1
================================================================================
REIMBURSEMENT AGREEMENT
among
XXXXXXXX-SONOMA, INC.
BANK OF AMERICA, NATIONAL ASSOCIATION,
as administrative agent,
and
the BANKS party hereto
dated as of
July 11, 2001
================================================================================
BANK OF AMERICA, NATIONAL ASSOCIATION
Sole Lead Arranger and Sole Book Manager
[BANK OF AMERICA LOGO]
2
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION OF THIS AGREEMENT ........................................ 1
Section 1.1 Definitions .................................................... 1
Section 1.2 Other Interpretive Provisions .................................. 15
Section 1.3 Accounting Terms and Determinations ............................ 16
Section 1.4 Time of Day .................................................... 17
ARTICLE 2 - Credit Facility ......................................................... 17
Section 2.1 The Letter of Credit Commitment ................................ 17
Section 2.2 Requesting Letter of Credit Actions ............................ 17
Section 2.3 Reimbursement of Payments Under Letters of Credit .............. 17
Section 2.4 Funding by Banks When Agent Not Reimbursed ..................... 18
Section 2.5 Nature of Banks' Funding ....................................... 18
Section 2.6 Special Provisions Relating to Evergreen Letters of Credit ..... 18
Section 2.7 Obligations Absolute ........................................... 18
Section 2.8 Role of the Agent .............................................. 20
Section 2.9 Applicability of ISP98 and UCP ................................. 20
Section 2.10 Letter of Credit Fees and Expenses ............................. 21
Section 2.11 Existing Letters of Credit ..................................... 21
Section 2.12 Termination .................................................... 21
ARTICLE 3 - Administrative Matters .................................................. 22
Section 3.1 Sharing of Payments ............................................ 22
Section 3.2 Non Receipt of Funds by the Agent .............................. 22
Section 3.3 Taxes .......................................................... 23
ARTICLE 4 - Guaranties .............................................................. 24
Section 4.1 Guaranties ..................................................... 24
Section 4.2 New Guarantors ................................................. 24
ARTICLE 5 - Conditions Precedent .................................................... 25
Section 5.1 Initial Letter of Credit Action ................................ 25
Section 5.2 All Letter of Credit Actions ................................... 27
ARTICLE 6 - Representations and Warranties .......................................... 28
Section 6.1 Existence, Power and Authority ................................. 28
Section 6.2 Financial Condition ............................................ 28
Section 6.3 Corporate and Similar Action; No Breach ........................ 29
Section 6.4 Operation of Business .......................................... 29
Section 6.5 Litigation and Judgments ....................................... 29
Section 6.6 Rights in Properties; Liens .................................... 29
Section 6.7 Enforceability ................................................. 29
Section 6.8 Approvals ...................................................... 30
Section 6.9 Debt ........................................................... 30
3
Section 6.10 Taxes ........................................................................ 30
Section 6.11 Margin Securities ............................................................ 30
Section 6.12 ERISA ........................................................................ 30
Section 6.13 Disclosure ................................................................... 31
Section 6.14 Subsidiaries; Capitalization ................................................. 31
Section 6.15 Material Agreements .......................................................... 31
Section 6.16 Compliance with Laws ......................................................... 31
Section 6.17 Investment Company Act ....................................................... 31
Section 6.18 Public Utility Holding Company Act ........................................... 31
Section 6.19 Environmental Matters ........................................................ 32
Section 6.20 Broker's Fees ................................................................ 33
Section 6.21 Employee Matters ............................................................. 33
Section 6.22 Solvency ..................................................................... 33
ARTICLE 7 - Affirmative Covenants ................................................................. 33
Section 7.1 Reporting Requirements ....................................................... 33
Section 7.2 Maintenance of Existence; Conduct of Business ................................ 36
Section 7.3 Maintenance of Properties .................................................... 36
Section 7.4 Taxes and Claims ............................................................. 36
Section 7.5 Insurance .................................................................... 36
Section 7.6 Inspection Rights ............................................................ 37
Section 7.7 Keeping Books and Records .................................................... 37
Section 7.8 Compliance with Laws ......................................................... 37
Section 7.9 Compliance with Agreements ................................................... 38
Section 7.10 Further Assurances ........................................................... 38
Section 7.11 ERISA ........................................................................ 38
ARTICLE 8 - Negative Covenants .................................................................... 38
Section 8.1 Debt ......................................................................... 38
Section 8.2 Mergers, Etc. ................................................................ 40
Section 8.3 Restricted Payments .......................................................... 40
Section 8.4 Investments .................................................................. 40
Section 8.5 Limitation on Issuance of Capital Stock of Subsidiaries ...................... 42
Section 8.6 Transactions with Affiliates ................................................. 42
Section 8.7 Lines of Business ............................................................ 42
Section 8.8 Limitations on Restrictions Affecting the Parent and its Subsidiaries......... 42
Section 8.9 Environmental Protection ..................................................... 43
Section 8.10 ERISA ........................................................................ 43
ARTICLE 9 - Financial Covenants ................................................................... 43
Section 9.1 Leverage Ratio ............................................................... 43
Section 9.2 Fixed Charge Coverage Ratio .................................................. 44
Section 9.3 Minimum Tangible Net Worth ................................................... 44
Section 9.4 Capital Expenditures ......................................................... 44
4
ARTICLE 10 - Default ..................................................................... 45
Section 10.1 Events of Default ................................................... 45
Section 10.2 Remedies ............................................................ 47
Section 10.3 Performance by the Agent ............................................ 48
Section 10.4 Set-off ............................................................. 48
Section 10.5 Continuance of Default .............................................. 49
ARTICLE 11 - The Agent ................................................................... 49
Section 11.1 Appointment and Authorization of the Agent .......................... 49
Section 11.2 Delegation of Duties ................................................ 49
Section 11.3 Liability of the Agent .............................................. 49
Section 11.4 Reliance by the Agent ............................................... 50
Section 11.5 Notice of Default ................................................... 50
Section 11.6 Credit Decision; Disclosure of Information by the Agent ............. 50
Section 11.7 Indemnification of the Agent ........................................ 51
Section 11.8 The Agent in Individual Capacity .................................... 51
Section 11.9 Resignation of the Agent ............................................ 52
ARTICLE 12 - Miscellaneous ............................................................... 52
Section 12.1 Expenses ............................................................. 52
Section 12.2 Indemnity by the Parent .............................................. 53
Section 12.3 Limitation of Liability .............................................. 53
Section 12.4 No Duty .............................................................. 53
Section 12.5 No Fiduciary Relationship ............................................ 53
Section 12.6 Equitable Relief ..................................................... 54
Section 12.7 No Waiver; Cumulative Remedies ....................................... 54
Section 12.8 Binding Effect; Successors; Assignment ............................... 54
Section 12.9 Survival ............................................................. 56
Section 12.10 Entire Agreement .................................................... 56
Section 12.11 Amendments and Waivers .............................................. 56
Section 12.12 Maximum Interest Rate ............................................... 57
Section 12.13 Notices ............................................................. 57
Section 12.14 Governing Law; Venue; Service of Process ............................ 58
Section 12.15 Counterparts ........................................................ 58
Section 12.16 Severability ........................................................ 58
Section 12.17 Headings ............................................................ 58
Section 12.18 Construction ........................................................ 58
Section 12.19 Independence of Covenants ........................................... 59
Section 12.20 Waiver of Jury Trial ................................................ 58
Section 12.21 Confidentiality ..................................................... 59
Section 12.22 Foreign Banks ....................................................... 60
5
INDEX TO EXHIBITS
EXHIBIT A Form of Assignment and Acceptance
EXHIBIT B Form of Compliance Certificate
EXHIBIT C Form of Subsidiary Guaranty
EXHIBIT D Form of Joinder Agreement
INDEX TO SCHEDULES
Schedule 1.1 Existing Letters of Credit
Schedule 5.1 Governmental Certificates
Schedule 5.2 Governmental Restrictions
Schedule 6.4 Operation of Business
Schedule 6.5 Litigation and Judgments
Schedule 6.9 Debt
Schedule 6.10 Taxes
Schedule 6.12 ERISA Matters
Schedule 6.14 Subsidiaries; Capitalization
Schedule 6.15 Material Agreements
Schedule 6.19 Environmental Matters
Schedule 6.20 Broker's Fees
Schedule 6.21 Employee Matters
Schedule 8.4 Investments
Schedule 12.13 Addresses for Notices
6
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT, dated as of July 11, 2001, is among
XXXXXXXX-SONOMA, INC., a corporation duly organized and validly existing under
the laws of the State of California (the "Parent"), each of the banks or other
lending institutions which is (or which may from time to time become) a party
hereto or any successor or assignee thereof pursuant to Section 12.8(b)
(individually, a "Bank" and, collectively, the "Banks"), and BANK OF AMERICA,
NATIONAL ASSOCIATION, a national banking association, as administrative agent
for the Banks (in its capacity as administrative agent, together with its
successors in such capacity, the "Agent").
R E C I T A L S:
A. The Parent has requested that the Banks extend a $100,000,000
unsecured credit facility to the Parent for the issuance of commercial and
standby letters of credit.
B. The Banks are willing to extend such credit facility to the Parent
upon the terms and conditions set forth in this Agreement and the other
Transaction Documents.
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
Section 1.1 Definitions. Wherever used in this Agreement, the following
terms have the following meanings:
"Affiliate" means, with respect to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds ten percent (10.0%) or more of any
class of Capital Stock of such Person; or (c) ten percent (10.0%) or more of the
Capital Stock of which is directly or indirectly beneficially owned or held by
the Person in question. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause direction of
the management and policies of a Person, whether through the ownership of
Capital Stock, by contract, or otherwise; provided, however, in no event shall
the Agent or any Bank be deemed an Affiliate of the Parent or any Subsidiary of
the Parent.
"Agent" has the meaning specified in the introductory paragraph of this
Agreement.
"Agent-Related Persons" means the Agent (including any successor
administrative agent), each of the Agent's Affiliates, and the officers,
directors, employees, agents, and attorneys-in-fact of such Persons and
Affiliates.
REIMBURSEMENT AGREEMENT - Page 1
7
"Agreement" means this Reimbursement Agreement, as it may be amended,
restated, or otherwise modified.
"Asset Disposition" means, with respect to any Person, the disposition,
whether a sale (including, without limitation, any sale/lease-back arrangement),
lease, assignment, transfer, or other voluntary disposition of any asset of such
Person (including, without limitation, the sale or other disposition of any
Capital Stock of any Subsidiary of such Person, but excluding any transaction
among any of the Parent and any Guarantor or any Subsidiary that concurrently
therewith becomes a Guarantor) other than (a) sales of inventory in the ordinary
course of business, (b) asset dispositions which constitute an Investment
permitted by Section 8.4, (c) Permitted Sale-Leasebacks, and (d) sales of
equipment that is obsolete or no longer useful in the business of such Person
for an amount not in excess of $10,000,000.
