EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 21, 2003
among
THE BON-TON DEPARTMENT STORES, INC., and
THE BON-TON STORES OF LANCASTER, INC.
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent and Lender
THE CIT GROUP/BUSINESS CREDIT, INC.
as Co-Syndication Agent
CONGRESS FINANCIAL CORPORATION (CENTRAL)
as Co-Syndication Agent
FOOTHILL CAPITAL CORPORATION
as Co-Documentation Agent
FLEET CAPITAL CORPORATION
as Co-Documentation Agent
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TABLE OF CONTENTS
1. AMOUNT AND TERMS OF CREDIT........................................................................ 2
1.1 Credit Facilities..................................................................... 2
1.2 Letters of Credit..................................................................... 5
1.3 Prepayments........................................................................... 5
1.4 Use of Proceeds....................................................................... 7
1.5 Interest and Applicable Margins....................................................... 7
1.6 [Intentionally Omitted]............................................................... 10
1.7 Eligible Inventory.................................................................... 10
1.8 Cash Management Systems............................................................... 11
1.9 Fees.................................................................................. 11
1.10 Receipt of Payments................................................................... 12
1.11 Application and Allocation of Payments................................................ 12
1.12 Loan Account and Accounting........................................................... 13
1.13 Indemnity............................................................................. 13
1.14 Access................................................................................ 15
1.15 Taxes................................................................................. 15
1.16 Capital Adequacy; Increased Costs; Illegality......................................... 16
1.17 Single Loan........................................................................... 18
2. CONDITIONS PRECEDENT.............................................................................. 18
2.1 Conditions to the Initial Loans....................................................... 18
2.2 Further Conditions to Each Loan....................................................... 19
2.3 Conditions to Commercial Letters of Credit............................................ 20
3. REPRESENTATIONS AND WARRANTIES.................................................................... 20
3.1 Corporate Existence; Compliance with Law.............................................. 21
3.2 Executive Offices; FEIN............................................................... 21
3.3 Corporate Power, Authorization, Enforceable Obligations............................... 21
3.4 Financial Statements and Projections.................................................. 22
3.5 Material Adverse Effect............................................................... 22
3.6 Ownership of Property; Liens.......................................................... 23
3.7 Labor Matters......................................................................... 23
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3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness............. 24
3.9 Government Regulation................................................................. 24
3.10 Margin Regulations.................................................................... 24
3.11 Taxes................................................................................. 24
3.12 ERISA................................................................................. 25
3.13 No Litigation......................................................................... 26
3.14 Brokers............................................................................... 26
3.15 Intellectual Property................................................................. 26
3.16 Full Disclosure....................................................................... 26
3.17 Environmental Matters................................................................. 26
3.18 Insurance............................................................................. 27
3.19 Deposit and Disbursement Accounts..................................................... 27
3.20 Government Contracts.................................................................. 27
3.21 Customer and Trade Relations.......................................................... 28
3.23 Agreements and Other Documents........................................................ 28
3.24 Solvency.............................................................................. 28
4. FINANCIAL STATEMENTS AND INFORMATION.............................................................. 28
4.1 Reports and Notices................................................................... 28
4.2 Communication with Accountants........................................................ 28
5. AFFIRMATIVE COVENANTS............................................................................. 29
5.1 Maintenance of Existence and Conduct of Business...................................... 29
5.2 Payment of Obligations................................................................ 29
5.3 Books and Records..................................................................... 30
5.4 Insurance; Damage to or Destruction of Collateral..................................... 30
5.5 Compliance with Laws.................................................................. 31
5.6 Supplemental Disclosure............................................................... 31
5.7 Intellectual Property................................................................. 32
5.8 Environmental Matters................................................................. 32
5.9 Landlords' Agreements and Bailee Letters.............................................. 33
5.10 Further Assurances.................................................................... 33
6. NEGATIVE COVENANTS................................................................................ 33
6.1 Mergers, Subsidiaries, Etc............................................................ 33
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6.2 Investments; Loans and Advances....................................................... 34
6.3 Indebtedness.......................................................................... 34
6.4 Employee Loans and Affiliate Transactions............................................. 35
6.5 Capital Structure and Business........................................................ 35
6.6 Guaranteed Indebtedness............................................................... 35
6.7 Liens................................................................................. 35
6.8 Sale of Stock and Assets.............................................................. 36
6.9 ERISA................................................................................. 36
6.10 Financial Covenants................................................................... 36
6.11 Hazardous Materials................................................................... 37
6.12 Sale-Leasebacks....................................................................... 37
6.13 Cancellation of Indebtedness.......................................................... 37
6.14 Restricted Payments................................................................... 37
6.15 Change of Corporate Name or Location; Change of Fiscal Year........................... 37
6.16 No Impairment of Intercompany Transfers............................................... 38
6.17 No Speculative Transactions........................................................... 38
6.18 Leases................................................................................ 38
6.19 Changes Relating to Securitization Documents.......................................... 38
6.20 Availabililty......................................................................... 39
7. TERM.............................................................................................. 39
7.1 Termination........................................................................... 39
7.2 Survival of Obligations Upon Termination of Financing Arrangements.................... 39
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES............................................................ 39
8.1 Events of Default..................................................................... 39
8.2 Remedies.............................................................................. 41
8.3 Waivers by Credit Parties............................................................. 42
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENTS.............................................. 42
9.1 Assignment and Participations......................................................... 42
9.2 Appointment of Agents................................................................. 44
9.3 Agents' Reliance, Etc................................................................. 44
9.4 GE Capital and its Affiliates......................................................... 45
9.5 Lender Credit Decision................................................................ 45
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9.6 Indemnification....................................................................... 45
9.7 Successor Agents...................................................................... 46
9.8 Setoff and Sharing of Payments........................................................ 47
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.............. 47
10. SUCCESSORS AND ASSIGNS............................................................................ 49
10.1 Successors and Assigns................................................................ 49
11. MISCELLANEOUS..................................................................................... 50
11.1 Complete Agreement; Modification of Agreement......................................... 50
11.2 Amendments and Waivers................................................................ 50
11.3 Fees and Expenses..................................................................... 52
11.4 No Waiver............................................................................. 53
11.5 Remedies.............................................................................. 53
11.6 Severability.......................................................................... 53
11.7 Conflict of Terms..................................................................... 53
11.8 Confidentiality....................................................................... 54
11.9 GOVERNING LAW......................................................................... 54
11.10 Notices............................................................................... 55
11.11 Section Titles........................................................................ 55
11.12 Counterparts.......................................................................... 55
11.13 WAIVER OF JURY TRIAL.................................................................. 55
11.14 Press Releases........................................................................ 56
11.15 Reinstatement......................................................................... 56
11.16 Advice of Counsel..................................................................... 56
11.17 No Strict Construction................................................................ 56
12. CROSS-GUARANTY.................................................................................... 57
12.1 Cross-Guaranty........................................................................ 57
12.2 Waivers by Borrowers.................................................................. 57
12.3 Benefit of Guaranty................................................................... 58
12.4 Subordination of Subrogation, Etc..................................................... 58
12.5 Election of Remedies.................................................................. 58
12.6 Limitation............................................................................ 59
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12.7 Contribution with Respect to Guaranty Obligations..................................... 59
12.8 Liability Cumulative.................................................................. 60
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INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.1(d)(ii) - Form of New Lender Agreement
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit B-1 - Application for Standby Letter of Credit
Exhibit B-2 - Application for Documentary Letter of Credit
Schedule 1.1 - Responsible Individual
Schedule 2.3 - Form of Inspection Certificate
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Projections
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.2 - Existing Investments
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Schedule 6.8 - Permitted Properties
Schedule A-1 - Designated Properties
Schedule A-2 - Location of Eligible Fixed Assets
Schedule B-1 - Existing Letters of Credit
Schedule C-1 - Mortgaged Properties
Schedule D-1 - Form of Collateral Report
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management Systems
Annex D (Section 2.1(a)) - Schedule of Additional Closing Documents
Annex E (Section 4.1(a)) - Financial Statements and
Projections--Reporting
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Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 21,
2003 among The Bon-Ton Department Stores Inc., a Pennsylvania corporation
("Bon-Ton" ), The Bon-Ton Stores of Lancaster, Inc., a Pennsylvania corporation
("Lancaster") (Bon-Ton and Lancaster are sometimes collectively referred to
herein as the "Borrowers" and individually as a "Borrower"); the other Credit
Parties signatory hereto; the Lenders signatory hereto from time to time;
General Electric Capital Corporation, a Delaware corporation (in its individual
capacity, "GE Capital"), for itself, as Lender and as Administrative Agent for
Lenders; The CIT Group/Business Credit, Inc. and Congress Financial Corporation
(Central), as Co-Syndication Agents, and Foothill Capital Corporation and Fleet
Capital Corporation, as Co-Documentation Agents.
RECITALS
WHEREAS, the parties hereto are each party to a Credit
Agreement dated as of April 15, 1997 (as amended, the "Existing Credit
Agreement") among Borrowers, Credit Parties, Lenders and Administrative Agent;
WHEREAS, Borrowers desire that Lenders continue to extend
revolving credit facilities to Borrowers of up to One Hundred Fifty Million
Dollars ($150,000,000) in the aggregate for the purpose of providing (a) working
capital financing for Borrowers, and (b) funds for other general corporate
purposes of Borrowers; and for these purposes, Lenders are willing to continue
to make certain loans and other extensions of credit to Borrowers of up to such
amount upon the terms and conditions set forth herein;
WHEREAS, Borrowers, Credit Parties, Lenders and Administrative
Agent have agreed to amend and restate the Existing Credit Agreement to provide
for certain amendments on the terms set forth in this Agreement, which Agreement
shall become effective upon satisfaction of certain conditions precedent set
forth herein;
WHEREAS, it is the intent of the parties hereto that this
Agreement not constitute a novation of the obligations and liabilities existing
under the Existing Credit Agreement or evidence payment of all or any of such
obligations and liabilities, that this Agreement amend and restate in its
entirety the Existing Credit Agreement, and that from and after the Effective
Date the Existing Credit Agreement be of no further force or effect except as to
evidence the incurrence of the obligations of Borrowers thereunder and the
representations and warranties made thereunder;
WHEREAS, Borrowers have secured all of their obligations under
the Loan Documents by granting to Administrative Agent, for the benefit of
Agents and Lenders, a security interest in and lien upon the Collateral
hereinafter referred to;
WHEREAS, The Bon-Ton Corp., a Delaware corporation
("Holdings") has guaranteed all of the obligations of Borrowers to Lenders under
the Loan Documents and has pledged to Administrative Agent, for the benefit of
itself and Lenders, all of the capital stock of Bon-Ton to secure such guaranty;
and
WHEREAS, The Bon-Ton Stores, Inc., a Pennsylvania corporation
and the sole stockholder of Holdings ("Parent") has guaranteed all of the
obligations of Borrowers to Lenders under the Loan Documents and has pledged to
Administrative Agent, for the benefit of itself, Agents and Lenders, all of the
capital stock of Holdings to secure such guaranty; and
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in Annex A. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, "Appendices") hereto, or expressly
identified to this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility. (i) Subject to the terms and
conditions hereof, each Lender agrees to make available from time to time until
the Commitment Termination Date its Pro Rata Share of advances (each, a
"Revolving Credit Advance"). On the Closing Date, the Existing Lenders and
Lenders shall be deemed to have reallocated their Revolving Loan Commitments as
set forth on Annex J and the Pro Rata Share of the Revolving Loan of any Lender
shall not at any time exceed its separate Revolving Loan Commitment as set forth
in Annex J. The obligations of each Lender hereunder shall be several and not
joint. The aggregate amount of Revolving Credit Advances outstanding shall not
exceed at any time the lesser of (A) the Maximum Amount less the sum of the
Letter of Credit Obligations and (B) the Aggregate Borrowing Base less the sum
of 35% of the Eligible Trade L/C Obligations and 100% of such other Letter of
Credit Obligations and, in each case, less the Swing Line Loan outstanding at
such time ("Borrowing Availability"). Moreover, the sum of the Revolving Loan
and Swing Line Loan outstanding to any Borrower less 65% of the Eligible Trade
L/C Obligations of such Borrower shall not exceed at any time that Borrower's
separate Borrowing Base. Until the Commitment Termination Date, Borrowers may
from time to time borrow, repay and reborrow under this Section 1.1(a). Each
Revolving Credit Advance shall be made on notice by Borrower Representative on
behalf of the applicable Borrower to the representative of Administrative Agent
identified on Schedule 1.1 at the address specified thereon. Those notices must
be given no later than (1) 11:00 a.m. (New York time) on the Business Day of the
proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (2)
11:00 a.m. (New York time) on the date which is three (3) Business Days prior to
the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such
notice (a "Notice of Revolving Credit Advance") must be given in writing (by
telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i),
and shall include the information required in such Exhibit and such other
information as may be required by Administrative Agent. If any Borrower desires
to have the Revolving Credit Advances bear interest by reference to a LIBOR
Rate, Borrower Representative must comply with Section 1.5(e).
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(ii) Each Borrower shall execute and deliver to
each Lender a note to evidence the Revolving Loan Commitment of that Lender.
Each note shall be in the principal amount of the Revolving Loan Commitment of
the applicable Lender, dated the Effective Date and substantially in the form of
Exhibit 1.1(a)(ii) (each a "Revolving Note" and, collectively, the "Revolving
Notes"). Each Revolving Note shall represent the obligation of each Borrower to
pay the amount of each Lender's Revolving Loan Commitment or, if less, the
applicable Lender's Pro Rata Share of the aggregate unpaid principal amount of
all Revolving Credit Advances to such Borrower together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the aggregate Revolving
Loan and all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date.
(b) Swing Line Facility. (i) Administrative Agent shall notify
the Swing Line Lender upon Administrative Agent's receipt of any Notice of
Revolving Credit Advance. Subject to the terms and conditions hereof, the Swing
Line Lender may, in its discretion, make available from time to time until the
Commitment Termination Date advances (each, a "Swing Line Advance") in
accordance with any such notice. The aggregate amount of Swing Line Advances
outstanding shall not exceed the lesser of (A) the Swing Line Commitment and (B)
the Aggregate Borrowing Base less the outstanding balance of the Revolving Loan
plus 65% of the Eligible Trade L/C Obligations at such time ("Swing Line
Availability"). Moreover, the Swing Line Loan outstanding to any Borrower shall
not exceed at any time that Borrower's separate Borrowing Base less the
Revolving Loan outstanding to such Borrower plus 65% of the Eligible Trade L/C
Obligations of such Borrower. Until the Commitment Termination Date, Borrowers
may from time to time borrow, repay and reborrow under this Section 1.1(b). Each
Swing Line Advance shall be made pursuant to a Notice of Revolving Credit
Advance delivered to Administrative Agent by Borrower Representative on behalf
of the applicable Borrower in accordance with Section 1.1(a). Those notices must
be given no later than 11:00 a.m. (New York time) on the Business Day of the
proposed Swing Line Advance. Notwithstanding any other provision of this
Agreement or the other Loan Documents, the Swing Line Loan shall constitute an
Index Rate Loan. Borrowers shall repay the aggregate outstanding principal
amount of the Swing Line Loan upon demand therefor by Administrative Agent.
(ii) Each Borrower shall execute and deliver to
the Swing Line Lender a promissory note to evidence the Swing Line Commitment.
Each note shall be in the principal amount of the Swing Line Commitment of the
Swing Line Lender, dated the Effective Date and substantially in the form of
Exhibit 1.1(b)(ii) (each a "Swing Line Note" and, collectively, the "Swing Line
Notes"). Each Swing Line Note shall represent the obligation of each Borrower to
pay the amount of the Swing Line Commitment or, if less, the aggregate unpaid
principal amount of all Swing Line Advances made to such Borrower together with
interest thereon as prescribed in Section 1.5. The entire unpaid balance of the
Swing Line Loan and all other non-contingent Obligations shall be immediately
due and payable in full in immediately available funds on the Commitment
Termination Date if not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing
Line Lender, at any time and from time to time in its sole and absolute
discretion (but no less frequently than once per week), may on behalf of any
Borrower (and each Borrower hereby irrevocably authorizes the
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Swing Line Lender to so act on its behalf) request each Revolving Lender
(including the Swing Line Lender) to make a Revolving Credit Advance to such
Borrower (which shall be an Index Rate Loan) in an amount equal to such
Revolving Lender's Pro Rata Share of the principal amount of such Borrower's
Swing Line Loan (the "Refunded Swing Line Loan") outstanding on the date such
notice is given. Unless any of the events described in Sections 8.1(f), 8.1(g)
or 8.1(h) shall have occurred (in which event the procedures of Section
1.1(b)(iv) shall apply) and regardless of whether the conditions precedent set
forth in this Agreement to the making of a Revolving Credit Advance are then
satisfied, each Revolving Lender shall disburse directly to Administrative
Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the Swing
Line Lender, prior to 3:00 p.m. (New York time), in immediately available funds
on the Business Day next succeeding the date such notice is given. The proceeds
of such Revolving Credit Advances shall be immediately paid to the Swing Line
Lender and applied to repay the Refunded Swing Line Loan of the applicable
Borrower.
(iv) Participation in Swing Line Loans. If, prior
to refunding a Swing Line Loan with a Revolving Credit Advance pursuant to
Section 1.1(b)(iii), one of the events described in Sections 8.1(f), 8.1(g), and
8.1(h) shall have occurred, then, subject to the provisions of Section 1.1(b)(v)
below, each Revolving Lender will, on the date such Revolving Credit Advance was
to have been made for the benefit of the applicable Borrower, purchase from the
Swing Line Lender an undivided participation interest in the Swing Line Loan to
such Borrower in an amount equal to its Pro Rata Share of such Swing Line Loan.
Upon request, each Revolving Lender will promptly transfer to the Swing Line
Lender, in immediately available funds, the amount of its participation.
(v) Revolving Lenders' Obligations
Unconditional. Each Revolving Lender's obligation to make Revolving Credit
Advances in accordance with Section 1.1(b)(iii) and to purchase participating
interests in accordance with Section 1.1(b)(iv) shall be absolute and
unconditional and shall not be affected by any circumstance including (A) any
setoff, counterclaim, recoupment, defense or other right which such Revolving
Lender may have against the Swing Line Lender, any Borrower or any other Person
for any reason whatsoever; (B) the occurrence or continuance of any Default or
Event of Default; (C) any inability of any Borrower to satisfy the conditions
precedent to borrowing set forth in this Agreement on the date upon which such
participating interest is to be purchased or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
If any Revolving Lender does not make available to Administrative Agent or the
Swing Line Lender, as applicable, the amount required pursuant to Section
1.1(b)(iii) or 1.1(b)(iv), as the case may be, the Swing Line Lender shall be
entitled to recover such amount on demand from such Revolving Lender, together
with interest thereon for each day from the date of non-payment until such
amount is paid in full at the Federal Funds Rate for the first two (2) Business
Days and at the Index Rate thereafter.
(c) Reliance on Notices; Appointment of Borrower
Representative. Administrative Agent shall be entitled to rely upon, and shall
be fully protected in relying upon, any Notice of Revolving Credit Advance,
Notice of Conversion/Continuation or similar notice believed by Administrative
Agent to be genuine. Administrative Agent may assume that each Person executing
and delivering such a notice was duly authorized unless the responsible
individual acting thereon for Administrative Agent has actual knowledge to the
contrary. Each
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Borrower hereby designates Bon-Ton as its representative and agent on its behalf
for the purposes of issuing Notices of Revolving Credit Advances, Notices of
Swing Line Advances and Notices of Conversion/Continuation, giving instructions
with respect to the disbursement of the proceeds of the Loans, selecting
interest rate options, requesting Letters of Credit, giving and receiving all
other notices and consents hereunder or under any of the other Loan Documents
and taking all other actions (including in respect of compliance with covenants)
on behalf of any Borrower or Borrowers under the Loan Documents. Borrower
Representative hereby accepts such appointment. Administrative Agent and each
other Agent and Lender may regard any notice or other communication pursuant to
any Loan Document from Borrower Representative as a notice or communication from
all Borrowers, and may give any notice or communication required or permitted to
be given to any Borrower or Borrowers hereunder to Borrower Representative on
behalf of such Borrower or Borrowers. Each Borrower agrees that each notice,
election, representation and warranty, covenant, agreement and undertaking made
on its behalf by Borrower Representative shall be deemed for all purposes to
have been made by such Borrower and shall be binding upon and enforceable
against such Borrower to the same extent as if the same had been made directly
by such Borrower.
(d) Commitment Increase.
(i) At any time after the Effective Date,
provided that no Default or Event of Default shall have occurred and be
continuing, Borrowers may, with the consent of Administrative Agent (which
consent shall not be unreasonably withheld or delayed), request from the Lenders
an increase of the aggregate Revolving Loan Commitments for up to an aggregate
principal amount of Twenty Five Million Dollars ($25,000,000) by notice to
Administrative Agent in writing of the amount of such proposed increase. For any
Lender that accepts an offer to it by Borrowers to increase its Revolving
Commitment pursuant to this Section, the amount of Revolving Commitments
hereunder shall be deemed to be amended to so increase the Revolving Commitment
of such Lender. To the extent that the Lenders do not agree to the increase in
the Revolving Commitments, Borrowers may, with the consent of Administrative
Agent, offer to one or more other Persons acceptable to Administrative Agent (an
"assignee") the opportunity to participate in all or a portion of the increased
Revolving Commitments.
(ii) Any assignee that Borrowers select to offer
participation in the increased Revolving Commitments, and that elects to become
a party to this Agreement and obtain a Revolving Commitment, shall execute a
written agreement in the form of Exhibit 1.1(d)(ii) hereto (the "New Lender
Agreement") with Borrowers and Administrative Agent and satisfactory to
Administrative Agent, whereupon such assignee (a "New Lender") shall become a
Lender for all purposes and to the same extent as if originally a party hereto
and shall be bound by and entitled to the benefits of this Agreement, and the
signature pages hereof shall be deemed to be amended to add the name of such New
Lender and the amount of Revolving Commitments hereunder shall be deemed amended
to add the amount of the Revolving Commitment of such New Lender.
(iii) Notwithstanding anything to the contrary in
this Section, (i) no Lender shall have any obligation to increase its Revolving
Commitment unless it agrees to do so
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in its sole discretion and (ii) after giving effect to any increase in the
Revolving Commitments pursuant to this Section, the aggregate amount of the
Revolving Commitments shall not exceed $175,000,000.
1.2 Letters of Credit. Subject to and in accordance with
the terms and conditions contained herein and in Annex B, Borrower
Representative, on behalf of the applicable Borrower, shall have the right to
request, and Lenders agree to incur, or purchase participations in, Letter of
Credit Obligations in respect of each Borrower.
1.3 Prepayments.
(a) Voluntary Prepayments. Borrowers may at any time
voluntarily prepay all or part of the Revolving Loan without permanent reduction
of the Revolving Loan Commitment. In addition, Borrowers may at any time on at
least ten (10) days' prior written notice by Borrower Representative to
Administrative Agent terminate the Revolving Loan Commitment; provided that upon
such termination, all Loans and other Obligations shall be immediately due and
payable in full. Any such voluntary prepayment and any such termination of the
Revolving Loan Commitment must be accompanied by the payment of the fee required
by Section 1.9(c), if any, plus the payment of any LIBOR funding breakage costs
in accordance with Section 1.13(b). Upon any such permanent prepayment and
termination of the Revolving Loan Commitment, each Borrower's right to request
Revolving Credit Advances, or request that Letter of Credit Obligations be
incurred on its behalf, or request Swing Line Advances shall simultaneously be
permanently terminated, as the case may be.
(b) Mandatory Prepayments. (i) If at any time the outstanding
balance of (A) the aggregate Revolving Loan exceeds the Maximum Amount or (B)
the aggregate Revolving Loan less 65% of the Eligible Trade L/C Obligations
exceeds the Aggregate Borrowing Base, less, in each case, the aggregate
outstanding Swing Line Loan at such time, Borrowers shall immediately repay the
aggregate outstanding Revolving Credit Advances to the extent required to
eliminate such excess; provided, however, that if the Aggregate Borrowing Base
is less than the Maximum Amount and if such outstanding balance of the Revolving
Loan (less 65% of the Eligible Trade L/C Obligations) exceeds the Aggregate
Borrowing Base solely as a result of the Administrative Agent adjusting the
criteria, establishing new criteria or adjusting advance rates with respect to
Eligible Inventory, then Borrowers shall repay the aggregate outstanding
Revolving Credit Advances to the extent required to eliminate such excess no
later than five (5) Business Days after written notice to Borrowers by
Administrative Agent of such adjustment of criteria, such establishment of new
criteria or such adjustment of advance rates. If any such excess remains after
repayment in full of the aggregate outstanding Revolving Credit Advances,
Borrowers shall provide cash collateral for the Letter of Credit Obligations in
the manner set forth in Annex B to the extent required to eliminate such excess.
Furthermore, if the outstanding balance of the Revolving Loan of any Borrower
less 65% of the Eligible Trade L/C Obligations of such Borrower exceeds, at any
time, that Borrower's separate Borrowing Base, less the outstanding balance of
the Swing Line Loan of such Borrower at such time, the applicable Borrower shall
immediately repay its Revolving Credit Advances in the amount of such excess
(and, if necessary, shall provide cash collateral for its Letter of Credit
Obligations as described above); provided, however, that if the Borrowing Base
of such Borrower is less than the Maximum
6
Amount and if such outstanding balance of the Revolving Loan of such Borrower
(less 65% of the Eligible Trade L/C Obligations of such Borrower) exceeds the
Borrowing Base of such Borrower solely as a result of Administrative Agent
adjusting the criteria, establishing new criteria or adjusting advance rates
with respect to Eligible Inventory, then such Borrower shall repay the aggregate
outstanding Revolving Credit Advances of such Borrower to the extent required to
eliminate such excess no later than five (5) Business Days after written notice
to Borrowers by Administrative Agent of such adjustment of criteria, such
establishment of new criteria or such adjustment of advance rates.
(ii) Immediately upon receipt by any Credit Party
of cash or cash equivalent proceeds of any disposition of Collateral (including
condemnation proceeds, but excluding proceeds of asset dispositions permitted by
Section 6.8(a)-(g), Borrowers shall prepay the Loans in an amount equal to all
such proceeds, net of (A) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction
and payable by Borrowers in connection therewith (in each case, paid to
non-Affiliates), (B) transfer, sales or similar taxes, (C) amounts payable to
holders of senior Liens (to the extent such Liens constitute Permitted
Encumbrances hereunder), if any, and (D) an appropriate reserve for income taxes
in accordance with GAAP in connection therewith. Any such prepayment shall be
applied in accordance with clause (c) below.
(c) Application of Certain Mandatory Prepayments. Any
prepayments made by any Borrower pursuant to clause (b)(ii) above shall be
applied as follows: first, to Fees and reimbursable expenses of Agents then due
and payable pro rata pursuant to any of the Loan Documents; second, to interest
then due and payable on such Borrower's Swing Line Loan; third, to the principal
balance of the Swing Line Loan outstanding to such Borrower until the same shall
have been repaid in full; fourth, to interest then due and payable on Revolving
Credit Advances made to such Borrower; fifth, to the principal balance of
Revolving Credit Advances outstanding to such Borrower until the same shall have
been paid in full; sixth, to any Letter of Credit Obligations of such Borrower
to provide cash collateral therefor in the manner set forth in Annex B, until
all such Letter of Credit Obligations have been fully cash collateralized in the
manner set forth in Annex B; seventh, to interest then due and payable on the
Swing Line Loan of each other Borrower, pro rata; eighth, to the principal
balance of the Swing Line Loan outstanding to each other Borrower, pro rata,
until the same shall have been repaid in full; ninth, to interest then due and
payable on the Revolving Credit Advances outstanding to each other Borrower, pro
rata; tenth, to the principal balance of the Revolving Credit Advances made to
each other Borrower, pro rata, until the same shall have been paid in full, and
last to the Borrower which sold such assets. Neither the Revolving Loan
Commitment nor the Swing Line Commitment shall be permanently reduced by the
amount of any such prepayments.
(d) Application of Prepayments from Insurance Proceeds.
Prepayments from insurance proceeds in accordance with Section 5.4(c) shall be
applied first to the Swing Line Loans and second to the Revolving Credit
Advances of the Borrower that incurred such casualties or losses. Neither the
Revolving Loan Commitment nor the Swing Line Loan Commitment shall be
permanently reduced by the amount of any such prepayments. If the insurance
proceeds received as to a particular Borrower exceed the outstanding principal
7
balances of the Loans to that Borrower, the allocation and application of those
proceeds shall be determined by Administrative Agent, subject to the approval of
Requisite Lenders.
