applicable. The Collateral Agents shall have no duties or
responsibilities except as set forth in this Agreement and the remaining Loan
Documents, nor shall it have any fiduciary relationship with any Lender, and no
implied covenants, responsibilities, duties, obligations, or liabilities shall
be read into the Loan Documents or otherwise exist against the Collateral
Agents.
SECTION 8.03 Sharing of Excess Payments.
Each of the Lenders, the Agents and the Issuing Bank agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Loan Parties, including, but not limited to, a secured claim under
Section 506 of the Bankruptcy Code or other security or interest arising from,
or in lieu of, such secured claim and received by such Lender, any Agent or the
Issuing Bank under any applicable bankruptcy, insolvency or other similar law,
or otherwise, obtain payment in respect of the Obligations owed it (an "excess
payment") as a result of which such Lender, such Agent or the Issuing Bank has
received payment of any Loans or other
74
Obligations outstanding to it in excess of the amount that it would have
received if all payments at any time applied to the Loans and other Obligations
had been applied in the order of priority set forth in Section 7.04, then such
Lender, Agent or the Issuing Bank shall promptly purchase at par (and shall be
deemed to have thereupon purchased) from the other Lenders, such Agent and the
Issuing Bank, as applicable, a participation in the Loans and Obligations
outstanding to such other Persons, in an amount determined by the Administrative
Agent in good faith as the amount necessary to ensure that the economic benefit
of such excess payment is reallocated in such manner as to cause such excess
payment and all other payments at any time applied to the Loans and other
Obligations to be effectively applied in the order of priority set forth in
Section 7.04 in proportion to its Commitment Percentages; provided, that if any
such excess payment is thereafter recovered or otherwise set aside such purchase
of participations shall be correspondingly rescinded (without interest). The
Loan Parties expressly consent to the foregoing arrangements and agree that any
Lender, any Agent or the Issuing Bank holding (or deemed to be holding) a
participation in any Loan or other Obligation may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by such Loan Party to such Lender, such Agent or the Issuing Bank as fully as if
such Lender, Agent or the Issuing Bank held a Note and was the original obligee
thereon, in the amount of such participation.
SECTION 8.04 Agreement of Required Lenders.
(i) Upon any occasion requiring or permitting an approval,
consent, waiver, election or other action on the part of only the Required
Lenders, action shall be taken by the Agents for and on behalf or for the
benefit of all Lenders upon the direction of the Required Lenders, and any such
action shall be binding on all Lenders, and (ii) upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the part of
the Required Supermajority Lenders, action shall be taken by the Agents for and
on behalf or for the benefit of all Lenders upon the direction of the Required
Supermajority Lenders and any such action shall be binding on all Lenders. No
amendment, modification, consent, or waiver shall be effective except in
accordance with the provisions of Section 9.02.
(ii) Upon the occurrence of an Event of Default, the Agents shall
(subject to the provisions of Section 9.02) take such action with respect
thereto as may be reasonably directed by the Required Lenders; provided that
unless and until the Agents shall have received such directions, the Agents may
(but shall not be obligated to) take such action as it shall deem advisable in
the best interests of the Lenders. In no event shall the Agents be required to
comply with any such directions to the extent that the Agents believe that the
Agents' compliance with such directions would be unlawful.
SECTION 8.05 Liability of Agents.
(i) Each of the Agents, when acting on behalf of the Lenders and
the Issuing Bank, may execute any of its respective duties under this Agreement
by or through any of its respective officers, agents and employees, and none of
the Agents nor their respective directors, officers, agents or employees shall
be liable to the Lenders or the Issuing Bank or any of them for any action taken
or omitted to be taken in good faith, or be responsible to the Lenders or the
Issuing Bank or to any of them for the consequences of any oversight or error of
judgment, or for any loss, except to the extent of any liability imposed by law
by reason of such Agent's own gross negligence or willful misconduct. The Agents
and their respective directors, officers, agents and employees shall in no event
be liable to the Lenders or the Issuing Bank or to any of them for any
75
action taken or omitted to be taken by them pursuant to instructions received by
them from the Required Lenders, or Required Supermajority Lenders, as
applicable, or in reliance upon the advice of counsel selected by it. Without
limiting the foregoing, none of the Agents, nor any of their respective
directors, officers, employees, or agents (A) shall be responsible to any Lender
or the Issuing Bank for the due execution, validity, genuineness, effectiveness,
sufficiency, or enforceability of, or for any recital, statement, warranty or
representation in, this Agreement, any Loan Document or any related agreement,
document or order, or (B) shall be required to ascertain or to make any inquiry
concerning the performance or observance by any Loan Party of any of the terms,
conditions, covenants, or agreements of this Agreement or any of the Loan
Documents, or (C) shall be responsible to any Lender or the Issuing Bank for the
state or condition of any properties of the Borrower or any other obligor
hereunder constituting Collateral for the Obligations of the Borrower hereunder,
or any information contained in the books or records of the Borrower; or (D)
shall be responsible to any Lender or the Issuing Bank for the validity,
enforceability, collectibility, effectiveness or genuineness of this Agreement
or any other Loan Document or any other certificate, document or instrument
furnished in connection therewith; or (E) shall be responsible to any Lender or
the Issuing Bank for the validity, priority or perfection of any lien securing
or purporting to secure the Obligations or the value or sufficiency of any of
the Collateral.