"Assignment and Acceptance" means an assignment and acceptance, in
substantially the form of Exhibit A, entered into by a Bank and an Eligible
Assignee pursuant to Section 12.8(b) and accepted by the Parent (if required)
and the Agent.
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel and the allocated cost
of internal legal services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory paragraph of this
Agreement.
"Bank of America" means Bank of America, National Association, and its
successors and assigns.
"Bankruptcy Code" has the meaning specified in Section 10.1(e).
"Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus one-half of one percent (0.50%) and
(b) the rate of interest in effect for such day as publicly announced from time
to time by Bank of America as its "prime rate." Such rate is a rate set by Bank
of America based upon various factors including Bank of America's costs and
desired return, general economic conditions, and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.
"Business Day" means any day other than a Saturday, Sunday, or other day
on which commercial banks are authorized to close under the laws of, or are in
fact closed in, the state of Washington.
"Capital Expenditures" means, for any period, all expenditures of the
Parent and its Subsidiaries which are classified as capital expenditures in
accordance with GAAP, including, without limitation, the aggregate amount of all
such expenditures incurred during such period which constitute Capital Lease
Obligations.
Page 2
8
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal Property, which obligations are
classified and accounted for as a capital lease on a balance sheet of such
Person in accordance with GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Capital Stock" means corporate stock and any and all shares,
partnership interests, limited liability company interests, membership
interests, equity interests, participations, rights, securities (excluding debt
securities), or other equivalent evidences (however designated) of ownership, or
any options, warrants, voting trust certificates, or other instruments
evidencing an ownership interest or a right to acquire an ownership interest in
a Person (however designated) issued by any entity (whether a corporation,
partnership, limited liability company, or other type of entity).
"Change of Control" means, with respect to any Person, an event or
series of events by which: (a) any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but
excluding any employee benefit plan of such Person or its Subsidiaries, or any
Person acting in its capacity as trustee, agent or other fiduciary, or
administrator of any such plan), becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of fifty
percent (50.0%) or more of the membership interests of such Person; or (b)
during any period of twelve (12) consecutive months, a majority of the members
of the board of directors or other equivalent governing body of such Person
cease to be composed of individuals (i) who were members of that board or
equivalent governing body on the first day of such period, (ii) whose election
or nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) preceding constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body, or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clause (i) and clause
(ii) preceding constituting at the time of such election or nomination at least
a majority of that board or equivalent governing body.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Commitment" means, as to each Bank, the obligation of such Bank to
reimburse the Agent for amounts drawn under Letters of Credit in an aggregate
undrawn face amount at any one time outstanding up to but not exceeding the
amount set forth opposite the name of such Bank on the signature pages hereto
(or if applicable, the most recent Assignment and Acceptance executed by such
Bank) under the heading "Commitment". The aggregate amount of the Commitments
equals one hundred million Dollars ($100,000,000).
Page 3
9
"Commitment Percentage" means, with respect to each Bank, the percentage
equivalent (carried to nine (9) decimal places) of a fraction, the numerator of
which is the aggregate amount of the Commitment of such Bank and the denominator
of which is the aggregate amount of the Commitments of all of the Banks.
"Compliance Certificate" means a certificate in substantially the form
of Exhibit B, properly completed and executed by the chief financial officer or
Vice President, Finance of the Parent.
"Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of August 23, 2000, among the Parent, Bank of America (as
administrative agent), and the "Lenders" (as defined therein), as such agreement
may be amended, restated, or otherwise modified from time to time.
"Debt" means, with respect to any Person at any time (without
duplication): (a) all obligations of such Person for borrowed money; (b) all
obligations of such Person evidenced by bonds, notes, debentures, or other
similar instruments; (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable of such
Person arising in the ordinary course of business that are not past due by more
than ninety (90) days or that are being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves have been
established in accordance with GAAP; (d) all Capital Lease Obligations of such
Person; (e) Guarantees by such Person of indebtedness, liabilities, or
obligations of the kinds described in the clauses (a), (b), (c), (d), (f), (g),
(h), (i), (j), (k), and (l) of this definition; (f) all indebtedness,
liabilities, and obligations of the types described in the foregoing clauses (a)
through (e) secured by a Lien existing on Property owned by such Person, whether
or not the indebtedness, liabilities, and obligations secured thereby have been
assumed by such Person or are non-recourse to such Person; provided, however,
that the amount of such Debt of any Person described in this clause (f) shall,
for purposes of this Agreement, be deemed to be equal to the lesser of (i) the
aggregate unpaid amount of such Debt or (ii) the fair market value of the
Property encumbered, as determined by the Agent in its discretion; (g) all
reimbursement obligations of such Person (whether contingent or otherwise) in
respect of letters of credit, bankers' acceptances, surety or other bonds, and
similar instruments; (h) all liabilities of such Person in respect of unfunded
vested benefits under any Plan (excluding obligations to deliver stock in
respect of stock options or stock ownership plans); (i) all vested obligations
of such Person for the payment of money under any earn-out, noncompete,
consulting, or similar arrangements providing for the deferred payment of the
purchase price for any property to the extent that any such obligations are,
according to GAAP, reflected as a capitalized liability on a balance sheet of
such Person; (j) all obligations of such Person to redeem or retire shares of
Capital Stock of such Person; (k) all indebtedness, liabilities, and obligations
of such Person under any Hedge Agreement; and (l) the principal balance
outstanding under any synthetic lease, tax retention operating lease, off
balance sheet loan, or similar off balance sheet financing product to which such
Person is a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP. The Debt of any Person shall include the Debt of any
partnership or joint venture in which such Person is a general partner or a
joint venturer, but only to the extent to which there is recourse to such Person
for payment of such Debt.
Page 4
10
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any amount payable by the Parent
under any Transaction Document, a rate per annum equal to the sum of two percent
(2.00%), plus the Base Rate.
"Dollars" and "$" mean lawful money of the U.S.
"EBITDAR" means, for any period, the total of the following calculated
for the Parent, without duplication, on a consolidated basis for such period:
(a) Net Income; plus (b) any provision for (or less any benefit from) income or
franchise taxes to the extent included in the determination of Net Income; plus
(c) Interest Expense to the extent included in the determination of Net Income;
plus (d) amortization and depreciation expense to the extent included in the
determination of Net Income; plus (e) other non-cash, non-recurring charges to
the extent included in the determination of Net Income; minus (f) other
non-recurring gains to the extent included in the determination of Net Income;
plus (g) all lease and rent expense for any real Property or personal Property
to the extent included in the determination of Net Income.
"Eligible Assignee" means (a) a financial institution organized under
the laws of the U.S., or any state thereof, and having a combined capital and
surplus of at least $100,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000; provided that
such bank is acting through a branch or agency located in the U.S., (c) a Person
that is primarily engaged in the business of commercial banking and that is (i)
a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (iii) a Person of which a Bank is a Subsidiary, (d) another Bank,
(e) any other entity which is an "accredited investor" (as defined in Regulation
D under the Securities Act of 1933, as amended) which extends credit or buys
loans as one of its businesses, including, but not limited to, insurance
companies, mutual funds, and lease financing companies, or (f) other lenders or
institutional investors consented to in writing in advance by the Agent and the
Parent. Neither the Parent nor any Affiliate of the Parent shall be an Eligible
Assignee. Without the Parent's written consent, no Person whose non-lending
businesses compete with those of the Parent and its Subsidiaries shall be an
Eligible Assignee.
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements regulating health, safety, or the environment, as
such laws, regulations, and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any Person, all indebtedness,
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs, and expenses
(including, without limitation, all reasonable fees, disbursements, and expenses
of counsel, expert and consulting fees, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, by any Person, whether based in contract, tort,
implied or express warranty, strict liability, or criminal or civil statute,
including, without limitation, any Environmental Law, Permit, order, or
Page 5
11
agreement with any Governmental Authority or other Person, arising from
environmental, health, or safety conditions, or the Release or threatened
Release of a Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Parent or any Subsidiary of the Parent or is
under common control (within the meaning of Section 414(c) of the Code) with the
Parent or any Subsidiary of the Parent.
"Event of Default" has the meaning specified in Section 10.1.
"Existing Letters of Credit" means those letters of credit issued under
the Original Agreement and outstanding on the Closing Date, as such letters of
credit may be listed on Schedule 1.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Bank of America on such day on such
transactions as determined by the Agent.
"Fiscal Period" means one of the three fiscal periods in a Fiscal
Quarter each of which is approximately one calendar month in duration. There are
twelve (12) Fiscal Periods in a Fiscal Year.
"Fiscal Quarters" means one of four thirteen (13) week or, if
applicable, fourteen (14) week quarters in a Fiscal Year, with the first of such
quarters beginning on the first day of a Fiscal Year and ending on the Sunday of
the thirteenth (or fourteenth, if applicable) week in such quarter.
"Fiscal Year" means the Parent's fiscal year for financial accounting
purposes beginning on the Monday following the Sunday nearest January 31 of each
year and ending on the Sunday nearest January 31 of the following year. The
current Fiscal Year of the Parent will end on February 2, 2002.
"Fixed Charge Coverage Ratio" means, for any period and determined on a
consolidated basis for the Parent and its Subsidiaries, the ratio of (a) EBITDAR
for such period to (b) the sum of each of the following for such period (i)
Interest Expense to the extent included in the determination of Net Income, plus
(ii) lease and rent expense for any real Property or personal Property, plus
(iii) scheduled principal payments on long term Debt (including Capital Leases)
arising during such period.
Page 6
12
"Foreign Bank" means any Bank that is a "foreign corporation,
partnership, or trust" within the meaning of the Code.
"Funded Debt" means, with respect to any Person (the "subject Person")
at any time (without duplication): (a) Debt described in clauses (a), (b), (c),
(d), (f), (g) other than Debt consisting of Undrawn Letters of Credit, and (j)
of the definition of Debt; and (b) Guarantees by the subject Person of Funded
Debt (as described in clause (a) preceding) of any other Person.
"GAAP" means generally accepted accounting principles, applied on a
"consistent basis" (as such phrase is interpreted in accordance with Section
1.3), as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question.
"Governmental Authority" means any nation or government, any federal,
state, county, municipal, parish, provincial, township, or other political
subdivision thereof, and any department, commission, board, court, agency, or
other instrumentality or entity exercising executive, legislative, judicial,
regulatory, or administrative functions of or pertaining to government.
"Guarantee" means any indebtedness, liability, or obligation, contingent
or otherwise, of any Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person or indemnifying such other Person for any
Debt or other obligation and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of such Person (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions or
otherwise) or (b) entered into for the purpose of assuring in any other manner
the obligee of such Debt or other obligation of the payment thereof or to
protect the obligee against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. The amount of any Guarantee shall
be deemed to be equal to the lesser of (y) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
is made or (z) the maximum amount for which such guaranteeing Person may be
liable pursuant to the terms of the instrument embodying such Guarantee, unless
such primary obligation and the maximum amount for which such guaranteeing
Person may be liable are not stated or determinable, in which case the amount of
such Guarantee shall be such guaranteeing Person's maximum reasonably
anticipated liability in respect thereof as mutually determined by the Parent
and the Agent in good faith. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantor" means any Person who is or becomes a party to any Guaranty
of the Obligations or any part thereof, including each Subsidiary of the Parent
who is a party to the Subsidiary Guaranty pursuant to the terms of Article 4.