(e) Nothing in this Section 1.3 shall be construed to
constitute any Agent's or Lender's consent to any transaction referred to in
clauses (b)(ii) and (b)(iii) above which is not permitted by other provisions of
this Agreement or the other Loan Documents.
1.4 Use of Proceeds. Borrowers shall utilize the proceeds
of the Revolving Loan and the Swing Line Advances solely for the financing of
Borrowers' ordinary working capital and general corporate needs (but excluding
in any event the making of any Restricted Payment not specifically permitted by
Section 6.14).
1.5 Interest and Applicable Margins. (a) Borrowers shall
pay interest to Administrative Agent, for the ratable benefit of Lenders in
accordance with the various Loans being made by each Lender, in arrears on each
applicable Interest Payment Date, at the following rates: (i) with respect to
the Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index
Margin per annum or, at the election of Borrower Representative, the applicable
LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based on the
aggregate Revolving Credit Advances outstanding from time to time and (ii) with
respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver
Index Margin per annum.
The Applicable Revolver Index Margin, and Applicable Revolver
LIBOR Margin, will be 0.25%, and 1.50% per annum, respectively, as of the
Effective Date. The Applicable Margins will be adjusted (up or down)
prospectively on a quarterly basis as determined by Parent's consolidated
financial performance for the trailing four quarters most recently ended,
commencing on June 1, 2003 (the "Initial Adjustment Date"). Adjustments in
Applicable Margins will be determined by reference to the following grids:
IF FIXED CHARGE IF AVERAGE EXCESS LEVEL OF
COVERAGE RATIO IS: AVAILABILITY FOR QUARTER IS: APPLICABLE MARGINS:
----------------- --------------------------- ------------------
> or = 1.1:1.0 > or = $50MM Level I
> or = 1.1:1.0 < $50MM > or = $40MM Level II
> or = 1.1:1.0 <$40MM Level III
<1.1:1.0 > or = $50MM Level IV
<1.1:1.0 <$50MM > or = $40MM Level V
<1.1:1.0 <$40MM > or = $30MM Level VI
<1.1:1.0 <$30MM Xxxxx XXX
0
XXXXX X XXXXX XX XXXXX XXX XXXXX XX XXXXX X XXXXX XX XXXXX XXX
------- -------- --------- -------- ------- -------- ---------
Applicable Revolver
Index Margin 0.25% 0.25% 0.50% 0.25% 0.50% 0.75% 1.00%
Applicable Revolver
LIBOR Margin 1.5% 1.75% 2.00% 1.75% 2.00% 2.25% 2.50%
Applicable Unused Facility Fee 0.25% 0.25% 0.375% 0.25% 0.25% 0.375% 0.375%
For purposes of this Section 1.5(a), the Fixed Charge Coverage Ratio shall be
calculated without adjustments for any Special Capital Expenditures.
Notwithstanding the foregoing, the Applicable Margins with respect to the
aggregate amount of Advances outstanding on any date in excess of the Aggregate
Borrowing Base, as of such date, determined with reference solely to Eligible
Inventory shall be equal to the then otherwise Applicable Margin plus .50%.
All adjustments in the Applicable Margins after the Initial
Adjustment Date will be implemented quarterly on a prospective basis, for each
calendar month commencing after the date of delivery to Lenders of the quarterly
unaudited or annual audited (as applicable) Financial Statements of Parent
evidencing the need for an adjustment. Concurrently with the delivery of those
Financial Statements, Borrower Representative shall deliver to Administrative
Agent and Lenders a certificate, signed by its chief financial officer, setting
forth in reasonable detail the basis for the continuance of, or any change in,
the Applicable Margins. Failure to deliver such Financial Statements shall, in
addition to any other remedy provided for in this Agreement, result in an
increase in the Applicable Margins to the highest level set forth in the
foregoing grid, until the first day of the first calendar month following the
delivery of those Financial Statements demonstrating that such an increase is
not required. If an Event of Default shall have occurred or be continuing at the
time any reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the first day of the first calendar month
following the date on which such Event of Default is waived or cured.
(b) If any payment on any Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis
and interest shall be made by Administrative Agent on the basis of a three
hundred and sixty (360) day year, in each case for the actual number of days
occurring in the period for which such interest and Fees are payable. The Index
Rate shall be determined each day based upon the Index Rate as in effect each
day. Each determination by Administrative Agent of an interest rate hereunder
shall be conclusive, absent error.
9
(d) So long as any Event of Default shall have occurred and be
continuing, and at the election of Administrative Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Administrative
Agent to Borrower Representative, the interest rates applicable to the Loans and
the Letter of Credit Fees shall be increased by two percentage points (2%) per
annum above the rates of interest or the rate of such Fees otherwise applicable
hereunder ("Default Rate"), and all outstanding Obligations shall bear interest
at the Default Rate applicable to such Obligations. Interest and Letter of
Credit Fees at the Default Rate shall accrue from the initial date of such Event
of Default until that Event of Default is cured or waived and shall be payable
upon demand.
(e) So long as no Default or Event of Default shall have
occurred and be continuing, and subject to the additional conditions precedent
set forth in Section 2.2, Borrower Representative shall have the option to (i)
request that any Revolving Credit Advances be made as a LIBOR Loan, (ii) convert
at any time all or any part of outstanding Loans (other than the Swing Line
Loan) from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an
Index Rate Loan, subject to payment of LIBOR breakage costs in accordance with
Section 1.13(b) if such conversion is made prior to the expiration of the LIBOR
Period applicable thereto, or (iv) continue all or any portion of any Loan
(other than the Swing Line Loan) as a LIBOR Loan upon the expiration of the
applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan
shall commence on the last day of the LIBOR Period of the Loan to be continued.
Any Loan to be made or continued as, or converted into, a LIBOR Loan must be in
a minimum amount of $10,000,000 and integral multiples of $1,000,000 in excess
of such amount. Any such election must be made by 11:00 a.m. (New York time) on
the third (3rd) Business Day prior to (1) the date of any proposed Advance which
is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with
respect to any LIBOR Loans to be continued as such, or (3) the date on which
Borrower Representative wishes to convert any Index Rate Loan to a LIBOR Loan
for a LIBOR Period designated by Borrower Representative in such election. If no
election is received with respect to a LIBOR Loan by 11:00 a.m. (New York time)
on the third (3rd) Business Day prior to the end of the LIBOR Period with
respect thereto (or if a Default or an Event of Default shall have occurred and
be continuing or if the additional conditions precedent set forth in Section 2.2
shall not have been satisfied), that LIBOR Loan shall be converted to an Index
Rate Loan at the end of its LIBOR Period. Borrower Representative must make such
election by notice to Administrative Agent in writing, by telecopy or overnight
courier. In the case of any conversion or continuation, such election must be
made pursuant to a written notice (a "Notice of Conversion/Continuation") in the
form of Exhibit 1.5(e).
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Administrative
Agent, on behalf of Lenders, is equal to the total
10
interest which would have been received had the interest rate payable hereunder
been (but for the operation of this paragraph) the interest rate payable since
the Initial Closing Date or the Effective Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e) above, unless
and until the rate of interest again exceeds the Maximum Lawful Rate, and at
that time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount which such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Administrative Agent shall, to
the extent permitted by applicable law, promptly apply such excess in the order
specified in Section 1.11 and thereafter shall refund any excess to Borrowers or
as a court of competent jurisdiction may otherwise order.
1.6 [Intentionally Omitted]
1.7 Eligible Inventory. Based on the most recent
Borrowing Base Certificate delivered by each Borrower to Administrative Agent
and determined based upon the salability, at retail, of the Eligible Inventory
or which reflects such other factors as effects the marketability of the
Eligible Inventory and on other information available to Administrative Agent,
Administrative Agent shall in its reasonable credit judgment determine which
Inventory of each Borrower shall be "Eligible Inventory" for purposes of this
Agreement. In determining whether any particular Inventory of any Borrower
constitutes Eligible Inventory, Administrative Agent shall not include any such
Inventory to which any of the exclusionary criteria set forth below applies.
Administrative Agent reserves the right, at any time and from time to time after
the Initial Closing Date, to adjust any such criteria, to establish new criteria
and, except as set forth in Section 11.2(f), to adjust advance rates with
respect to Eligible Inventory, in its reasonable credit judgment, subject to the
approval of Supermajority Revolving Lenders in the case of adjustments or new
criteria or, except as set forth in Section 11.2(f), changes in advance rates
which have the effect of making more credit available. Without limiting the
generality of the foregoing, Eligible Inventory shall not include any Inventory
of any Borrower:
(a) that is not owned by such Borrower free and clear of all
Liens and rights of any other Person (including the rights of a purchaser that
has made progress payments and the rights of a surety that has issued a bond to
assure such Borrower's performance with respect to that Inventory), except the
Liens in favor of Administrative Agent, on behalf of itself, the other Agent and
Lenders and Permitted Encumbrances;
(b) that is (i) not located on premises owned, leased or
operated by such Borrower or (ii) is stored with a bailee, warehouseman or
similar Person, unless Administrative Agent has given its prior consent thereto
and unless (x) a satisfactory bailee letter or landlord waiver has been
delivered to Administrative Agent, or (y) Reserves satisfactory to
Administrative Agent have been established with respect thereto, or (iii)
located at any site if the aggregate book value
11
of Inventory at any such location is less than $100,000, unless in each case
such Inventory is Eligible In-Transit Inventory;
(c) that is placed on consignment or is in transit (other than
Eligible In-Transit Inventory or inventory in transit between warehouses and the
store locations or between the store locations);
(d) that is covered by a negotiable document of title, unless
such document has been delivered to Administrative Agent or other Persons
acceptable to it;
(e) that in accordance with the audits, appraisals and reports
conducted and/or delivered pursuant to Annex F, is excess, obsolete, unsalable,
shopworn, seconds, damaged or unfit for sale or due to changes in the mix,
composition, balance shrink, or markup/markdown; provided, however that to the
extent any of the foregoing items occur outside of the Borrowers' ordinary
course of business, the extent of such items shall be as reasonably determined
by the Administrative Agent;
(f) that consists of samples, display items or packing or
shipping materials, manufacturing supplies, work-in-process Inventory or
replacement parts;
(g) that consists of goods which have been returned by the
buyer because of any damage or imperfection;
(h) that is not of a type held for sale in the ordinary course
of such Borrower's business;
(i) as to which Administrative Agent's Lien, on behalf of
itself, the other Agent and Lenders, therein is not a first priority perfected
Lien;
(j) as to which any of the representations or warranties
pertaining to Inventory set forth in this Agreement or the Security Agreement is
untrue;
(k) consists of any costs associated with advertising load,
unearned discounts;
(l) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(m) is not covered by casualty insurance acceptable to
Administrative Agent; or
(n) is otherwise unacceptable to Administrative Agent in its
reasonable credit judgment.
1.8 Cash Management Systems. On or prior to the Initial
Closing Date, Borrowers will establish and will maintain until the Termination
Date, the cash management systems described on Annex C (the "Cash Management
Systems").
12
1.9 Fees. (a) Borrowers shall pay to GE Capital,
individually, the Fees specified in the GE Capital Fee Letter at the times
specified for payment therein.
(b) As additional compensation for the Lenders, Borrowers
agree to pay to Administrative Agent, for the ratable benefit of such Lenders,
in arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a fee in respect of the
Lenders' Commitments in an amount equal (i) to one-quarter of one percent
(0.25%) per annum (calculated on the basis of a 360 day year for actual days
elapsed) on the Effective Date and (ii) thereafter based on the pricing grid set
forth in Section 1.5(a), in each case of the difference between (x) the Maximum
Amount and (y) the average for the period of the daily closing balances of the
aggregate Revolving Loan and Swing Line Loan outstanding during the period for
which such fee is due.
(c) Borrowers shall pay to Administrative Agent, for the
ratable benefit of the Lenders, on the Effective Date, an amendment fee equal to
three-eighths of one percent (0.375%) of the aggregate amount of the
Commitments.
1.10 Receipt of Payments. Borrowers shall make each
payment under this Agreement not later than 2:00 p.m. (New York time) on the day
when due in immediately available funds in Dollars to the Collection Account.
For purposes of computing interest and Fees and determining Borrowing
Availability or Net Borrowing Availability as of any date, all payments shall be
deemed received on the day of receipt of immediately available funds therefor in
the Collection Account prior to 2:00 p.m. (New York time). Payments received
after 2:00 p.m. (New York time) on any Business Day shall be deemed to have been
received on the following Business Day.
1.11 Application and Allocation of Payments. (a) So long
as no Default or Event of Default shall have occurred and be continuing, (i)
voluntary prepayments shall be applied as determined by Borrower Representative,
subject to the provisions of Section 1.3(a); and (ii) mandatory prepayments
shall be applied as set forth in Section 1.3. As to each other payment, and as
to all payments made when a Default or Event of Default shall have occurred and
be continuing or following the Commitment Termination Date, each Borrower hereby
irrevocably waives the right to direct the application of any and all payments
received from or on behalf of such Borrower, and each Borrower hereby
irrevocably agrees that Administrative Agent shall have the continuing exclusive
right to apply any and all such payments against the Obligations of Borrowers as
Administrative Agent may deem advisable notwithstanding any previous entry by
Administrative Agent in the Loan Account or any other books and records. In the
absence of a specific determination by Administrative Agent with respect
thereto, payments shall be applied to amounts then due and payable in the
following order: (1) to Fees and Agent's expenses reimbursable hereunder; (2) to
interest on the Swing Line Loan; (3) to principal payments on the Swing Line
Loan; (4) to interest on the Loans, ratably in proportion to the interest
accrued as to each Loan; (5) to principal payments on the Loans and to provide
cash collateral for Letter of Credit Obligations in the manner described in
Annex B, ratably to the aggregate, combined principal balance of the other Loans
and outstanding Letter of Credit Obligations; and (6) to all other Obligations
including expenses of Lenders to the extent reimbursable under Section 11.3.
13
(b) Administrative Agent is authorized to, and at its sole
election may, charge to the Revolving Loan balance on behalf of each Borrower
and cause to be paid all Fees, expenses, Charges, costs (including insurance
premiums in accordance with Section 5.4(a)) and interest and principal, other
than principal of the Revolving Loan, owing by Borrowers under this Agreement or
any of the other Loan Documents if and to the extent Borrowers fail to promptly
pay any such amounts as and when due, even if such charges would cause the
balance of the aggregate Revolving Credit Advances and the Swing Line Loan to
exceed Borrowing Availability or would cause the balance of the Revolving Loan
and the Swing Line Loan of any Borrower less 65% of Eligible Trade L/C
Obligations of such Borrower to exceed such Borrower's separate Borrowing Base.
At Administrative Agent's option and to the extent permitted by law, any charges
so made shall constitute part of the Revolving Loan hereunder.
1.12 Loan Account and Accounting. Administrative Agent
shall maintain a loan account (the "Loan Account") on its books to record: (a)
all Advances, (b) all payments made by Borrowers, and (c) all other debits and
credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Administrative Agent's customary accounting practices as in effect from time to
time. The balance in the Loan Account, as recorded on Administrative Agent's
most recent printout or other written statement, shall be presumptive evidence
of the amounts due and owing to Agents and Lenders by each Borrower; provided
that any failure to so record or any error in so recording shall not limit or
otherwise affect any Borrower's duty to pay the Obligations. Administrative
Agent shall render to Borrower Representative a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account as to each Borrower. Unless Borrower Representative notifies
Administrative Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within thirty (30) days
after the date thereof, each and every such accounting shall (absent error) be
deemed final, binding and conclusive upon Borrowers in all respects as to all
matters reflected therein. Only those items expressly objected to in such notice
shall be deemed to be disputed by Borrowers.
1.13 Indemnity. (a) Each Credit Party that is a signatory
hereto shall jointly and severally indemnify and hold harmless each of the
Agents, Lenders and their respective Affiliates, and each such Person's
respective officers, directors, employees, attorneys, agents and representatives
(each, an "Indemnified Person"), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and reasonable out-of-pocket
expenses (including attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal) which may be
instituted or asserted against or incurred by any such Indemnified Person as the
result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents and the administration of such credit,
and in connection with or arising out of the transactions contemplated hereunder
and thereunder and any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and legal costs and expenses
arising out of or incurred in connection with disputes between or among any
parties to any of the Loan Documents (unless such dispute is among any of the
parties hereto other than Credit Parties or the Credit Parties prevail in such
dispute) (collectively, "Indemnified Liabilities"); provided that no such Credit
Party shall be
14
liable for any indemnification to an Indemnified Person to the extent that any
such suit, action, proceeding, claim, damage, loss, liability or expense results
solely from that Indemnified Person's gross negligence or willful misconduct, as
finally determined by a court of competent jurisdiction. No Indemnified Person
shall enter into any compromise or settlement in any action as to which such
Indemnified Person intends to seek indemnification hereunder without the prior
written consent of the Credit Party from whom indemnification hereunder is
sought, which consent shall not be unreasonably withheld or delayed. NO PERSON
SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the
terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
is the result of acceleration, by operation of law or otherwise); (ii) any
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) any Borrower shall default in making any
borrowing of, conversion into or continuation of LIBOR Loans after Borrower
Representative has given notice requesting the same in accordance herewith; or
(iv) any Borrower shall fail to make any prepayment of a LIBOR Loan after
Borrower Representative has given a notice thereof in accordance herewith,
Borrowers shall jointly and severally indemnify and hold harmless each Lender
from and against all losses, costs and expenses resulting from or arising from
any of the foregoing. Such indemnification shall include any loss (including
loss of margin) or expense arising from the reemployment of funds obtained by it
or from fees payable to terminate deposits from which such funds were obtained.
For the purpose of calculating amounts payable to a Lender under this
subsection, each Lender shall be deemed to have actually funded its relevant
LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate
in an amount equal to the amount of that LIBOR Loan and having a maturity
comparable to the relevant Interest Period; provided, however, that each Lender
may fund each of its LIBOR Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this subsection. This covenant shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder. As
promptly as practicable under the circumstances, each Lender shall provide
Borrower Representative with its written calculation of all amounts payable
pursuant to this Section 1.13(b), and such calculation shall be binding on the
parties hereto unless Borrower Representative shall object in writing within ten
(10) Business Days of receipt thereof, specifying the basis for such objection
in detail.
1.14 Access. Each Credit Party which is a party hereto
shall, during normal business hours, from time to time upon one (1) Business
Day's prior notice as frequently as Administrative Agent reasonably determines
to be appropriate: (a) provide Administrative
15
Agent, and any of its officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each Credit Party and
to the Collateral, (b) permit Administrative Agent, and any of its officers,
employees and agents, to inspect, audit and make extracts from any Credit
Party's books and records, and (c) permit Administrative Agent, and any of its
officers, employees and agents, to inspect, review, evaluate and make test
verifications and counts of the Inventory and other Collateral of any Credit
Party. If a Default or Event of Default shall have occurred and be continuing,
each such Credit Party shall provide such access to Administrative Agent, and to
each Lender at all times and without advance notice. Furthermore, so long as any
Event of Default shall have occurred and be continuing, Borrowers shall provide
Administrative Agent, and each Lender with access to their suppliers and
customers. Each Credit Party shall make available to Administrative Agent and
its counsel, as quickly as is possible under the circumstances, originals or
copies of all books and records which Administrative Agent may request. Each
Credit Party shall deliver any document or instrument necessary for
Administrative Agent, as it may from time to time request, to obtain records
from any service bureau or other Person which maintains records for such Credit
Party, and shall maintain duplicate records or supporting documentation on
media, including computer tapes and discs owned by such Credit Party.
Administrative Agent will give Lenders at least ten (10) days' prior written
notice of regularly scheduled audits. Representatives of Lenders may accompany
Administrative Agent' representatives on regularly scheduled audits at no charge
to Borrowers.
1.15 Taxes. (a) Any and all payments by each Borrower
hereunder (including any payments made pursuant to Section 12) or under the
Notes shall be made, in accordance with this Section 1.15, free and clear of and
without deduction for any and all present or future Taxes, excluding Taxes
imposed by reason of the failure of any Lender to timely comply with Section
1.15(c) (or the inaccuracy of the certificates, documents and any other evidence
thereunder). If any Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder (including any sum payable pursuant
to Section 12) or under the Notes, (i) the sum payable shall be increased as
much as shall be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
1.15) Agents or Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions been made, (ii) such Borrower shall
make such deductions, and (iii) such Borrower shall pay the full amount deducted
to the relevant taxing or other authority in accordance with applicable law.
Within thirty (30) days after the date of any payment of Taxes, Borrower
Representative shall furnish to Administrative Agent the original or a certified
copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and, within ten (10) days of demand therefor, pay each
Agent and each Lender for the full amount of Taxes (including any Taxes imposed
by any jurisdiction on amounts payable under this Section 1.15) paid by each
Agent or such Lender, as appropriate, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty
16
shall provide to Borrower Representative and Administrative Agent a properly
completed and executed IRS Form 4224, Form 1001 or Form W-8 or other applicable
form, certificate or document prescribed by the IRS or the United States
certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower
Representative and Administrative Agent prior to becoming a Lender hereunder. No
foreign Person may become a Lender hereunder if such Person is unable to deliver
a Certificate of Exemption. Within ten (10) days of the date hereof or, if
later, of acquiring an interest in the Notes, each Lender that is a "United
States person" as defined in IRC Section 7701(a)(30) shall deliver to Borrowers
two duly completed Forms W-9. When any form required in this Section 1.15(c)
expires or becomes obsolete or inaccurate in any respect, or after an event
requiring a change in the most recent form previously delivered to Borrowers, a
substitute form, or a successor applicable form, shall be delivered to
Borrowers.
1.16 Capital Adequacy; Increased Costs; Illegality. (a) If
any Lender shall have determined that the adoption after the date hereof of any
law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender with any request or directive made after the date
hereof regarding capital adequacy, reserve requirements or similar requirements
(whether or not having the force of law) from any central bank or other
Governmental Authority increases or would have the effect of increasing the
amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder to a level below that which such Lender
could have achieved but for such adoption or compliance, then Borrowers shall
from time to time upon 90 days prior notice by such Lender (with a copy of such
demand to Administrative Agent) pay to Administrative Agent, for the account of
such Lender, additional amounts sufficient to compensate such Lender for such
reduction; provided, however, that such Lender shall repay to Borrowers any
amounts paid by Borrowers to such Lender under this Section 1.16 at any time
such Lender shall determine, in its sole judgment, that such adoption or
compliance was not applicable to, or required by, such Lender. A certificate as
to the amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower Representative and to Administrative Agent
shall, absent error, be final, conclusive and binding for all purposes.
(b) If, due to either (i) the enactment of or any change after
the date hereof in any law or regulation (or any change in the interpretation
thereof) or (ii) the compliance with any guideline or request made after the
date hereof from any central bank or other Governmental Authority (whether or
not having the force of law), there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Administrative Agent), pay to Administrative Agent for the
account of such Lender additional amounts sufficient to compensate such Lender
for such increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower Representative and to Administrative Agent by such Lender,
shall be conclusive and binding on Borrowers for all purposes, absent error.
Each Lender agrees that, as promptly as practicable after it becomes aware of
any circumstances
17
referred to above which would result in any such increased cost, the affected
Lender shall, to the extent not inconsistent with such Lender's internal
policies of general application, use reasonable commercial efforts to minimize
costs and expenses incurred by it and payable to it by Borrowers pursuant to
this Section 1.16(a) and (b).
(c) Notwithstanding anything to the contrary contained herein,
if the enactment of or any change in any law or regulation (or any change in the
interpretation thereof) made after the date hereof shall make it unlawful, or
any central bank or other Governmental Authority shall assert that it is
unlawful, for any Lender to agree to make or to make or to continue to fund or
maintain any LIBOR Loan, then, unless that Lender is able to make or to continue
to fund or to maintain such LIBOR Loan at another branch or office of that
Lender without, in that Lender's opinion, adversely affecting it or its Loans or
the income obtained therefrom, on notice thereof and demand therefor by such
Lender to Borrower Representative through Administrative Agent, (i) the
obligation of such Lender to agree to make or to make or to continue to fund or
maintain LIBOR Loans shall terminate and (ii) each Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing by such Borrower to such
Lender, together with interest accrued thereon, unless Borrower Representative
on behalf of such Borrower, within five (5) Business Days after the delivery of
such notice and demand, converts all such Loans into a Loan bearing interest
based on the Index Rate.
(d) Replacement of Lender in Respect of Increased Costs.
Within fifteen (15) days after receipt by Borrower Representative of written
notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Section 1.15(a), 1.16(a),
1.16(b) or 1.16(c), Borrower Representative may, at its option, notify
Administrative Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Default or Event of Default shall have occurred
and be continuing, Borrower Representative, with the consent of Administrative
Agent, may obtain, at Borrowers' expense, a replacement Lender ("Replacement
Lender") for the Affected Lender, which Replacement Lender must be satisfactory
to Administrative Agent. If Borrowers obtain a Replacement Lender within ninety
(90) days following notice of their intention to do so, the Affected Lender must
sell and assign its Loans and Commitments to such Replacement Lender for an
amount equal to the principal balance of all Loans held by the Affected Lender
and all accrued interest and Fees with respect thereto through the date of such
sale, provided that Borrowers shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment.
Notwithstanding the foregoing, Borrowers shall not have the
right to obtain a Replacement Lender if the Affected Lender rescinds its demand
for increased costs or additional amounts within fifteen (15) days following its
receipt of Borrowers' notice of intention to replace such Affected Lender.
Furthermore, if Borrowers give a notice of intention to replace and do not so
replace such Affected Lender within ninety (90) days thereafter, Borrowers'
rights under this Section 1.16(d) shall terminate and Borrowers shall promptly
pay all increased costs or additional amounts demanded by such Affected Lender
pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).
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1.17 Single Loan. All Loans to each Borrower and all of
the other Obligations of each Borrower arising under this Agreement and the
other Loan Documents shall constitute one general obligation of that Borrower
secured, until the Termination Date, by all of its Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans.
No Lender shall be obligated to make any Loan or incur any
Letter of Credit Obligations on the Effective Date, or to take, fulfill, or
perform any other action hereunder, until the following conditions have been
satisfied or provided for in a manner satisfactory to Administrative Agent, or
waived in writing by Administrative Agent and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrowers, Agents and Lenders; and Administrative Agent shall have received such
documents, instruments, agreements and legal opinions as Administrative Agent
shall request in connection with the transactions contemplated by this Agreement
and the other Loan Documents, including all those listed in the Closing
Checklist attached hereto as Annex D, each in form and substance satisfactory to
Administrative Agent.
(b) Approvals. Administrative Agent shall have received (i)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including all requisite Governmental
Authorities, to the execution, delivery and performance of this Agreement and
the other Loan Documents and the consummation of the transactions contemplated
hereby or (ii) an officer's certificate in form and substance satisfactory to
Administrative Agent affirming that no such consents or approvals are required.
(c) Payment of Fees. Borrowers shall have paid the Fees
required to be paid on the Effective Date in the respective amounts specified in
Section 1.9 (including the Fees specified in the GE Capital Fee Letter), and
shall have reimbursed Agents for all fees, costs and expenses of closing
presented as of the Effective Date.
(d) Capital Structure: Other Indebtedness. The capital
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party shall be acceptable to Administrative Agent in its sole
discretion.
2.2 Further Conditions to Each Loan. Except as otherwise
expressly provided herein, no Lender shall be obligated to fund any Loan,
convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit
Obligation, if, as of the date thereof:
(a) Any representation or warranty by any Credit Party
contained herein or in any of the other Loan Documents shall be untrue or
incorrect as of such date in any material respect, except to the extent that
such representation or warranty expressly relates to an earlier date and except
for changes therein not prohibited by this Agreement; or
19
(b) Any event or circumstance having a Material Adverse Effect
shall have occurred since the date hereof; or
(c) (i) Any Event of Default shall have occurred and be
continuing or would result after giving effect to any Loan (or the incurrence of
any Letter of Credit Obligations), or (ii) a Default shall have occurred and be
continuing or would result after giving effect to any Loan, and Administrative
Agent or Requisite Lenders shall have determined not to make any Loan or incur
any Letter of Credit Obligation so long as that Default is continuing; or
(d) After giving effect to any Advance (or the incurrence of
any Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan less 65% of the Eligible Trade L/C Obligations would
exceed the Aggregate Borrowing Base less the then outstanding principal amount
of the Swing Line Loan, (ii) the aggregate Revolving Loan would exceed the
Maximum Amount less the then outstanding principal amount of the Swing Line
Loan, or (iii) the outstanding principal amount of the Revolving Loan of the
applicable Borrower less 65% of the Eligible Trade L/C Obligations of such
Borrower would exceed such Borrower's separate Borrowing Base less the
outstanding principal amount of the Swing Line Loan to such Borrower.