(ii) The Agents may execute any of their duties under this
Agreement or any other Loan Document by or through their agents or
attorneys-in-fact, and shall be entitled to the advice of counsel concerning all
matters pertaining to its rights and duties hereunder or under the Loan
Documents. The Agents shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by them with reasonable care.
(iii) None of the Agents nor any of their respective directors,
officers, employees, or agents shall have any responsibility to the Loan Parties
on account of the failure or delay in performance or breach by any Lender (other
than by the Agent in its capacity as a Lender) or the Issuing Bank of any of
their respective obligations under this Agreement or the Notes or any of the
Loan Documents or in connection herewith or therewith.
(iv) The Agents shall be entitled to rely, and shall be fully
protected in relying, upon any notice, consent, certificate, affidavit, or other
document or writing believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or persons, and upon the advice and
statements of legal counsel (including, without, limitation, counsel to the Loan
Parties), independent accountants and other experts selected by the Agents. The
Agents shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless they shall first receive such
advice or concurrence of the Required Lenders as they deem appropriate or they
shall first be indemnified to their satisfaction by the Lenders against any and
all liability and expense which may be incurred by them by reason of the taking
or failing to take any such action.
SECTION 8.06 Notice of Default. The Agents shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
unless the Agents have actual knowledge of the same or have received notice from
a Lender or the Loan Parties referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Agents obtain such actual knowledge or receive
such a notice, the Agents shall give prompt notice thereof to each of the
Lenders. The Agents shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders. Unless and
until the Agents shall have received such direction, the Agents
76
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to any such Default or Event of Default as they shall
deem advisable in the best interest of the Lenders.
SECTION 8.07 Lenders' Credit Decisions. Each Lender acknowledges
that it has, independently and without reliance upon the Agents or any other
Lender, and based on the financial statements prepared by the Loan Parties and
such other documents and information as it has deemed appropriate, made its own
credit analysis and investigation into the business, assets, operations,
property, and financial and other condition of the Loan Parties and has made its
own decision to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agents or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in determining whether or not conditions precedent to closing any Loan hereunder
have been satisfied and in taking or not taking any action under this Agreement
and the other Loan Documents.
SECTION 8.08 Reimbursement and Indemnification.
Each Lender agrees (i) to reimburse (x) each Agent for such Lender's
Commitment Percentage of any expenses and fees incurred by such Agent for the
benefit of the Lenders or the Issuing Bank under this Agreement, the Notes and
any of the Loan Documents, including, without limitation, counsel fees and
compensation of agents and employees paid for services rendered on behalf of the
Lenders or the Issuing Bank, and any other expense incurred in connection with
the operations or enforcement thereof not reimbursed by the Loan Parties and (y)
each Agent for such Lender's Commitment Percentage of any expenses of such Agent
incurred for the benefit of the Lenders or the Issuing Bank that the Loan
Parties have agreed to reimburse pursuant to Section 9.03 and has failed to so
reimburse and (ii) to indemnify and hold harmless the Agents and any of their
directors, officers, employees, or agents, on demand, in the amount of such
Lender's Commitment Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against it or any of them in any way relating to or
arising out of this Agreement, the Notes or any of the Loan Documents or any
action taken or omitted by it or any of them under this Agreement, the Notes or
any of the Loan Documents to the extent not reimbursed by the Loan Parties
(except such as shall result from their respective gross negligence or willful
misconduct). The provisions of this Section 8.06 shall survive the repayment of
the Obligations and the termination of the Commitments.