"Guaranty" means the Subsidiary Guaranty or any other guaranty agreement
executed and delivered by a Person in favor of the Agent, for the benefit of the
Agent and the Banks, and any and
Page 7
13
all amendments, restatements, or other modifications thereof, and "Guaranties"
means all of such agreements, collectively.
"Hazardous Material" means any substance, product, waste, pollutant,
chemical, contaminant, insecticide, pesticide, constituent, or material which is
or becomes listed, regulated, or addressed under any Environmental Law as a
result of its hazardous or toxic nature.
"Hedge Agreement" means any agreement, device, or arrangement designed
to protect a Person from the fluctuations of interest rates, exchange rates, or
forward rates applicable to its assets, liabilities, or exchange transactions,
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap, swap, or collar protection agreements, and forward rate currency or
interest rate options, as the same may be amended or modified and in effect from
time to time, and any cancellation, buy-back, reversal, termination, or
assignment of any of the foregoing.
"Indemnified Liabilities" has the meaning specified in Section 12.2.
"Intellectual Property" means any U.S. or foreign patents, patent
applications, trademarks, trade names, service marks, brand names, logos and
other trade designations (including, without limitation, unregistered names and
marks), trademark and service xxxx registrations and applications, copyrights
and copyright registrations and applications, inventions, invention disclosures,
protected formulae, formulations, processes, methods, trade secrets, computer
software, computer programs and source codes, manufacturing research and similar
technical information, engineering know-how, customer and supplier information,
assembly and test data drawings, or royalty rights.
"Interest Expense" means, for any period and for any Person, the sum of
(a) interest expense of such Person calculated without duplication on a
consolidated basis for such period in accordance with GAAP, plus (b) interest
expenses paid under Hedge Agreements during such period, minus (c) interest
payments received under Hedge Agreements during such period.
"Investments" has the meaning specified in Section 8.4.
"Joinder Agreement" means an agreement to be executed by a Person
pursuant to the terms of Section 4.2, in substantially the form of Exhibit D.
"Letter of Credit" means any letter of credit issued or outstanding
hereunder. A Letter of Credit may be a standby or commercial letter of credit
and may be issued by the Agent for the account of the Parent or, upon the
Parent's request, for the account of any Subsidiary of the Parent.
"Letter of Credit Action" means the issuance, supplement, amendment,
renewal, extension, modification, or other action relating to a Letter of
Credit.
"Letter of Credit Application" means an application for a Letter of
Credit Action from time to time in use by the Agent.
Page 8
14
"Letter of Credit Cash Collateral Account" means a blocked deposit
account maintained by the Parent with the Agent in which the Parent hereby
grants a security interest to the Agent as security for Letter of Credit Usage
and with respect to which the Parent agrees to execute and deliver from time to
time such documentation as the Agent may reasonably request to further assure
and confirm such security interest.
"Letter of Credit Expiration Date" means the date which is twelve (12)
months after the Maturity Date.
"Letter of Credit Usage" means, as at any date of determination, the
aggregate undrawn face amount of outstanding Letters of Credit, plus the
aggregate amount of all drawings under the Letters of Credit which as of such
date remain not reimbursed by the Parent.
"Leverage Ratio" means, as of any period end and determined on a
consolidated basis for the Parent and its Subsidiaries, the ratio of (a) Total
Adjusted Funded Debt to (b) EBITDAR.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
charge, hypothecation, assignment, preference, priority, or other encumbrance of
any kind or nature whatsoever (including, without limitation, any conditional
sale or title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Material Adverse Effect" means any material adverse effect, or the
occurrence of any event or the existence of any condition that could reasonably
be expected to have a material adverse effect, on (a) the business or financial
condition, prospects, performance, or operations of the Parent individually or
the Parent and its Subsidiaries taken as a whole, (b) the ability of the Parent
individually or the Parent and its Subsidiaries taken as a whole to pay and
perform the obligations for which it or they, as applicable, are responsible
when due, or (c) the validity or enforceability of (i) any of the Transaction
Documents or (ii) the rights and remedies of the Agent or the Banks under any of
the Transaction Documents.
"Maturity Date" means the day which is the first anniversary of the
Closing Date.
"Maximum Rate" has the meaning specified in Section 12.12.
"Minimum Amount" means, with respect to any Letter of Credit Action, a
face amount equal to $5,000.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Parent or
any ERISA Affiliate at any time within the six (6) year period preceding the
date hereof or hereafter and which is covered by Title IV of ERISA.
"Net Income" means, for any period and any Person, such Person's
consolidated net income (or loss) determined in accordance with GAAP, but
excluding the income of any other Person (other
Page 9
15
than Subsidiaries) in which such Person or any Subsidiary of such Person has an
ownership interest, unless received by such Person or a Subsidiary of such
Person in a cash distribution.
"Net Proceeds" means (a) in connection with any disposition of Property
of the Parent or any of its Subsidiaries, the cash proceeds received by such
Person from such disposition (including, without limitation, payments under
notes or other debt Securities received in connection with any such disposition,
but only as and when received) net of (i) the costs of such disposition
(including reasonable, out-of-pocket professional fees and expenses, investment
banking fees, financial advisory fees, taxes, notarial fees, survey costs, title
insurance premiums, required escrow deposits, and purchase price adjustments and
other customary fees and expenses, in each case attributable to and actually
paid in connection with such disposition), and (ii) amounts applied to repayment
of Debt (other than the Obligations) secured by a Lien on the Property disposed
of and (b) in connection with issuance of any Securities, the cash proceeds
received from such issuance, net of all costs of such issuance (including,
without limitation, reasonable, out-of-pocket professional fees and expenses,
notarial fees, underwriting discounts and commissions, placement, underwriting,
or arrangement fees, and other customary fees and expenses) actually paid.
"Note Agreement" means that certain Note Agreement Re: $40,000,000 7.20%
Senior Notes Due August 8, 2005, dated as of August 1, 1995, entered into by the
Parent and the "Purchasers" party thereto and each other agreement, document, or
instrument entered into or delivered in connection therewith, as such
agreements, documents, and instruments may be amended, restated, or otherwise
modified from time to time.
"Obligations" means any and all obligations, indebtedness, and
liabilities of the Parent to the Agent and the Banks, or any of them, arising
pursuant to this Agreement or any other Transaction Document, whether now
existing or hereafter arising, whether direct, indirect, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several, including,
without limitation, the obligation of the Parent to repay amounts funded under
any Letter of Credit, interest on amounts funded under any Letter of Credit, and
all fees, costs, and expenses (including, without limitation, Attorney Costs)
provided for in the Transaction Documents.
"Original Agreement" means that certain Letter of Credit Agreement,
dated June 1, 1997, between the Parent and Bank of America, as amended.
"Other Taxes" has the meaning specified in Section 3.3(b).
"Parent" has the meaning specified in the introductory paragraph of this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Permit" means any permit, certificate, approval, order, license, or
other authorization.
Page 10
16
"Permitted Acquisition" means any acquisition of the Capital Stock of a
Person or any acquisition of Property which constitutes a significant or
material portion of an existing business of a Person, in each case, in a
transaction that satisfies each of the following requirements:
(a) No Default; Certificate of Compliance. Both before and after
giving effect to such acquisition, no Default exists or will exist or
would result therefrom, and, not less than five (5) Business Days prior
to the date of such acquisition, the Parent shall provide the Agent and
the Banks with a certificate duly executed by the chief financial
officer or Vice President, Finance of the Parent which represents and
warrants pro forma compliance with each of the terms and covenants of
this Agreement as of the date of and after giving effect to such
acquisition;
(b) Consideration. The purchase price to be paid by the Parent
or its applicable Subsidiary in connection with any such acquisition
shall not (i) with respect to cash consideration paid (whether
classified as purchase price, noncompete payments, or otherwise and
without regard to whether such amount is paid at closing or paid over
time and the Dollar value of all other assets, including Capital Stock
of the Parent, to be transferred by the purchaser in connection with
such acquisition to the seller or sellers, all valued in accordance with
the applicable agreement entered into between the Target and/or the
seller and the purchaser) and the amount of any Debt incurred, assumed,
or acquired by the Parent or a Subsidiary of the Parent in connection
with such acquisition, exceed fifteen percent (15.0%) of the Parent's
Tangible Net Worth at the time of such acquisition, (ii) with respect to
consideration paid in Capital Stock of the Parent or any Subsidiary of
the Parent, exceed twenty percent (20.0%) of the Parent's Tangible Net
Worth at the time of such acquisition, or (iii) with respect to
acquisitions for a combination of cash and non-cash consideration exceed
the limits set forth in clause (i) and clause (ii), preceding
respectively, and the purchase price to be paid by the Parent or its
applicable Subsidiary in connection with all such acquisitions shall not
exceed $100,000,000 in the aggregate whether paid in cash, constituting
Debt incurred, assumed, or acquired, or paid in Capital Stock of the
Parent or any Subsidiary of the Parent;
(c) Diligence. The Parent has completed due diligence to its
satisfaction on the Target or the Property to be acquired and has
provided the Agent and the Banks with copies of all agreements and
information (including, without limitation, due diligence materials)
entered into or received by the Parent or requested by the Agent or any
Bank, as the Agent or any Bank may reasonably request;
(d) Structure. If the proposed acquisition is an acquisition of
the Capital Stock of a Target, the acquisition will be structured so
that the Target will become a Wholly-Owned Subsidiary; and, if the
proposed acquisition is an acquisition of assets, the acquisition will
be structured so that the Parent or a Wholly-Owned Subsidiary shall
acquire such assets;
(e) Material Adverse Effect. Neither the Parent nor any of its
Subsidiaries shall, as a result of or in connection with any such
acquisition, assume or incur any contingent
Page 11
17
liabilities (whether relating to environmental, tax, litigation, or
other matters) that could reasonably be expected, as of the date of such
acquisition, to result in the existence or occurrence of a Material
Adverse Effect; and
(f) Lines of Business. The Target shall be engaged in
substantially the same line or lines of business, or a business
reasonably related or complementary thereto, as the Parent and its
Subsidiaries.
"Permitted Liens" means any Liens permitted under the Credit Agreement.
"Permitted Sale-Leaseback" means a transaction designed to reduce state
tax liability whereby the Parent or one of its Subsidiaries sells Property to
another Person which finances the purchase price of such Property by selling
notes to, or otherwise borrowing from, the Parent or one of its Subsidiaries and
leases such Property to the seller in an operating lease transaction.
"Person" means any individual, corporation, limited liability company,
business trust, association, company, partnership, joint venture, Governmental
Authority, or other entity.
"Plan" means any employee benefit plan established or maintained by the
Parent or any ERISA Affiliate and which is subject to Title IV of ERISA.
"Principal Office" means the office of the Agent, located at
WA1-501-37-20, 000 Xxxxx Xxxxxx, Xxxxx 00, Xxxxxxx, Xxxxxxxxxx 00000.