(e) After giving effect to any Swing Line Advance, (i) the
outstanding principal amount of the Swing Line Loan would exceed Swing Line
Availability, or (ii) the outstanding principal amount of the Swing Line Loan of
the applicable Borrower would exceed such Borrower's separate Borrowing Base
less the outstanding principal amount of the Revolving Loan to that Borrower
minus 65% of the Eligible Trade L/C Obligations of such Borrower.
The request and acceptance by any Borrower of the proceeds of any Loan, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request or acceptance, (i) a representation
and warranty by Borrowers that the conditions in this Section 2.2 have been
satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty provisions
set forth in Section 12 and of the granting and continuance of Administrative
Agent's Liens on behalf of itself, the other Agent and Lenders, pursuant to the
Collateral Documents.
2.3 Conditions to Commercial Letters of Credit.
Administrative Agent shall have no obligation to approve any request for a
commercial Letter of Credit for the purchase of finished goods unless each of
the following documents are required as conditions to any draw thereon, and for
such commercial Letter of Credit to constitute an Eligible Trade L/C, such
deliveries must be conditions to any draw thereon (except that the
Administrative Agent may waive any one or more of the following conditions):
(i) the original Eligible Trade L/C, if only one
draw is permitted thereunder or if multiple draws are
permitted and the subject draw is the final draw thereunder;
20
(ii) an inspection certificate substantially in
the form attached hereto as Disclosure Schedule (2.3),
executed by a Borrower's employee or agent at the point of
origin of the finished goods;
(iii) a commercial invoice with respect to the
purchase order(s) against which such finished goods are being
delivered and a packaging list with respect to such goods;
(iv) a non-negotiable ocean xxxx of lading,
freight forwarders cargo receipt, a house xxxx of lading or a
copy of an airway xxxx of lading (a "Document of Title")
issued by an Approved Shipper with respect to the finished
goods being shipped and providing for the delivery thereof to
a Borrower; and
(v) a certificate of origin.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of
Credit Obligations, the Credit Parties executing this Agreement, jointly and
severally, make the following representations and warranties to Administrative
Agent and Lenders with respect to all Credit Parties, each and all of which
shall survive the execution and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit
Party (a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation; (b) is duly qualified to
conduct business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to qualify, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;
(c) has the requisite corporate power and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease and to conduct its business as now, heretofore
and proposed to be conducted; (d) has all licenses, permits, consents or
approvals from or by, and has made all filings with, and has given all notices
to, all Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct, except where such failures, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect; (e) is in compliance with its charter and by-laws; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, is in compliance with all applicable provisions of law,
except where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices; FEIN. As of the Effective Date,
the current location of each Credit Party's chief executive office and principal
place of business is set forth in Disclosure Schedule (3.2), and none of such
locations have changed within the twelve (12) months preceding the Effective
Date. In addition, Disclosure Schedule (3.2) lists the federal employer
identification number of each Credit Party.
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3.3 Corporate Power, Authorization, Enforceable
Obligations. The execution, delivery and performance by each Credit Party of the
Loan Documents to which it is a party and the creation of all Liens provided for
therein: (a) are within such Person's corporate power; (b) have been duly
authorized by all necessary or proper corporate and shareholder action; (c) do
not contravene any provision of such Person's charter or bylaws; (d) do not
violate any law or regulation, or any order or decree of any court or
Governmental Authority; (e) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which such Person is a party or
by which such Person or any of its property is bound; (f) do not result in the
creation or imposition of any Lien upon any of the property of such Person other
than those in favor of Administrative Agent, on behalf of itself, the other
Agent and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(b), all of which will have been duly obtained,
made or complied with prior to the Effective Date. On or prior to the Effective
Date, each of the Loan Documents shall have been duly executed and delivered by
each Credit Party thereto and each such Loan Document shall then constitute a
legal, valid and binding obligation of such Credit Party enforceable against it
in accordance with its terms except as such enforceability may be limited by
fraudulent conveyance, bankruptcy, insolvency or similar law or by general
equitable principles.
3.4 Financial Statements and Projections. Except for the
Projections, all Financial Statements concerning Parent and its Subsidiaries
which are referenced below have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the
periods then ended.
(a) The following Financial Statements attached hereto as
Disclosure Schedule (3.4(A)) have been delivered on the date hereof:
(i) The audited consolidated balance sheets at
February 2, 2002 and February 3, 2001 and the related
statements of income and cash flows of Parent and its
Subsidiaries for the Fiscal Years then ended, certified by
Xxxxxx Xxxxxxxx LLP.
(ii) The unaudited consolidated balance sheet(s)
at November 2, 2002 and the related statement(s) of income and
cash flows of Parent and its Subsidiaries for the four Fiscal
Quarters then ended.
(b) Projections. The Projections delivered on the date hereof
and attached hereto as Disclosure Schedule (3.4(B)) have been prepared by Parent
in light of the past operations of their businesses, but including future
payments of known contingent liabilities reflected on the balance sheet, and
reflect projections for the Fiscal Year period beginning on February 1, 2003 on
a month by month basis for the first year and on a year by year basis
thereafter. The Projections are based upon estimates and assumptions stated
therein, all of which Parent believe
22
to be reasonable and fair in light of current conditions and current facts known
to Parent and, as of the Effective Date, reflect Parent's good faith and
reasonable estimates of the future financial performance of Borrowers and of the
other information projected therein for the period set forth therein.
3.5 Material Adverse Effect. Between February 1, 2003 and
the Effective Date, (a) no Credit Party has incurred any obligations, contingent
or non-contingent liabilities, liabilities for Charges, long-term leases or
unusual forward or long-term commitments which are not reflected in the
unaudited consolidated balance sheet at February 1, 2003 of Parent or incurred
in the ordinary course of business since February 1, 2003 and which, alone or in
the aggregate, could reasonably be expected to have a Material Adverse Effect,
(b) no contract, lease or other agreement or instrument has been entered into by
any Credit Party or has become binding upon any Credit Party's assets and no law
or regulation applicable to any Credit Party has been adopted which has had or
could reasonably be expected to have a Material Adverse Effect, and (c) no
Credit Party is in default and to the best of Borrowers' knowledge no third
party is in default under any material contract, lease or other agreement or
instrument, which alone or in the aggregate could reasonably be expected to have
a Material Adverse Effect. Between February 1, 2003 and the Effective Date no
event has occurred, which alone or together with other events, could reasonably
be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Effective
Date, the real estate ("Real Estate") listed on Disclosure Schedule (3.6)
constitutes all of the real property owned, leased, subleased, or used by any
Credit Party. Each Credit Party owns insurable fee simple title to all of its
owned real estate, and valid leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6), and copies of all such
leases or a summary of terms thereof satisfactory to Administrative Agent have
been delivered to Administrative Agent. Disclosure Schedule (3.6) further
describes any Real Estate with respect to which any Credit Party is a lessor,
sublessor or assignor as of the Effective Date. Each Credit Party also has good
and marketable title to, or valid leasehold interests in, all of its personal
properties and assets. As of the Effective Date, none of the properties and
assets of any Credit Party are subject to any Liens other than Permitted
Encumbrances, and there are no facts, circumstances or conditions known to any
Credit Party that may result in any Liens (including Liens arising under
Environmental Laws) other than Permitted Encumbrances. Each Credit Party has
received all deeds, assignments, waivers, consents, non-disturbance and
recognition or similar agreements, bills of sale and other documents, and has
duly effected all recordings, filings and other actions necessary to establish,
protect and perfect such Credit Party's right, title and interest in and to all
such Real Estate and other properties and assets. Disclosure Schedule (3.6) also
describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any Real Estate. As of the Effective Date, no
portion of any Credit Party's Real Estate has suffered any material damage by
fire or other casualty loss which has not heretofore been repaired and restored
in all material respects to its original condition or otherwise remedied. As of
the Effective Date, all material permits required to have been issued or
appropriate to enable the Real Estate to be lawfully occupied and used for all
of the purposes for which they are currently occupied and used have been
lawfully issued and are in full force and effect.
23
3.7 Labor Matters. As of the Effective Date (a) no
strikes or other material labor disputes against any Credit Party are pending
or, to any Credit Party's knowledge, threatened; (b) hours worked by and payment
made to employees of each Credit Party comply with the Fair Labor Standards Act
and each other federal, state, local or foreign law applicable to such matter
which could be reasonably expected to have a Material Adverse Effect; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
except as set forth in Disclosure Schedule (3.7), no Credit Party is a party to
or bound by any collective bargaining agreement, management agreement,
consulting agreement or any employment agreement (and true and complete copies
of any agreements described on Disclosure Schedule (3.7) have been delivered to
Administrative Agent); (e) there is no organizing activity involving any Credit
Party pending or, to any Credit Party's knowledge, threatened by any labor union
or group of employees which could be reasonably expected to have a Material
Adverse Effect; (f) there are no representation proceedings pending or, to any
Credit Party's knowledge, threatened with the National Labor Relations Board,
and no labor organization or group of employees of any Credit Party has made a
pending demand for recognition which could be reasonably expected to have a
Material Adverse Effect; and (g) except as set forth in Disclosure Schedule
(3.7), there are no complaints or charges against any Credit Party pending or,
to the knowledge of any Credit Party, threatened to be filed with any
Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
any Credit Party of any individual which could be reasonably expected to have a
Material Adverse Effect.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness. Except as set forth in Disclosure Schedule (3.8), no
Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person. All
of the issued and outstanding Stock of each Credit Party (other than Parent) is
owned by each of the stockholders and in the amounts set forth on Disclosure
Schedule (3.8). There are no outstanding rights to purchase, options, warrants
or similar rights or agreements pursuant to which any Credit Party (other than
Parent) may be required to issue, sell, repurchase or redeem any of its Stock or
other equity securities or any Stock or other equity securities of its
Subsidiaries. All outstanding Indebtedness of each Credit Party as of the
Effective Date is described in Section 6.3 (including Disclosure Schedule
(6.3)).
3.9 Government Regulation. No Credit Party is an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940 as amended. No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any other federal or state statute that restricts or limits its
ability to incur Indebtedness or to perform its obligations hereunder. The
making of the Loans by Lenders to Borrowers, the incurrence of the Letter of
Credit Obligations on behalf of Borrowers, the application of the proceeds
thereof and repayment thereof and consummation of the transactions contemplated
hereby will not violate any provision of any such statute or any rule,
regulation or order issued by the Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor
will it engage, principally or as one of its important activities, in the
business of extending credit for the purpose
24
of "purchasing" or "carrying" any "margin security" as such terms are defined in
Regulation U or G of the Federal Reserve Board as now and from time to time
hereafter in effect (such securities being referred to herein as "Margin
Stock"). No Credit Party owns any Margin Stock, and none of the proceeds of the
Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under this Agreement
to be considered a "purpose credit" within the meaning of Regulation G, T, U or
X of the Federal Reserve Board. No Credit Party will take or permit to be taken
any action which might cause any Loan Document to violate any regulation of the
Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements,
including information returns, required by any Governmental Authority to be
filed by any Credit Party have been filed with the appropriate Governmental
Authority and all Charges have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof (or
any such fine, penalty, interest, late charge or loss has been paid), excluding
Charges or other amounts being contested in accordance with Section 5.2(b)
except where such failures, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. Proper and accurate
amounts have been withheld by each Credit Party from its respective employees
for all periods in full and complete compliance with all applicable federal,
state, local and foreign law and such withholdings have been timely paid to the
respective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of
the Effective Date those taxable years for which any Credit Party's tax returns
are currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described on Disclosure
Schedule (3.11), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to each Credit Party's knowledge, as a transferee which in each case could
reasonably be expected to have a Material Adverse Effect. As of the Effective
Date, no Credit Party has agreed or been requested to make any adjustment under
IRC Section 481(a), by reason of a change in accounting method or otherwise,
which would have a Material Adverse Effect.
3.12 ERISA. (a) Disclosure Schedule (3.12) lists and
separately identifies all Title IV Plans, Multiemployer Plans, ESOPs and Retiree
Welfare Plans. Copies of all such listed Plans, together with a copy of the
latest form 5500 for each such Plan, have been delivered to Administrative
Agent. Each Qualified Plan has been determined by the IRS to qualify under
Section 401 of the IRC, and the trusts created thereunder have been determined
to be exempt from tax under the provisions of Section 501 of the IRC, and
nothing has occurred which would cause the loss of such qualification or
tax-exempt status. Each Plan is in all material respects in compliance with the
applicable provisions of ERISA and the IRC, including the filing of reports
required under the IRC or ERISA. No Credit Party or ERISA Affiliate has failed
to make any contribution or pay any amount due as required by either Section 412
of the IRC or Section 302
25
of ERISA or the terms of any such Plan which could result in a material
liability to any Credit Party. No Credit Party or ERISA Affiliate has engaged in
a prohibited transaction, as defined in Section 4975 of the IRC, in connection
with any Plan, which would subject any Credit Party to a material tax on
prohibited transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no
Title IV Plan has any material Unfunded Pension Liability; (ii) no ERISA Event
or event described in Section 4062(e) of ERISA with respect to any Title IV Plan
has occurred or is reasonably expected to occur; (iii) there are no pending, or
to the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan
which could result in a material liability to any Credit Party; (iv) no Credit
Party or ERISA Affiliate has incurred or reasonably expects to incur any
liability as a result of a complete or partial withdrawal from a Multiemployer
Plan which could result in a material liability to any Credit Party; (v) within
the last five years no Title IV Plan with Unfunded Pension Liabilities has been
transferred outside of the "controlled group" which could result in a material
liability to any Credit Party (within the meaning of Section 4001(a)(14) of
ERISA) of any Credit Party or ERISA Affiliate; and (vi) no liability under any
Title IV Plan has been satisfied with the purchase of a contract from an
insurance company that was not rated AAA by the Standard & Poor's Corporation or
the equivalent by another nationally recognized rating agency at the time of
such purchase.
3.13 No Litigation. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party, before any Governmental Authority or
before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a)
which challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) which could reasonably be expected to have a Material Adverse Effect.
Except as set forth on Disclosure Schedule (3.13), as of the Effective Date
there is no Litigation pending or threatened which seeks damages in excess of
$250,000 or injunctive relief or alleges criminal misconduct of any Credit
Party.
3.14 Brokers. No broker or finder acting on behalf of any
Credit Party brought about the obtaining, making or closing of the Loans or the
consummation of the transaction contemplated hereby, and no Credit Party has any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.15 Intellectual Property. As of the Effective Date, each
Credit Party owns or has rights to use all Intellectual Property necessary to
continue to conduct its business as now or heretofore conducted by it or
proposed to be conducted by it, and each registered Patent, Trademark, Copyright
and License is listed, together with application or registration numbers, as
applicable, in Disclosure Schedule (3.15) hereto. Each Credit Party conducts its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
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3.16 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other reports from time to time delivered
hereunder or any written statement furnished by or on behalf of any Credit Party
to any Agent or Lender pursuant to the terms of this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. The Liens
granted to Administrative Agent, on behalf of itself, the other Agent and
Lenders, pursuant to the Collateral Documents will at all times be fully
perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances with respect to the
Collateral other than Accounts.
3.17 Environmental Matters. (a) Except as set forth in
Disclosure Schedule (3.17), as of the Effective Date: (i) the Real Estate is
free of contamination from any Hazardous Material except for such contamination
which would not result in Environmental Liabilities which could reasonably be
expected to exceed $250,000; (ii) no Credit Party has caused or suffered to
occur any Release of Hazardous Materials on, at, in, under, above, to, from or
about any of its Real Estate; (iii) the Credit Parties are and have been in
compliance with all Environmental Laws, except for such noncompliance which
would not result in Environmental Liabilities which could reasonably be expected
to exceed $250,000; (iv) the Credit Parties have obtained, and are in compliance
with, all Environmental Permits required by Environmental Laws for the
operations of their respective businesses as presently conducted or as proposed
to be conducted, except where the failure to so obtain or comply with such
Environmental Permits would not result in Environmental Liabilities which could
reasonably be expected to exceed $250,000, and all such Environmental Permits
are valid, uncontested and in good standing; (v) no Credit Party is involved in
operations or knows of any facts, circumstances or conditions, including any
Releases of Hazardous Materials, that are likely to result in any Environmental
Liabilities of such Credit Party which could reasonably be expected to exceed
$250,000, and no Credit Party has permitted any current or former tenant or
occupant of the Real Estate to engage in any such operations; (vi) the Credit
Parties' estimated costs of compliance with Environmental Laws and Environmental
Permits for each of the two Fiscal Years following the Effective Date are not in
excess of $250,000 and $250,000, respectively; (vii) there is no Litigation
involving any Credit Party arising under or related to any Environmental Laws,
Environmental Permits or Hazardous Material which seeks damages, penalties,
fines, costs or expenses in excess of $25,000 or injunctive relief, or which
alleges criminal misconduct by any Credit Party; and (viii) no notice has been
received by any Credit Party identifying it as a "potentially responsible party"
or requesting information under CERCLA or analogous state statutes, and to the
knowledge of the Credit Parties, there are no facts, circumstances or conditions
that could reasonably be expected to result in any Credit Party being identified
as a "potentially responsible party" under CERCLA or analogous state statutes.
(b) Each Credit Party hereby acknowledges and agrees that
Administrative Agent (i) is not now, and has not ever been, in control of any of
the Real Estate or any Credit Party's affairs, and (ii) does not have the
capacity through the provisions of the Loan Documents or otherwise to influence
any Credit Party's conduct with respect to the ownership, operation or
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management of any of its Real Estate or compliance with Environmental Laws or
Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all
insurance policies of any nature maintained, as of the Effective Date, for
current occurrences by each Credit Party, as well as a summary of the terms of
each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure
Schedule (3.19) lists all banks and other financial institutions at which any
Credit Party maintains deposits and/or other accounts as of the Effective Date,
including any Disbursement Accounts, and such Schedule correctly identifies the
name, address and telephone number of each depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number.
3.20 Government Contracts. Except as set forth in
Disclosure Schedule (3.20), as of the Effective Date, no Credit Party is a party
to any contract or agreement with any Governmental Authority and no Credit
Party's Accounts are subject to the Federal Assignment of Claims Act, as amended
(31 U.S.C. Section 3727), or any similar state or local law.
3.21 Customer and Trade Relations. As of the Effective
Date, there exists no actual or, to the knowledge of any Credit Party,
threatened termination or cancellation of, or any material adverse modification
or change in: the business relationship of any Credit Party with any customer or
group of customers whose purchases during the preceding twelve (12) months
caused them to be ranked among the ten largest customers of such Credit Party;
or (b) the business relationship of any Credit Party with any supplier material
to its operations.
3.22 Agreements and Other Documents. As of the Effective
Date, each Credit Party has provided to Administrative Agent or its counsel, on
behalf of Lenders, accurate and complete copies (or summaries) of all of the
following agreements or documents to which any is subject and each of which are
listed on Disclosure Schedule (3.22): (a) supply agreements and purchase
agreements not terminable by such Credit Party within sixty (60) days following
written notice issued by such Credit Party and involving transactions in excess
of $1,000,000 per annum; (b) any lease of Equipment having a remaining term of
one year or longer and requiring aggregate rental and other payments in excess
of $500,000 per annum; (c) licenses and permits held by the Credit Parties, the
absence of which could be reasonably likely to have a Material Adverse Effect;
(d) instruments or documents evidencing Indebtedness of such Credit Party and
any security interest granted by such Credit Party with respect thereto; and (e)
instruments and agreements evidencing the issuance of any equity securities,
warrants, rights or options to purchase equity securities of such Credit Party
(other than Parent).
3.23 Solvency. Both before and after giving effect to (a)
the Loans and Letter of Credit Obligations to be made or extended on the
Effective Date or such other date as Loans and Letter of Credit Obligations
requested hereunder are made or extended, (b) the disbursement of the proceeds
of such Loans pursuant to the instructions of Borrower Representative, (c) the
Refinancing and the consummation of the other transactions contemplated hereby
and (d) the
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payment and accrual of all transaction costs in connection with the foregoing,
each Credit Party is Solvent.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Each Credit Party executing
this Agreement hereby agrees that from and after the Effective Date and until
the Termination Date, it shall deliver to Administrative Agent and/or Lenders,
as required, the Financial Statements, notices, Projections and other
information at the times, to the Persons and in the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby agrees
that from and after the Effective Date and until the Termination Date, it shall
deliver to Administrative Agent and/or Lenders, as required, the various
Collateral Reports (including Borrowing Base Certificates in the form of Exhibit
4.1(b)) at the times, to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party
executing this Agreement authorizes Administrative Agent and, so long as a
Default or Event of Default shall have occurred and be continuing, each Agent
and Lender, to communicate directly with its independent certified public
accountants including KPMG LLP, and authorizes and shall instruct those
accountants and advisors to disclose and make available to Administrative Agent
and each Lender any and all Financial Statements and other supporting financial
documents, schedules and information relating to any Credit Party (including
copies of any issued management letters) with respect to the business, financial
condition and other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. (a)
Each Credit Party shall: (a) do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and its
rights and franchises necessary to conduct its business (except as a result of
any merger permitted hereunder); (b) continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder; (c) at all
times maintain, preserve and protect all of its assets and properties used or
useful in the conduct of its business, and keep the same in good repair, working
order and condition in all material respects (taking into consideration ordinary
wear and tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (d) transact business only in
such corporate and trade names as are set forth in Disclosure Schedule (5.1),
unless in each case Borrower Representative gives the Administrative Agent at
least thirty (30) days prior written notice of any change.
(b) Each Subsidiary of the Credit Parties in existence as of
the Effective Date (i) shall continue to conduct its business substantially as
now conducted or as otherwise permitted
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hereunder and (ii) shall not acquire any assets other than in the ordinary
course of business and which are related to the business of such Subsidiary as
now conducted or otherwise permitted hereunder.
5.2 Payment of Obligations. (a) Subject to Section
5.2(b), each Credit Party shall pay and discharge or cause to be paid and
discharged promptly all Charges payable by it, including (A) Charges imposed
upon it, its income and profits, or any of its property (real, personal or
mixed) and all Charges with respect to tax, social security and unemployment
withholding with respect to its employees, and (B) lawful claims for labor,
materials, supplies and services or otherwise, before any thereof shall become
past due, except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges or claims
described in Section 5.2(a); provided that (i) adequate reserves with respect to
such contest are maintained on the books of such Credit Party, in accordance
with GAAP, (ii) such contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection or enforcement of such Charges or
claims or any Lien in respect thereof, (iii) none of the Collateral becomes
subject to forfeiture or loss as a result of such contest, (iv) no Lien shall be
imposed to secure payment of such Charges or claims other than Permitted
Encumbrances, (v) such Credit Party shall promptly pay or discharge such
contested Charges or claims and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Administrative Agent evidence acceptable
to Administrative Agent of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to such Credit Party or the
conditions set forth in this Section 5.2(b) are no longer met, and (vi)
Administrative Agent has not advised Borrowers in writing that Administrative
Agent reasonably believes that nonpayment or nondischarge thereof could have or
result in a Material Adverse Effect.
5.3 Books and Records. Each Credit Party shall keep
adequate books and records with respect to its business activities in which
proper entries, reflecting all financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financial Statements attached as
Disclosure Schedule (3.4(A)).
5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described on Disclosure Schedule (3.18) in form and with
insurers acceptable to Administrative Agent (it being acknowledged that as of
the date hereof the current form and insurers are acceptable). If any Credit
Party at any time or times hereafter shall fail to obtain or maintain any of the
policies of insurance required above or to pay all premiums relating thereto,
Administrative Agent may at any time or times thereafter obtain and maintain
such policies of insurance and pay such premiums and take any other action with
respect thereto which Administrative Agent deems advisable. No Agent shall have
any obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, no Agent shall be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
attorneys' fees, court costs and other
30
charges related thereto, shall be payable on demand by Borrowers to
Administrative Agent and shall be additional Obligations hereunder secured by
the Collateral.
(b) Administrative Agent reserves the right at any time upon
any material change in any Credit Party's risk profile (including any change in
the product mix maintained by any Credit Party or any laws affecting the
potential liability of such Credit Party) to require additional forms and limits
of insurance to, in Administrative Agent's opinion, adequately protect
Administrative Agent's and Lenders' interests in all or any portion of the
Collateral and to ensure that each Credit Party is protected by insurance in
amounts and with coverage customary for its industry. If requested by
Administrative Agent, each Credit Party shall deliver to Administrative Agent
from time to time a report of a reputable insurance broker, satisfactory to
Administrative Agent, with respect to its insurance policies.
(c) Each Borrower shall deliver to Administrative Agent, in
form and substance satisfactory to Administrative Agent, endorsements to (i) all
"All Risk" and business interruption insurance naming Administrative Agent, on
behalf of itself, the other Agent and Lenders, as loss payee with respect to the
Collateral, and (ii) all general liability and other liability policies naming
Administrative Agent, on behalf of itself, the other Agent and Lenders, as
additional insured. Each Borrower irrevocably makes, constitutes and appoints
Administrative Agent (and all officers, employees or agents designated by
Administrative Agent), so long as any Default or Event of Default shall have
occurred and be continuing or the anticipated insurance proceeds exceed
$1,000,000, as such Borrower's true and lawful agent and attorney-in-fact for
the purpose of making, settling and adjusting claims under such "All Risk"
policies of insurance, endorsing the name of such Borrower on any check or other
item of payment for the proceeds of such "All Risk" policies of insurance and
for making all determinations and decisions with respect to such "All Risk"
policies of insurance. Administrative Agent shall have no duty to exercise any
rights or powers granted to it pursuant to the foregoing power-of-attorney.
Borrower Representative shall promptly notify Administrative Agent of any loss,
damage, or destruction to the Collateral in the amount of $250,000 or more,
whether or not covered by insurance. After deducting from such proceeds the
expenses, if any, incurred by Administrative Agent in the collection or handling
thereof, Administrative Agent may, at its option, apply such proceeds to the
reduction of the Obligations in accordance with Section 1.3(d), or permit or
require the applicable Borrower to use such money, or any part thereof, to
replace, repair, restore or rebuild the Collateral in a diligent and expeditious
manner with materials and workmanship of substantially the same quality as
existed before the loss, damage or destruction. Notwithstanding the foregoing,
if the casualty giving rise to such insurance proceeds would not reasonably be
expected to have a Material Adverse Effect, Administrative Agent shall permit
the applicable Borrower to replace, restore, repair or rebuild the property;
provided that if such Borrower shall not have completed or entered into binding
agreements to complete such replacement, restoration, repair or rebuilding
within 180 days of such casualty, Administrative Agent may apply such insurance
proceeds to the Obligations in accordance with Section 1.3(d). All insurance
proceeds which are to be made available to any Borrower to replace, repair,
restore or rebuild the Collateral shall be applied by Administrative Agent to
reduce the outstanding principal balance of the Revolving Loan of such Borrower
(which application shall not result in a permanent reduction of the Revolving
Loan Commitment) and upon such application,
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Administrative Agent shall establish a Reserve against the separate Borrowing
Base of the affected Borrower in an amount equal to the amount of such proceeds
so applied. Thereafter, such funds shall be made available to that Borrower to
provide funds to replace, repair, restore or rebuild the Collateral as follows:
(i) Borrower Representative shall request a Revolving Credit Advance be made to
such Borrower in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Lenders shall make such
Revolving Credit Advance; and (iii) the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such Revolving Credit
Advance. To the extent not used to replace, repair, restore or rebuild the
Collateral, such insurance proceeds shall be applied in accordance with Section
1.3(d).
5.5 Compliance with Laws. Each Credit Party shall comply
with all federal, state, local and foreign laws and regulations applicable to
it, including those relating to ERISA and labor matters and Environmental Laws
and Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be
requested by Administrative Agent (which request will not be made more
frequently than once each year absent the occurrence and continuance of an Event
of Default), the Credit Parties shall supplement each Disclosure Schedule
hereto, or any representation herein or in any other Loan Document, with respect
to any matter hereafter arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or which is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall be or be
deemed a waiver of any Default or Event of Default resulting from the matters
disclosed therein, except as consented to by Administrative Agent and Requisite
Lenders in writing; and (b) no supplement shall be required as to
representations and warranties that relate solely to the Effective Date.
5.7 Intellectual Property. Each Credit Party will conduct
its business and affairs without material infringement of or material
interference with any Intellectual Property of any other Person.