SECTION 8.09 Rights of Agents.
It is understood and agreed that Fleet and FRF shall each have the same
rights and powers hereunder (including the right to give such instructions) as
the other Lenders and may exercise such rights and powers, as well as its rights
and powers under other agreements and instruments to which it is or may be
party, and engage in other transactions with the Borrowers, as though they were
not the Administrative Agent or the Collateral Agents, respectively, of the
Lenders under this Agreement. The Agents and their affiliates may accept
deposits from, lend money to, and generally engage in any kind of commercial or
investment banking, trust, advisory or other business with the Loan Parties and
their Subsidiaries and Affiliates as if it were not the Agent hereunder.
77
SECTION 8.10 Independent Lenders and Issuing Bank.
The Lenders and the Issuing Bank each acknowledge that they have
decided to enter into this Agreement and to make the Loans or issue the Letters
of Credit hereunder based on their own analysis of the transactions contemplated
hereby and of the creditworthiness of the Loan Parties and agrees that the
Agents shall bear no responsibility therefor.
SECTION 8.11 Notice of Transfer.
The Agents may deem and treat a Lender party to this Agreement as the
owner of such Lender's portion of the Loans for all purposes, unless and until,
and except to the extent, an Assignment and Acceptance shall have become
effective as set forth in Section 9.05(b).
SECTION 8.12 Successor Agent
Any Agent may resign at any time by giving five (5) Business Days'
written notice thereof to the Lenders, the Issuing Bank, the other Agents and
the Lead Borrower. Upon any such resignation of any Agent, the Required Lenders
shall have the right to appoint a successor Agent, which so long as there is no
Default or Event of Default, shall be reasonably satisfactory to the Lead
Borrower (whose consent shall not be unreasonably withheld or delayed). If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
of notice of resignation, the retiring Agent may, on behalf of the Lenders, the
other Agents and the Issuing Bank, appoint a successor Agent which shall be a
Person capable of complying with all of the duties of such Agent (and the
Issuing Bank), hereunder (in the opinion of the retiring Agent and as certified
to the Lenders in writing by such successor Agent) which, so long as there is no
Default or Event of Default, shall be reasonably satisfactory to the Lead
Borrower (whose consent shall not be unreasonably withheld or delayed).
Notwithstanding the foregoing, if Fleet resigns as Administrative Agent, FRF
may, at its option, become successor Administrative Agent; and if either Fleet
or FRF resigns as Collateral Agent, the other party may, at its option, become
successor Collateral Agent. Upon the acceptance of any appointment as Agent by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as such Agent,
the provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was such Agent under this Agreement.
SECTION 8.13 Reports and Financial Statements.
Promptly after receipt thereof from the Borrowers, the Administrative
Agent shall remit to each Lender and the Collateral Agents copies of all
financial statements and other notices (excluding Borrowing Requests and other
routine communications in the ordinary course of business) required to be
delivered by the Borrowers hereunder and all commercial finance examinations and
appraisals of the Collateral received by the Administrative Agent.
SECTION 8.14 Delinquent Lender. If for any reason any Lender shall
fail or refuse to abide by its obligations under this Agreement, including
without limitation its obligation to make available to Administrative Agent its
Commitment Percentage of any Revolving Loans, expenses or setoff or purchase its
Commitment Percentage of a participation interest in the Swingline Loans (a
"Delinquent Lender") and such failure is not cured within ten (10) days of
receipt from
78
the Administrative Agent of written notice thereof, then, in addition to the
rights and remedies that may be available to Agents, other Lenders, the Loan
Parties or any other party at law or in equity, and not at limitation thereof,
(i) such Delinquent Lender's right to participate in the administration of, or
decision-making rights related to, the Loans, this Agreement or the other Loan
Documents shall be suspended during the pendency of such failure or refusal, and
(ii) a Delinquent Lender shall be deemed to have assigned any and all payments
due to it from the Loan Parties, whether on account of outstanding Loans,
interest, fees or otherwise, to the remaining non-delinquent Lenders for
application to, and reduction of, their proportionate shares of all outstanding
Loans until, as a result of application of such assigned payments the Lenders'
respective Commitment Percentages of all outstanding Loans shall have returned
to those in effect immediately prior to such delinquency and without giving
effect to the nonpayment causing such delinquency. The Delinquent Lender's
decision-making and participation rights and rights to payments as set forth in
clauses (i) and (ii) hereinabove shall be restored only upon the payment by the
Delinquent Lender of its Commitment Percentage of any Loans, any participation
obligation, or expenses as to which it is delinquent, together with interest
thereon at the rate set forth in Section 2.10 hereof from the date when
originally due until the date upon which any such amounts are actually paid.