"Prohibited Transaction" means any transaction described in Section 406
or 407 of ERISA or Section 4975(c)(1) of the Code for which no statutory or
administrative exemption applies.
"Projections" means the Parent's forecasted consolidated (a) balance
sheets, (b) profit and loss statements, (c) cash flow statements, and (d)
capitalization statements, all materially consistent with the Parent's
historical financial statements, together with appropriate supporting details
and a statement of underlying assumptions.
"Property" means, for any Person, property or assets of all kinds, real,
personal, or mixed, tangible or intangible (including, without limitation, all
rights relating thereto), whether owned or acquired on or after the Closing
Date.
"Register" has the meaning specified in Section 12.8(e).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended, modified, or supplemented
from time to time or any successor regulation therefor.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended, modified, or supplemented
from time to time or any successor regulation therefor.
Page 12
18
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or into
or from Property owned or leased by such Person, including, without limitation,
the migration of Hazardous Materials through or in the air, soil, surface water,
ground water, or property, in violation of Environmental Laws.
"Remedial Action" means all actions required under applicable
Environmental Laws to (a) cleanup, remove, treat, or otherwise address Hazardous
Materials in the indoor or outdoor environment, (b) prevent the Release or
threat of Release or minimize the further Release of Hazardous Materials, or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care; provided that "Remedial Action" shall not include such actions taken in
the normal course of business and in material compliance with Environmental
Laws.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA for which the 30-day notice requirement has not been waived by the PBGC.
"Required Banks" means any combination of Banks having more than fifty
percent (50.0%) of the sum of the Commitments.
"Securities" means any stock, shares, options, warrants, voting trust
certificates, or other instruments evidencing an ownership interest or a right
to acquire an ownership interest in a Person or any bonds, debentures, notes, or
other evidences of indebtedness for borrowed money, secured or unsecured.
"Solvent" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations, and other commitments as they
mature in the normal course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed at the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Subsidiary" means, (a) when used to determine the relationship of a
Person (the "parent") to another Person, a Person (the "subsidiary") of which an
aggregate of more than fifty percent (50.0%) or more of the Capital Stock is
owned of record or beneficially by the parent, or by one or more Subsidiaries of
the parent, or by the parent and one or more Subsidiaries of the parent, (i) if
the
Page 13
19
holders of such Capital Stock (A) are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the directors
(or other individuals performing similar functions) of the subsidiary, even
though the right so to vote has been suspended by the happening of such a
contingency, or (B) are entitled, as such holders, to vote for the election of a
majority of the directors (or individuals performing similar functions) of the
subsidiary, whether or not the right so to vote exists by reason of the
happening of a contingency, or (ii) in the case of Capital Stock which is not
issued by a corporation, if such ownership interests constitute a majority
voting interest, and (b) when used with respect to a Plan, ERISA, or a provision
of the Code pertaining to employee benefit plans, means, with respect to the
parent, any corporation, trade, or business (whether or not incorporated) which
is under common control with the parent and is treated as a single employer with
the parent under Section 414(b) or Section 414(c) of the Code and the
regulations thereunder.
"Subsidiary Guarantor" means a Subsidiary of the Parent which is a
Guarantor hereunder.
"Subsidiary Guaranty" means a guaranty agreement executed and delivered
by a Subsidiary of the Parent in favor of the Agent, for the benefit of the
Agent and the Banks, in substantially the form of Exhibit C, as such guaranty
agreement may be amended, restated, or otherwise modified from time to time.
"Tangible Net Worth" means the Parent's (a) shareholder's equity
(including, without limitation, Capital Stock, additional paid-in capital, and
retained earnings) minus (b) all intangible assets, each as determined in
accordance with GAAP.
"Target" means the Person who is to be acquired or whose assets are to
be acquired by the Parent or a Wholly-Owned Subsidiary in connection with a
Permitted Acquisition.
"Taxes" has the meaning specified in Section 3.3.
"Termination Event" means (a) a Reportable Event, or (b) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (c) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or the appointment
of a trustee to administer any Plan.
"Total Adjusted Funded Debt" means, as of any date of determination,
with respect to the Parent and its Subsidiaries, (a) the average outstanding
principal balance of all Funded Debt of such Persons as of the end of each of
the immediately preceding twelve (12) Fiscal Periods, plus (b) without
duplication, all lease and rent expense for any real Property for the preceding
four (4) Fiscal Quarters multiplied by eight (8), plus (c) without duplication,
all lease and rent expense for any personal Property for the preceding four (4)
Fiscal Quarters multiplied by three (3).
"Transaction Documents" means this Agreement, each Letter of Credit
Application, the Subsidiary Guaranty, any Joinder Agreement, and all other
agreements, documents, and instruments now or hereafter executed and/or
delivered pursuant to or in connection with any of the foregoing, and any and
all amendments, modifications, supplements, renewals, extensions, or
restatements
Page 14
20
thereof (excluding any commitment letter, term sheet, or other agreement entered
into prior to the Closing Date).
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of California.
"Undrawn Letter of Credit" means any outstanding standby or commercial
letter of credit issued for the account of the Parent or any Subsidiary of the
Parent under which (a) a drawing for payment has not been made by the
beneficiary, (b) a drawing for payment has been made by the beneficiary and was
timely paid by the Parent or such Subsidiary in accordance with the terms
thereof and a balance remains undrawn pursuant to the terms thereof, or (c) a
drawing has been made and remains unpaid by the Parent or such Subsidiary and
such drawing has been outstanding for a period not in excess of three (3)
Business Days.
"Unfunded Vested Accrued Benefits" means with respect to any Plan at any
time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds, (b) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan.
"U.S." means the United States of America.
"Voting Stock" means Capital Stock of a Person having by the terms
thereof ordinary voting power to elect a majority of the board of directors (or
similar governing body) of such Person (irrespective of whether or not at the
time Capital Stock of any other class or classes of such Person shall have or
might have voting power by reason of the happening of any contingency).
"Wholly-Owned Subsidiary" means any Subsidiary of the Parent that is
owned 100% by the Parent and/or a Subsidiary of the Parent.
Section 1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) (i) The words "hereof", "herein", "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless
otherwise specified, all Article, Exhibit, Section, and Schedule
references pertain to Articles, Exhibits, Sections, and Schedules of
this Agreement.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means
"from and including"; the words "to" and
Page 15
21
"until" each mean "to but excluding", and the word "through"
means "to and including."
(c) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and
other modifications thereto, but only to the extent such amendments and
other modifications are not prohibited by the terms of any Transaction
Document, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing, or interpreting the
statute or regulation.
(d) This Agreement and other Transaction Documents may use
several different limitations, tests, or measurements to regulate the
same or similar matters. All such limitations, tests, and measurements
are cumulative and shall each be performed in accordance with their
terms. Unless otherwise expressly provided, any reference to any action
of the Agent or any Bank by way of consent, approval, or waiver shall be
deemed modified by the phrase "in its/their sole discretion."
(e) Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Agent and the Banks hereunder
shall be prepared, in accordance with GAAP, on a "consistent basis" with those
used in the preparation of the financial statements referred to in Section 6.2.
All calculations made for the purposes of determining compliance with the
provisions of this Agreement shall be made by application of GAAP, on a
"consistent basis" with those used in the preparation of the financial
statements referred to in Section 6.2. Accounting principles are applied on a
"consistent basis" when the accounting principles applied in a current period
are comparable in all material respects to those accounting principles applied
in a preceding period. Changes in the application of accounting principles which
do not have a material impact on calculating the financial covenants herein
shall be deemed comparable in all material respects to accounting principles
applied in a preceding period. To enable the ready and consistent determination
of compliance by the Parent with its obligations under this Agreement, the
Parent will not, nor will it permit any of its Subsidiaries to, change the
manner in which either the last day of its Fiscal Year or the last day of each
of the first three Fiscal Quarters of its Fiscal Year is determined without the
prior written consent of the Required Banks. In the event any changes in
accounting principles required by GAAP, recommended by the Parent's or any of
its Subsidiaries's certified public accountants, or requested by the Parent (or
that the Parent otherwise requests and the Agent and the Required Banks agree to
accept, such agreement not unreasonably to be denied) and implemented by the
Parent or any of its Subsidiaries occur and such changes result in a change in
the method of the calculation of financial covenants under this Agreement, then
the Parent, the Agent, and the Required Banks agree to enter into negotiations
in order to amend such provisions of this Agreement so as to equitably reflect
such changes with the desired result that the criteria for evaluating such
covenants shall be the same after such changes as
Page 16
22
if such changes had not been made. Until such time as such an amendment shall
have been executed and delivered by the Parent, the Agent, and the Required
Banks, all financial covenants, standards, and terms in this Agreement shall
continue to be calculated or construed as if such changes had not occurred.
Section 1.4 Time of Day. Unless otherwise indicated, all references in
this Agreement to times of day shall be references to San Francisco, California
time.
ARTICLE 2
Credit Facility
Section 2.1 The Letter of Credit Commitment. Subject to the terms and
conditions set forth in this Agreement, (a) from the Closing Date through and
including the Maturity Date, the Agent shall issue Letters of Credit as the
Parent may from time to time request and (b) from the Closing Date through and
including the Letter of Credit Expiration Date, the Agent shall take such other
Letter of Credit Actions as the Parent may from time to time request; provided,
however, that the Letter of Credit Usage shall not exceed the aggregate amount
of the Commitments at any time. Subject to Section 2.6 and unless consented to
by the Agent and the Required Banks, no Letter of Credit may have an expiration
date more than twelve (12) months after the date of its issuance or last
renewal; provided, however, that no Letter of Credit shall have an expiration
date after the Letter of Credit Expiration Date. Notwithstanding the foregoing,
if any Letter of Credit remains outstanding after the Letter of Credit
Expiration Date, the Parent shall, not later than the Letter of Credit
Expiration Date, deposit cash in an amount equal to such Letter of Credit Usage
in a Letter of Credit Cash Collateral Account.
Section 2.2 Requesting Letter of Credit Actions. The Parent may
irrevocably request a Letter of Credit Action in a Minimum Amount therefor in
U.S. Dollars by delivering a Letter of Credit Application therefor to the Agent
by notice delivered in accordance with Section 12.13 (a) with respect to the
initial issuance of any Letter of Credit, not later than three (3) Business Days
prior to the effective date of such issuance and (b) with respect to any Letter
of Credit Action not included in clause (a) preceding, by 10:00 a.m. (San
Francisco, California time) on the day of the requested Letter of Credit Action.
Each request for any Letter of Credit Action shall be in a form acceptable to
the Agent in its sole discretion, including, without limitation, the current
form of Letter of Credit Application in use by the Agent. The Agent shall, upon
satisfaction of the applicable conditions set forth in Article 7, effect such
Letter of Credit Action. This Agreement shall control in the event of any
conflict with any Letter of Credit Application. Upon the issuance of any Letter
of Credit, each Bank shall be deemed to have purchased from the Agent a risk
participation therein in an amount equal to such Bank's Commitment Percentage of
such Letter of Credit.