5.8 Environmental Matters. Each Credit Party shall and
shall require each Person within its control to: (a) conduct its operations and
keep and maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance which could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions which are required to
comply with Environmental Laws and Environmental Permits pertaining to the
presence, generation, treatment, storage, use, disposal, transportation or
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate; (c) notify Administrative Agent promptly after such
Credit Party becomes aware of any violation of Environmental Laws or
Environmental Permits or any Release on, at, in, under, above, to, from or about
any Real Estate which is
32
reasonably likely to result in Environmental Liabilities in excess of $100,000
and (d) promptly forward to Administrative Agent a copy of any order, notice,
request for information or any communication or report received by such Credit
Party in connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to result in Environmental Liabilities in excess of
$250,000, in each case whether or not the Environmental Protection Agency or any
Governmental Authority has taken or threatened any action in connection with any
such violation, Release or other matter. If Administrative Agent at any time has
a reasonable basis to believe that there may be a violation of any Environmental
Laws or Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate, which, in each case, could
reasonably be expected to have a Material Adverse Effect, then each Credit Party
shall, upon Administrative Agent's written request (i) cause the performance of
such environmental audits to address such potential violation, liability or
release including, if necessary, subsurface sampling of soil and groundwater,
and preparation of such environmental reports, at Borrowers' expense, as
Administrative Agent may from time to time request, which shall be conducted by
reputable environmental consulting firms acceptable to Administrative Agent and
shall be in form and substance acceptable to Administrative Agent, and (ii) if
the Credit Party fails to perform any of the audits or testing requested
pursuant to clause (i) above, permit Administrative Agent or its representatives
to have access to all Real Estate for the purpose of conducting such
environmental audits and testing as Administrative Agent deems appropriate,
including, if necessary, subsurface sampling of soil and groundwater. Borrowers
shall reimburse Administrative Agent for the costs of such audits and tests and
the same will constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements and Bailee Letters. Each Credit
Party shall use its reasonable commercial efforts to obtain a landlord's
agreement or bailee letter, as applicable, from the lessor of each leased
property or with respect to any warehouse, processor or converter facility or
other location where Collateral is located, which agreement or letter shall
contain a waiver or subordination of all Liens or claims that the landlord or
bailee may assert against the Inventory or other Collateral at that location,
and shall otherwise be satisfactory in form and substance to Administrative
Agent. With respect to such locations or warehouse space leased as of the
Effective Date, if Administrative Agent has not received a landlord or bailee
letter as of the Effective Date, any Borrower's Eligible Inventory or Eligible
Fixed Assets at that location, in Administrative Agent's discretion, may be
subject to such Reserves as may be established by Administrative Agent in its
reasonable credit judgment; provided, however, that the maximum amount of any
such Reserve shall not exceed the lesser of (i) the maximum value of the
Inventory from time to time located at such location or warehouse space and (ii)
the maximum amount payable by a Credit Party to the landlord or bailee and in
respect of which such landlord or bailee has recourse against Inventory situated
at such location or warehouse space. After the Effective Date, (i) no real
property or warehouse space shall be leased or acquired by any Credit Party,
(ii) no Eligible Fixed Asset shall be located on real property or in warehouse
space, and (iii) no Inventory shall be shipped to a processor or converter under
arrangements established after the Effective Date, unless and until, in each
case, a satisfactory landlord agreement or bailee letter, as appropriate, shall
first have been obtained with respect to such location. Each Credit
33
Party shall timely and fully pay and perform its obligations under all leases
and other agreements with respect to each leased location or public warehouse
where any Collateral is or may be located, except for any good faith contest by
appropriate proceedings of the amount or validity of any payment or other
obligation under any such leases or agreements.
5.10 Further Assurances. Each Credit Party executing this
Agreement agrees that it shall and shall cause each other Credit Party to, at
such Credit Party's expense and upon request of either Agent, duly execute and
deliver, or cause to be duly executed and delivered, to Administrative Agent
such further instruments and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of either Agent to perfect or
maintain the Liens of the Administrative Agent for the benefit of itself, the
other Agent and Lenders on the Collateral.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that, without the prior written
consent of Administrative Agent and the Requisite Lenders, from and after the
date hereof until the Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall
directly or indirectly, by operation of law or otherwise, (a) form or acquire
any Subsidiary, or (b) merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise combine with
or acquire, any Person or operating division of any Person, except that any
Credit Party may merge with another Credit Party, provided that Bon-Ton and
Parent shall be the survivor of any such merger to which each may be a party.
6.2 Investments; Loans and Advances. Except as otherwise
expressly permitted by this Section 6, no Credit Party shall make or permit to
exist any investment in, or make, accrue or permit to exist loans or advances of
money to, any Person, through the direct or indirect lending of money, holding
of securities or otherwise, except that (a) Borrowers may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to any Borrower pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of business
consistent with past practice; (b) each Credit Party may maintain its existing
investments as of the Effective Date described in Disclosure Schedule (6.2); (c)
Parent or Holdings may make investments in any Borrower, (d) the Deferred
Payment Note and (e) other investments not exceeding $500,000 in the aggregate
at any time outstanding.
6.3 Indebtedness. (a) No Credit Party shall create,
incur, assume or permit to exist any Indebtedness, except (without duplication)
(i) Indebtedness secured by purchase money security interests and Capital Leases
permitted in clause (c) of Section 6.7, (ii) the Loans and the other
Obligations, (iii) deferred taxes, (iv) unfunded pension fund and other employee
benefit plan obligations and liabilities to the extent they are permitted to
remain unfunded under applicable law, (v) existing Indebtedness described in
Disclosure Schedule (6.3) and refinancings thereof or amendments or
modifications thereto which do not have the effect of increasing the principal
amount thereof and which are otherwise on terms and conditions, taken as a
whole, no
34
less favorable to any Credit Party, Agent or Lender, as determined by
Administrative Agent, than the terms of the Indebtedness being refinanced,
amended or modified, (vi) other Indebtedness not in excess of $10,000,000 to the
extent such Indebtedness is secured by mortgages on Real Estate other than the
Mortgaged Properties, (vii) Indebtedness consisting of interest rate swap
contracts outstanding at any one time to fix up to $100 million of Borrowers'
floating rate debt on terms acceptable to the Administrative Agent and (viii)
Indebtedness consisting of intercompany loans and advances made by any Credit
Party to any Borrower, provided that (A) each Borrower shall have executed and
delivered to each other Borrower, on the Effective Date, a demand note
(collectively, the "Intercompany Notes") to evidence any such intercompany
Indebtedness owing at any time by such Borrower to such other Borrowers which
Intercompany Notes shall be in form and substance satisfactory to Administrative
Agent and shall be pledged and delivered to Administrative Agent pursuant to the
applicable Pledge Agreement or Security Agreement as additional collateral
security for the Obligations; (B) each Borrower shall record all intercompany
transactions on its books and records in a manner satisfactory to Administrative
Agent; (C) the obligations of each Borrower under any such Intercompany Notes
shall be subordinated to the Obligations of such Borrower hereunder in a manner
satisfactory to Administrative Agent; (D) at the time any such intercompany loan
or advance is made by any Borrower to any other Borrower and after giving effect
thereto, each such Borrower shall be Solvent; and (E) no Default or Event of
Default would occur and be continuing after giving effect to any such proposed
intercompany loan.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations, (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Sections 6.8(b) or (c), (iii) other Indebtedness not in excess of $250,000
and (iv) refinancing of Indebtedness permitted hereunder.
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this Section 6
with respect to Affiliates, no Credit Party shall enter into or be a party to
any transaction with any other Credit Party or any Affiliate thereof except in
the ordinary course of and pursuant to the reasonable requirements of such
Credit Party's business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Credit Party. In
addition, if any such transaction or series of related transactions involves
payments in excess of $1,000,000 in the aggregate, the terms of these
transactions must be disclosed in advance to Administrative Agent and Lenders.
All such transactions existing as of the date hereof are described on Disclosure
Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to their
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes up to a maximum of $250,000 to any employee and up to a maximum of
$1,500,000 in the aggregate at any one time outstanding.
35
6.5 Capital Structure and Business. No Credit Party shall
(a) make any changes in any of its business objectives, purposes or operations
which could in any way materially adversely affect the repayment of the Loans or
any of the other Obligations or could reasonably be expected to have a Material
Adverse Effect, (b) make any change in its capital structure as described on
Disclosure Schedule (3.8), including, other than as to Parent, the issuance of
any shares of Stock, warrants or other securities convertible into Stock or any
revision of the terms of its outstanding Stock, or (c) amend its charter or
bylaws in each case in a manner which would materially adversely affect
Administrative Agent or Lenders or such Credit Party's duty or ability to repay
the Obligations. No Credit Party shall engage in any business other than the
businesses currently engaged in by it or businesses reasonably related thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall
create, incur, assume or permit to exist any Guaranteed Indebtedness except (a)
by endorsement of instruments or items of payment for deposit to the general
account of any Credit Party, and (b) for Guaranteed Indebtedness incurred for
the benefit of any other Credit Party if the primary obligation is not
prohibited by this Agreement.
6.7 Liens. No Credit Party shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts or any of its other
properties or assets (whether now owned or hereafter acquired) except for (a)
Permitted Encumbrances; (b) Liens in existence on the date hereof and summarized
on Disclosure Schedule (6.7) and replacements and refinancings thereof to the
extent such refinancing is permitted hereunder; (c) Liens created after the date
hereof by conditional sale or other title retention agreements (including
Capital Leases) or in connection with purchase money Indebtedness with respect
to Equipment and Fixtures acquired by any Credit Party in the ordinary course of
business, involving the incurrence of an aggregate amount of purchase money
Indebtedness and Capital Lease Obligations of not more than $7,500,000
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within twenty (20) days following such purchase and does not exceed
100% of the purchase price of the subject assets). In addition, no Credit Party
shall become a party to any agreement, note, indenture or instrument, or take
any other action, which would prohibit the creation of a Lien on any of its
properties or other assets in favor of Administrative Agent, on behalf of
itself, the other Agent and Lenders, as additional collateral for the
Obligations, except operating leases, Capital Leases, purchase money financing
documents or Licenses which prohibit Liens upon the assets that are subject
thereto.
6.8 Sale of Stock and Assets. Except as permitted under
Section 6.2, no Credit Party shall sell, transfer, convey, assign or otherwise
dispose of any of its properties or other assets, including (other than as to
Parent) its capital Stock or the capital Stock of any of its (including as to
Parent) Subsidiaries (whether in a public or a private offering or otherwise)
other than (a) the sale of Inventory in the ordinary course of business, (b) the
sale, transfer, conveyance or other disposition by a Credit Party in the
ordinary course of such Credit Party's business of Equipment, Fixtures or Real
Estate that are obsolete or no longer used or useful in such Credit Party's
business (c) other Equipment and Fixtures having a value not exceeding $250,000
in any single transaction or $1,000,000 in the aggregate in any Fiscal Year, (d)
the sale, transfer or other conveyance of any asset by a Credit Party (other
than Holdings and Parent) to
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another Credit Party (other than Holdings and Parent), (e) the sale of any asset
by a Credit Party if the proceeds from such sale are used to purchase a
"like-kind" replacement asset within ninety (90) days of the sale of the
original asset, (f) sales of Borrowers' private-label credit card receivables
pursuant to the Transfer Agreement, (g) sales of Designated Properties or any
property listed on Disclosure Schedule (6.8), or any sales permitted under
Section 6.12 and (h) the sale, transfer, conveyance or other disposition of
Equipment, Fixtures or Real Estate by Borrowers in connection with the sale of a
store location up to an aggregate amount equal to $30,000,000. With respect to
any disposition of assets or other properties permitted pursuant to clause (b),
clause (c), clause (f), clause (g) and clause (h) above, Administrative Agent
agrees on reasonable prior written notice to release its Lien on such assets or
other properties in order to permit the applicable Credit Party to effect such
disposition and shall execute and deliver to Borrowers, at Borrowers' expense,
appropriate UCC-3 termination statements and other releases as reasonably
requested by Borrowers.
6.9 ERISA. No Credit Party shall, or shall cause or
permit any ERISA Affiliate to, cause or permit to occur an event which could
result in the imposition of a Lien under Section 412 of the IRC or Section 302
or 4068 of ERISA.
6.10 Financial Covenants. Borrowers shall not breach or
fail to comply with any of the Financial Covenants (the "Financial Covenants")
set forth in Annex G.
6.11 Hazardous Materials. No Credit Party shall cause or
permit a Release of any Hazardous Material on, at, in, under, above, to, from or
about any of the Real Estate where such Release would (a) violate in any
respect, or form the basis for any Environmental Liabilities under, any
Environmental Laws or Environmental Permits or (b) otherwise adversely impact
the value or marketability of any of the Real Estate or any of the Collateral,
other than such violations, liabilities or impacts which could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets other than up to $15,000,000 in the aggregate of assets of the Credit
Parties.
6.13 Cancellation of Indebtedness. No Credit Party shall
cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's-length basis and in the ordinary course of its business
consistent with past practices.
6.14 Restricted Payments. No Credit Party shall make any
Restricted Payment, except (a) intercompany loans and advances between Borrowers
and Credit Parties to the extent permitted by Section 6.3 above, (b) dividends
and distributions by Subsidiaries of any Borrower paid to such Borrower or a
Subsidiary of such Borrower, (c) dividends and distributions by Lancaster to
Bon-Ton; (d) dividends paid to Holdings by Bon-Ton and dividends to Parent by
Holdings to pay for the ordinary course operating expenses of Holdings and
Parent, (e) employee loans permitted under Section 6.4(b) above, (f) dividends
paid to Holdings by Bon-Ton and dividends to Parent by Holdings for the
repurchase of Parent's outstanding common stock and payments made by Parent for
such repurchase and dividends by Parent on Parent's outstanding
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common stock; provided that with respect to clause (f) above (i) no Default or
Event of Default shall have occurred and be continuing or would result after
giving effect to any such payment; (ii) Borrowers collectively shall have Net
Borrowing Availability of at least $30,000,000 before and after giving effect to
any such payment; (iii) Borrowers shall have Excess Cash Flow for the four
Fiscal Quarter periods then ended of at least $20,000,000; (iv) the amount of
such dividends shall not in the aggregate exceed 50% of Borrowers' Excess Cash
Flow for such four Fiscal Quarter periods; (v) Borrowers shall have, on a pro
forma basis, after giving effect to such payment a Fixed Charge Coverage Ratio
for the four Fiscal Quarter period then ended of not less than 1.75:1.0; and
(vi) the timing of such payments shall be set at dates which permit the delivery
of Financial Statements necessary to determine current financial covenant
compliance prior to each payment; provided, further, however, that with respect
to clause (f) above, notwithstanding the foregoing proviso and in addition to
any amounts paid pursuant to such proviso, such dividends may be paid pursuant
to such clause (f) up to an aggregate amount of $4,000,000 in any Fiscal Year
and up to $7,500,000 in the aggregate if no Default or Event of Default shall
have occurred and be continuing or would result after giving effect to any such
payment.
6.15 Change of Corporate Name or Location; Change of
Fiscal Year. No Credit Party shall (a) change its corporate name, or (b) change
its chief executive office, principal place of business, corporate offices or
warehouses or locations at which Collateral is held or stored, or the location
of its records concerning the Collateral, in any case without at least thirty
(30) days prior written notice to Administrative Agent and after Administrative
Agent's written acknowledgment that any reasonable action requested by
Administrative Agent in connection therewith, including to continue the
perfection of any Liens in favor of Administrative Agent, on behalf of itself,
the other Agent and Lenders, in any Collateral, has been completed or taken, and
provided that any such new location shall be in the continental United States.
Without limiting the foregoing, no Credit Party shall change its name, identity
or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the Code or any other then applicable
provision of the Code except upon prior written notice to Administrative Agent
and Lenders and after Administrative Agent's written acknowledgment that any
reasonable action requested by Administrative Agent in connection therewith,
including to continue the perfection of any Liens in favor of Administrative
Agent, on behalf of itself, the other Agent and Lenders in any Collateral, has
been completed or taken. No Credit Party shall change its Fiscal Year without
the consent of Administrative Agent.
6.16 No Impairment of Intercompany Transfers. No Credit
Party shall directly or indirectly enter into or become bound by any agreement,
instrument, indenture or other obligation (other than this Agreement and the
other Loan Documents) which could directly or indirectly restrict, prohibit or
require the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary
of any Borrower to any Borrower or between Borrowers.
6.17 No Speculative Transactions. No Credit Party shall
engage in any transaction involving commodity options, futures contracts or
similar transactions, except solely
38
to hedge against fluctuations in the prices of commodities owned or purchased by
it and the values of foreign currencies receivable or payable by it and interest
swaps, caps or collars.
6.18 Leases. No Credit Party shall enter into any
operating lease for Equipment or Real Estate, if the aggregate of all such
operating lease payments payable in any year for Borrowers and their
Subsidiaries on a consolidated basis would exceed $30,000,000.
6.19 Changes Relating to Securitization Documents. Bon-Ton
shall not, and shall not permit any of its Subsidiaries to change, refinance,
waive or amend the terms of any Securitization Document if the effect of such
change, waiver refinancing or amendment is to: (a) change the payment,
termination or repurchase provisions thereof other than to extend the dates
therefor; and (b) change, refinance, waive or amend any other term if such
change or amendment would materially increase the obligations of the obligor or
confer additional rights to the purchasers and/or investors or any other party
to the Securitization Documents in each case, taken as a whole in a manner
materially adverse to any Credit Party, Agent or Lenders. Without limiting the
generality of the foregoing, neither Bon-Ton nor any of its subsidiaries shall
permit any purchaser or investor under the Securitization Documents to purchase
a percentage participation in receivables greater than that currently provided
for in the Securitization Documents.
6.20 Availabililty. The Credit Parties will not permit the
Revolving Credit Advances to exceed Borrowing Availability less $10,000,000 at
any time.
7. TERM
7.1 Termination. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the Loans
and all other Obligations shall be automatically due and payable in full on such
date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of
Administrative Agent and Lenders relating to any unpaid portion of the Loans or
any other Obligations, due or not due, liquidated, contingent or unliquidated or
any transaction or event occurring prior to such termination, or any transaction
or event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of the
Administrative Agent and Lender, all as contained in the Loan Documents, shall
not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided however, that in all events the provisions of Section 11, the
payment obligations under Sections 1.15 and 1.16, and the indemnities contained
in the Loan Documents shall survive the Termination Date.
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8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more
of the following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
(a) Any Borrower (i) fails to make any payment of principal
of, or interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable in each case, with respect to interest and
fees, not cured within one Business Day after notice from Administrative Agent,
or (ii) fails to pay or reimburse any Agent or Lenders for any expense
reimbursable hereunder or under any other Loan Document within ten (10) days
following either Agent's demand for such reimbursement or payment of expenses.
(b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of Sections 1.4, 1.8, 4, 5.4 or 6, or any of the
provisions set forth in Annexes C (other than inadvertent violations of the
provisions thereof), E, F or G, respectively.
(c) Any Credit Party shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for twenty (20) days
after the earlier of the date on which (i) a Responsible Officer of a Credit
Party becomes aware of such failure or (ii) written notice thereof shall have
been given to Borrower Representative by Administrative Agent.
(d) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $1,000,000 in the aggregate,
or (ii) causes, or permits any holder of such Indebtedness or a trustee to
cause, Indebtedness or a portion thereof in excess of $1,000,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, unless such default is waived or cured.
(e) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect, or any representation or
warranty herein or in any Loan Document or in any written statement, report,
financial statement or certificate (other than a Borrowing Base Certificate)
made or delivered to any Agent or any Lender by any Credit Party is untrue or
incorrect in any material respect as of the date when made or deemed made.
(f) Assets of any Credit Party with a fair market value of
$500,000 or more shall be attached, seized, levied upon or subjected to a writ
or distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for sixty (60) days or more.
(g) A case or proceeding shall have been commenced against any
Credit Party seeking a decree or order in respect of any Credit Party (i) under
Title 11 of the United States Code, as now constituted or hereafter amended or
any other applicable federal, state or foreign
40
bankruptcy or other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for any
Credit Party or of any substantial part of any such Person's assets, or (iii)
ordering the winding-up or liquidation of the affairs of any Credit Party, and
such case or proceeding shall remain undismissed or unstayed for sixty (60) days
or more or such court shall enter a decree or order granting the relief sought
in such case or proceeding.
(h) Any Credit Party (i) shall file a petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) shall fail to contest in a timely and appropriate manner or
shall consent to the institution of proceedings thereunder or to the filing of
any such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
any Credit Party or of any substantial part of any such Person's assets, (iii)
shall make an assignment for the benefit of creditors, (iv) shall take any
corporate action in furtherance of any of the foregoing; or (v) shall admit in
writing its inability to, or shall be generally unable to, pay its debts as such
debts become due.
(i) A final judgment or judgments for the payment of money in
excess of $250,000 in the aggregate at any time outstanding shall be rendered
against any Credit Party and the same shall not, within thirty (30) days after
the entry thereof, have been discharged or execution thereof stayed or bonded
pending appeal, or shall not have been discharged prior to the expiration of any
such stay.
(j) Any material provision of any Loan Document shall for any
reason cease to be valid, binding and enforceable in accordance with its terms
(or any Credit Party shall challenge the enforceability of any Loan Document or
shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any security interest created under any Loan Document shall cease to be a
valid and perfected first priority security interest or Lien (except as
otherwise permitted herein or therein) in any of the Collateral having a value
in excess of $500,000 purported to be covered thereby.
(k) Any "Change of Control" shall occur.
(l) A "Termination Event" under and as defined in the
Securitization Documents shall have occurred which is not cured within any
applicable grace period.
8.2 Remedies. (a) If any Event of Default shall have
occurred and be continuing or if a Default shall have occurred and be continuing
and Administrative Agent or Requisite Lenders shall have determined not to make
any Advances or incur any Letter of Credit Obligations so long as that specific
Default is continuing, Administrative Agent may (and at the written request of
the Requisite Lenders shall), without notice, suspend this facility with respect
to further Advances and/or the incurrence of further Letter of Credit
Obligations whereupon any further Advances and Letter of Credit Obligations
shall be made or extended in Administrative Agent's sole discretion (or in the
sole discretion of the Requisite Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
41
Event of Default shall have occurred and be continuing, Administrative Agent may
(and at the written request of Requisite Lenders shall), without notice except
as otherwise expressly provided herein, increase the rate of interest applicable
to the Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be
continuing, Administrative Agent may (and at the written request of the
Requisite Lenders shall), without notice, (i) terminate this facility with
respect to further Advances or the incurrence of further Letter of Credit
Obligations; (ii) declare all or any portion of the Obligations, including all
or any portion of any Loan to be forthwith due and payable, and require that the
Letter of Credit Obligations be cash collateralized as provided in Annex B, all
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by Borrowers and each other Credit Party; and (iii)
exercise any rights and remedies provided to Administrative Agent under the Loan
Documents and/or at law or equity, including all remedies provided under the
Code; provided, however, that upon the occurrence of an Event of Default
specified in Sections 8.1(g) or (h), all of the Obligations, including the
aggregate Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise
provided for in this Agreement or in any other Loan Document or by applicable
law, each Credit Party waives (including for purposes of Section 12): (a)
presentment, demand and protest and notice of presentment, dishonor, notice of
intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Administrative Agent on which any
Credit Party may in any way be liable, and hereby ratifies and confirms whatever
Administrative Agent may do in this regard, (b) all rights to notice and a
hearing prior to Administrative Agent's taking possession or control of, or to
Administrative Agent's replevy, attachment or levy upon, the Collateral or any
bond or security which might be required by any court prior to allowing
Administrative Agent to exercise any of its remedies, and (c) the benefit of all
valuation, appraisal, marshalling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENTS
9.1 Assignment and Participations. (a) The Credit Parties
signatory hereto consent to any Lender's assignment of, and/or sale of
participations in, at any time or times, the Loan Documents, Loans, Letter of
Credit Obligations and any Commitment or of any portion thereof or interest
therein, including any Lender's rights, title, interests, remedies, powers or
duties thereunder, whether evidenced by a writing or not. Any assignment by a
Lender shall (i) require the consent of Administrative Agent and Bon-Ton (which
shall not be unreasonably withheld or delayed) and the execution of an
assignment agreement (an "Assignment Agreement") substantially in the form
attached hereto as Exhibit 9.1(a) and otherwise in form and substance
satisfactory to, and acknowledged by, Administrative Agent, provided, however,
that the consent of Bon-Ton shall not be required for any assignment by a Lender
if at the time of such assignment a Default or Event of Default shall have
occurred and be continuing; (ii) be conditioned on such assignee Lender
representing to the assigning Lender and Administrative
42
Agent that it is purchasing the applicable Loans to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof; (iii) if a partial assignment, be in an amount at least equal to
$5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; and (iv) include a payment to Administrative Agent of an assignment
fee of $3,500. In the case of an assignment by a Lender under this Section 9.1,
the assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as it would if it were a Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Commitments or assigned portion thereof from and after the date of such
assignment. Each Borrower hereby acknowledges and agrees that any assignment
will give rise to a direct obligation of Borrowers to the assignee and that the
assignee shall be considered to be a "Lender". In all instances, each Lender's
liability to make Loans hereunder shall be several and not joint and shall be
limited to such Lender's Pro Rata Share of the applicable Commitment. In the
event Administrative Agent or any Lender assigns or otherwise transfers all or
any part of a Note, Administrative Agent or any such Lender shall so notify
Borrowers and Borrowers shall, upon the request of Administrative Agent or such
Lender, execute new Notes in exchange for the Notes being assigned.
Notwithstanding the foregoing provisions of this Section 9.1(a), any Lender may
at any time pledge or assign all or any portion of such Lender's rights under
this Agreement and the other Loan Documents to a Federal Reserve Bank; provided,
however, that no such pledge or assignment shall release such Lender from such
Lender's obligations hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be in an amount at least equal to $5,000,000, and with the
understanding that all amounts payable by Borrowers hereunder shall be
determined as if that Lender had not sold such participation, and that the
holder of any such participation shall not be entitled to require such Lender to
take or omit to take any action hereunder except actions directly affecting (i)
any reduction in the principal amount of, or interest rate or Fees payable with
respect to, any Loan in which such holder participates, (ii) any extension of
the scheduled amortization of the principal amount of any Loan in which such
holder participates or the final maturity date thereof, and (iii) any release of
all or substantially all of the Collateral (other than in accordance with the
terms of this Agreement, the Collateral Documents or the other Loan Documents).
Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, each Borrower
acknowledges and agrees that a participation shall give rise to a direct
obligation of Borrowers to the participant and the participant shall be
considered to be a "Lender". Except as set forth in the preceding sentence no
Borrower or Credit Party shall have any obligation or duty to any participant.
No Agent nor any Lender (other than the Lender selling a participation) shall
have any duty to any participant and may continue to deal solely with the Lender
selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrowers and that Lender, or any Agent and that
Lender, be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist
any Lender permitted to sell assignments or participations under this Section
9.1 as reasonably required to enable the
43
assigning or selling Lender to effect any such assignment or participation,
including the execution and delivery of any and all agreements, notes and other
documents and instruments as shall be requested not inconsistent with the terms
of the Loan Documents and, if requested by Administrative Agent, the preparation
of informational materials for, and the participation of management in meetings
with, potential assignees or participants. Each Credit Party executing this
Agreement shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their affairs contained in any selling
materials provided by them and all other information provided by them and
included in such materials, except that any Projections delivered by Borrowers
shall only be certified by Borrowers as having been prepared by Borrowers in
compliance with the representations contained in Section 3.4(c).
(e) A Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants). Each Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.16(a),
increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.16(d).
9.2 Appointment of Agents. GE Capital is hereby appointed
to act on behalf of all Lenders as Administrative Agent under this Agreement and
the other Loan Documents. The CIT Group/Business Credit and Congress Financial
Corporation (Central) are hereby appointed to act on behalf of all Lenders as
Co-Syndication Agents under this Agreement and the other Loan Documents.
Foothill Capital Corporation and Fleet Capital Corporation are hereby appointed
to act on behalf of all Lenders as Co-Documentation Agents under this Agreement
and the other Loan Documents. The provisions of this Section 9.2 are solely for
the benefit of Agents and Lenders and no Credit Party nor any other Person shall
have any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Loan
Documents, Agents shall act solely as an agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for any Credit Party or any other Person. Agents shall
have no duties or responsibilities except for those expressly set forth in this
Agreement and the other Loan Documents. The duties of Agents shall be mechanical
and administrative in nature and Agents shall not have, or be deemed to have, by
reason of this Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. No Agents nor any of its Affiliates nor
any of their respective officers, directors, employees, agents or
representatives shall be liable to any Lender for any action taken or omitted to
be taken by it hereunder or under any other Loan Document, or in connection
herewith or therewith, except for damages solely caused by its or their own
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
44
If an Agent shall request instructions from Requisite Lenders
or all affected Lenders with respect to any act or action (including failure to
act) in connection with this Agreement or any other Loan Document, then such
Agent shall be entitled to refrain from such act or taking such action unless
and until it shall have received instructions from Requisite Lenders or all
affected Lenders, as the case may be, and such Agent shall not incur liability
to any Person by reason of so refraining. Agents shall be fully justified in
failing or refusing to take any action hereunder or under any other Loan
Document (a) if such action would, in the opinion of such Agent, be contrary to
law or the terms of this Agreement or any other Loan Document, (b) if such
action would, in the opinion of such Agent, expose Agents to Environmental
Liabilities or (c) if such Agent shall not first be indemnified to its
satisfaction against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against any
Agent as a result of an Agent acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of Requisite
Lenders or all affected Lenders, as applicable.