The non-delinquent Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to acquire for no
cash consideration, (pro rata, based on the respective Commitments of those
Lenders electing to exercise such right) the Delinquent Lender's Commitment to
fund future Loans (the "Future Commitment"). Upon any such purchase of the
Commitment Percentage of any Delinquent Lender's Future Commitment, the
Delinquent Lender's share in future Loans and its rights under the Loan
Documents with respect thereto shall terminate on the date of purchase, and the
Delinquent Lender shall promptly execute all documents reasonably requested to
surrender and transfer such interest, including, if so requested, an Assignment
and Acceptance. Each Delinquent Lender shall indemnify the Agents and each
non-delinquent Lender from and against any and all loss, damage or expenses,
including but not limited to reasonable attorneys' fees and funds advanced by
any Agent or by any non-delinquent Lender, on account of a Delinquent Lender's
failure to timely fund its Commitment Percentage of a Loan or to otherwise
perform its obligations under the Loan Documents.
SECTION 8.15 Arranger. Notwithstanding the provisions of this
Agreement or any of the other Loan Documents, except as provided in the
commitment letter for this transaction, the Arranger shall have no powers,
rights, duties, responsibilities or liabilities with respect to this Agreement
and the other Loan Documents.
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to any Loan Party, to it at 00 Xxxxxx Xxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Chief Financial Officer (Telecopy No. (781)
830-3484), with a copy to Goulston & Storrs, P.C., 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx Xxxxxxx,
79
Esquire (Telecopy No. (000) 000-0000);
(b) if to the Administrative Agent or the Collateral Agents, or
the Swingline Lender to Fleet Retail Finance Inc., 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xxxxx Xxxxxxx (Telecopy No. (000) 000-0000),
with a copy to Xxxxxx & Xxxxxxxxxx, LLP, Xxxxx Xxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx, Esquire (Telecopy No. (617)
880-3456);
(c) if to any other Lender, to it at its address (or telecopy
number) set forth on the signature pages hereto or on any Assignment and
Acceptance for such Lender.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02 Waivers; Amendments. (a) No failure or delay by the
Agents, the Issuing Bank or any Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agents, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Agents, any Lender or the Issuing Bank may
have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document
nor any provision hereof or thereof may be waived, amended or modified except,
in the case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Agents and the Loan Parties that are parties thereto, in each case
with the Consent of the Required Lenders, provided that no such agreement shall
(i) increase the Commitment of any Lender without the Consent of such Lender,
(ii) reduce the principal amount of any Loan or L/C Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder, without the
Consent of each Lender affected thereby, (iii) postpone the scheduled date of
payment of the principal amount of any Loan or L/C Disbursement, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of the
Commitments or the Maturity Date, without the Consent of each Lender affected
thereby, (iv) change Sections 2.19, 2.22, or 2.23 or Section 6.02 of the
Security Agreement, without the Consent of each Lender, (v) change any of the
provisions of this Section 9.02 or the definition of the term "Required Lenders"
or "Required Supermajority Lenders" or, except as set forth in any intercreditor
agreement entered into pursuant to Section 6.01(a)(x) hereof, any other
provision of any Loan Document specifying the number or percentage of Lenders
required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without
80
the Consent of each Lender, (vi) release any Loan Party from its obligations
under any Loan Document, or limit its liability in respect of such Loan
Document, without the Consent of each Lender, (vii) except for sales described
in Section 6.05 or as permitted in the Security Documents, release any material
portion of the Collateral from the Liens of the Security Documents, without the
Consent of each Lender, (viii) change the definition of the term "Borrowing
Base" or any component definition thereof if as a result thereof the amounts
available to be borrowed by the Borrowers would be increased, without the
Consent of each Lender, provided that the foregoing shall not limit the
discretion of the Administrative Agent to change, establish or eliminate any
Reserves, except that the Administrative Agent shall not decrease the Excess
Availability Reserve provided in Section 2.02(a)(iv) hereof prior to the time
specified in Section 2.02(c) hereof without the consent of the Required
Supermajority Lenders, (ix) increase the Permitted Overadvance, without the
Consent of each Lender, (x) subordinate the Obligations hereunder, or, except as
set forth in any intercreditor agreement entered into pursuant to Section
6.01(a)(x) hereof, the Liens granted hereunder or under the other Loan
Documents, to any other Indebtedness or Lien, as the case may be without the
prior Consent of each Lender, and provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Agents or the
Issuing Bank without the prior written consent of the Agents or the Issuing
Bank, as the case may be.