Section 2.3 Reimbursement of Payments Under Letters of Credit. Promptly
upon receiving notice of any drawing under a Letter of Credit, the Agent shall
notify the Parent. Within one (1) Business Day of such notification from the
Agent to the Parent, the Parent shall reimburse the Agent for any payment that
the Agent makes under a Letter of Credit. The Agent may, but shall
Page 17
23
not be obligated to, withdraw the amount of any such payment which is not made
when due from any account of the Parent maintained with the Agent.
Section 2.4 Funding by Banks When Agent Not Reimbursed. If the Parent
fails to make the payment required pursuant to Section 2.3 by 10:00 a.m. (San
Francisco, California time) on the next Business Day, the Agent shall notify
each Bank of its Commitment Percentage of such amount. Each Bank shall make
funds in an amount equal to its Commitment Percentage of such amount available
to the Agent at the Principal Office not later than 2:00 p.m. (San Francisco,
California time) on the date of such drawing. The obligation of each Bank to so
reimburse the Agent shall be absolute and unconditional and shall not be
affected by the occurrence of a Default or Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the Parent to reimburse the Agent for the amount of any
payment made by the Agent under any Letter of Credit, together with interest as
provided herein.
Section 2.5 Nature of Banks' Funding. If the Parent fails to reimburse
the Agent for a drawing under a Letter of Credit, the funding by the Banks
pursuant to Section 2.4 shall be deemed to be a funding by each Bank of its risk
participation in such Letter of Credit, and each Bank making such funding shall
thereupon acquire a pro rata participation, to the extent of its reimbursement,
in the claim of the Agent against the Parent in respect of such payment and
shall share, in accordance with that pro rata participation, in any payment made
by the Parent with respect to such claim. Any amounts made available by a Bank
under its risk participation shall be payable by the Parent upon demand of the
Agent, and shall bear interest at a rate per annum equal to the Default Rate.
Section 2.6 Special Provisions Relating to Evergreen Letters of Credit.
The Parent may request Letters of Credit that have automatic extension or
renewal provisions ("evergreen" Letters of Credit) so long as the Agent consents
in its sole and absolute discretion thereto and has the right to not permit any
such extension or renewal at least annually within a notice period to be agreed
upon at the time each such Letter of Credit is issued. Once an evergreen Letter
of Credit is issued, unless the Required Banks have elected not to permit such
extension or renewal, the Parent and the Banks shall be deemed to have
authorized (but may not require) the Agent to, in its sole and absolute
discretion, permit the renewal of such evergreen Letter of Credit at any time to
a date not later than the Letter of Credit Expiration Date, and, unless directed
by the Agent, the Parent shall not be required to request such extension or
renewal. The Agent may, in its sole and absolute discretion elect not to permit
an evergreen Letter of Credit to be extended or renewed at any time.
Section 2.7 Obligations Absolute. The obligation of the Parent to pay to
the Agent the amount of any payment made by the Agent under any Letter of Credit
shall be absolute, unconditional, and irrevocable. Without limiting the
foregoing, the Parent's obligation shall not be affected by any of the following
circumstances:
(a) any lack of validity or enforceability of such Letter of
Credit, this Agreement, or any other agreement or instrument relating
hereto or thereto;
(b) any amendment or waiver of or any consent to departure from
such Letter of Credit, this Agreement, or any other agreement or
instrument relating hereto or thereto;
Page 18
24
(c) the existence of any claim, setoff, defense, or other rights
which the Parent or any Subsidiary of the Parent may have at any time
against the Agent or any Bank, any beneficiary of such Letter of Credit
(or any Person for whom any such beneficiary may be acting) or any other
Person, whether in connection with such Letter of Credit, this
Agreement, or any other agreement or instrument relating hereto or
thereto, or any unrelated transactions;
(d) any demand, statement, or any other document presented under
such 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 whatsoever so long as any such document
appeared to comply with the terms of the Letter of Credit;
(e) payment by the Agent in good faith under such Letter of
Credit against presentation of a draft or any accompanying document
which does not strictly comply with the terms of such Letter of Credit;
or any payment made by the Agent under such Letter of Credit to any
Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver, or other
representative of or successor to any beneficiary or any transferee of
such Letter of Credit, including any arising in connection with any
proceeding under the Bankruptcy Code or other applicable laws;
(f) the existence, character, quality, quantity, condition,
packing, value, or delivery of any property purported to be represented
by documents presented in connection with such Letter of Credit or for
any difference between any such property and the character, quality,
quantity, condition, or value of such property as described in such
documents;
(g) the time, place, manner, order, or contents of shipments or
deliveries of property as described in documents presented in connection
with such Letter of Credit or the existence, nature, and extent of any
insurance relative thereto;
(h) the solvency or financial responsibility of any party
issuing any documents in connection with such Letter of Credit;
(i) any failure or delay in notice of shipments or arrival of
any Property;
(j) any error in the transmission of any message relating to
such Letter of Credit not caused by the Agent, or any delay or
interruption in any such message;
(k) any error, neglect, or default of any correspondent of the
Agent in connection with such Letter of Credit;
(l) any consequence arising from acts of God, wars,
insurrections, civil unrest, disturbances, labor disputes, emergency
conditions, or other causes beyond the control of the Agent;
Page 19
25
(m) so long as the Agent in good faith determines that the
document appears to comply with the terms of the Letter of Credit, the
form, accuracy, genuineness, or legal effect of any contract or document
referred to in any document submitted to the Agent in connection with
such Letter of Credit; and
(n) any other circumstances whatsoever where the Agent has acted
in good faith.
In addition, the Parent will promptly examine a copy of each Letter of Credit
and amendments thereto delivered to it and, in the event of any claim of
noncompliance with the Parent's instructions or other irregularity, the Parent
will immediately notify the Agent in writing. The Parent shall be conclusively
deemed to have waived any such claim against the Agent and its correspondents
unless such notice is given as aforesaid.
Section 2.8 Role of the Agent. Each Bank and the Parent agrees that, in
paying any drawing under a Letter of Credit, the Agent shall not have any
responsibility to obtain any document (other than any sight draft, certificates,
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. No Agent-Related Person
nor any of the respective correspondents, participants, or assignees of the
Agent shall be liable to any Bank for (a) any action taken or omitted in
connection herewith at the request or with the approval of the Banks or the
Required Banks, as applicable, (b) any action taken or omitted in the absence of
gross negligence or willful misconduct, or (c) the due execution, effectiveness,
validity, or enforceability of any document or instrument related to any Letter
of Credit. The Parent hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Parent's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants, or
assignees of the Agent, shall be liable or responsible for any of the matters
described in Section 2.7. In furtherance and not in limitation of the foregoing,
the Agent may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the Agent shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a 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.
Section 2.9 Applicability of ISP98 and UCP. Subject to applicable law,
unless otherwise expressly agreed by the Agent and the Parent when a Letter of
Credit is issued, performance under Letters of Credit by the Agent, its
correspondents, and beneficiaries will be governed by (a) with respect to
standby Letters of Credit, the rules of the "International Standby Practices
1998" ("ISP98") or such later revision as may be published by the Institute of
International Banking Law & Practice, and (b) with respect to commercial Letters
of Credit, the rules of the Uniform Customs and Practice for Documentary
Credits, as published in its most recent version by the International Chamber of
Commerce (the "ICC") on the date any commercial Letter of Credit is issued, and
including the ICC decision published by the Commission on Banking Technique and
Practice on April 6, 1998 regarding the European single currency (euro).
Page 20
26
Section 2.10 Letter of Credit Fees and Expenses. The Parent shall pay
directly to the Agent for its sole account its customary documentary and
processing charges in accordance with its standard schedule, as from time to
time in effect, for any Letter of Credit Action or other occurrence relating to
a Letter of Credit for which such charges are customarily made and such other
fees as may be charged by the Agent in accordance with its customary operating
practices in connection with any such Letter of Credit Action. Such fees and
charges are nonrefundable.
Section 2.11 Existing Letters of Credit. On and after the Closing Date,
the Existing Letters of Credit and related payment obligations (a) shall be
deemed to have been issued under, and the payment obligations in respect thereof
shall be governed by and have the benefits of, this Agreement and the other
Transaction Documents, provided that in the event any provision of any agreement
between the Parent and Bank of America (in its capacity as the issuer under the
Original Agreement) is inconsistent with this Agreement, the terms of this
Agreement shall control and (b) shall be deemed included as a Letter of Credit
under the terms of this Agreement. All amounts payable by the Parent in respect
of each Existing Letter of Credit are hereby reaffirmed and continued in full
force and effect. All obligations of the Parent for payment in respect of any
obligations arising under any Existing Letter of Credit, as provided by the
Original Agreement or any Letter of Credit Application delivered to Bank of
America in connection therewith, are hereby renewed, continued, and reaffirmed
under the terms of this Agreement and the other Transaction Documents.
Section 2.12 Termination. The term of this Agreement shall end on the
Letter of Credit Expiration Date. The Parent shall have the right to terminate
this Agreement, without premium or penalty, at any time prior to the Letter of
Credit Expiration Date by giving the other parties hereto written notice of such
termination not less than thirty (30) days prior to such date of termination,
provided that the Parent makes payment to the Agent of an amount equal to the
aggregate amount of all outstanding Letter of Credit Usage to be held in a
Letter of Credit Cash Collateral Account. To the extent any Bank provides to the
Parent a separate facility for such Bank to issue letters of credit for the
account of the Parent and its Subsidiaries, such Bank shall have the right to
terminate its Commitment under this Agreement at any time prior to the Letter of
Credit Expiration Date by giving the other parties hereto written notice of such
termination not less than thirty (30) days prior to such date of termination,
provided such termination shall be ineffective with respect to any Letter of
Credit Usage outstanding on the effective date of such termination and such
terminating Bank shall remain fully obligated under the terms of this Agreement
with respect to any such outstanding Letter of Credit Usage, including, without
limitation, such Bank's obligation to fund drawings as specified in Section 2.4.
Upon the effective date of any Bank's termination of its Commitment hereunder,
the aggregate Commitments shall be reduced to an amount equal to the aggregate
amount of the Commitments of the remaining Banks, plus an amount equal to the
amount of Letter of Credit Usage which the terminating Bank remains obligated to
fund to the Agent pursuant to the terms hereof. With respect to any Letters of
Credit outstanding on the effective date of any termination of a Bank's
Commitment as provided herein, the Agent and the remaining Banks may, without
the terminating Bank's consent, take any Letter of Credit Action with respect
thereto other than any amendment of a Letter of Credit which increases the face
amount thereof.