Notwithstanding anything to the contrary contained in this
Agreement, each of the Documentation Agent and the Syndication Agent is a
Lender, designated as "Documentation Agent" or "Syndication Agent", as the case
may be, for title purposes only and in such capacity shall have no obligations
or duties whatsoever under this Agreement or any other Loan Document to any
Credit Party or any Lender and shall have no rights separate from its rights as
a Lender except as expressly provided in this Agreement.
9.3 Agents' Reliance, Etc. No Agent nor any of its
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for
damages solely caused by its or their own gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction. Without limitation
of the generality of the foregoing, each Agent: (a) may treat the payee of any
Note as the holder thereof until Administrative Agent receives written notice of
the assignment or transfer thereof signed by such payee and in form satisfactory
to Administrative Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and records) of
any Credit Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
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9.4 GE Capital and its Affiliates. With respect to its
Commitments hereunder, GE Capital shall have the same rights and powers under
this Agreement and the other Loan Documents as any other Lender and may exercise
the same as though it were not Administrative Agent hereunder; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include GE
Capital in its individual capacity. GE Capital and its Affiliates may lend money
to, invest in, and generally engage in any kind of business with, any Credit
Party, any of its Affiliates and any Person who may do business with or own
securities of any Credit Party or any such Affiliate, all as if GE Capital was
not Administrative Agent and without any duty to account therefor to Lenders. GE
Capital and its Affiliates may accept fees and other consideration from any
Credit Party for services in connection with this Agreement or otherwise without
having to account for the same to Lenders. Each Lender acknowledges the
potential conflict of interest between GE Capital as a Lender and GE Capital as
Administrative Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon any Agent or any other Lender
and based on the Financial Statements referred to in Section 3.4(a) and such
other documents and information as it has deemed appropriate, made its own
credit and financial analysis of the Credit Parties and its own decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon any Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement. Each Lender acknowledges the potential conflict of interest of
each other Lender as a result of Lenders holding disproportionate interests in
the Loans, and expressly consents to, and waives any claim based upon, such
conflict of interest.
9.6 Indemnification. Lenders agree to indemnify each
Agent (to the extent not reimbursed by Credit Parties and without limiting the
obligations of Credit Parties hereunder), ratably according to their respective
Pro Rata Shares, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against any Agent, in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by any Agent
in connection therewith; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from an Agent's, gross negligence or wilful misconduct as finally determined by
a court of competent jurisdiction. Without limiting the foregoing, each Lender
agrees to reimburse each Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by it in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Loan Document, to the extent that each Agent is
not reimbursed for such expenses by Credit Parties.
9.7 Successor Agents. Each Agent may resign at any time
by giving not less than thirty (30) days' prior written notice thereof to the
other Agent, Lenders and Borrower Representative. Upon any such resignation, the
Requisite Lenders shall have the right to appoint
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a successor Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within 30 days after
the resigning Agent's giving notice of resignation, then the resigning Agent
may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
if a Lender is willing to accept such appointment, or otherwise shall be a
commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, by the 30th day after the
date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of such resigning Agent hereunder until such time, if
any, as the Requisite Lenders appoint a successor Agent as provided above. Any
successor Agent appointed by Requisite Lenders hereunder shall be subject to the
approval of Borrower Representative, such approval not to be unreasonably
withheld or delayed; provided that such approval shall not be required if a
Default or an Event of Default shall have occurred and be continuing. Upon the
acceptance of any appointment as an Agent hereunder by a successor Agent, such
successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent. Upon the earlier of the acceptance
of any appointment as an Agent hereunder by a successor Agent or the effective
date of the resigning Agent's resignation, the resigning Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Agent shall continue. After any resigning Agent's resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents. An Agent may be removed at the written
direction of the holders (other than such Agent) of two-thirds or more of the
Commitments (excluding such Agent's Commitment); provided that in so doing, such
Lenders shall be deemed to have waived and released any and all claims they may
have against such Agent.
9.8 Setoff and Sharing of Payments. In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Lender and each holder of any Note is hereby
authorized at any time or from time to time, without notice to any Credit Party
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all balances held by it at any of
its offices for the account of any Credit Party (regardless of whether such
balances are then due to such Credit Party) and any other properties or assets
any time held or owing by that Lender or that holder to or for the credit or for
the account of Credit Parties against and on account of any of the Obligations
which are not paid when due. Any Lender or holder of any Note exercising a right
to set off or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so set off or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares. Each
Lender's obligation under this Section 9.8 shall be in addition to and not
limitation of its obligations to purchase a participation in an amount equal to
its Pro Rata Share of the Swing Line Loans under Section 1.1. Each Credit
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Party agrees, to the fullest extent permitted by law, that (a) any Lender or
holder may exercise its right to set off with respect to amounts in excess of
its Pro Rata Share of the Obligations and may sell participations in such amount
so set off to other Lenders and holders and (b) any Lender or holders so
purchasing a participation in the Loans made or other Obligations held by other
Lenders or holders may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the set-off amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of set-off,
the purchase of participations by that Lender shall be rescinded and the
purchase price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert.
(a) Advances; Payments. (i) Lenders shall refund or
participate in the Swing Line Loan in accordance with clauses (iii) and (iv) of
Section 1.1(b). If the Swing Line Lender declines to make a Swing Line Loan or
if the Swing Line Availability is zero, Administrative Agent shall notify the
other Agent and Lenders, promptly after receipt of a Notice of Revolving Credit
Advance and in any event prior to 1:00 p.m. (New York time) on the date such
Notice of Revolving Credit Advance is received, by telecopy, telephone or other
similar form of transmission. Each Lender shall make the amount of such Lender's
Pro Rata Share of each Revolving Credit Advance available to Administrative
Agent in same day funds by wire transfer to Administrative Agent's account as
set forth in Annex H not later than 3:00 p.m. (New York time) on the requested
funding date, in the case of an Index Rate Loan and not later than 11:00 a.m.
(New York time) on the requested funding date in the case of a LIBOR Loan. After
receipt of such wire transfers (or, in the Administrative Agent's sole
discretion, before receipt of such wire transfers), subject to the terms hereof,
Administrative Agent shall make the requested Revolving Credit Advance to the
Borrower designated by Borrower Representative in the Notice of Revolving Credit
Advance. All payments by each Lender shall be made without setoff, counterclaim
or deduction of any kind.
(ii) On the second (2nd) Business Day of each
calendar week or more frequently as aggregate cumulative payments in excess of
$2,000,000 are received with respect to the Loans (other than the Swing Line
Loan) (each, a "Settlement Date"), Administrative Agent will advise each Lender
by telephone, or telecopy of the amount of such Lender's Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that such Lender has made all payments required
to be made by it and has purchased all participations required to be purchased
by it under this Agreement and the other Loan Documents as of such Settlement
Date, Administrative Agent will pay to each Lender such Lender's Pro Rata Share
of principal, interest and Fees paid by Borrowers since the previous Settlement
Date for the benefit of that Lender on the Loans held by it. Such payments shall
be made by wire transfer to such Lender's account (as specified by such Lender
in Annex H or the applicable Assignment Agreement) not later than 2:00 p.m. (New
York time) on the next Business Day following each Settlement Date.
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(b) Availability of Lender's Pro Rata Share. Administrative
Agent may assume that each Lender will make its Pro Rata Share of each Revolving
Credit Advance available to Administrative Agent on each funding date. If such
Pro Rata Share is not, in fact, paid to Administrative Agent by such Lender when
due, Agent will be entitled to recover such amount on demand from such Lender
without set-off, counterclaim or deduction of any kind. If any Lender fails to
pay the amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower Representative and Borrowers shall immediately repay
such amount to Agent. Nothing in this Section 9.9(b) or elsewhere in this
Agreement or the other Loan Documents shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
Borrowers may have against any Lender as a result of any default by such Lender
hereunder. To the extent that Agent advances funds to any Borrower on behalf of
any Lender and is not reimbursed therefor on the same Business Day as such
Advance is made, Agent shall be entitled to retain for its account all interest
accrued on such Advance until reimbursed by the applicable Lender.
(c) Return of Payments. (i) If Administrative Agent pays an
amount to a Lender under this Agreement in the belief or expectation that a
related payment has been or will be received by Agent from Borrowers and such
related payment is not received by Administrative Agent, then Administrative
Agent will be entitled to recover such amount from such Lender on demand without
set-off, counterclaim or deduction of any kind.
(ii) If Administrative Agent determines at any
time that any amount received by Administrative Agent under this Agreement must
be returned to any Borrower or paid to any other Person pursuant to any
insolvency law or otherwise, then, notwithstanding any other term or condition
of this Agreement or any other Loan Document, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Administrative Agent on demand any portion of such amount that
Administrative Agent has distributed to such Lender, together with interest at
such rate, if any, as Administrative Agent is required to pay to any Borrower or
such other Person, without set-off, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Lender (such
Lender, a "Non-Funding Lender") to make any Revolving Credit Advance or to
purchase any participation in any Swing Line Loan to be made or purchased by it
on the date specified therefor shall not relieve any other Lender (each such
other Lender, an "Other Lender") of its obligations to make such Advance or
purchase such participation on such date, but neither any Other Lender nor any
Agent shall be responsible for the failure of any Non-Funding Lender to make an
Advance to be made, or to purchase a participation to be purchased, by such
Non-Funding Lender, and no Non-Funding Lender shall have any obligation to any
Agent or any Other Lender for the failure by such Non-Funding Lender.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a "Lender" (or be included in the calculation of
"Requisite Lenders" hereunder) for any voting or consent rights under or with
respect to any Loan Document.
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(e) Dissemination of Information. Administrative Agent will
use reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Administrative Agent from, or delivered by Administrative
Agent to, any Credit Party, with notice of any Event of Default of which
Administrative Agent has actually become aware and with notice of any action
taken by Administrative Agent following any Event of Default; provided, however,
that Administrative Agent shall not be liable to any Lender for any failure to
do so, except to the extent that such failure is attributable solely to
Administrative Agent's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Lenders acknowledge that
Borrowers are required to provide Financial Statements and Collateral Reports to
Lenders in accordance with Annexes E and F hereto and agree that Administrative
Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of Administrative Agent or Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert and
at the direction or with the consent of Administrative Agent.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other
Loan Documents shall be binding on and shall inure to the benefit of each Credit
Party each Agent, and Lenders and their respective successors and permitted
assigns (including, in the case of any Credit Party, a debtor-in-possession on
behalf of such Credit Party), except as otherwise provided herein or therein. No
Credit Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Administrative Agent and
Requisite Lenders. Any such purported assignment, transfer, hypothecation or
other conveyance by any Credit Party without the prior express written consent
of Administrative Agent and Requisite Lenders shall be void. The terms and
provisions of this Agreement are for the purpose of defining the relative rights
and obligations of each Credit Party, Agents and Lenders with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any of the
other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter thereof and may not be modified, altered or
amended except as set forth in Section 11.2 below. Any letter of interest,
commitment letter and/or fee letter (other than the GE Capital Fee Letter)
between any Credit Party and any Agent or any Lender or any of their respective
affiliates predating this Agreement and relating to a financing of substantially
similar form, purpose or effect shall be superseded by this Agreement.
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11.2 Amendments and Waivers. (a) Except for actions
expressly permitted to be taken by Administrative Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any of
the Notes, or any consent to any departure by any Credit Party therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Borrowers and by Requisite Lenders or all affected Lenders, as applicable.
Except as set forth in clause (b) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver shall,
unless in writing and signed by each Lender directly affected thereby, do any of
the following: (i) increase the principal amount of any Lender's Commitment
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date of the principal amount of any Loan of any
affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender; (v) except as otherwise permitted
herein or in the other Loan Documents, release any Guaranty or release, permit
any Credit Party to sell or otherwise dispose of, any Collateral with a value
exceeding $5,000,000 in the aggregate (which action shall be deemed to directly
affect all Lenders); (vi) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required for
Lenders or any of them to take any action hereunder; and (vii) amend or waive
this Section 11.2 or the definition of the term "Requisite Lenders" insofar as
such definition affects the substance of this Section 11.2. Furthermore, no
amendment, modification, termination or waiver affecting the rights or duties of
any Agent under this Agreement or any other Loan Document shall be effective
unless in writing and signed by such Agent, in addition to Borrowers and Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Administrative Agent to take
additional Collateral pursuant to any Loan Document. No amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the holder of that Note. No notice to or demand on
any Credit Party in any case shall entitle such Credit Party or any other Credit
Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder
of the Notes at the time outstanding and each future holder of the Notes.
(c) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change") requiring the consent
of all affected Lenders, the consent of Requisite Lenders is obtained, but the
consent of other Lenders whose consent is required is not obtained (any such
Lender whose consent is not obtained as described in this clause (c) being
referred to as a "Non-Consenting Lender"), then, so long as Administrative Agent
is not a Non-Consenting Lender, at Borrower Representative's request,
Administrative Agent or a Person acceptable to Administrative Agent shall have
the right with Administrative Agent's consent and in Administrative Agent's sole
discretion (but shall have no obligation) to purchase from such Non-Consenting
Lenders, and such Non-Consenting Lenders agree that they shall, upon
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Administrative Agent's request, sell and assign to Administrative Agent or such
Person, all of the Commitments and all rights in its Notes and under the Loan
Documents of such Non-Consenting Lender for an amount equal to the principal
balance of all Loans held by the Non-Consenting Lender and all accrued interest
and Fees with respect thereto through the date of sale, such purchase and sale
to be consummated pursuant to an executed Assignment Agreement.
(d) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations under Section 1.13) and
termination of the Commitments, Administrative Agent shall deliver to Borrowers
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
(e) Notwithstanding anything to the contrary in this Section,
the Administrative Agent may waive the Borrowers' compliance with the provisions
of Section 6.20 hereof without the consent of any Lender, provided that, without
the consent of the Requisite Lenders, (i) the Administrative Agent may not waive
compliance with the provisions of Section 6.20 hereof more than six times in any
one March 1 to December 31 period, and (ii) the aggregate amount of time during
which the Borrowers shall not be required to comply with the provisions of
Section 6.20 shall not exceed 30 days with respect to any single waiver or an
aggregate of 90 days in any one March 1 to December 31 period.
(f) No increase in the advance rates percentage set forth in
the definitions of "Fixed Asset Availability" or, with respect to Eligible
Inventory, "Bon-Ton Borrowing Base" shall be effective unless in writing and
signed by the Administrative Agent and each Lender.
11.3 Fees and Expenses. Borrowers shall reimburse Agents
for all reasonable out-of-pocket expenses incurred in connection with the
preparation of the Loan Documents (including the reasonable fees and expenses of
all of its special loan counsel, advisors, consultants and auditors retained in
connection with the Loan Documents and the other transactions contemplated
hereby and advice in connection therewith). Borrowers shall reimburse Agents
(and, with respect to clauses (c) and (d) below, all Lenders) for all reasonable
fees, costs and expenses, including the reasonable fees, costs and expenses of
counsel or other advisors (including environmental and management consultants
and appraisers) for advice, assistance, or other representation in connection
with:
(a) the forwarding to Borrowers or any other Person on behalf
of Borrowers by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or the transactions contemplated hereby or
advice in connection with the administration of the Loans made pursuant hereto
or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by any Agent, any Lender, any Borrower or any other
Person) in any way relating to the Collateral, any of the Loan Documents or any
other agreement to be executed or delivered in connection therewith or herewith,
whether as party, witness, or otherwise, including any
52
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against any or all
of the Borrowers or any other Person that may be obligated to any Agent by
virtue of the Loan Documents; including any such litigation, contest, dispute,
suit, proceeding or action arising in connection with any work-out or
restructuring of the Loans during the pendency of one or more Events of Default;
provided that in the case of reimbursement of counsel for Lenders other than
Agents, such reimbursement shall be limited to one counsel for all such Lenders;
provided, further, however, that the Borrowers shall not be required to
reimburse any Agent or Lender for any such costs, fees or expenses if it is
finally determined by a court of competent jurisdiction that such litigation,
consent, dispute, suit, proceeding or action resulted solely from such Agent's
or Lender's gross negligence or wilful misconduct;
(d) any attempt to enforce any remedies of Agents against any
or all of the Credit Parties or any other Person that may be obligated to Agents
or any Lender by virtue of any of the Loan Documents; including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders; provided,
further, however, that Borrowers shall not be required to reimburse any Agent or
Lender for such costs, fees and expenses if it is finally determined by a court
of competent jurisdiction that such attempt to enforce remedies was not
justified or legally permitted;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default;
(f) efforts to verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral subject
to the provisions of Annex F with respect to appraisals and audits of
Collateral;
including all reasonable attorneys' and other professional and service
providers' fees arising from such services, including those in connection with
any appellate proceedings; and all reasonable expenses, costs, charges and other
fees incurred by such counsel and others in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section 11.3 shall be payable, on demand, by Borrowers to the Agents. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4 No Waiver. Agents' or Lenders' failure, at any time
or times, to require strict performance by the Credit Parties of any provision
of this Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agents or Lenders thereafter to demand strict compliance
and performance therewith. Any suspension or waiver of an Event of
53
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Administrative Agent and the applicable required Lenders, and directed to
Borrowers specifying such suspension or waiver.
11.5 Remedies. Agents' and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies which Agents or Lenders may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise. Recourse
to the Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of
this Agreement and the other Loan Documents shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
11.7 Conflict of Terms. Except as otherwise provided in
this Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
11.8 Confidentiality. Each Agent and each Lender agrees to
use commercially reasonable efforts (equivalent to the efforts such Agent or
Lender applies to maintaining the confidentiality of its own confidential
information) to maintain as confidential all confidential information provided
to them by the Credit Parties and designated as confidential for a period of two
(2) years following receipt thereof, except that Agents and any Lender may
disclose such information (a) to Persons employed or engaged by them in
evaluating, approving, structuring or administering the Loans and the
Commitments; (b) to any bona fide assignee or participant or potential assignee
or participant that has agreed to comply with the covenant contained in this
Section 11.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed by such Agent or Lender to
be compelled by any court decree, subpoena or legal or administrative order or
process, provided that in any such instance in which such Agent or Lender
intends to make such disclosure, such Agent or Lender shall give Borrower
Representative such prior written notice thereof as is reasonably practicable
under the circumstances in order to allow the Credit Party or Credit Parties
affected thereby opportunity to seek a protective order or injunctive relief;
(d) as, in the opinion of such Agent's or Lender's counsel, required by law; (e)
in connection with the exercise of any right or remedy under the
54
Loan Documents or in connection with any Litigation to which such Agent or
Lender is a party; or (f) which ceases to be confidential through no fault of
such Agent or Lender.
Notwithstanding anything to the contrary set forth herein or
in any other agreement to which the parties hereto are parties or by which they
are bound, any obligations of confidentiality contained herein and therein, as
they relate to the transactions contemplated by this Agreement (the "Loan
Transactions"), shall not apply to the federal tax structure or federal tax
treatment of the Loan Transactions, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the federal tax structure and federal
tax treatment of the Loan Transactions. The preceding sentence is intended to
cause the Loan Transactions not to be treated as having been offered under
conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any
successor provision) of the Treasury regulations promulgated under Section 6011
of the Code and shall be construed in a manner consistent with such purpose. In
addition, each party hereto acknowledges that it has no proprietary or exclusive
rights to any tax concept, tax matter or tax idea related to the Loan
Transactions.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX
XXXXXX, XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENTS AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED THAT AGENTS, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY, CITY OF NEW YORK, NEW YORK AND, PROVIDED, FURTHER NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENTS FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENTS. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL
55
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON SUCH CREDIT
PARTY'S ACTUAL RECEIPT THEREOF.
11.10 Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other parties, or whenever any of the parties
desires to give or serve upon any other parties any communication with respect
to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 11.10), (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated on Annex I or to
such other address (or facsimile number) as may be substituted by notice given
as herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than Borrower Representative or any
Agent) designated on Annex I to receive copies shall in no way adversely affect
the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
11.11 Section Titles. The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
11.12 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION,
56
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENTS, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases. Each Credit Party executing this
Agreement agrees that neither it nor its Affiliates will in the future issue any
press releases or other public disclosure using the name of GE Capital or its
Affiliates or referring to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby without at least two (2) Business
Days' prior notice to GE Capital and without the prior written consent of GE
Capital unless (and only to the extent that) such Credit Party or Affiliate is
required to do so under law and then, in any event, such Credit Party or
Affiliate will consult with GE Capital before issuing such press release or
other public disclosure. Each Credit Party consents to the publication by Agents
or any Lender of a tombstone or similar advertising material relating to the
financing transactions contemplated by this Agreement.
11.15 Reinstatement. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Borrower for liquidation or reorganization, should any Borrower
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Borrower's assets, and shall continue to be effective or
to be reinstated, as the case may be, if at any time payment and performance of
the Obligations, or any part thereof, is, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by any obligee
of the Obligations, whether as a "voidable preference," "fraudulent conveyance,"
or otherwise, all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to
each other party hereto that it has discussed this Agreement and, specifically,
the provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
12. CROSS-GUARANTY
12.1 Cross-Guaranty. Each Borrower hereby agrees that such
Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally guarantees to Administrative Agent and Lenders and their
respective successors and assigns, the full and
57
prompt payment (whether at stated maturity, by acceleration or otherwise) and
performance of, all Obligations owed or hereafter owing to Administrative Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, and that its obligations under this Section 12 shall be absolute
and unconditional, irrespective of, and unaffected by,
(a) the genuineness, validity, regularity,
enforceability or any future amendment of, or change in, this
Agreement, any other Loan Document or any other agreement,
document or instrument to which any Borrower is or may become
a party;
(b) the absence of any action to enforce this
Agreement (including this Section 12) or any other Loan
Document or the waiver or consent by Administrative Agent and
Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or
failure to perfect its Lien against, any security for the
Obligations or any action, or the absence of any action, by
Administrative Agent and Lenders in respect thereof (including
the release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which
might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor,
it being agreed by each Borrower that its obligations under this Section 12
shall not be discharged until the payment and performance, in full, of the
Obligations has occurred. Each Borrower shall be regarded, and shall be in the
same position, as principal debtor with respect to the Obligations guaranteed
hereunder.
12.2 Waivers by Borrowers. Each Borrower expressly waives
all rights it may have now or in the future under any statute, or at common law,
or at law or in equity, or otherwise, to compel Administrative Agent or Lenders
to xxxxxxxx assets or to proceed in respect of the Obligations guaranteed
hereunder against any other Credit Party, any other party or against any
security for the payment and performance of the Obligations before proceeding
against, or as a condition to proceeding against, such Borrower. It is agreed
among each Borrower, Administrative Agent and Lenders that the foregoing waivers
are of the essence of the transaction contemplated by this Agreement and the
other Loan Documents and that, but for the provisions of this Section 12 and
such waivers, Administrative Agent and Lenders would decline to enter into this
Agreement.
12.3 Benefit of Guaranty. Each Borrower agrees that the
provisions of this Section 12 are for the benefit of Administrative Agent and
Lenders and their respective successors, transferees, endorsees and assigns, and
nothing herein contained shall impair, as between any other Borrower and
Administrative Agent, or Lenders, the obligations of such other Borrower under
the Loan Documents.
58
12.4 Subordination of Subrogation, Etc. Notwithstanding
anything to the contrary in this Agreement or in any other Loan Document, and
except as set forth in Section 12.7, each Borrower hereby expressly and
irrevocably subordinates to payment of the Obligations any and all rights at law
or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor until the Obligations are indefeasibly
paid in full in cash. Each Borrower acknowledges and agrees that this
subordination is intended to benefit Administrative Agent and Lenders and shall
not limit or otherwise affect such Borrower's liability hereunder or the
enforceability of this Section 12, and that Administrative Agent, Lenders and
their respective successors and assigns are intended third party beneficiaries
of the waivers and agreements set forth in this Section 12.4.
12.5 Election of Remedies. If any Agent or any Lender may,
under applicable law, proceed to realize its benefits under any of the Loan
Documents giving such person a Lien upon any Collateral, whether owned by any
Borrower or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, any Agent or any Lender may, at its sole
option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Section 12. If, in the
exercise of any of its rights and remedies, any Agent or any Lender shall
forfeit any of its rights or remedies, including its right to enter a deficiency
judgment against any Borrower or any other Person, whether because of any
applicable laws pertaining to "election of remedies" or the like, each Borrower
hereby consents to such action by such Agent or Lender and waives any claim
based upon such action, even if such action by such Agent or Lender shall result
in a full or partial loss of any rights of subrogation which each Borrower might
otherwise have had but for such action by such Agent or Lender. Any election of
remedies which results in the denial or impairment of the right of any Agent or
Lender to seek a deficiency judgment against any Borrower shall not impair any
other Borrower's obligation to pay the full amount of the Obligations. In the
event any Agent or Lender shall bid at any foreclosure or trustee's sale or at
any private sale permitted by law or the Loan Documents, such Agent or Lender
may bid all or less than the amount of the Obligations and the amount of such
bid need not be paid by such Agent or such Lender but shall be credited against
the Obligations. The amount of the successful bid at any such sale, whether any
Agent or Lender or any other party is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 12, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which any Agent or Lender might otherwise be entitled but for such
bidding at any such sale.
12.6 Limitation. Notwithstanding any provision herein
contained to the contrary, each Borrower's liability under this Section 12
(which liability is in any event in addition to amounts for which such Borrower
is primarily liable under Section 1) shall be limited to an amount not to exceed
as of any date of determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower
under this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
59
(b) the amount which could be claimed by Administrative Agent
and Lenders from such Borrower under this Section 12 without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law after taking into
account, among other things, such Borrower's right of contribution and
indemnification from each other Borrower under Section 12.7.
12.7 Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Borrower shall make a payment under
this Section 12 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a "Guarantor Payment") which, taking
into account all other Guarantor Payments then previously or concurrently made
by any other Borrower, exceeds the amount which such Borrower would otherwise
have paid if each Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower's "Allocable Amount"
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim which could then
be recovered from such Borrower under this Section 12 without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 12.7 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including Section 12.1. Nothing contained in this
Section 12.7 shall limit the liability of any Borrower to pay the Loans made
directly or indirectly to that Borrower and accrued interest, Fees and expenses
with respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other
Credit Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
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12.8 Liability Cumulative. The liability of Borrowers
under this Section 12 is in addition to and shall be cumulative with all
liabilities of each Borrower to Administrative Agent and Lenders under this
Agreement and the other Loan Documents to which such Borrower is a party or in
respect of any Obligations or obligation of the other Borrower, without any
limitation as to amount, unless the instrument or agreement evidencing or
creating such other liability specifically provides to the contrary.
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
THE BON-TON DEPARTMENT STORES, INC.
By: /s/ Xxxx Xxxxxxxxx
Title: Treasurer
THE BON-TON STORES OF LANCASTER, INC.
By: /s/ Xxxxxx X. Xxxxx
Title: Secretary/Treasurer
Revolving Loan GENERAL ELECTRIC CAPITAL
Commitment CORPORATION,
(including a as Administrative Agent and Lender
Swing Line
Commitment of
$20,000,000): By: /s/ Xxxxxxx X. Xxxxxx
$42,000,000 Title: Duly Authorized Signatory
Revolving Loan THE CIT GROUP/BUSINESS CREDIT INC.,
Commitment: as Lender
$25,000,000
By: /s/ Xxxxxx Xxxxxx
Title: Vice President / Team Leader
Revolving Loan CONGRESS FINANCIAL CORPORATION (CENTRAL)
Commitment: as Lender
$25,000,000
By: /s/ Xxxxx Xxxxx
Title: Vice President
62
Revolving Loan FOOTHILL CAPITAL CORPORATION
Commitment:
$27,000,000
By: /s/ Xxxx Xxxxx
Title: AE - Assistant Vice President
Revolving Loan FLEET CAPITAL CORPORATION
Commitment:
$31,000,000
By: /s/ Xxxx Xxxxxx
Title: VP - Loan Officer
63
The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as Borrowers.
THE BON-TON STORES, INC.
By: /s/ Xxxx Xxxxxxxxx
Title: Treasurer
THE BON-TON CORP.
By: /s/ Xxxxxxx Xxxxx
Title: Assistant Treasurer
THE BON-TON TRADE CORP.