(c) Notwithstanding anything to the contrary contained herein, no
modification, amendment or waiver which (i) increases the maximum amount of the
Swingline Loans to an amount in excess of $10,000,000 (or such greater amount to
which such limit has been previously increased in accordance with the provisions
of this Section 9.02(c)), or (ii) modifies the provisions of Section 2.02(c)
shall be made without the Consent of the Required Supermajority Lenders.
(d) Notwithstanding anything to the contrary contained in this
Section 9.02, in the event that the Borrowers request that this Agreement or any
other Loan Document be modified, amended or waived in a manner which would
require the Consent of the Lenders pursuant to Sections 9.02(b) or 9.02(c) and
such amendment is approved by the Required Lenders, but not by the percentage of
the Lenders set forth in said Sections 9.02(b) or 9.02(c), as applicable, the
Borrowers, and the Required Lenders shall be permitted to amend this Agreement
without the Consent of the Lender or Lenders which did not agree to the
modification or amendment requested by the Borrowers (such Lender or Lenders,
collectively the "Minority Lenders") to provide for (w) the termination of the
Commitment of each of the Minority Lenders, (x) the addition to this Agreement
of one or more other financial institutions, or an increase in the Commitment of
one or more of the Required Lenders, so that the aggregate Commitments after
giving effect to such amendment shall be in the same amount as the aggregate
Commitments immediately before giving effect to such amendment, (y) if any Loans
are outstanding at the time of such amendment, the making of such additional
Loans by such new or increasing Lender or Lenders, as the case may be, as may be
necessary to repay in full the outstanding Loans (including principal, interest,
and fees) of the Minority Lenders immediately before giving effect to such
amendment and (z) such other modifications to this Agreement or the Loan
Documents as may be appropriate and incidental to the foregoing.
(e) No notice to or demand on any Loan Party shall entitle any
Loan Party to any other or further notice or demand in the same, similar or
other circumstances. Each holder of a Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not a
Note shall have been marked to indicate such amendment, modification, waiver or
consent and any consent by a Lender, or any holder of a Note, shall bind any
Person
81
subsequently acquiring a Note, whether or not a Note is so marked. No amendment
to this Agreement or any other Loan Document shall be effective against the
Borrowers unless signed by the Borrowers or other applicable Loan Party.
SECTION 9.03 Expenses; Indemnity; Damage Waiver. (a) The Loan
Parties shall jointly and severally pay (i) all reasonable out-of-pocket
expenses incurred by the Agents and their Affiliates, including the reasonable
fees, charges and disbursements of counsel for the Agents, outside consultants
for the Agents, appraisers, for commercial finance examinations and
environmental site assessments, in connection with the initial syndication of
the credit facilities provided for herein, the preparation and administration of
the Loan Documents or any amendments, modifications or waivers of the provisions
thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all reasonable
out-of-pocket expenses incurred by the Agents, the Issuing Bank or any Lender,
including the reasonable fees, charges and disbursements of any counsel and any
outside consultants for the Agents, the Issuing Bank or any Lender, for
appraisers, commercial finance examinations, and environmental site assessments,
in connection with the enforcement or protection of its rights in connection
with the Loan Documents, including its rights under this Section, or in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit; provided that the
Lenders who are not the Agents shall be entitled to reimbursement for no more
than one counsel representing all such Lenders (absent a conflict of interest in
which case the Lenders may engage and be reimbursed for additional counsel) and
the Agents shall be entitled to one counsel representing all Agents.
(b) The Loan Parties shall, jointly and severally,
indemnify the Agents, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable and
documented fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of any Loan Document or
any other agreement or instrument contemplated hereby, the performance by the
parties to the Loan Documents of their respective obligations thereunder or the
consummation of the transactions contemplated by the Loan Documents or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by the Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property currently or formerly owned or operated by any
Loan Party or any of the Subsidiaries, or any Environmental Liability related in
any way to any Loan Party or any of the Subsidiaries, or (iv) any actual claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto, provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence or wilful
misconduct of such Indemnitee or any Affiliate of such Indemnitee (or of any
officer, director, employee, advisor or agent of such Indemnitee or any such
Indemnitee's Affiliates).