Page 21
27
ARTICLE 3
Administrative Matters
Section 3.1 Sharing of Payments. If a Bank shall obtain payment of any
principal of or interest on any of the Obligations due to such Bank hereunder
directly (and not through the Agent) through the exercise of any right of
set-off, banker's lien, counterclaim, or similar right, or otherwise, it shall
promptly purchase from the other Banks participations in the Obligations held by
the other Banks in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share the benefit
of such payment pro rata in accordance with the unpaid principal of and interest
on the Obligations then due to each of them. To such end, all of the Banks shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if all or any portion of such excess payment is thereafter
rescinded or must otherwise be restored. The Parent agrees, to the fullest
extent it may effectively do so under applicable law, that any Bank so
purchasing a participation in the Obligations held by the other Banks may
exercise all rights of set-off, banker's lien, counterclaim, or similar rights
with respect to such participation as fully as if such Bank were a direct holder
of Obligations in the amount of such participation. Nothing contained herein
shall require any Bank to exercise any such right or shall affect the right of
any Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness, liability, or obligation of the Parent.
Section 3.2 Non Receipt of Funds by the Agent.
(a) Unless the Parent or any Bank (as used in this Section, the
"Payor") has notified the Agent prior to the date any payment to be made
by the Payor is due, that the Payor does not intend to remit such
payment, the Agent may, in its sole and absolute discretion, assume that
the Payor has timely remitted such payment and the Agent may, in its
sole and absolute discretion and in reliance thereon, make available
such payment to the Person entitled thereto. If such payment was not in
fact remitted to the Agent in immediately available funds, then:
(i) if the Parent failed to make such payment, each Bank
shall forthwith on demand repay to the Agent the amount of such
assumed payment made available to such Bank, together with
interest thereon in respect of each day from and including the
date such amount was made available by the Agent to such Bank to
the date such amount is repaid to the Agent at the Federal Funds
Rate; and
(ii) if any Bank failed to make such payment, the Agent
shall be entitled to recover such corresponding amount on demand
from such Bank. The Agent also shall be entitled to recover from
such Bank interest on such corresponding amount in respect of
each day from the date such corresponding amount was made
available by the Agent to the Parent to the date such
corresponding amount is recovered by the Agent, from such Bank
at a rate per annum equal to the daily Federal Funds Rate.
Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its
Page 22
28
Commitment or to prejudice any rights which the Agent may have
against any Bank as a result of any default by such Bank
hereunder.
(b) The Commitments and other obligations of the Banks under any
Transaction Document are several. The default by any Bank in making any
amount available to the Agent hereunder in accordance with its
Commitment shall not relieve the other Banks of their obligations under
any Transaction Document. In the event of any default by any Bank in
making any amount available to the Agent hereunder, each nondefaulting
Bank shall be obligated to make its amount available to the Agent
hereunder but shall not be obligated to advance the amount which the
defaulting Bank was required make available hereunder. No Bank shall be
responsible for any act or omission of any other Bank.
Section 3.3 Taxes.
(a) Withholding Taxes. Except as otherwise provided in this
Agreement, any and all payments by the Parent or any Guarantor to or for
the account of any Bank or the Agent hereunder or under any other
Transaction Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies,
imposts, deductions, charges, or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Bank or the Agent (as
applicable), taxes imposed on or measured by its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such
Bank or the Agent (as the case may be) is organized, located, or doing
business or any political subdivision thereof, and excluding in the case
of any Foreign Bank taxes arising as a result of such Bank's failure to
comply with Section 12.22 (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If the Parent or any Guarantor
shall be required by law to deduct any Taxes from or in respect of any
sum payable under any Transaction Document to any Bank or the Agent (as
applicable), (i) the sum payable shall be increased as necessary so that
after making all required deductions (including, without limitation,
deductions applicable to additional sums payable under this Section 3.3)
such Bank or the Agent (as applicable) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Parent or any Guarantor, as applicable, shall make such deductions,
(iii) the Parent or any Guarantor, as applicable, shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (iv) the Parent or any Guarantor, as
applicable, shall furnish to the Agent the original or a certified copy
of a receipt evidencing payment thereof.
(b) Stamp Taxes, Etc. In addition, the Parent agrees to pay any
and all present or future stamp or documentary taxes and any other
excise or property taxes or charges or similar levies which arise from
any payment made under this Agreement or any other Transaction Document
or from the execution or delivery of, or otherwise with respect to, this
Agreement or any other Transaction Document ("Other Taxes").
(c) Tax Indemnification. THE PARENT AGREES TO INDEMNIFY EACH
BANK AND THE AGENT-RELATED PERSONS FOR THE FULL AMOUNT OF TAXES
Page 23
29
AND OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY "TAXES" OR "OTHER
TAXES" IMPOSED OR ASSERTED BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER
THIS SECTION 3.3) PAID BY SUCH BANK OR ANY AGENT-RELATED PERSON (AS THE
CASE MAY BE) AND ANY LIABILITY (INCLUDING, WITHOUT LIMITATION,
PENALTIES, INTEREST, AND EXPENSES) ARISING THEREFROM OR WITH RESPECT
THERETO, OTHER THAN PENALTIES, ADDITIONS TO TAX, INTEREST, AND EXPENSES
ARISING AS A RESULT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE
PART OF SUCH BANK OR AGENT-RELATED PERSON AND ANY TAXES ARISING AS A
RESULT OF THE FAILURE OF ANY FOREIGN BANK TO COMPLY WITH THE TERMS OF
SECTION 12.22.
ARTICLE 4
Guaranties
Section 4.1 Guaranties. Each Subsidiary of the Parent which at any time
Guarantees the indebtedness, liabilities, and obligations of the Parent under
the Credit Agreement shall guarantee payment and performance of the Obligations
pursuant to the Subsidiary Guaranty. Additionally, the Parent shall cause one or
more of its other domestic Subsidiaries (if any) to Guarantee payment and
performance of the Obligations pursuant to the Subsidiary Guaranty as follows:
(a) in the event that any domestic Subsidiary of the Parent which is not a
Guarantor has assets of a net book value in excess of $10,000,000 or gross
revenue for the most recently completed four (4) Fiscal Quarters, beginning with
the four (4) Fiscal Quarters ending April 29, 2001, in excess of $10,000,000 the
Parent shall cause such domestic Subsidiary to become a Guarantor as provided by
Section 4.2 and (b) in the event that the Parent's domestic Subsidiaries which
are not previously Guarantors hereunder have assets, in the aggregate for all
such domestic Subsidiaries, of a net book value in excess of $75,000,000 or
gross revenue for the most recently completed four (4) Fiscal Quarters,
beginning with the four (4) Fiscal Quarters ending April 29, 2001, in excess of
$75,000,000, the Parent shall cause one or more of such Subsidiaries to become
Guarantors as provided by Section 4.2 with the effect that the assets and gross
revenue of the remaining domestic Subsidiaries of the Parent which are not
Guarantors hereunder do not exceed $75,000,000 as of such date.
Section 4.2 New Guarantors. In the event that the Parent is required to
cause one or more of its Subsidiaries to become Guarantors as set forth in
Section 4.1, such new Guarantor or Guarantors (as the case may be) shall,
contemporaneously with the delivery of the financial statements required by
Section 7.1(a) and Section 7.1(b), execute and deliver to the Agent a Joinder
Agreement pursuant to which each such Subsidiary of the Parent becomes a
Guarantor under this Agreement and such other certificates and documentation,
including the items otherwise required pursuant to Section 5.1, as the Agent may
reasonably request.
Page 24
30
ARTICLE 5
Conditions Precedent
Section 5.1 Initial Letter of Credit Action. The obligation of the Agent
to take any Letter of Credit Action under this Agreement is subject to the
following conditions precedent:
(a) Deliveries. The Agent shall have received on or before the
Closing Date and on or before the day of such Letter of Credit Action
all of the following, each dated (unless otherwise indicated) the
Closing Date, in form and substance satisfactory to the Agent and the
Banks:
(i) Resolutions; Authority. For each of the Parent and
the Guarantors, resolutions of its board of directors (or
similar governing body) certified by its Secretary or an
Assistant Secretary which authorize its execution, delivery, and
performance of the Transaction Documents to which it is or is to
be a party;
(ii) Incumbency Certificate. For each of the Parent and
the Guarantors, a certificate of incumbency certified by the
Secretary or an Assistant Secretary certifying the names of its
officers (A) who are authorized to sign the Transaction
Documents to which it is or is to be a party (including, without
limitation, the certificates contemplated herein) together with
specimen signatures of each such officer and (B) who will, until
replaced by other officers duly authorized for that purpose, act
as its representatives for the purposes of signing documentation
and giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby;
(iii) Governmental Certificates. For each of the Parent
and the Guarantors, (A) certificates of the appropriate
Governmental Authorities of the state of incorporation,
formation, or organization as to its existence and, to the
extent applicable, good standing and (B) certificates of the
appropriate Governmental Authorities of each of the states set
forth on Schedule 5.1 (to the extent any such Person conducts
business in any such state) and of each other state in which
such Person conducts business, other than the state of
organization of such Person, as to such Person's qualification
to do business and good standing in such state where failure to
be so qualified could reasonably be expected to have a Material
Adverse Effect, provided that the Parent may defer delivery of
such certificates included in this clause (B) for a period of
forty-five (45) days after the Closing Date;
(iv) Reimbursement Agreement. This Agreement, together
with all Schedules, Exhibits, and other attachments (if any),
duly executed by the Parent, the Agent, and the Banks;
Page 25
31
(v) Subsidiary Guaranty. The Subsidiary Guaranty
executed by each of the Guarantors;
(vi) Consents. Copies of all material consents or
waivers necessary for the execution, delivery, and performance
by the Parent and each Guarantor of the Transaction Documents to
which it is a party, as the Agent may require, which consents
shall be certified by an authorized representative of the Parent
or such Guarantor, as applicable, as true and correct copies of
such consents as of the Closing Date; and
(vii) Opinions of Counsel. Satisfactory opinions of
legal counsel to the Parent and the Guarantors as to such
matters as the Agent may request.
(b) Attorney Costs. The Attorney Costs referred to in Section
12.1 for which statements have been presented shall have been paid in
full on the Closing Date.
(c) Compliance with Laws. As of the Closing Date, each Person
that is a party to this Agreement or any of the other Transaction
Documents shall have complied with all requirements of any Governmental
Authority necessary to consummate the transactions contemplated by this
Agreement and the other Transaction Documents.
(d) No Prohibitions. No requirement of any Governmental
Authority shall prohibit the consummation of the transactions
contemplated by this Agreement or any other Transaction Document, and no
order, judgment, ruling, injunction, or decree of any Governmental
Authority or arbitrator shall, and no litigation or other proceeding
shall be pending or threatened which would, enjoin, prohibit, restrain,
or otherwise adversely affect in any material manner the consummation of
the transactions contemplated by this Agreement or the other Transaction
Documents or otherwise have a Material Adverse Effect.
(e) No Material Adverse Change. As of the Closing Date, no
material adverse change shall have occurred with respect to (i) the
business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise), or prospects of the Parent
(individually) or the Parent and its Subsidiaries (taken as a whole)
since January 28, 2001 or (ii) in the facts and information regarding
such Persons disclosed to the Agent and the Banks prior to the Closing
Date.