By: /s/ Xxxxxxx Xxxxx
Title: Assistant Treasurer
THE BON-TON GIFTCO, INC.
By: /s/ Xxx X. Xxxxxxxxx
Title: Treasurer
64
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings and all section references in the following definitions
shall refer to Sections of the Agreement:
"Account Debtor" means any Person who may become obligated to
any Credit Party under, with respect to, or on account of, an Account, Chattel
Paper or General Intangibles (including a payment intangible).
"Accounts" means all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Credit Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all health care insurance receivables and (f) all
collateral security of any kind, given by any Account Debtor or any other Person
with respect to any of the foregoing.
"Administrative Agent" shall mean GE Capital or its successor
appointed pursuant to Section 9.
"Activation Event" and "Activation Notice" shall have the
meanings set forth in Annex C.
"Advance" shall mean any Revolving Credit Advance or Swing
Line Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, ten percent (10%) or more of the
Stock having ordinary voting power in the election of directors of such Persons,
(b) each Person that controls, is controlled by or is under common control with
A-1
such Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in the case of Borrowers, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of any Borrower. For
the purposes of this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that the term
"Affiliate" shall specifically exclude Administrative Agent and each Lender.
"Agents" shall mean, collectively, Administrative Agent,
Co-Syndication Agents and Co-Documentation Agents.
"Aggregate Borrowing Base" shall mean, as of any date of
determination, an amount equal to the sum of the Bon-Ton Borrowing Base and the
Lancaster Borrowing Base.
"Agreement" shall mean the Amended and Restated Credit
Agreement by and among Borrowers, the other Credit Parties named therein, GE
Capital, as Administrative Agent and Lender and the other Lenders signatory from
time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in the
recitals to the Agreement.
"Applicable Margins" means collectively, the Applicable
Revolver Index Margin and the Applicable Revolver LIBOR Margin.
"Applicable Revolver Index Margin" shall mean the per annum
interest rate margin from time to time in effect and payable in addition to the
Index Rate applicable to the Revolving Loan, as determined by reference to
Section 1.5(a) of the Agreement.
"Applicable Revolver LIBOR Margin" shall mean the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Revolving Loan, as determined by reference to Section
1.5(a) of the Agreement.
"Appraised Value" shall mean with respect to any Designated
Property the fair market value of such Designated Property or with respect to
any Eligible Fixed Asset the orderly liquidation value of such Eligible Fixed
Asset, each as of the Effective Date and as determined by an independent
third-party appraisal which has been previously delivered to Administrative
Agent.
"Approved Shipper" shall mean any reputable and creditworthy
shipper or freight forwarder transporting finished goods Inventory from overseas
to a Borrower's Distribution Center.
"Assignment Agreement" shall have the meaning assigned to it
in Section 9.1(a).
"Attributed Value" shall mean with respect to (i) a Designated
Property, the product of the Appraised Value of such Designated Property and 50%
and (ii) an Eligible Fixed Asset, the product of the Appraised Value of such
asset and 40%.
A-2
"Bon-Ton" means The Bon-Ton Department Stores, Inc., a
Pennsylvania corporation.
"Bon-Ton Borrowing Base" shall mean, as of any date of
determination by Administrative Agent, from time to time, an amount equal to the
lesser of (i) seventy-five percent (75%) of the cost of Bon-Ton's Eligible
Inventory based upon the salability, at retail, of such Eligible Inventory
(valued on a first-in, first-out basis) (at the lower of cost or market), and
(ii) eighty-five (85%) of Net Realizable Liquidation Value plus, the Fixed Asset
Availability of Bon-Ton at such time less, in each case, any Reserves
established by Administrative Agent in its reasonable credit judgment at such
time.
"Bon-Ton Receivables" shall mean The Bon-Ton Receivables
Partnership, L.P., a Pennsylvania limited partnership.
"Borrower Accounts" shall have the meaning assigned to it in
Annex C.
"Borrower Representative" shall mean Bon-Ton in its capacity
as Borrower Representative pursuant to the provisions of Section 1.1(c).
"Borrowers" and "Borrower" shall have the respective
meanings assigned thereto in the recitals to the Agreement.
"Borrowing Availability" shall have the meaning assigned to it
in Section 1.1(a)(i).
"Borrowing Base" shall mean, as the context may require, the
Bon-Ton Borrowing Base and the Lancaster Borrowing Base or any such Borrowing
Base.
"Borrowing Base Certificate" shall mean a certificate to be
executed and delivered from time to time by each Borrower in the form attached
to the Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York and in reference to LIBOR Loans shall mean any such day that
is also a LIBOR Business Day.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures (by the expenditure of cash or the incurrence of Indebtedness)
by such Person during any measuring period for any fixed assets or improvements
or for replacements (other than any repair or replacement of a property to the
extent from insurance proceeds covering such property), substitutions or
additions thereto, that have a useful life of more than one year and that are
required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person.
A-3
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease of any Person, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of
such lessee in respect of such Capital Lease.
"Cash Management Systems" shall have the meaning assigned to
it in Section 1.8.
"Change of Control" means any of the following: (a) any
issuance or change in ownership or other occurrence in respect of any shares of
any class of capital Stock of Parent which would result in M. Xxxxxx Xxxxxxxxxx,
his heirs or devisees, or any trusts of which any such Person serves as sole
trustee now or hereafter established for any of his family members ceasing to
have the power to control the election of a majority of the board of directors
of Parent, (b) such Persons' ceasing to own and control shares of capital Stock
of Parent having at least 51% of the aggregate voting power of all outstanding
shares of the capital Stock of Parent, (c) Parent shall cease to own and control
all of the economic and voting rights associated with all of the outstanding
capital Stock of Holdings, except as a result of any merger permitted under
clause (b) of Section 6.1 of the Agreement, or (d) Holdings shall cease to own
and control all of the economic and voting rights associated with all of the
outstanding capital Stock of Bon-Ton, except as a result of any merger permitted
under clause (b) of Section 6.1 of the Agreement.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including taxes owed to
the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (b) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term
is defined in the Code, including electronic chattel paper, now owned or
hereafter acquired by any Credit Party, wherever located.
"Closing Checklist" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex D.
"Co-Documentation Agents" shall mean Foothill Capital
Corporation and Fleet Capital Corporation or their respective successors
appointed pursuant to Section 9.
"Co-Syndication Agents" shall mean Congress Financial
Corporation (Central) and The CIT Group/Business Credit, Inc. or their
respective successors appointed pursuant to Section 9.
"Code" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided, that
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or
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Division 9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to Administrative Agent's or any Lender's
Lien on any Collateral is governed by the Uniform Commercial Code as enacted and
in effect in a jurisdiction other than the State of New York, the term "Code"
shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.
"Collateral" shall mean the property covered by the Security
Agreement, the Mortgages and the other Collateral Documents and any other
property, real or personal, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of Administrative Agent, on behalf of itself, the other Agent and
Lenders, to secure the Obligations, provided however, that the Collateral shall
not include any "Designated Asset" as that term is defined in the Intercreditor
Agreement.
"Collateral Documents" shall mean the Security Agreement, the
Pledge Agreement, the Guaranty, the Mortgages, the Trademark Security Agreement,
and all similar agreements entered into guaranteeing payment of, or granting a
Lien upon property as security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to
the Collateral referred to in Annex F.
"Collection Account" shall mean that certain account of
Administrative Agent, account number 000-000-00 in the name of Administrative
Agent at Bankers Trust Company in New York, New York.
"Commitment Termination Date" shall mean the earliest of (a)
Xxxxx 00, 0000, (x) the date of termination of Lenders' obligations to make
Advances and/or incur Letter of Credit Obligations or permit existing Loans to
remain outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrowers of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of the Revolving Loan Commitment and the Swing Line Commitment to zero
dollars ($0), in accordance with the provisions of Section 1.3(a).
"Commitments" shall mean (a) as to any Lender, the aggregate
of such Lender's Revolving Loan Commitment (including without duplication the
Swing Line Lender's Swing Line Commitment) as set forth on Annex J to the
Agreement or in the most recent Assignment Agreement executed by such Lender and
(b) as to all Lenders, the aggregate of all Lenders' Revolving Loan Commitments
(including without duplication the Swing Line Lender's Swing Line Commitment)
which aggregate commitment shall be One Hundred Fifty Million ($150,000,000), as
such amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"Compliance Certificate" shall have the meaning assigned to it
in Annex E.
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"Concentration Accounts" shall have the meaning assigned to it
in Annex C.
"Contracts" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party, in any
event, including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyrights" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all copyrights and general
intangibles of like nature (whether registered or unregistered), now owned or
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" shall mean Parent, Holdings, each Borrower,
each of the Guarantors.
"Default" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in
Section 1.5(d).
"Deferred Payment Note" shall have the meaning assigned to
such term in the Transfer Agreement.
"Deposit Accounts" means all "deposit accounts" as such term
is defined in the Code, now or hereafter held in the name of any Credit Party.
"Designated Properties" shall mean, collectively, the Real
Estate of any Borrower listed on Disclosure Schedule (A-1).
"Disbursement Accounts" shall have the meaning assigned to it
on Annex C.
"Disclosure Schedules" shall mean the Schedules prepared by
Borrowers and denominated as Disclosure Schedules 1.4 through D-1 in the Index
to the Agreement.
"Distribution Center" shall mean the warehouse and
distribution facilities operated by Bon-Ton and located at 0000 X. Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx, 000 Xx. Xxxx Xxxx, Xxxx Xxxxxxxxxxxx and 000
Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx.
A-6
"Documents" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"Dollars" or "$" shall mean lawful currency of the United
States of America.
"EBITDA" shall mean, with respect to any Person for any fiscal
period, an amount equal to (a) consolidated net income of such Person for such
period, minus (b) the sum of (i) income tax credits, (ii) interest income, (iii)
gain from extraordinary items for such period, (iv) any aggregate net gain
during such period arising from the sale, exchange or other disposition of
capital assets by such Person (including any fixed assets, whether tangible or
intangible and all securities), and (v) any other non-cash gains which have been
added in determining consolidated net income, in each case to the extent
included in the calculation of consolidated net income of such Person for such
period in accordance with GAAP, but without duplication, plus (c) the sum of (i)
any provision for income taxes, (ii) Interest Expense, (iii) loss from
extraordinary items for such period, (iv) the amount of depreciation and
amortization for such period, (v) amortized debt discount for such period, (vi)
the amount of any deduction to consolidated net income as the result of any
grant to any members of the management of such Person of any Stock and (vii) any
aggregate net loss during such period arising from the sale, exchange or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible and all securities), in each case to the extent
included in the calculation of consolidated net income of such Person for such
period in accordance with GAAP, but without duplication. For purposes of this
definition, the following items shall be excluded in determining consolidated
net income of a Person: (1) the income (or deficit) of any other Person accrued
prior to the date it became a Subsidiary of, or was merged or consolidated into,
such Person or any of such Person's Subsidiaries; (2) the income (or deficit) of
any other Person (other than a Subsidiary) in which such Person has an ownership
interest, except to the extent any such income has actually been received by
such Person in the form of cash dividends or distributions; (3) the
undistributed earnings of any Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contractual obligation or
requirement of law applicable to such Subsidiary; (4) any restoration to income
of any contingency reserve, except to the extent that provision for such reserve
was made out of income accrued during such period; (5) any write-up of any
asset; (6) any net gain from the collection of the proceeds of life insurance
policies; (7) any net gain arising from the acquisition of any securities, or
the extinguishment, under GAAP, of any Indebtedness, of such Person, (8) in the
case of a successor to such Person by consolidation or merger or as a transferee
of its assets, any earnings of such successor prior to such consolidation,
merger or transfer of assets, and (9) any deferred credit representing the
excess of equity in any Subsidiary of such Person at the date of acquisition of
such Subsidiary over the cost to such Person of the investment in such
Subsidiary.
"Effective Date" shall mean the first date on which all of the
conditions precedent set forth in Article II are satisfied.
"Eligible Fixed Assets" shall mean, as determined from time to
time, pursuant to an appraisal acceptable to Administrative Agent, Equipment,
Fixtures and owned furniture of
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each Borrower; provided, however, that Eligible Fixed Assets shall not include
any such fixed asset as to which any of the following exclusionary criteria
applies:
(a) such asset is not owned by a Borrower free and clear
of all Liens and rights of others, except the Liens in favor of Administrative
Agent for itself and the benefit of the other Agent and Lenders and Permitted
Encumbrances;
(b) such asset is not located on premises leased, owned
or operated by a Borrower referenced on either Disclosure Schedule (3.6) or
(A-2);
(c) such asset is in the possession or control of a
bailee, warehouseman, processor, converter or other Person other than a
Borrower, unless Administrative Agent is in possession of such agreements,
instruments and documents as Administrative Agent may require (each in form and
content acceptable to Administrative Agent and duly executed, as appropriate by
the bailee, warehouseman, processor, converter or other Person in possession or
control of such asset as applicable), including but not limited to warehouse
receipts in Administrative Agent's name covering such asset, except to the
extent that Administrative Agent has established a Reserve with respect to such
asset;
(d) such asset is Equipment, Fixtures or furniture held
on or at leased premises where the landlord thereof has not executed a consent
and waiver in form and substance satisfactory to Administrative Agent, except to
the extent that Administrative Agent has established a reserve with respect to
such asset; or
(e) such asset is Equipment, Fixtures or furniture which
in any way fails to meet or violates in any material respect any warranty,
representation or covenant contained in this Agreement or any other Loan
Document.
"Eligible In-Transit Inventory" shall mean Inventory which is
not excluded from being Eligible Inventory by any of the criteria set forth in
Section 1.7, except that such Inventory is in-transit from the manufacturer
thereof to the Distribution Center or by drop shipment to one or more stores
operated by a Borrower. In furtherance of and without limiting the foregoing:
Eligible In-Transit Inventory shall be limited to finished goods (i) in the
possession of an Approved Shipper under contract with a Borrower and in which
such Borrower has good title; (ii) as to which Administrative Agent for the
benefit of itself, the other Agent and Lenders has a first priority security
interest through constructive possession of documents of title thereof by means
of a bailee agreement with an Approved Shipper or other means acceptable to
Administrative Agent; (iii) which have been accepted by a Borrower (F.O.B.
shipping point) as conforming goods and as to which the L/C Issuer has received
an inspection certificate signed by a Borrower's agent or employee; (iv) which
are fully insured against loss under insurance naming Administrative Agent as
loss payee for the benefit of itself, the other Agent and Lenders; (v) as to
which the purchase price has been paid to the manufacturer by a draw under the
corresponding Eligible Trade L/C or otherwise and (vi) with an aggregate book
value equal to or less than $15,000,000 at any time.
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"Eligible Inventory" shall have the meaning assigned to it in
Section 1.7 of the Agreement. Unless the context otherwise requires, Eligible
Inventory shall include Eligible In-Transit Inventory.
"Eligible Trade L/Cs" shall mean, subject to further
conditions contained in Section 2.3 of the Agreement, trade letters of credit
issued by the L/C Issuer for the account of a Borrower for payment of the
purchase price of finished goods inventory which will be Eligible In-Transit
Inventory upon presentation of a draft under that trade letter of credit.
"Eligible Trade L/C Obligations" shall mean all outstanding
obligations incurred by Administrative Agent and Lenders at the request of a
Borrower, whether direct or indirect, contingent or otherwise, due or not due,
in connection with the issuance of a reimbursement agreement or guaranty by
Administrative Agent or purchase of a participation as set forth in Annex B with
respect to any Eligible Trade L/C. The Amount of any such Eligible Trade L/C
Obligations shall equal the maximum amount which may be payable by
Administrative Agent or Lenders thereupon or pursuant thereto.
"Environmental Laws" shall mean all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and in each case as amended or
supplemented from time to time, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health and
safety, as it relates to occupational exposure to Hazardous Materials, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C.Sections 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. Sections 6901 et seq.); the Toxic Substances
Control Act (15 U.S.C. Sections 2601 et seq.); the Clean Air Act (42 U.S.C.
Sections 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C.
Sections 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C.
Sections 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. Sections
300(f) et seq.), each as from time to time amended, and any and all regulations
promulgated thereunder, and all analogous state, local and foreign counterparts
or equivalents and any transfer of ownership notification or approval
environmental statutes.
"Environmental Liabilities" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law relating to the protection of
the environment, including any arising under or related to any Environmental
A-9
Laws, Environmental Permits, or in connection with any Release or threatened
Release or presence of a Hazardous Material whether on, at, in, under, from or
about or in the vicinity of any real or personal property.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals, registrations or other written
documents required by any Governmental Authority under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located and, in any event, including all such Credit Party's machinery
and equipment, including processing equipment, conveyors, machine tools, data
processing and computer equipment including embedded software and peripheral
equipment and all engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment, tools, attachments,
accessories, automotive equipment, trailers, trucks, forklifts, molds, dies,
stamps, motor vehicles, rolling stock and other equipment of every kind and
nature, trade fixtures and fixtures not forming a part of real property,
together with all additions and accessions thereto, replacements therefor, all
parts therefor, all substitutes for any of the foregoing, fuel therefor, and all
manuals, drawings, instructions, warranties and rights with respect thereto, and
all products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit
Party, any trade or business (whether or not incorporated) which, together with
such Credit Party, are treated as a single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan for which the requirement to provide notice has not
been waived; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA which
could result in a material liability to any Credit Party; (c) the complete or
partial withdrawal of any Credit Party or any ERISA Affiliate from any
Multiemployer Plan which could result in a material liability to any Credit
Party; (d) the filing of a notice of intent to terminate a Title IV Plan under
Section 4041(c) of ERISA or the treatment of a plan amendment as a termination
under Section 4041(c) of ERISA; (e) the institution of proceedings to terminate
a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days
or does not result in a material liability to any Credit Party; (g) any other
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee by the PBGC to administer, any Title IV Plan or Multiemployer Plan or
for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under
A-10
Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer
Plan under Section 4241 of ERISA; or (i) the loss of a Qualified Plan's
qualification or tax exempt status which could result in a material liability to
any Credit Party.
"ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in
Section 8.1.
"Excess Cash Flow" shall mean, without duplication, with
respect to any Fiscal Year of Borrowers and their Subsidiaries, consolidated net
income plus (a) depreciation, amortization and other non-cash charges and
Interest Expense to the extent deducted in determining consolidated net income,
minus (b) Capital Expenditures during such Fiscal Year (excluding the financed
portion thereof), minus (c) Interest Expense paid or accrued (excluding any
original issue discount, interest paid in kind or amortized debt discount, to
the extent included in determining Interest Expense) and scheduled principal
payments paid or payable in respect of Funded Debt, plus or minus (as the case
may be), (d) extraordinary gains or losses which are cash items not included in
the calculation of net income, minus (e) mandatory prepayments paid in cash
pursuant to Section 1.3 other than mandatory prepayments made pursuant to
Sections 1.3(b)(i) or 1.3(d), plus (f) taxes deducted in determining
consolidated net income to the extent not paid for in cash.
"Existing Lenders" shall mean the lenders under the Existing
Credit Agreement.
"Existing Credit Agreement" shall have the meaning assigned to
such term in the recitals to this Agreement.
"Federal Funds Rate" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight Federal funds
transactions among members of the Federal Reserve System, as determined by
Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any successor thereto.
"Fees" shall mean any and all fees payable to Agents or any
Lender pursuant to the Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Parent and its Subsidiaries delivered in accordance with Section 3.4 of the
Agreement and Annex E to the Agreement.
"Fiscal Month" shall mean any of the monthly accounting
periods of Parent.
"Fiscal Quarter" shall mean a fiscal quarter of Parent and its
Subsidiaries for financial accounting purposes.
A-11
"Fiscal Year" shall mean the period of 52 or 53 weeks, as the
case may be, ending on the Saturday nearer to January 31 of the succeeding
calendar year.
"Fixed Asset Availability" shall mean (i) on any date of
determination as of the Effective Date until the delivery of an updated
appraisal pursuant to paragraph 5 of Annex F, an amount equal to the lesser of
(a) $15,000,000 and (b) the sum of (x) 37.5% of the Appraised Value of all
Eligible Fixed Assets of Borrowers and (y) 25% of the Appraised Value of the
Designated Properties; and (ii) thereafter, an amount equal to the lesser of (a)
$15,000,000 and (b) the sum of (x) 40% of the Appraised Value of all Eligible
Fixed Assets of Borrowers and (y) 50% of the Appraised Value of Designated
Properties. Upon a sale or other disposition of a Designated Property or
Eligible Fixed Asset, Fixed Asset Availability shall be reduced (but not below
zero) by an amount equal to (i) with respect to a Designated Property sold or
otherwise disposed of for an amount less than its Attributed Value, the
Attributed Value of such Designated Property and (ii) with respect to either (A)
any Eligible Fixed Asset or (B) any Designated Property sold or otherwise
disposed of for an amount greater than its Attributed Value, then in each case
the amount received upon the disposition of such Eligible Fixed Asset or
Designated Property.
"Fixed Charges" shall mean, with respect to any Person for any
fiscal period, the aggregate of all Interest Expense paid or accrued during such
period plus (a) scheduled payments of principal with respect to Indebtedness
during such period, plus (b) Capital Expenditures (other than Special Capital
Expenditures) funded with cash proceeds other than cash proceeds of Indebtedness
permitted under clause (a)(vi) of Section 6.3 of the Agreement during such
period, plus (c) cash taxes actually paid during such period.
"Fixed Charge Coverage Ratio" shall mean, with respect to any
Person for any fiscal period, the ratio of EBITDA to Fixed Charges.
"Fixtures" shall mean any "fixtures" as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party located at a
Mortgaged Property.
"Funded Debt" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrowers, the Obligations.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect on the Effective Date, consistently
applied as such term is further defined in Annex G to the Agreement.
A-12
"GE Capital Fee Letter" shall mean that certain letter, dated
as of May __, 2003, between GE Capital and Borrowers with respect to certain
Fees to be paid from time to time by Borrowers to GE Capital.
"General Intangibles" means all "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Goods" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such Person
(a) to purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof. The amount of any Guaranteed Indebtedness at any time
shall be deemed to be an
A-13
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
made and (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.
"Guarantors" shall mean Parent, Holdings, The Bon-Ton Trade
Corp., The Bon-Ton Gifto, Inc. and each other Person, if any, which executes a
guarantee or other similar agreement in favor of Administrative Agent in
connection with the transactions contemplated by the Agreement and the other
Loan Documents.
"Guaranty" shall mean the Guaranty dated as of April 15, 1997
executed by each of Parent, Holdings, The Bon-Ton National Corp. and The Bon-Ton
Trade Corp. in favor of Administrative Agent, on behalf of itself, the other
Agent and Lenders.
"Hazardous Material" shall mean any substance, material or
waste which is regulated by or forms the basis of liability now or hereafter
under, any Environmental Laws, including any material or substance which is (a)
defined as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Holdings" shall have the meaning ascribed thereto in the
recitals to the Agreement.
"Indebtedness" of any Person shall mean without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred six (6) months or more,
but excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract
A-14
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to
it in Section 1.13.
"Index Rate" shall mean, for any day, a floating rate equal to
the higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans at large U.S. money center
commercial banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in the Agreement based upon the Index Rate
shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Initial Closing Date" shall mean April 15, 1997, the Closing
Date as defined in the Existing Credit Agreement.
"Instruments" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located, and, in any event, including all certificated securities, all
certificates of deposit, and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses,
Patents, Copyrights, Trademarks, trade secrets and customer lists.
"Intercompany Notes" shall have the meaning assigned to it in
Section 6.3.
"Intercreditor Agreement" shall mean the Intercreditor
Agreement dated as of April 15, 1997 executed by The First National Bank of
Chicago, Bon-Ton, The Bon-Ton Receivables Partnership, L.P. and the
Administrative Agent.
"Interest Coverage Ratio" shall mean, with respect to any
Person for any period, the ratio of EBITDA to Interest Expense.
"Interest Expense" shall mean, with respect to any Person for
any fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, interest expense with respect to any Funded Debt of
such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
(b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; provided
that in the case of any LIBOR Period greater than
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three months in duration, interest shall be payable at three-month intervals and
on the last day of such LIBOR Period; and provided, further, that, in addition
to the foregoing, each of (x) the date upon which all of the Commitments have
been terminated and the Loans have been paid in full and (y) the Commitment
Termination Date shall be deemed to be an "Interest Payment Date" with respect
to any interest which is then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by any Credit Party,
wherever located, and in any event including inventory, merchandise, goods and
other personal property that are held by or on behalf of any Credit Party for
sale or lease or are furnished or are to be furnished under a contract of
service, or that constitute raw materials, work in process, finished goods,
returned goods, or materials or supplies of any kind, nature or description used
or consumed or to be used or consumed in such Credit Party's business or in the
processing, production, packaging, promotion, delivery or shipping of the same,
including all supplies and embedded software.
"Investment Property" means all "investment property" as such
term is defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and all regulations promulgated thereunder and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
"Lancaster" means The Bon-Ton Stores of Lancaster, Inc., a
Pennsylvania corporation.
"Lancaster Borrowing Base" shall mean, as of any date of
determination by Administrative Agent, from time to time, an amount equal to the
Fixed Asset Availability of Lancaster at such time, less any Reserves
established by Administrative Agent at such time.
"L/C Availability" shall have the meaning assigned to such
term in Annex B.
"L/C Issuer" shall have the meaning assigned to such term in
Annex B.
"L/C Sublimit" shall have the meaning assigned to such term in
Annex B.
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"Lenders" shall mean GE Capital, the other Lenders named on
the signature page of the Agreement, and, if any such Lender shall decide to
assign all or any portion of the Obligations, such term shall include such
assignee.
"Letter of Credit Fee" has the meaning ascribed thereto in
Annex B.
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Administrative Agent and Lenders at the request of
Borrower Representative, whether direct or indirect, contingent or otherwise,
due or not due, in connection with the issuance of a reimbursement agreement or
guaranty by Administrative Agent or purchase of a participation as set forth in
Annex B with respect to any Letter of Credit. The amount of such Letter of
Credit Obligations shall equal the maximum amount which may be payable by
Administrative or Lenders thereupon or pursuant thereto. This term expressly
includes Eligible Trade L/C Obligations.
"Letter-of-Credit Rights" means letter-of-credit rights as
such term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including rights to payment or performance under a letter of credit,
whether or not such Credit Party, as beneficiary, has demanded or is entitled to
demand payment or performance.
"Letters of Credit" shall mean commercial or standby letters
of credit, including without limitation any Eligible Trade L/C issued for the
account of any Borrower by any L/C Issuer, and bankers' acceptances issued by
any Borrower, for which Administrative Agent and Lenders have incurred Letter of
Credit Obligations.
"LIBOR Business Day" shall mean a Business Day on which banks
in the city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan,
each period commencing on a LIBOR Business Day selected by Borrower
Representative pursuant to the Agreement and ending one, two, three or six
months thereafter, as selected by Borrower Representative's irrevocable notice
to Administrative Agent as set forth in Section 1.5(e); provided that the
foregoing provision relating to LIBOR Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a
day that is not a LIBOR Business Day, such LIBOR Period shall
be extended to the next succeeding LIBOR Business Day unless
the result of such extension would be to carry such LIBOR
Period into another calendar month in which event such LIBOR
Period shall end on the immediately preceding LIBOR Business
Day;
(b) any LIBOR Period that would otherwise extend
beyond the Commitment Termination Date shall end two (2) LIBOR
Business Days prior to such date;
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(c) any LIBOR Period pertaining to a LIBOR Loan
that begins on the last LIBOR Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such LIBOR Period)
shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR
Periods so as not to require a payment or prepayment of any
LIBOR Loan during a LIBOR Period for such Loan; and
(e) Borrower Representative shall select LIBOR
Periods so that there shall be no more than five (5) separate
LIBOR Loans in existence at any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of
interest determined by Administrative Agent equal to:
(a) the offered rate for deposits in United
States Dollars for the applicable LIBOR Period which appears
on Telerate Page 3750 as of 11:00 a.m., London time, on the
second full LIBOR Business Day next preceding the first day of
each LIBOR Period (unless such date is not a Business Day, in
which event the next succeeding Business Day will be used);
divided by
(b) a number equal to 1.0 minus the aggregate
(but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day which
is two (2) LIBOR Business Days prior to the beginning of such
LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Board of
Governors of the Federal Reserve system or other governmental
authority having jurisdiction with respect thereto, as now and
from time to time in effect) for Eurocurrency funding
(currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board which are required to be maintained
by a member bank of the Federal Reserve System (such rate to
be adjusted to the nearest one sixteenth of one percent
(1/16th of 1%) or, if there is not a nearest one sixteenth of
one percent (1/16th of 1%), to the next highest one sixteenth
of one percent (1/16th of 1%).