82
(c) To the extent that any Loan Party fails to pay any
amount required to be paid by it to the Agents or the Issuing Bank under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Agents or the Issuing Bank, as the case may be, such Lender's pro rata share
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount, provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Agents or the Issuing Bank. For
purposes hereof, a Lender's "pro rata share" shall be determined based upon its
share of the Total Commitments at the time.
(d) To the extent permitted by Applicable Law, no Loan
Party shall assert, and each hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the transactions contemplated by the Loan Documents, any
Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 9.04 Designation of Lead Borrower as Borrowers' Agent.
(a) Each Borrower hereby irrevocably designates and appoints the
Lead Borrower as that Borrower's agent to obtain Loans and Letters of Credit
hereunder, the proceeds of which shall be available to each Borrower for those
uses as those set forth herein. As the disclosed principal for its agent, each
Borrower shall be obligated to the Agents and each Lender on account of Loans so
made and Letters of Credit so issued hereunder as if made directly by the
Lenders to that Borrower, notwithstanding the manner by which such Loans and
Letters of Credit are recorded on the books and records of the Lead Borrower and
of any Borrower.
(b) Each Borrower recognizes that credit available to it hereunder
is in excess of and on better terms than it otherwise could obtain on and for
its own account and that one of the reasons therefor is its joining in the
credit facility contemplated herein with all other Borrowers. Consequently, each
Borrower hereby assumes, guarantees, and agrees to discharge all Obligations of
all other Borrowers as if the Borrower so assuming and guarantying were each
other Borrower.
(c) The Lead Borrower shall act as a conduit for each Borrower
(including itself, as a "Borrower") on whose behalf the Lead Borrower has
requested a Loan.
(i) The Lead Borrower shall cause the transfer
of the proceeds of each Loan to the (those) Borrower(s) on
whose behalf such Loan was obtained. Neither the Agents nor
any Lender shall have any obligation to see to the application
of such proceeds.
(ii) If, for any reason, and at any time during
the term of this Agreement,
(A) any Borrower, including the Lead
Borrower, as agent for the Borrowers, shall be unable
to, or prohibited from carrying out the terms and
conditions of this Agreement (as determined by the
83
Administrative Agent in the Administrative Agent's
sole and absolute discretion); or
(B) the Administrative Agent deems it
inexpedient (in the Administrative Agent's sole and
absolute discretion) to continue making Loans and
cause Letters of Credit to be issued to or for the
account of any particular Borrower, or to channel
such Loans and Letters of Credit through the Lead
Borrower,
then the Lenders may make Loans directly to, and cause the
issuance of Letters of Credit directly for the account of such
of the Borrowers as the Administrative Agent determines to be
expedient, which Loans may be made without regard to the
procedures otherwise included herein.
(d) In the event that the Administrative Agent determines to forgo
the procedures included herein pursuant to which Loans and Letters of Credit are
to be channeled through the Lead Borrower, then the Administrative Agent may
designate one or more of the Borrowers to fulfill the financial and other
reporting requirements otherwise imposed herein upon the Lead Borrower.
(e) Each of the Borrowers shall remain liable to the Agents and
the Lenders for the payment and performance of all Obligations (which payment
and performance shall continue to be secured by all Collateral granted by each
of the Borrowers) notwithstanding any determination by the Administrative Agent
to cease making Loans or causing Letters of Credit to be issued to or for the
benefit of any Borrower.
(f) The authority of the Lead Borrower to request Loans on behalf
of, and to bind, the Borrowers, shall continue unless and until the
Administrative Agent acts as provided in subparagraph (c), above, or the
Administrative Agent actually receives
(i) written notice of: (i) the termination of
such authority, and (ii) the subsequent appointment of a
successor Lead Borrower, which notice is signed by the
respective Presidents of each Borrower (other than the
President of the Lead Borrower being replaced) then eligible
for borrowing under this Agreement; and
(ii) written notice from such successive Lead
Borrower (i) accepting such appointment; (ii) acknowledging
that such removal and appointment has been effected by the
respective Presidents of such Borrowers eligible for borrowing
under this Agreement; and (iii) acknowledging that from and
after the date of such appointment, the newly appointed Lead
Borrower shall be bound by the terms hereof, and that as used
herein, the term "Lead Borrower" shall mean and include the
newly appointed Lead Borrower.