(f) No Material Litigation. Except as set forth in Schedule 6.5,
as of the Closing Date, no action, suit, investigation, or proceeding
shall be pending or threatened before any Governmental Authority that
purports to affect the Parent or any of its Subsidiaries that could
reasonably be expected to result in a Material Adverse Effect.
(g) Compliance With Financial and Other Obligations. As of the
Closing Date, the Parent and each of its Subsidiaries shall be in
compliance with all of its respective existing financial obligations,
and no default or event of default shall be in existence (either
Page 26
32
before or after giving effect to this Agreement) under any Capital Stock
or Debt of the Parent or any Subsidiary of the Parent.
(h) Capital Structure. The corporate capital and ownership
structure (including, without limitation, articles of incorporation and
bylaws), shareholders agreements, and management of the Parent and its
Subsidiaries shall be reasonably satisfactory to the Agent on the
Closing Date and, thereafter, shall not have changed in any material
respect unless such change is reasonably satisfactory to the Agent.
(i) No Material Market Changes. The absence of any material
disruption of or material adverse change in conditions in the financial,
banking, or capital markets which the Agent, in its sole discretion,
deems material in connection with the syndication of the Commitment
provided to the Parent pursuant to the terms of this Agreement.
(j) Additional Documentation. The Agent and the Banks shall have
received such additional approvals, opinions, or other documentation as
the Agent or any Bank may reasonably request to effectuate the purpose
hereof.
Section 5.2 All Letter of Credit Actions. The obligation of the Agent to
take any Letter of Credit Action under this Agreement is subject to the
following additional conditions precedent:
(a) No Default. No Default shall have occurred and be
continuing, or would result from such requested Letter of Credit Action;
(b) Representations and Warranties. All of the representations
and warranties contained in Article 6 and in the other Transaction
Documents shall be true and correct in all material respects on and as
of the date of taking such Letter of Credit Action with the same force
and effect as if such representations and warranties had been made on
and as of such date except to the extent that such representations and
warranties relate specifically to another date;
(c) Governmental Restrictions. Except as set forth in Schedule
5.2, there shall be no governmental inquiries, injunctions, or
restraining orders instituted or pending, or any statute or rule
enacted, promulgated, entered, or enforced which would have a Material
Adverse Effect upon the Parent (individually) or the Parent and its
Subsidiaries (taken as a whole);
(d) No Material Adverse Change. No material adverse change shall
have occurred with respect to the business, assets, liabilities (actual
or contingent), operations, condition (financial or otherwise), or
prospects of the Parent (individually) or the Parent and its
Subsidiaries (taken as a whole) since January 28, 2001; and
(e) Letter of Credit Application. The Parent shall have
delivered to the Agent a duly completed Letter of Credit Application as
required by Section 2.2 and such other documentation related thereto as
the Agent shall reasonably request.
Page 27
33
Each Letter of Credit Action requested by the Parent hereunder shall constitute
a representation and warranty by the Parent that the conditions precedent set
forth in this Section 5.2 have been satisfied (both as of the date of such
notice and, unless the Parent otherwise notifies the Agent prior to the date of
such requested Letter of Credit Action as of the date of such requested Letter
of Credit Action).
ARTICLE 6
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, the
Parent represents and warrants that the following statements are and, after
giving effect to the transactions contemplated hereby will be, true, correct,
and complete:
Section 6.1 Existence, Power and Authority.
(a) The Parent and each of its Subsidiaries is (i) duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization; (ii) has all requisite power and
authority to own its assets and carry on its business as now being or as
proposed to be conducted; and (iii) is qualified to do business in all
jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would have a
Material Adverse Effect;
(b) The Parent and each of its Subsidiaries has the power and
authority to execute, deliver, and perform its respective obligations
under the Transaction Documents to which it is or may become a party.
Section 6.2 Financial Condition.
(a) Financial Statements. The Parent has delivered to the Agent
and each Bank the audited financial statements of the Parent and its
Subsidiaries as of and for the Fiscal Years ended January 31, 1999,
January 30, 2000, and January 28, 2001. Such financial statements have
been prepared in accordance with GAAP, and present fairly, the financial
condition of the Parent and its Subsidiaries as of the respective dates
indicated therein and the results of operations for the respective
periods indicated therein. Neither the Parent nor any of its
Subsidiaries has any material contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments, or unrealized or
anticipated losses from any unfavorable commitments except as referred
to or reflected in the financial statements dated as of January 28,
2001. Since the date of the financial statements dated as of January 28,
2001, no material adverse change has occurred with respect to the
business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise), or prospects of the Parent
(individually) or of the Parent and its Subsidiaries (taken as a whole).
(b) Projections. The Projections delivered and to be delivered
by the Parent to the Agent and the Banks prior to the Closing Date and
the Projections to be delivered by the
Page 28
34
Parent pursuant to Section 7.1(a) have been and will be prepared by the
Parent in light of the past operation of the business of the Parent and
its Subsidiaries. All such Projections represent, as of the date
thereof, a good faith estimate by the Parent and its senior management
of the financial conditions and performance of the Parent and its
Subsidiaries based on assumptions believed to be reasonable at the time
made (provided that the performance of the Parent and its Subsidiaries
may vary from such Projections).
Section 6.3 Corporate and Similar Action; No Breach. The execution,
delivery, and performance by the Parent and each of its Subsidiaries of the
Transaction Documents to which it is or may become a party and compliance with
the terms and provisions thereof have been duly authorized by all requisite
action on the part of the Parent and each of its Subsidiaries, respectively, and
do not and will not (a) violate or conflict with, or result in a breach of, or
require any consent under (i) the articles of incorporation, bylaws, or other
organizational documents (as applicable) of such Person, (ii) any applicable
law, rule, or regulation or any order, writ, injunction, or decree of any
Governmental Authority or arbitrator, or (iii) any agreement or instrument to
which such Person is a party or by which any of them or any of their property is
bound or subject, or (b) constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any of the
revenues or assets of such Person.
Section 6.4 Operation of Business. Each of the Parent and its
Subsidiaries possesses all material licenses, Permits, franchises, patents,
copyrights, trademarks, and tradenames, or rights thereto, necessary to conduct
its business substantially as now conducted and as presently proposed to be
conducted, and, to the best of their knowledge, neither the Parent nor any of
its Subsidiaries is in violation of any valid rights of others with respect to
any of the foregoing where such violation could be expected to have a Material
Adverse Effect. Except as set forth in Schedule 6.4, since January 28, 2001, the
Parent and its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course.
Section 6.5 Litigation and Judgments. Except as set forth in Schedule
6.5, there is no action, suit, investigation, or proceeding before or by any
Governmental Authority or arbitrator pending or threatened against or affecting
the Parent or any of its Subsidiaries which could reasonably be expected to have
a Material Adverse Effect. As of the Closing Date, except as set forth in
Schedule 6.5, there are no outstanding judgments against the Parent or any of
its Subsidiaries.
Section 6.6 Rights in Properties; Liens. The Parent and each of its
Subsidiaries has good title to or valid leasehold interests in its respective
Properties, real and personal and none of such Properties or leasehold interests
of the Parent or any of its Subsidiaries is subject to any Lien, other than
Permitted Liens.
Section 6.7 Enforceability. The Transaction Documents to which the
Parent or any Subsidiary of the Parent is a party, when executed and delivered,
shall constitute the legal, valid, and binding obligations of the Parent or such
Subsidiary, as applicable, enforceable against such Person in accordance with
their respective terms, except as limited by bankruptcy, insolvency, or other
laws of general application relating to the enforcement of creditors' rights and
general principles of equity.
Page 29
35
Section 6.8 Approvals. No authorization, approval, or consent of, and no
filing or registration with, any Governmental Authority or other third party is
or will be necessary for the execution, delivery, or performance by the Parent
or any Subsidiary of the Parent of the Transaction Documents to which it is or
may become a party, except where the failure to obtain any such authorization,
approval, or consent could not reasonably be expected to have a Material Adverse
Effect, or for the validity or enforceability thereof.
Section 6.9 Debt. Neither the Parent nor any of its Subsidiaries has any
Debt, except as set forth in Schedule 6.9 or as otherwise permitted by Section
8.1.
Section 6.10 Taxes. Except as set forth in Schedule 6.10 or, after the
Closing Date, matters which do not violate Section 7.4, the Parent and each
Subsidiary of the Parent have filed all tax returns (federal, state, and local)
required to be filed, including all income, franchise, employment, property, and
sales tax returns, and have paid all of their respective liabilities for taxes,
assessments, governmental charges, and other levies that are due and payable
other than those being contested in good faith by appropriate proceedings
diligently pursued for which adequate reserves have been established in
accordance with GAAP. Except as set forth in Schedule 6.10 or, after the Closing
Date, matters which do not violate Section 7.4, there is no pending
investigation of the Parent or any Subsidiary of the Parent by any taxing
authority with respect to any liability for tax or of any pending but unassessed
tax liability of the Parent or any Subsidiary of the Parent.
Section 6.11 Margin Securities. Neither the Parent nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of buying or carrying margin
stock (within the meaning of Regulation U or Regulations T or X of the Board of
Governors of the Federal Reserve System), and no Letter of Credit requested by
the Parent hereunder will be used in connection with any transaction whereby the
Parent or any Subsidiary of the Parent buys or carries any margin stock or
extends credit to others for the purpose of buying or carrying margin stock.
Section 6.12 ERISA. With respect to each Plan, the Parent and each
Subsidiary of the Parent is in compliance with all applicable provisions of
ERISA. Neither a Reportable Event nor a Prohibited Transaction has occurred and
is continuing with respect to any Plan. No notice of intent to terminate a Plan
has been filed, nor has any Plan been terminated. As of the Closing Date, no
circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings. Neither the Parent nor any of its
Subsidiaries nor any ERISA Affiliate has completely or partially withdrawn from
a Multiemployer Plan. The Parent each Subsidiary of the Parent, and each ERISA
Affiliate have met their minimum funding requirements under ERISA with respect
to each Plan. Except as set forth in Schedule 6.12, the present value of all
vested benefits under each Plan do not exceed the fair market value of all Plan
assets allocable to such benefits, as determined on the most recent valuation
date of the Plan and in accordance with ERISA. Neither the Parent, any of its
Subsidiaries, nor any ERISA Affiliate has any outstanding liability to the PBGC
under ERISA (other than liability for the payment of PBGC premiums in the
ordinary course of business).
Page 30
36
Section 6.13 Disclosure. All factual information furnished by or on
behalf of the Parent or any Subsidiary of the Parent to the Agent or any Bank
for purposes of or in connection with this Agreement, the other Transaction
Documents, or any transaction contemplated herein or therein is, and all other
such factual information hereafter furnished by or on behalf of the Parent or
any Subsidiary of the Parent to the Agent or any Bank, will be true and accurate
in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information not misleading in any material respect at such time in light of
the circumstances under which such information was provided.