If such interest rates shall cease to be available from Telerate News Service,
the LIBOR Rate shall be determined from such financial reporting service or
other information as shall be mutually acceptable to Administrative Agent and
Borrower Representative.
"License" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or
A-18
agreement to give, any financing statement perfecting a security interest under
the Code or comparable law of any jurisdiction) functionally equivalent to a
lien or security interest.
"Litigation" shall have the meaning assigned to it in Section
3.13.
"Loan Account" shall have the meaning assigned to it in
Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes, the
Collateral Documents, the GE Capital Fee Letter, the Intercreditor Agreement,
the Master Standby Agreement, the Master Documentary Agreement, and all other
agreements, instruments, documents and certificates identified in the Closing
Checklist executed and delivered to, or in favor of, Administrative Agent and/or
Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Administrative Agent or any
Lender in connection with the Agreement or the transactions contemplated hereby.
Any reference in the Agreement or any other Loan Document to a Loan Document
shall include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times such reference
becomes operative.
"Loan Transaction" shall have the meaning assigned to it in
Section 11.8.
"Loans" shall mean the Revolving Loan and the Swing Line Loan.
"Master Documentary Agreement" shall mean the Master Agreement
for Documentary Letters of Credit dated as of the Effective Date between
Borrowers, as Applicant, and GE Capital, as Issuer.
"Master Standby Agreement" shall mean the Master Agreement for
Standby Letters of Credit dated as of the Effective Date between Borrowers, as
Applicant, and GE Capital, as Issuer.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, operations, prospects or financial or other
condition of the Credit Parties considered as a whole, (b) any Borrower's
ability to pay any of the Loans or any of the other Obligations in accordance
with the terms of the Agreement, (c) the Collateral or Administrative Agent's
Liens, on behalf of itself, the other Agent and Lenders, on the Collateral or
the priority of such Liens, or (d) any Agent's or Lender's rights and remedies
under the Agreement and the other Loan Documents. Without limiting the
foregoing, any event or occurrence which results or could reasonably be expected
to result in costs or liabilities in excess of 10% of Borrowing Availability as
of any date of determination shall be deemed to have had Material Adverse
Effect.
"Maximum Amount" shall mean, at any particular time, an amount
equal to the Revolving Loan Commitment of all Lenders.
A-19
"Mortgaged Properties" shall mean the Real Estate set forth on
Disclosure Schedule C-1 subject to a Mortgage in favor of Administrative Agent.
"Mortgages" shall mean each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by any Credit Party to
Administrative Agent with respect to the Mortgaged Properties, all in form and
substance satisfactory to Administrative Agent.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
in each case in the last six years. contributions on behalf of participants who
are or were employed by any of them.
"Net Borrowing Availability" shall mean as of any date of
determination (a) as to all Borrowers, the lesser of (i) the Maximum Amount
(less the aggregate Revolving Loan and Swing Line Loan) and (ii) the Aggregate
Borrowing Base, less the sum of the aggregate Revolving Loan and the Swing Line
Loan plus 65% of the Eligible Trade L/C Obligations then outstanding, or (b) as
to an individual Borrower, the lesser of (i) the Maximum Amount less the sum of
the aggregate Revolving Loan and Swing Line Loan outstanding to all other
Borrowers and (ii) that Borrower's separate Borrowing Base, less the sum of the
aggregate Revolving Loan, Swing Line Loan of such Borrower plus 65% of the
Eligible Trade L/C Obligations of such Borrower then outstanding.
"Net Realizable Liquidation Value" shall mean the product of
(a) Eligible Inventory and (b) that percentage, determined from the most recent
appraisal of Borrower's Inventory as determined by an independent appraiser
acceptable to Administrative Agent, to reflect the appraiser's estimate of the
net recovery on the Borrower's Inventory in the event of an in-store liquidation
of that inventory.
"New Lender" shall have the meaning assigned to it in Section
1.1(d).
"New Lender Agreement" shall have the meaning assigned to it
in Section 1.1(d).
"Notes" shall mean the Revolving Notes and the Swing Line
Notes, collectively.
"Notice of Conversion/Continuation" shall have the meaning
assigned to it in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(a).
"Obligations" shall mean all loans, advances, debts,
liabilities and obligations, for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable) owing by
any Credit Party to Agents or any Lender, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether or not evidenced
by
A-20
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest which accrues after the commencement of any case or proceeding in
bankruptcy after the insolvency of, or for the reorganization of any Credit
Party, whether or not allowed in such proceeding), Fees, Charges, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents.
"Parent" shall have the meaning ascribed thereto in the
recitals to the Agreement.
"Patent License" shall mean rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right with
respect to any invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Credit
Party now holds or hereafter acquires any interest: (a) all letters patent of
the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or any
other country, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State or Territory thereof, or any other country, and (b)
all reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Permitted Encumbrances" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other governmental Charges
not yet due and payable; (b) pledges or deposits of money securing obligations
under workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (c) pledges or deposits of money securing
bids, tenders, contracts (other than contracts for the payment of money) or
leases to which any Credit Party is a party as lessee made in the ordinary
course of business; (d) deposits of money securing statutory obligations of any
Credit Party; (e) inchoate workers', mechanics' or similar liens arising in the
ordinary course of business, so long as such Liens attach only to Equipment,
Fixtures and/or Real Estate; (f) (i) with respect to Inventory, carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business, and (ii) with respect to any Equipment, Fixtures or
furniture, warehousemen's or other similar possessory liens arising in the
ordinary course of business so long as such Liens attach only to such asset; (g)
deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings
to which any Credit Party is a party; (h) any attachment or judgment lien not
constituting an Event of Default under Section 8.1(i), so long as such Lien only
attaches to Real Estate; (i) zoning restrictions, easements, licenses, or other
restrictions on the use of any Real Estate or other minor irregularities in
title (including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (j) presently
existing or hereinafter created Liens in favor of Administrative Agent, on
behalf of itself, the other Agent and Lenders; and (k) Liens expressly permitted
under clauses (b) and (c) of Section 6.7 of the Agreement.
A-21
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" shall mean an employee benefit plan, as defined in
Section 3(3) of ERISA, which any Credit Party maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were
employed by any Credit Party.
"Pledge Agreement" shall mean the Pledge Agreement dated as of
April 15, 1997 executed by each of Parent, Holdings, Bon-Ton and The Bon-Ton
National Corp. in favor of Administrative Agent, on behalf of itself, the other
Agent and Lenders.
"Proceeds" means "proceeds," as such term is defined in the
Code, including (a) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of, interference with the use of, defects in,
or infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to payment
or other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral.
"Projections" means Borrowers' forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary or division by division basis, if applicable, and otherwise
consistent with the historical Financial Statements of the Borrowers, together
with appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters
relating to any Lender the percentage obtained by dividing (a) the Revolving
Loan Commitment of that Lender by (b) the aggregate Revolving Loan Commitments,
as any such percentages may be adjusted by assignments permitted pursuant to
Section 9.1.
"Qualified Plan" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
A-22
"Reaffirmation Agreement" shall mean the Consent and
Reaffirmation Agreement of even date herewith executed by each of Parent,
Holdings, Bon-Ton and The Bon-Ton Trade Corp. in favor of Administrative Agent,
on behalf of itself, the other Agents and Lenders.
"Real Estate" shall have the meaning assigned to it in Section
3.6.
"Release" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"Requisite Lenders" shall mean (a) Lenders having more than
fifty percent (50%) of the Commitments of all Lenders, or (b) if the Commitments
have been terminated, more than fifty percent (50%) of the aggregate outstanding
amount of all Loans.
"Reserves" shall mean, with respect to the Borrowing Base of
any Borrower (a) reserves established by Administrative Agent from time to time
against Eligible Inventory or Fixed Asset Availability pursuant to either
Section 1.7 or Section 5.9, (b) reserves established pursuant to Section 5.4(c)
and (c) such other reserves against Eligible Inventory, Eligible Fixed Assets or
Designated Properties or Borrowing Availability of any Borrower which
Administrative Agent may, in its reasonable credit judgment, establish from time
to time. Without limiting the generality of the foregoing, Reserves may include
but not be limited to Reserves based upon unpaid rent, taxes, gift certificates,
layaway or customer deposits established to ensure the payment of accrued
Interest Expenses or Indebtedness shall be deemed to be a reasonable exercise of
Administrative Agent's credit judgment.
"Responsible Officer" shall mean, with respect to any Credit
Party, such Credit Party's Vice Chairman, Chief Executive Officer, Chief
Financial Officer, General Counsel, Treasurer, Assistant Treasurer or
Controller.
"Restricted Payment" shall mean (a) the declaration or payment
of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person, except for services rendered (other than any fees
for management or
A-23
consulting services in excess of $100,000 per Fiscal Year) or goods furnished,
in each case in the ordinary course of business of such Person; and (g) any
payment of management fees (or other fees of a similar nature) by such Person to
any Stockholder of such Person or their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is
a "welfare plan" as defined in Section 3(2) of ERISA, that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Revolving Credit Advance" shall have the meaning assigned to
it in Section 1.1(a)(i).
"Revolving Loan" shall mean as the context may require, at any
time, the sum of (i) the aggregate amount of Revolving Credit Advances
outstanding to any Borrower or to all Borrowers plus (ii) the aggregate Letter
of Credit Obligations incurred on behalf of any Borrower or all Borrowers.
"Revolving Loan Commitment" shall mean (a) as to any Lender,
the aggregate commitment of such Lender to make Revolving Credit Advances
(including without duplication Swing Line Advances) and/or incur Letter of
Credit Obligations as set forth in Annex J to the Agreement or in the most
recent Assignment Agreement executed by such Lender and (b) as to all Lenders,
the aggregate commitment of all Lenders to make Revolving Credit Advances
(including without duplication Swing Line Advances) and/or incur Letter of
Credit Obligations, which aggregate commitment shall be One Hundred Fifty
Million Dollars ($150,000,000), as such amount may be adjusted, if at all, from
time to time in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in
Section 1.1(a)(ii).
"Security Agreement" shall mean the Amended and Restated
Security Agreement of even date herewith entered into among Administrative
Agent, on behalf of itself, the other Agent and Lenders, and each Credit Party
that is a signatory thereto.
"Securitization Documents" shall mean, collectively, (i) the
Second Amended and Restated Receivables Purchase Agreement, dated as of January
17, 2003 as amended, among Bon-Ton Receivables, The Bon-Ton Receivables Corp.,
Falcon Asset Securitization Corporation, the financial institutions party
thereto and The First National Bank of Chicago, as agent, (ii) the Transfer
Agreement, (iii) the Deferred Payment Note and (iv) any other agreement pursuant
to which a Borrower sells or otherwise transfers Accounts to Bon-Ton
Receivables.
"Software" means all "software" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
A-24
"Solvent" shall mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person; (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probably liability of such Person on its debts as they become absolute and
matured; (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities (such as litigation, guarantees and pension
plan liabilities) at any time shall be computed as the amount which, in light of
all the facts and circumstances existing at the time, represents the amount
which can be reasonably be expected to become an actual or matured liability.
"Special Capital Expenditures" shall mean capital expenditures
made with net proceeds derived from a public offering of common stock by Parent
and which is transferred to a Borrower as equity. Special Capital Expenditures
shall be designated by Borrower Representative and will include store expansions
and new stores.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including common stock, preferred stock or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such Stock
whether by proxy, agreement, operation of law or otherwise, and (b) any
partnership or limited liability company in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) or of which any such Person is a general partner or may exercise
the powers of a general partner.
"Supermajority Revolving Lenders" means Lenders having (a) 66
2/3% or more of the Revolving Loan Commitments of all Lenders, or (b) if the
Revolving Loan Commitments have been terminated, 66 2/3% or more of the
aggregate outstanding amount of the Revolving Loan (with Swing Line Loan being
attributed to the Lender making such Loan) and Letter of Credit Obligations.
A-25
"Supporting Obligations" means all supporting obligations as
such term is defined in the Code, including letters of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Swing Line Advance" has the meaning assigned to it in Section
1.1(b)(i).
"Swing Line Availability" has the meaning assigned to it in
Section 1.1(b)(i).
"Swing Line Commitment" shall mean, as to the Swing Line
Lender, the commitment of the Swing Line Lender to make Swing Line Loans as set
forth on the signature page to the Agreement, which commitment constitutes a
subfacility of the Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean, as the context may require, at
any time, the aggregate amount of Swing Line Advances outstanding to any
Borrower or to all Borrowers.
"Swing Line Note" has the meaning assigned to it in Section
1.1(b)(ii).
"Taxes" shall mean taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding capital
stock and franchise taxes and other taxes imposed on or measured by the net
income or gross receipts of any Lender by the United States of America, the
jurisdictions under the laws of which Lender's applicable lending office is
located or other jurisdictions where such Lender is subject to tax solely by
reason of its activities or former activities in such jurisdictions other than
activities in connection with the transactions contemplated by this Agreement
or, in each case, any political subdivision thereof.
"Termination Date" shall mean the date on which the Loans have
been repaid in full and all other Obligations under the Agreement and the other
Loan Documents have been completely discharged and Letter of Credit Obligations
have been cash collateralized, cancelled or backed by stand-by letters of credit
in accordance with Annex B, and none of Borrowers shall have any further right
to borrow any monies under the Agreement.
"Title IV Plan" shall mean an employee pension benefit plan,
as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is
covered by Title IV of ERISA, and which any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Trademark Security Agreements" shall mean (i) the Trademark
Security Agreement dated as of April 15, 1997 and any other Trademark Security
Agreement made in favor of Administrative Agent, on behalf of itself, the other
Agent and Lenders, by each applicable Credit Party.
"Trademark License" shall mean rights under any written
agreement now owned or hereafter acquired by any Credit Party granting any right
to use any Trademark.
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"Trademarks" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any state or territory thereof, or any other country or
any political subdivision thereof; (b) all reissues, extensions or renewals
thereof; and (c) all goodwill associated with or symbolized by any of the
foregoing.
"Transfer Agreement" shall mean that Transfer Agreement dated
as of January 17, 2003 as amended, between Bon-Ton and Bon-Ton Receivables.
"Uniform Commercial Code jurisdiction" means any jurisdiction
that had adopted all or substantially all of Article 9 as contained in the 2000
Official Text of the Uniform Commercial Code, as recommended by the National
Conference of Commissioners on Uniform State Laws and the American Law
Institute, together with any subsequent amendments or modifications to the
Official Text.
"Unfunded Pension Liability" shall mean, at any time, the
aggregate amount, if any, of the sum of (a) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for a period of
five (5) years following a transaction which might reasonably be expected to be
covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
All other undefined terms contained in any of the Loan
Documents shall, unless the context indicates otherwise, have the meanings
provided for by the Code as in effect in the State of New York to the extent the
same are used or defined therein. Unless otherwise specified, references in the
Agreement or any of the Appendices to a Section, subsection or clause refer to
such Section, subsection or clause as contained in the Agreement. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the
same may from time to time be amended, restated, modified or supplemented, and
not to any particular section, subsection or clause contained in the Agreement
or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental
A-27
Persons, Persons succeeding to the relevant functions of such Persons; and all
references to statutes and related regulations shall include any amendments of
the same and any successor statutes and regulations. Whenever any provision in
any Loan Document refers to the knowledge (or an analogous phrase) of any Credit
Party, such words are intended to signify that such Credit Party has actual
knowledge or awareness of a particular fact or circumstance or that such Credit
Party, if it had exercised reasonable diligence, would have known or been aware
of such fact or circumstance.
A-28
ANNEX B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the
Agreement, Administrative Agent and Lenders agree to incur, from time to time
prior to the Commitment Termination Date, upon the request of Borrower
Representative on behalf of the applicable Borrower and for such Borrower's
account, Letter of Credit Obligations by causing Letters of Credit to be issued
(by a Lender or other legally authorized Person selected by or acceptable to
Administrative Agent in its sole discretion (each, an "L/C Issuer")) for such
Borrower's account and guaranteed by Administrative Agent; provided, however,
that if the L/C Issuer is a Lender, then such Letters of Credit shall not be
guaranteed by Administrative Agent but rather each Lender shall, subject to the
terms and conditions hereinafter set forth, purchase (or be deemed to have
purchased) risk participations in all such Letters of Credit issued with the
written consent of Administrative Agent, as more fully described in paragraph
(b)(ii) below. The aggregate amount of all such Letter of Credit Obligations
shall not at any time exceed the lesser of (i) Twenty-Five Million Dollars
($25,000,000) (the "L/C Sublimit"), and (ii) the Maximum Amount less the
aggregate outstanding principal balance of the Revolving Credit Advances and the
Swing Line Loan; provided, however, that the sum of 35% of the Eligible Trade
L/Cs Obligations and 100% of such other Letter of Credit Obligations shall not
exceed the Aggregate Borrowing Base less the aggregate outstanding principal
balance of the Revolving Credit Advances and the Swing Line Loan (the
determination of availability described in this sentence is herein referred to
as the "L/C Availability"). Furthermore, the sum of 35% of the Eligible Trade
L/C Obligations and 100% aggregate amount of all other Letter of Credit
Obligations incurred on behalf of any Borrower shall not at any time exceed such
Borrower's separate Borrowing Base less the aggregate principal balance of the
Revolving Credit Advances and the Swing Line Loan to such Borrower. No such
Letter of Credit shall have an expiry date which is more than (i) if such Letter
of Credit is a documentary Letter of Credit, six months following the date of
issuance thereof or such longer period with the consent of Administrative Agent
or (ii) any other Letter of Credit, one year following the date of issuance
thereof, and in no event shall the Administrative Agent or Lenders be under any
obligation to incur Letter of Credit Obligations in respect of, or purchase risk
participations in, any Letter of Credit having an expiry date which is later
than 30 days prior to the Commitment Termination Date.
(b) (i) Advances Automatic; Participations. In the event
that Administrative Agent or any Lender shall make any payment on or pursuant to
any Letter of Credit Obligation, such payment shall then be deemed automatically
to constitute a Revolving Credit Advance to the applicable Borrower under
Section 1.1(a) of the Agreement regardless of whether a Default or Event of
Default shall have occurred and be continuing and notwithstanding any Borrower's
failure to satisfy the conditions precedent set forth in Section 2, and each
Lender shall be obligated to pay its Pro Rata Share thereof in accordance with
the Agreement. The failure of any Lender to make available to Administrative
Agent for Administrative Agent's own account its
B-1
Pro Rata Share of any such Revolving Credit Advance or payment by Administrative
Agent under or in respect of a Letter of Credit shall not relieve any other
Lender of its obligation hereunder to make available to Administrative Agent its
Pro Rata Share thereof, but no Lender shall be responsible for the failure of
any other Lender to make available such other Lender's Pro Rata Share of any
such payment.
(ii) If the L/C Issuer is a Lender, or if it
shall be illegal or unlawful for any Borrower to incur Revolving Credit Advances
as contemplated by paragraph (b)(i) above because of an Event of Default
described in Section 8.1(g) or (h) or otherwise or if it shall be illegal or
unlawful for any Lender to be deemed to have assumed a ratable share of the
reimbursement obligations owed to an L/C Issuer, then (i) immediately and
without further action whatsoever, each Lender shall be deemed to have
irrevocably and unconditionally purchased from Administrative Agent (or such L/C
Issuer, as the case may be) an undivided interest and participation equal to
such Lender's Pro Rata Share (based on the Revolving Loan Commitments) of the
Letter of Credit Obligations in respect of all Letters of Credit then
outstanding and (ii) thereafter, immediately upon issuance of any Letter of
Credit, each Lender shall be deemed to have irrevocably and unconditionally
purchased from Administrative Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation in such Lender's Pro Rata Share (based on
the Revolving Loan Commitments) of the Letter of Credit Obligations with respect
to such Letter of Credit on the date of such issuance. Each Lender shall fund
its participation in all payments or disbursements made under the Letters of
Credit in the same manner as provided in the Agreement with respect to Revolving
Credit Advances.
(c) Cash Collateral. If Borrowers are required to provide
cash collateral for any Letter of Credit Obligations pursuant to the Agreement
prior to the Commitment Termination Date, each Borrower will pay to
Administrative Agent for the benefit of Lenders cash or cash equivalents
acceptable to Administrative Agent ("Cash Equivalents") in an amount equal to
105% of the maximum amount then available to be drawn under each applicable
Letter of Credit outstanding for the benefit of such Borrower. Such funds or
Cash Equivalents shall be held by Administrative Agent in a cash collateral
account (the "Cash Collateral Account") maintained at a bank or financial
institution acceptable to Administrative Agent. The Cash Collateral Account
shall be in the name of the applicable Borrower and shall be pledged to, and
subject to the control of, Administrative Agent, for the benefit of
Administrative Agent and Lenders, in a manner satisfactory to Administrative
Agent. Each Borrower hereby pledges and grants to Administrative Agent, on
behalf of Lenders, a security interest in all such funds and Cash Equivalents
held in the Cash Collateral Account from time to time and all proceeds thereof,
as security for the payment of all amounts due in respect of the Letter of
Credit Obligations and other Obligations, whether or not then due. The
Agreement, including this Annex B, shall constitute a security agreement under
applicable law.
If any Letter of Credit Obligations, whether or not then due
and payable, shall for any reason be outstanding on the Commitment Termination
Date, Borrowers shall either (i) provide cash collateral therefor in the manner
described above, or (ii) cause all such Letters of Credit and guaranties thereof
to be canceled and returned, or (iii) deliver a stand-by letter (or letters) of
credit in guaranty of such Letter of Credit Obligations, which stand-by letter
(or letters) of credit shall be of like tenor and duration as, and in an amount
equal to 105% of the
B-2
aggregate maximum amount then available to be drawn under, the Letters of Credit
to which such outstanding Letter of Credit Obligations relate and shall be
issued by a Person, and shall be subject to such terms and conditions, as are be
satisfactory to Administrative Agent in its sole discretion.
From time to time after funds are deposited in the Cash
Collateral Account by any Borrower, whether before or after the Commitment
Termination Date, Administrative Agent may apply such funds or Cash Equivalents
then held in the Cash Collateral Account to the payment of any amounts, in such
order as Administrative Agent may elect, as shall be or shall become due and
payable by such Borrower to Lenders with respect to such Letter of Credit
Obligations of such Borrower and, upon the satisfaction in full of all Letter of
Credit Obligations of such Borrower, to any other Obligations of any Borrower
then due and payable.
No Borrower nor any Person claiming on behalf of or through
any Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrowers to Lenders in respect thereof, any funds remaining in the
Cash Collateral Account shall be applied to other Obligations when due and owing
and upon payment in full of such Obligations, any remaining amount shall be paid
to Borrowers or as otherwise required by law.
(d) Fees and Expenses. Borrowers agree to pay to
Administrative Agent for the benefit of Lenders, as compensation to such Lenders
for Letter of Credit Obligations incurred hereunder, (x) all costs and expenses
incurred by Administrative Agent or any Lender on account of such Letter of
Credit Obligations, and (y) for each month during which any Letter of Credit
Obligation shall remain outstanding, a fee (the "Letter of Credit Fee") in an
amount equal to (a) with respect to documentary Letters of Credit, the greater
of (i) one and one-quarter percent per annum (1.25%) and (ii) one-quarter
percent per annum (0.25%) less than the Applicable Revolver LIBOR Margin set
forth in Section 1.5(a) from time to time in effect and (b) with respect to any
other Letter of Credit, the Applicable Revolver LIBOR Margin set forth in
Section 1.5(a) from time to time in effect, in each case multiplied by the
maximum amount available from time to time to be drawn under the applicable
Letter of Credit. Such fee shall be paid to Administrative Agent for the benefit
of the Lenders in arrears, on the first day of each month. In addition,
Borrowers shall pay to any L/C Issuer, within five (5) days after demand, such
costs and expenses, charges and expenses of such L/C Issuer in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of such
Letter of Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued. The Letter of Credit
fees shall be calculated on the basis of a 360-day year and actual days elapsed.
(e) Request for Incurrence of Letter of Credit
Obligations. Borrower Representative shall give Administrative Agent at least
two (2) Business Days prior written notice requesting the incurrence of any
Letter of Credit Obligation, specifying the date such Letter of Credit
Obligation is to be incurred, identifying the beneficiary and the Borrower to
which such Letter of Credit Obligation relates and describing the nature of the
transactions proposed to be supported thereby; provided, however, that Borrower
Representative need not
B-3
obtain approval and need not provide notice to Administrative Agent for the
incurrence of a Letter of Credit Obligation if (i) the issuance of such Letter
of Credit Obligation would not violate any provision of this Annex B, (ii) the
amount of such Letter of Credit Obligation is less than $300,000 and (iii) the
aggregate amount of all Letter of Credit Obligations issued in such week is less
than $300,000. For administrative purposes, by Monday of the following week, the
L/C Issuer shall distribute a summary sheet to Administrative Agent stating the
amount requested during such week and the date of all Letter of Credit
Obligations issued during such week. The notice shall be accompanied by the form
of the Letter of Credit (which shall be acceptable to the L/C Issuer) and a
completed Application for Standby Letter of Credit or Application for
Documentary Letter of Credit, as applicable, in the form of Exhibit B-1 or
Exhibit B-2 attached hereto. Notwithstanding anything contained herein to the
contrary, Letter of Credit applications by Borrower Representative and approvals
by Administrative Agent and the L/C Issuer may be made and transmitted pursuant
to electronic codes and security measures mutually agreed upon and established
by and among Borrower Representative, Administrative Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrowers to
reimburse Administrative Agent and Lenders for payments made with respect to any
Letter of Credit Obligation shall be absolute, unconditional and irrevocable,
without necessity of presentment, demand, protest or other formalities, and the
obligations of each Lender to make payments to Administrative Agent or the L/C
Issuer if it is a Lender with respect to Letters of Credit shall be
unconditional and irrevocable subject to clause (iii) of the second paragraph of
paragraph (g) below. Such obligations of Borrowers and Lenders shall be paid
strictly in accordance with the terms hereof under all circumstances including
the following circumstances:
(i) any lack of validity or enforceability of
any Letter of Credit or the Agreement or the other Loan
Documents or any other agreement;
(ii) the existence of any claim, set-off, defense
or other right which any Borrower or any of their respective
Affiliates or any Lender may at any time have against a
beneficiary or any transferee of any Letter of Credit (or any
Persons or entities for whom any such transferee may be
acting), Administrative Agent, any Lender, or any other
Person, whether in connection with the Agreement, the Letter
of Credit, the transactions contemplated herein or therein or
any unrelated transaction (including any underlying
transaction between any Borrower or any of their respective
Affiliates and the beneficiary for which the Letter of Credit
was procured);
(iii) any draft, demand, certificate or any other
document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any
respect;
(iv) payment by Administrative Agent or any L/C
Issuer under any Letter of Credit or guaranty thereof against
presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter
B-4
of Credit or such guaranty, except as set forth in the proviso
to clause (iii) of the second paragraph of paragraph (g)
below;
(v) any other circumstance or happening
whatsoever, which is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of
Default shall have occurred and be continuing.
(g) Indemnification; Nature of Lenders' Duties. In
addition to amounts payable as elsewhere provided in the Agreement, Borrowers
hereby agree to pay and to protect, indemnify, and save harmless Administrative
Agent and each Lender from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including attorneys' fees and
allocated costs of internal counsel) which Administrative Agent or any Lender
may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of any Letter of Credit or guaranty thereof, or (ii) the failure of
Administrative Agent or any Lender seeking indemnification or of any L/C Issuer
to honor a demand for payment under any Letter of Credit or guaranty thereof as
a result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority, in each case
other than to the extent solely as a result of the gross negligence or willful
misconduct of Administrative Agent or such Lender (as finally determined by a
court of competent jurisdiction). No Agent or Lender shall enter into any
compromise or settlement in any action as to which such Person intends to seek
indemnification hereunder without the prior written consent of the Credit Party
from whom indemnification hereunder is sought, which consent shall not be
unreasonably withheld or delayed.
As between Administrative Agent and any Lender and Borrowers,
Borrowers assume all risks of the acts and omissions of, or misuse of any Letter
of Credit by beneficiaries thereof. In furtherance and not in limitation of the
foregoing, to the fullest extent permitted by law neither Administrative Agent
nor any Lender shall be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document issued by any party in
connection with the application for and issuance of any Letter of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of any Letter of Credit to comply fully
with conditions required in order to demand payment under such Letter of Credit
or Eligible Trade L/C; provided that, in the case of any payment by
Administrative Agent or the L/C Issuer if it is a Lender under any Letter of
Credit or guaranty thereof, Administrative Agent or such L/C Issuer shall be
liable to the extent such payment was made solely as a result of its gross
negligence or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of
Credit or guaranty thereof complies on its face with any applicable requirements
for a demand for payment under such Letter of Credit or guaranty thereof; (iv)
for errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not they
be in cipher; (v) for errors in
B-5
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a payment
under any Letter of Credit or guaranty thereof or of the proceeds thereof; (vii)
for the credit of the proceeds of any drawing under any Letter of Credit,
Eligible Trade L/C or guaranty thereof; and (viii) for any consequences arising
from causes beyond the control of Administrative Agent or any Lender. None of
the above shall affect, impair, or prevent the vesting of any of Administrative
Agent's or any Lender's rights or powers hereunder or under the Agreement.