SECTION 9.05 Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that no
Loan Party may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any such
attempted assignment or transfer without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their
84
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Agents, the Issuing Bank
and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it), provided that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, each of the Lead Borrower (but only after the completion
of the initial syndication and if no Default then exists), the Agents and the
Issuing Bank must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld or delayed), (ii) except in the case
of an assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitment or Loans, the
amount of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $5,000,000 unless each of the Lead Borrower (but only after the completion
of the initial syndication and if no Default then exists) and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations, (iv) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, and, after completion of
the syndication of the Loans, together with a processing and recordation fee of
$3,500. Subject to acceptance and recording thereof pursuant to paragraph (d) of
this Section, from and after the effective date specified in each Assignment and
Acceptance the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 9.03).
Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this paragraph shall be treated for purposes
of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as
an agent of the Loan Parties, shall maintain at one of its offices in Boston,
Massachusetts a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans and L/C Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive and the Loan Parties, the
Administrative Agent, the Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Lead Borrower,
the Issuing Bank and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the processing and
recordation fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and
85
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Loan
Parties, the Agents, and the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it), provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Loan Parties, the Agents, the Issuing Bank and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation in
the Commitments, the Loans and the Letters of Credit Outstandings shall provide
that such Lender shall retain the sole right to enforce the Loan Documents and
to approve any amendment, modification or waiver of any provision of the Loan
Documents, provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Loan
Parties agree that each Participant shall be entitled to the benefits of
Sections 2.24, 2.26 and 2.27 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.09 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.26(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any
greater payment under Section 2.24 or 2.27 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Lead Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.27 unless (i) the Lead Borrower is notified of the participation sold
to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 2.27(f) as though it were a Lender and (ii)
such Participant is eligible for exemption from the withholding tax referred to
therein, following compliance with Section 2.27(f).
(g) Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to any of the twelve Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341, and this Section shall not
apply to any such pledge or assignment of a security interest, provided that no
such pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
SECTION 9.06 Survival. All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Agents, the Issuing Bank or any
Lender may have had notice or
86
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.24, 2.27 and 9.03 and Article VIII
shall survive and remain in full force and effect regardless of the consummation
of the transactions contemplated hereby, the repayment of the Loans, the
expiration or termination of the Letters of Credit and the Commitments or the
termination of this Agreement or any provision hereof.
SECTION 9.07 Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to fees
payable to the Agents constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all contemporaneous or
previous agreements and understandings, oral or written, relating to the subject
matter hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Agents and the Lenders and
when the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.08 Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.09 Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, 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 and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Loan Parties against any of and all the obligations of the Loan Parties now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender may have.
SECTION 9.10 Governing Law; Jurisdiction; Consent to Service of
Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS.
(b) The Loan Parties agree that any suit for the enforcement of
this Agreement or any other Loan Document may be brought in the courts of the
Commonwealth of Massachusetts or any federal court sitting therein and consent
to the non-exclusive jurisdiction of such courts. The
87
Loan Parties hereby waive any objection which they may now or hereafter have to
the venue of any such suit or any such court or that such suit is brought in an
inconvenient forum.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.12 Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.13 Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts that are treated as interest
on such Loan under Applicable Law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
Applicable Law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14 Additional Waivers.
(a) The Obligations are the joint and several obligations of each
Loan Party. To the fullest extent permitted by Applicable Law, the obligations
of each Loan Party hereunder shall not be affected by (i) the failure of any
Agent or any other Secured Party to assert any claim or demand or to enforce or
exercise any right or remedy against any other Loan Party under the provisions
of this Agreement, any other Loan Document or otherwise, (ii) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of, this Agreement, any other Loan Document, or any other agreement,
including with respect to any other Borrower of the Obligations under this
Agreement, or (iii) the failure to perfect any security
88
interest in, or the release of, any of the security held by or on behalf of the
Collateral Agents or any other Secured Party.
(b) The obligations of each Loan Party hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than the indefeasible payment in full in cash of the Obligations),
including any claim of waiver, release, surrender, alteration or compromise of
any of the Obligations, and shall not be subject to any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Loan Party hereunder
shall not be discharged or impaired or otherwise affected by the failure of any
Agent or any other Secured Party to assert any claim or demand or to enforce any
remedy under this Agreement, any other Loan Document or any other agreement, by
any waiver or modification of any provision of any thereof, by any default,
failure or delay, wilful or otherwise, in the performance of the Obligations, or
by any other act or omission that may or might in any manner or to any extent
vary the risk of any Loan Party or that would otherwise operate as a discharge
of any Loan Party as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations).
(c) To the fullest extent permitted by Applicable Law, each Loan
Party waives any defense based on or arising out of any defense of any other
Loan Party or the unenforceability of the Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of any other Loan
Party, other than the indefeasible payment in full in cash of all the
Obligations. The Collateral Agents and the other Secured Parties may, at their
election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial sales, accept an assignment of any such security in lieu
of foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any other Loan Party, or exercise any other right or remedy
available to them against any other Loan Party, without affecting or impairing
in any way the liability of any Loan Party hereunder except to the extent that
all the Obligations have been indefeasibly paid in full in cash. Pursuant to
Applicable Law, each Loan Party waives any defense arising out of any such
election even though such election operates, pursuant to Applicable Law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Loan Party against any other Loan Party, as the case may be,
or any security.
(d) Upon payment by any Loan Party of any Obligations, all rights
of such Loan Party against any other Loan Party arising as a result thereof by
way of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations, as more
particularly set forth in an Indemnity, Subrogation and Contribution Agreement
to be entered into amongst the Loan Parties. In addition, any indebtedness of
any Loan Party now or hereafter held by any other Loan Party is hereby
subordinated in right of payment to the prior payment in full of the
Obligations. None of the Loan Parties will demand, xxx for, or otherwise attempt
to collect any such indebtedness. If any amount shall erroneously be paid to any
Loan Party on account of (a) such subrogation, contribution, reimbursement,
indemnity or similar right or (b) any such indebtedness of any Loan Party, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Collateral Agents to be credited against the payment of
the Obligations, whether matured or unmatured, in accordance with the terms of
the Loan Documents.
89
[SIGNATURE PAGES FOLLOW]
90
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as a sealed instrument as
of the day and year first above written.
NEW ENGLAND AUDIO CO., INC., as
Lead Borrower and Borrower
By: /s/ Xxxxxx XxXxxxx
--------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief
Financial Officer
SOUND ADVICE OF ARIZONA INC., as
Borrower
By: /s/ Xxxxxx XxXxxxx
--------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief
Financial Officer
NEA DELAWARE, INC., as Borrower
By: /s/ Xxxxxx XxXxxxx
--------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief
Financial Officer
THEG USA, L.P., as Borrower
By: New England Audio Co.,
Inc., its General Partner
By: /s/ Xxxxxx XxXxxxx
--------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief
Financial Officer
HILLCREST HIGH FIDELITY, INC., as
Borrower
By: /s/ Xxxxxx XxXxxxx
--------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief
Financial Officer
91
SOUND ADVICE, INC., as Borrower
By: /s/ Xxxxxx XxXxxxx
--------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief
Financial Officer
TWEETER HOME ENTERTAINMENT
GROUP FINANCING COMPANY TRUST,
as Facility Guarantor
By: /s/ Xxxxxx XxXxxxx
--------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief
Financial Officer
TWEETER HOME ENTERTAINMENT
GROUP, INC., as Facility Guarantor
By: /s/ Xxxxxx XxXxxxx
--------------------------------
Name: Xxxxxx XxXxxxx
Title: Vice President and Chief
Financial Officer
FLEET RETAIL FINANCE INC.,
As Collateral Agent, as Swingline Lender
and as Lender
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Director
Address:
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
92
FLEET NATIONAL BANK,
as Administrative Agent, as Collateral Agent
and as Issuing Bank
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Director
Address:
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
93
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Duly Authorized Signatory
Address: 000 Xxxxxxxxxxx Xxxxxx,
Xxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Tweeter Account Manager
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
94
NATIONAL CITY COMMERCIAL
FINANCE, INC., as Lender
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------
Title: Senior Vice President
--------------------------------
Address: 0000 X. Xxxxx Xx., Xxxxx 000
Xxxxxxx-00-0000
Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
95
CONGRESS FINANCIAL
CORPORATION (CENTRAL), as Lender
By: /s/ Xxxxxx Lindermon
------------------------------
Name: Xxxxxx Lindermon
------------------------------
Title: Senior Vice President
------------------------------
Address: 000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
96
FOOTHILL CAPITAL CORPORATION, as
Lender
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
------------------------------
Title: Vice President
------------------------------
Address: 0000 Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
97