Nothing contained herein shall be deemed to limit or to expand
any waivers, covenants or indemnities made by Borrowers in favor of any L/C
Issuer in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between or among Borrowers and such L/C
Issuer, including a Master Documentary Agreement and a Master Standby Agreement
entered into with Administrative Agent.
B-6
ANNEX C (SECTION 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Each Credit Party shall, and shall cause its Subsidiaries to,
establish and maintain the Cash Management Systems described below:
(a) On or before the Initial Closing Date and until the
Termination Date, each Borrower shall deposit and cause its Subsidiaries to
deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (other than payments made in respect of
third-party credit card providers) into bank accounts in such Borrower's name or
any such Subsidiary's name (collectively, the "Borrower Accounts") at banks set
forth on Disclosure Schedule (3.19) (each, a "Relationship Bank"). On or before
the Initial Closing Date, Bon-Ton shall have established a concentration account
in its name (each a "Concentration Account" and collectively, the "Concentration
Accounts") at the bank or banks which shall be designated as the Concentration
Account bank for each such Borrower on Disclosure Schedule (3.19) (each a
"Concentration Account Bank" and collectively, the "Concentration Account
Banks"), which banks shall be satisfactory to Administrative Agent. At all times
after the Initial Closing Date and until the Termination Date, each Borrower
shall deposit or cause its Subsidiaries to deposit or cause to be deposited,
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all cash, checks, drafts or other similar it payment
relating to or constituting payments made in respect of, or on account of, any
third-party credit card receivables into the Concentration Account.
(b) On or before the Initial Closing Date (or such later
date as Administrative Agent shall consent to in writing), the Concentration
Account Bank and each bank where a Disbursement Account is located, shall have
entered into tri-party blocked account agreements with Administrative Agent, for
the benefit of itself, the other Agent and Lenders, and the applicable Borrower
and Subsidiaries thereof, as applicable, in form and substance acceptable to
Administrative Agent, which shall become operative on or prior to the Initial
Closing Date; provided that the balance in each Disbursement Account held by
such banks identified on Disclosure Schedule 3.19 for which blocked account
agreements have not been obtained shall not be greater than $50,000 at any time.
Each such blocked account agreement shall provide, among other things, that (i)
all items of payment deposited in such account and proceeds thereof deposited in
the applicable Concentration Account are held by such bank as agent or
bailee-in-possession for Administrative Agent, on behalf of Lenders, (ii) the
bank executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) from and
after the Initial Closing Date with respect to each Concentration Account Bank,
such bank
C-1
agrees, from and after the receipt of a notice (an "Activation Notice") from
Administrative Agent (which Activation Notice may be given by Administrative
Agent at any time at which (1) a Default or Event of Default shall have occurred
and be continuing or (2) Net Borrowing Availability is less than $12,500,000
(each of the foregoing being referred to herein as an "Activation Event")), to
immediately forward all amounts received in the applicable Concentration Account
to the Collection Account through daily sweeps from such Concentration Account
into the Collection Account. From and after the date Administrative Agent has
delivered an Activation Notice to any bank with respect to any Disbursement
Account(s), no Borrower shall, or shall cause or permit any Subsidiary thereof
to, accumulate or maintain cash in disbursement or payroll accounts as of any
date of determination in excess of checks outstanding against such accounts as
of that date and amounts necessary to meet minimum balance requirements.
(c) On or before the Effective Date (or such later date
as Administrative Agent shall consent to in writing), each Relationship Bank,
shall have executed and delivered to Administrative Agent, for the benefit of
itself, the other Agent and Lenders, and the applicable Borrower and
Subsidiaries thereof, as applicable, in form and substance acceptable to
Administrative Agent, an agreement which shall become operative on or prior to
the Effective Date. Each such agreement shall provide, among other things, that
(i) the rights of setoff or recoupment or any other claim against such account,
as the case may be, of such Relationship Bank other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment shall be subject to
the rights of Administrative Agent to such Borrower Account and the contents
thereof, and (ii) from and after the Effective Date to forward from time to time
all amounts in such Borrower Account to the Concentration Account Bank.
(d) So long as no Default or Event of Default has
occurred and is continuing, Borrowers may amend Disclosure Schedule (3.19) to
add or replace a Relationship Bank or Borrower Account or to replace any
Concentration Account or any Disbursement Account; provided, however, that (i)
Administrative Agent shall have consented in writing in advance to the opening
of such account with the relevant bank and (ii) prior to the time of the opening
of such account, the applicable Borrower and/or the Subsidiaries thereof, as
applicable, and such bank shall have executed and delivered to Administrative
Agent a tri-party blocked account agreement or such other agreement, in form and
substance satisfactory to Administrative Agent. Borrowers shall close any of
their accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly and in any event within thirty (30) days of notice
from Administrative Agent that the creditworthiness of any bank holding an
account is no longer acceptable in Administrative Agent's reasonable judgment,
or as promptly as practicable and in any event within sixty (60) days of notice
from Administrative Agent that the operating performance, funds transfer and/or
availability procedures or performance with respect to accounts or lockboxes of
the bank holding such accounts or Administrative Agent's liability under any
tri-party blocked account agreement or such other agreement with such bank is no
longer acceptable in Administrative Agent's reasonable judgment.
(e) The Borrower Accounts, Disbursement Accounts and the
Concentration Accounts shall be cash collateral accounts, with all cash, checks
and other similar items of
C-2
payment in such accounts securing payment of the Loans and all other
Obligations, and in which each Borrower and each Subsidiary thereof shall have
granted a Lien to Administrative Agent, on behalf of itself, the other Agent and
Lenders, pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall
be deemed received by Administrative Agent in accordance with Section 1.10 of
the Agreement and shall be applied (and allocated) by Administrative Agent in
accordance with Section 1.11 of the Agreement. In no event shall any amount be
so applied unless and until such amount shall have been credited in immediately
available funds to the Collection Account.
(g) Each Borrower may maintain, in its name, an account
(each a "Disbursement Account" and collectively, the "Disbursement Accounts") at
a bank acceptable to Administrative Agent into which Administrative Agent shall,
from time to time, deposit proceeds of Revolving Credit Advances and Swing Line
Advances made to such Borrower pursuant to Section 1.1 for use by such Borrower
solely in accordance with the provisions of Section 1.4.
(h) Each Borrower shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting for or in concert
with such Borrower (each a "Related Person") to (i) hold in trust for
Administrative Agent, for the benefit of itself and Lenders, all checks, cash
and other items of payment received by such Borrower or any such Related Person,
and (ii) within one (1) Business Day after receipt by such Borrower or any such
Related Person of any checks, cash or other items or payment, deposit the same
into a Borrower Account of such Borrower. Each Borrower and each Related Person
thereof acknowledges and agrees that all cash, checks or items of payment
constituting proceeds of Collateral are the property of Administrative Agent and
Lenders. All proceeds of the sale or other disposition of any Collateral, shall
be deposited directly into the applicable Borrower Accounts.
C-3
ANNEX D (SECTION 2.1(a))
TO
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions
described in Section 2.1 of the Agreement, pursuant to Section 2.1(a), the
following items must be received by Administrative Agent in form and substance
satisfactory to Administrative Agent on or prior to the Effective Date (each
capitalized term used but not otherwise defined herein shall have the meaning
ascribed thereto in Annex A to the Agreement):
(A) Appendices. All Appendices to the Agreement, in form
and substance satisfactory to Administrative Agent.
(B) Notes. Duly executed originals of the Revolving Notes
for each applicable Lender, dated the Effective Date.
(C) Security Agreement. Duly executed originals of the
Security Agreement, dated the Effective Date, and all instruments, documents and
agreements executed pursuant thereto.
(D) Insurance. Satisfactory evidence that the insurance
policies required by Section 5.4 are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses or
endorsements, as requested by Administrative Agent, in favor of Administrative
Agent, on behalf of Lenders.
(E) Security Interests and Code Filings. (a) Evidence
satisfactory to Administrative Agent that Administrative Agent (for the benefit
of itself, the other Agent and Lenders) has a valid and perfected first priority
security interest in the Collateral, including (i) such documents duly executed
by each Credit Party (including financing statements under the Code and other
applicable documents under the laws of any jurisdiction with respect to the
perfection of Liens) as Administrative Agent may request in order to perfect its
security interests in the Collateral and (ii) copies of Code search reports
listing all effective financing statements that name any Credit Party as debtor,
together with copies of such financing statements, none of which shall cover the
Collateral.
(b) Evidence satisfactory to Administrative
Agent, including copies, of all UCC-1 and other financing statements filed in
favor of any Credit Party with respect to each location, if any, at which
Inventory may be consigned.
(F) Reaffirmation Agreement. Duly executed originals of
the Reaffirmation Agreement, dated the Effective Date.
D-1
(G) Intellectual Property Security Agreements. Duly
executed originals of Trademark Security Agreements dated the Effective Date and
signed by each Credit Party which owns Trademarks with respect to Trademarks
owned by a Credit Party and not covered by the Trademark Security Agreement
dated as of April 15, 1997, all in form and substance satisfactory to
Administrative Agent, together with all instruments, documents and agreements
executed pursuant thereto.
(H) Cash Management System; Blocked Account Agreements.
Evidence satisfactory to Administrative Agent that, as of the Effective Date,
Cash Management Systems complying with Annex C to the Agreement have been
established and are currently being maintained in the manner set forth in such
Annex C, together with copies of duly executed tri-party blocked account
agreements, satisfactory to Administrative Agent, with the banks as required by
Annex C.
(I) Charter and Good Standing. For each Credit Party,
such Person's (a) charter and all amendments thereto, (b) good standing
certificates (including verification of tax status) in its state of
incorporation and (c) good standing certificates (including verification of tax
status) and certificates of qualification to conduct business in each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, each dated a recent date prior to the
Effective Date and certified by the applicable Secretary of State or other
authorized Governmental Authority.
(J) Bylaws and Resolutions. For each Credit Party, (a)
such Person's bylaws, together with all amendments thereto and (b) resolutions
of such Person's Board of Directors approving and authorizing the execution,
delivery and performance of the Loan Documents to which such Person is a party
and the transactions to be consummated in connection therewith, each certified
as of the Effective Date by such Person's corporate secretary or an assistant
secretary as being in full force and effect without any modification or
amendment.
(K) Incumbency Certificates. For each Credit Party,
signature and incumbency certificates of the officers of each such Person
executing any of the Loan Documents, certified as of the Effective Date by such
Person's corporate secretary or an assistant secretary as being true, accurate,
correct and complete.
(L) Opinions of Counsel. Duly executed originals of
opinions of Wolf, Block, Xxxxxx and Xxxxx-Xxxxx, counsel for the Credit Parties,
together with any local counsel opinions requested by Administrative Agent, each
in form and substance satisfactory to Administrative Agent and its counsel,
dated the Effective Date, and each accompanied by a letter addressed to such
counsel from the Credit Parties, authorizing and directing such counsel to
address its opinion to Administrative Agent, on behalf of Lenders, and to
include in such opinion an express statement to the effect that Administrative
Agent and Lenders are authorized to rely on such opinion.
(M) Accountants' Letter. A letter authorizing the
independent certified public accountants of the Credit Parties to communicate
with Administrative Agent and Lenders in
D-2
accordance with Section 4.2 and acknowledging Lenders' reliance on the auditor's
certification of past and future Financial Statements.
(N) Waivers. Administrative Agent, on behalf of Lenders,
shall have received landlord waivers and consents, bailee letters and mortgagee
agreements in form and substance satisfactory to Administrative Agent, in each
case as required pursuant to Section 5.9.
(O) Management Letters. Administrative Agent shall have
received copies of each management letter, exception report or similar letter or
report, if any, received by each Credit Party from its independent certified
public accountants (including Xxxxxx Xxxxxxxx LLP and KPMG LLP) within the 2
years prior to the Effective Date.
(P) Master Standby Agreement. A Master Agreement for
Standby Letters of Credit between Borrowers and GE Capital.
(Q) Master Documentary Agreement. A Master Agreement for
Documentary Letters of Credit between Borrowers and GE Capital.
(R) Other Documents. Such other certificates, documents
and agreements respecting any Credit Party as Administrative Agent may, in its
sole discretion, request.
D-3
ANNEX E (SECTION 4.1(a))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrowers shall deliver or cause to be delivered to
Administrative Agent or to Administrative Agent and Lenders, as indicated, the
following:
(a) Monthly Financials. To Administrative Agent and
Lenders, within thirty (30) days after the end of each Fiscal Month, financial
information regarding Parent and its Subsidiaries, prepared under the
supervision of the Chief Financial Officer of Borrower Representative,
consisting of consolidated and consolidating (i) unaudited balance sheets as of
the close of such Fiscal Month and the related statements of income and cash
flows for that portion of the Fiscal Year ending as of the close of such Fiscal
Month; (ii) unaudited statements of income and cash flows for such Fiscal Month,
setting forth in comparative form the figures for the corresponding period in
the prior year and the figures contained in the Projections for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments); and (iii) a summary of the outstanding balance of all Intercompany
Notes as of the last day of that Fiscal Month. Such financial information shall
be accompanied by the certification of Borrower Representative signed on its
behalf by its Chief Financial Officer that (i) such financial information
presents fairly in accordance with GAAP (subject to normal year-end adjustments)
the financial position, results of operations and cash flows of Borrowers and
their Subsidiaries, on a consolidated and consolidating basis, in each case as
at the end of such month and for the period then ended and (ii) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default and a schedule of store expenses by natural division,
reflecting detailed store expenses for the month and year to date, specifically
to include; store payroll, payroll taxes, advertising, co-op, rent, real estate
taxes, utilities/communication and other store operating expenses;
(b) Quarterly Financials. To Administrative Agent and
Lenders, within forty-five (45) days after the end of each Fiscal Quarter,
consolidated and consolidating financial information regarding Parent and its
Subsidiaries, prepared under the supervision of the Chief Financial Officer of
Borrower Representative, including (i) unaudited balance sheets as of the close
of such Fiscal Quarter and the related statements of income and cash flows for
that portion of the Fiscal Year ending as of the close of such Fiscal Quarter
and the period commencing at the end of the previous Fiscal Year and ending on
the last day of such Fiscal Quarter, (ii) unaudited statements of income and
cash flows for such Fiscal Quarter, in each case setting forth in comparative
form the figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments) and (iii) a summary of
Special Capital Expenditures made during that Fiscal Quarter and the proceeds
available for Special Capital Expenditures as of the
E-1
last day of that Fiscal Quarter. Such financial information shall be accompanied
by (A) a statement in reasonable detail (each, a "Compliance Certificate"
showing the calculations used in determining compliance with a Compliance
Certificate in respect of each of the financial covenants set forth on Annex G
which is tested on a quarterly basis and (B) the certification of the Borrower
Representative signed on its behalf by its Chief Financial Officer that (i) such
financial information presents fairly in accordance with GAAP (subject to normal
year-end adjustments) the financial position, results of operations and cash
flows of Borrowers and their Subsidiaries, on both a consolidated and
consolidating basis, as at the end of such Fiscal Quarter and for the period
then ended, (ii) any other information presented is true, correct and complete
in all material respects and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default. In addition, Borrowers
shall deliver to Administrative Agent and Lenders, within forty-five (45) days
after the end of each Fiscal Quarter, a management discussion and analysis which
includes a comparison to budget for that Fiscal Quarter and a comparison of
performance for that Fiscal Quarter to the corresponding period in the prior
year;
(c) Operating Plan. To Administrative Agent and Lenders,
as soon as available, but not later than forty-five (45) days after the end of
each Fiscal Year, an annual operating plan for each Borrower, approved by the
Board of Directors of such Borrower, for the following year, which will include
a statement of all of the material assumptions on which such plan is based, will
include monthly balance sheets and a monthly budget for the following year and
will integrate sales, gross profits, operating expenses, operating profit, cash
flow projections and Borrowing Availability projections all prepared on the same
basis and in similar detail as that on which operating results are reported.
(d) Annual Audited Financials. To Administrative Agent
and Lenders, within ninety (90) days after the end of each Fiscal Year, audited
Financial Statements for Borrowers and their Subsidiaries on a consolidated and
consolidating basis (which consolidating statements shall be unaudited),
consisting of balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the figures for the
previous Fiscal Year and the figures contained in the Projections for such
Fiscal Year, which consolidated Financial Statements shall be prepared in
accordance with GAAP, certified without qualification as to going concern or
scope of audit matters, by an independent certified public accounting firm of
national standing or otherwise acceptable to Administrative Agent. Such
Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance with
each of the financial covenants set forth on Annex G, (ii) a letter addressed to
Administrative Agent, on behalf of itself and Lenders, in form and substance
reasonably satisfactory to Administrative Agent and subject to standard
qualifications taken by nationally recognized accounting firms, signed by such
accounting firm acknowledging that Administrative Agent and Lenders are entitled
to rely upon such accounting firm's certification of such audited Financial
Statements, (iii) the annual letters to such accountants in connection with
their audit examination detailing contingent liabilities and material litigation
matters, and (iv) the certification of Borrower Representative signed on behalf
of each Borrower by the Chief Executive Officer or Chief Financial Officer of
Borrower Representative that all such Financial
E-2
Statements present fairly in accordance with GAAP the financial position,
results of operations and cash flows of Borrowers and their Subsidiaries on a
consolidated and consolidating basis, as at the end of such year and for the
period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default;
(e) Management Letters. To Administrative Agent and
Lenders, within five (5) Business Days after receipt thereof by any Credit
Party, copies of all management letters, exception reports or similar letters or
reports received by such Credit Party from its independent certified public
accountants;
(f) Default Notices. To Administrative Agent and Lenders,
as soon as practicable, and in any event within five (5) Business Days after an
executive officer of any Borrower has actual knowledge of the existence of any
Default, Event of Default, material default under any of the leases listed on
Disclosure Schedule (3.6) or other event which has had a Material Adverse
Effect, telephonic or telecopied notice specifying the nature of such Default or
Event of Default or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in writing on the
next Business Day;
(g) SEC Filings and Press Releases. To Administrative
Agent and Lenders, promptly upon their becoming available, copies of: (i) all
Financial Statements, reports, notices and proxy statements made publicly
available by any Credit Party to its security holders; (ii) all regular and
periodic reports and all registration statements and prospectuses, if any, filed
by any Credit Party with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority; and
(iii) all press releases and other statements made available by any Credit Party
to the public concerning material adverse changes or developments in the
business of any such Person;
(h) To Administrative Agent copies of all material
notices received under or with respect to any Securitization Document;
(i) Supplemental Schedules. To Administrative Agent,
supplemental disclosures, if any, required by Section 5.6 of the Agreement;
(j) Litigation. To Administrative Agent in writing,
promptly upon learning thereof, notice of any Litigation commenced or threatened
against any Credit Party that (i) seeks damages in excess of $1,000,000, (ii)
seeks injunctive relief, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets or against any Credit Party or ERISA Affiliate in
connection with any Plan, (iv) alleges criminal misconduct by any Credit Party,
or (v) alleges the violation of any law regarding, or seeks remedies in
connection with, any Environmental Liabilities;
(k) Insurance Notices. To Administrative Agent,
disclosure of losses or casualties required by Section 5.4 of the Agreement;
E-3
(l) To Administrative Agent, copies of (i) any and all
default notices received under or with respect to any leased location or public
warehouse where Collateral is located, and (ii) such other notices or documents
as Administrative Agent may request in its reasonable discretion; and
(m) Other Documents. To Administrative Agent and Lenders,
such other financial and other information respecting any Credit Party's
business or financial condition as Administrative Agent or any Lender shall,
from time to time, reasonably request.
E-4
ANNEX F (SECTION 4.1(b))
TO
CREDIT AGREEMENT
COLLATERAL REPORTS
1. Borrowers shall deliver or cause to be delivered, to
the Administrative Agent as set forth below and to any Lender upon such Lender's
written request, the following:
(a) To Administrative Agent, upon its request, and in no
event less frequently than ten (10) Business Days after the end of each Fiscal
Month (together with a copy of all or any part of such delivery requested by any
Lender in writing after the Effective Date), with respect to each Borrower, a
summary of Inventory by family of business with a supporting perpetual Inventory
report, in each case accompanied by such supporting detail and documentation as
shall be requested by Administrative Agent in its reasonable discretion and more
specifically as reflected in Disclosure Schedule (D-1);
(b) To the Administrative Agent, no later than ten (10)
Business Days after the end of each Fiscal Month, a Borrowing Base Certificate
with respect to each Borrower as of the close of business on the last day of the
immediately preceding Fiscal Month, accompanied by such supporting detail and
documentation as shall be requested by Administrative Agent in its reasonable
discretion; provided, however, that if Net Borrowing Availability shall equal an
amount less than $25,000,000 for fourteen (14) consecutive days or more,
Borrowers shall deliver or cause to be delivered, no later than Tuesday of each
week or less frequently as may otherwise be requested by Administrative Agent, a
Borrowing Base Certificate with respect to each Borrower as of the close of
business on the immediately preceding Saturday, in each case accompanied by such
supporting detail and documentation as shall be requested by Administrative
Agent in its reasonable discretion, until the earlier of such time as (i) Net
Borrowing Availability shall equal an amount greater than $25,000,000 for at
least twenty-eight (28) consecutive days or (ii) Administrative Agent shall
determine otherwise, at which time Borrowers shall deliver a Borrowing Base
Certificate solely on a monthly basis as provided in the first clause of this
sentence;
(c) To Administrative Agent, at the time of delivery of
each of the monthly Financial Statements delivered pursuant to Annex E,
month-end Inventory reports of each Borrower to such Borrower's general ledger
and monthly Financial Statements delivered pursuant to such Annex E, in each
case accompanied by such supporting detail and documentation as shall be
requested by Administrative Agent in its reasonable discretion;
(d) To the Administrative Agent, at the time of delivery
of the quarterly financial statements delivered pursuant to Annex E and store
operating expense summary;
(e) To Administrative Agent, at the time of delivery of
each of the annual Financial Statements delivered pursuant to Annex E, a list of
any applications for the registration
F-1
of any Patent, Trademark or Copyright with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency which any Credit Party thereof has filed in the prior Fiscal Quarter;
(f) Each Borrower, at its own expense, shall deliver to
Administrative Agent the results of each physical verification, if any, which
such Borrower or any of its Subsidiaries may in their discretion have made, or
caused any other Person to have made on their behalf, of all or any portion of
their Inventory and the Administrative Agent, at the Borrowers' expense, will
have the right to observe the Borrowers' physical verification (and, if a
Default or an Event of Default shall have occurred and be continuing, each
Borrower shall, upon the request of Administrative Agent, conduct, and deliver
the results of, such physical verifications as Administrative Agent may
require);
(g) Such other reports, statements and reconciliations
with respect to the Borrowing Base or Collateral of any or all Credit Parties as
Administrative Agent shall from time to time request in its reasonable
discretion.
2. During any Fiscal Year, Borrowers shall pay for all
costs and expenses of up to two (2) commercial finance field audits conducted by
an auditor selected by Administrative Agent, in form and substance satisfactory
to Administrative Agent.
3. At any time (i) after the occurrence and during the
continuance of a Default or an Event of Default, (ii) Net Borrowing Availability
is less than $15,000,000, or (iii) the appraised net recovery value is less than
90% of Inventory valued at cost, Borrowers shall pay all costs and expenses in
connection with all additional Inventory and commercial field audits conducted
by Administrative Agent.
4. The Administrative Agent may, and at the direction of
the Requisite Lenders, the Administrative Agent shall, at any time, conduct
Inventory appraisals. During any Fiscal Year Borrowers shall pay for all costs
and expenses of one (1) full-scope Inventory appraisal and one (1) limited-scope
Inventory appraisal and if at any time Net Borrowing Availability is less than
$35,000,000 for more than ten (10) consecutive days in a Fiscal Month, in
addition to the above Borrowers shall pay for all costs and expenses of one (1)
limited-scope Inventory appraisal for the remainder of such Fiscal Year.
Notwithstanding the foregoing, if a Default or an Event of Default shall have
occurred and be continuing, the Administrative Agent may undertake additional
appraisals at Borrowers' sole expense during such period as the Administrative
Agent shall reasonably require. All Inventory appraisals shall be conducted by
an appraiser selected by Administrative Agent and shall be in form and substance
satisfactory to Administrative Agent.
5. Borrowers shall pay for all costs and expenses of an
appraisal with respect to real property and fixed assets to be delivered to
Administrative Agent prior to June 30, 2003.
F-2
ANNEX G (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrowers shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a) Maximum Capital Expenditures. Borrowers and their
Subsidiaries on a consolidated basis shall not make Capital Expenditures (other
than Special Capital Expenditures) during the following periods that exceed in
the aggregate the amounts set forth opposite each of such periods:
Period Maximum Capital Expenditures per Period
------ ---------------------------------------
Fiscal Year 2003 $30,000,000
Fiscal Year 2004 $30,000,000
Fiscal Year 2005 $33,000,000
Fiscal Year 2006 and thereafter $35,000,000
provided, however, that the amount of permitted Capital Expenditures referenced
above will be increased in any Fiscal Year by the positive amount equal to the
lesser of (a) 50% of the amount of permitted Capital Expenditures for the
immediately prior Fiscal Year, and (b) the amount (if any), equal to the
difference obtained by taking the Capital Expenditures limit specified above for
the immediately prior Fiscal Year minus the actual amount of any Capital
Expenditures expended during such prior Fiscal Year (the "Carry Over Amount"),
and for purposes of measuring compliance herewith, the Carry Over Amount shall
be deemed to be the first amount spent on Capital Expenditures in that
succeeding Fiscal Year.
(b) Minimum Fixed Charge Coverage Ratio. Parent and its
Subsidiaries shall maintain, on a consolidated basis at the end of each Fiscal
Quarter of Parent a Fixed Charge Coverage Ratio for the 12-month period then
ended of not less than 1.0:1.0.
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then
G-1
Borrowers, Administrative Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrowers' and their Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (a) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (b)
changes in accounting principles concurred in by any Borrower's certified public
accountants; (c) purchase accounting adjustments under A.P.B. 16 and/or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (d) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Initial Closing
Date (including capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the expenditures
are made and deducted as part of the calculation of EBITDA in such period. If
Administrative Agent, Borrowers and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Administrative Agent, Borrowers and Requisite Lenders cannot agree upon the
required amendments within thirty (30) days following the date of implementation
of any Accounting Change, then all Financial Statements delivered and all
calculations of financial covenants and other standards and terms in accordance
with the Agreement and the other Loan Documents shall be prepared, delivered and
made without regard to the underlying Accounting Change.
G-2
ANNEX H (SECTION 9.9(a))
TO
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Bankers Trust Company
Xxx Xxxx, XX 00000
ABA#: 000000000
Account#: 00000000
Instructions: For the Account of GECC/CAF
Reference The Bon-Ton Stores, Inc.
CFN2080
Note: Please include the reason for the payment on all wires (i.e., settlement,
interest, etc.)
H-1
ANNEX I (SECTION 11.10)
TO
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Administrative Agent or GE Capital, at
(i) with respect to funding notices:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Bon-Ton Portfolio Analyst
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(ii) with respect to all other notices,
General Electric Capital Corporation
000 Xxxxxxxxxxx Xxxxxx, Xxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Bon-Ton Account Manager
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Counsel, Corporate - Financial Services - The Bon-Ton
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-1
(B) If to any Borrower, to Borrower Representative, at
The Bon-Ton Department Stores, Inc.
0000 Xxxx Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxx, Xxxxxxxxxxxx 00000
Attention: Chief Financial Officer
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
The Bon-Ton Department Stores, Inc.
0000 Xxxx Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxx, Xxxxxxxxxxxx 00000
Attention: Vice President-General Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-2
ANNEX J
REVOLVING LOAN COMMITMENTS
TO
CREDIT AGREEMENT
Revolving Loan Commitment:
$42,000,000 (28.0%) General Electric Capital Corporation
$25,000,000 (16.7%) The CIT Group/Business Credit, Inc.
$25,000,000 (16.7%) Congress Financial Corporation (Central)
$27,000,000 (18.0%) Foothill Capital Corporation
$31,000,000 (20.7%) Fleet Capital Corporation
J-1