Section 6.14 Subsidiaries; Capitalization. As of the Closing Date, the
Parent has no other Subsidiaries other than those listed in Schedule 6.14. As of
the Closing Date, Schedule 6.14 sets forth the jurisdiction of incorporation or
organization of the Parent and its Subsidiaries, the percentage of the Parent's
ownership of the outstanding Voting Stock of each Subsidiary of the Parent, and
the authorized, issued, and outstanding Capital Stock of the Parent and each
Subsidiary of the Parent. All of the outstanding Capital Stock of the Parent and
its Subsidiaries has been validly issued, is fully paid, is nonassessable, and
has not been issued in violation of any preemptive or similar rights. As of the
Closing Date, except as disclosed in Schedule 6.14, there are (a) no outstanding
subscriptions, options, warrants, calls, or rights (including, without
limitation, preemptive rights) to acquire, and no outstanding securities or
instruments convertible into, Capital Stock of the Parent or any of its
Subsidiaries, and (b) no shareholder agreements, voting trusts, or similar
agreements in effect and binding on any shareholder of (i) to the Parent's
knowledge, the Parent or any of its Capital Stock or (ii) any Subsidiary of the
Parent or any of their respective Capital Stock. All shares of Capital Stock of
the Parent and its Subsidiaries were issued in compliance with all applicable
state and federal securities laws.
Section 6.15 Material Agreements. Except as set forth in Schedule 6.15,
neither the Parent nor any of its Subsidiaries is a party to any indenture,
loan, or credit agreement, or to any lease or other agreement or instrument, or
subject to any charter or corporate restriction that could reasonably be
expected to have a Material Adverse Effect. Neither the Parent nor any of its
Subsidiaries is in default, or has knowledge of facts or circumstances that with
the giving of notice or passage of time or both could be expected to result in a
default, in any respect in the performance, observance, or fulfillment of any of
the obligations, covenants, or conditions contained in any agreement or
instrument (including, without limitation, any indenture, loan, or credit
agreement, or any lease or other similar agreement or instrument) to which it is
a party where such default could be expected to cause a Material Adverse Effect.
Section 6.16 Compliance with Laws. Neither the Parent nor any of its
Subsidiaries is in violation of any law, rule, regulation, order, or decree of
any Governmental Authority or arbitrator except for violations which could not
be expected to have a Material Adverse Effect.
Section 6.17 Investment Company Act. Neither the Parent nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 6.18 Public Utility Holding Company Act. Neither the Parent nor
any of its Subsidiaries is a "holding company" or a "subsidiary company" of a
"holding company" or an
Page 31
37
"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
Section 6.19 Environmental Matters.
Except as disclosed on Schedule 6.19:
(a) to the Parent's knowledge, the Parent, each Subsidiary of
the Parent, and all of their respective properties, assets, and
operations are in compliance with all Environmental Laws; neither the
Parent nor any of its Subsidiaries has knowledge of, nor has the Parent
or any Subsidiary of the Parent received notice of, any past, present,
or future conditions, events, activities, practices, or incidents which
interfere with or prevent the compliance or continued compliance of the
Parent or its Subsidiaries with all Environmental Laws;
(b) the Parent and its Subsidiaries have obtained and
maintained, and are in material compliance with, all material Permits,
licenses, and authorizations that are required under applicable
Environmental Laws;
(c) except in compliance in all material respects with
applicable Environmental Laws, during the course of the Parent's or any
of its Subsidiaries' ownership of or operations on any real Property,
there has been no generation, treatment, recycling, storage, or disposal
of hazardous waste, as that term is defined in 40 CFR Part 261 or any
state equivalent, use of underground storage tanks or surface
impoundments, use of asbestos containing materials, or use of
polychlorinated biphenyls (PCB) used in hydraulic oils, electrical
transformers, or other equipment that could reasonably be expected to
have a Material Adverse Effect, and the use which the Parent and its
Subsidiaries make and intend to make of their respective properties and
assets will not result in the use, generation, storage, transportation,
accumulation, disposal, or Release of any Hazardous Material on, in, or
from any of their properties or assets that could reasonably be expected
to have a Material Adverse Effect;
(d) neither the Parent, any of its Subsidiaries, nor any of
their respective currently or previously owned or leased Properties or
operations is subject to any outstanding or, to their knowledge,
threatened order from or agreement with any Governmental Authority or
other Person or subject to any judicial or administrative proceeding
with respect to (i) failure to comply with Environmental Laws, (ii)
Remedial Action, or (iii) any Environmental Liabilities arising from a
Release or threatened Release;
(e) there are no conditions or circumstances associated with the
currently or previously owned or leased Properties or operations of the
Parent or any Subsidiary of the Parent that could reasonably be expected
to result in any Environmental Liabilities or to have a Material Adverse
Effect;
(f) neither the Parent nor any of its Subsidiaries is or
operates a treatment, storage, or disposal facility requiring a permit
under the Resource Conservation and
Page 32
38
Recovery Act, 42 U.S.C. Section 6901 et seq., the regulations
thereunder, or any comparable provision of state law, and except as
would not reasonably be expected to have a Material Adverse Effect, the
Parent and each Subsidiary of the Parent is in compliance with all
applicable financial responsibility requirements of all applicable
Environmental Laws;
(g) neither the Parent nor any of its Subsidiaries has filed or
failed to file any notice required under applicable Environmental Law
reporting an unauthorized Release; and
(h) no Lien arising under any Environmental Law has attached to
any property or revenues of the Parent or any Subsidiary of the Parent.
Section 6.20 Broker's Fees. Except as disclosed on Schedule 6.20, no
broker's or finder's fee, commission, or similar compensation will be payable by
the Parent or any Subsidiary of the Parent with respect to the transactions
contemplated by this Agreement.
Section 6.21 Employee Matters. Except as set forth on Schedule 6.21, as
of the Closing Date (a) neither the Parent nor any of its Subsidiaries, nor any
of their respective employees, is subject to any collective bargaining
agreement, (b) no petition for certification or union election is pending with
respect to the employees of the Parent or any Subsidiary of the Parent and no
union or collective bargaining unit has sought such certification or recognition
with respect to the employees of the Parent or any Subsidiary of the Parent, and
(c) there are no strikes, slowdowns, work stoppages, or controversies pending
or, to the best knowledge of the Parent and the Subsidiaries of the Parent after
due inquiry, threatened between the Parent or any Subsidiary of the Parent and
its respective employees.
Section 6.22 Solvency. Each of the Parent and the Subsidiary Guarantors,
individually and on a consolidated basis is Solvent.
ARTICLE 7
Affirmative Covenants
The Parent covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, it will
perform and observe the following covenants:
Section 7.1 Reporting Requirements. The Parent will furnish to the Agent
and each Bank:
(a) Annual Financial Statements and Projections. As soon as
available, and in any event within ninety (90) days after the end of
each Fiscal Year of the Parent, beginning with the Fiscal Year ending
February 2, 2002, (i) a copy of the annual audit report of the Parent
for such Fiscal Year containing, on a consolidated basis, a balance
sheet and statements of income, retained earnings, and cash flow as at
the end of such Fiscal Year and for the Fiscal Year then ended, in each
case setting forth in comparative form the figures for the preceding
Fiscal Year, all in reasonable detail and audited and certified on an
unqualified
Page 33
39
basis by a "Big Five" firm of independent certified public accountants
or other independent certified public accountants of recognized standing
selected by the Parent and reasonably acceptable to the Agent, to the
effect that such report has been prepared in accordance with GAAP; (ii)
a copy of the annual unaudited report of the Parent and its Subsidiaries
for such Fiscal Year containing, on a consolidating basis balance sheets
and statements of income, retained earnings, and cash flow as at the end
of such Fiscal Year and for the Fiscal Year then ended, in each case
setting forth in comparative form the figures for the preceding Fiscal
Year, and in reasonable detail certified by the chief financial officer
or Vice President, Finance of the Parent to have been prepared in
accordance with GAAP and to fairly present the financial condition and
results of operation of the Parent and its Subsidiaries, on a
consolidating basis at the date and for the Fiscal Year then ended; and
(iii) a copy of Projections for the Parent's Fiscal Year immediately
following the Fiscal Year which is the subject of the financial
statements delivered pursuant to clause (i) preceding;
(b) Quarterly Financial Statements. As soon as available, and in
any event within forty-five (45) days after the end of each Fiscal
Quarter of the Parent, beginning with the Fiscal Quarter ending April
29, 2001, a copy of an unaudited financial report of the Parent and its
Subsidiaries as of the end of such Fiscal Quarter and for the portion of
the Fiscal Year then ended containing, on a consolidated basis, a
balance sheet and statements of income, retained earnings, and cash
flow, in each case setting forth in comparative form the figures for the
corresponding period of the preceding Fiscal Year, all in reasonable
detail certified by the chief financial officer or Vice President,
Finance of the Parent to have been prepared in accordance with GAAP and
to fairly present the financial condition and results of operations of
the Parent and its Subsidiaries on a consolidated basis, at the date and
for the periods indicated therein, subject to year-end audit adjustments
and the inclusion of footnotes;
(c) Compliance Certificate. As soon as available, and in any
event accompanying the financial statements delivered in accordance with
Section 7.1(a) and Section 7.1(b), a Compliance Certificate, together
with schedules setting forth the calculations supporting the
computations therein;
(d) Notice of Litigation, Etc. Promptly after receipt by the
Parent or any Subsidiary of the Parent of notice of the commencement
thereof, notice of all actions, suits, and proceedings by or before any
Governmental Authority or arbitrator affecting the Parent or any
Subsidiary of the Parent which, if determined adversely to the Parent or
such Subsidiary of the Parent, could reasonably be expected to have a
Material Adverse Effect;
(e) Notice of Default. As soon as possible and in any event
within two (2) Business Days after the chief executive officer,
president, chief financial officer, any vice president, secretary,
assistant secretary, treasurer, or any assistant treasurer of the Parent
has knowledge of the occurrence of a Default, a written notice setting
forth the details of such Default and the action that the Parent has
taken and proposes to take with respect thereto;
Page 34
40
(f) ERISA. As soon as possible and in any event within thirty
(30) days after the Parent or any Subsidiary of the Parent knows, or has
reason to know, that
(i) any Termination Event with respect to a Plan has
occurred or will occur,
(ii) the aggregate present value of the Unfunded Vested
Accrued Benefits under all Plans is equal to an amount in excess
of $0, or
(iii) the Parent or any Subsidiary of the Parent is in
"default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan required by reason
of the Parent's or any of its Subsidiaries' complete or partial
withdrawal (as described in Section 4203 or 4205 of ERISA) from
such Multiemployer Plan,
the Parent will provide the Agent and the Banks with a certificate of
its chief financial officer or Vice President, Finance setting forth the
details of such event and the action which is proposed to be taken with
respect thereto, together with any notice or filing which may be
required by the PBGC or any other Governmental Authority with respect to
such event;
(g) Notice of Material Adverse Effect. As soon as possible and
in any event within two (2) Business Days of the discovery of any event
or condition that could reasonably be expected to have a Material
Adverse Effect;
(h) Proxy Statements, Periodic Reporting, Etc. Upon the Agent's
request, one copy of each financial statement, report, notice, or proxy
statement sent by the Parent or any Subsidiary of the Parent to its
stockholders generally and one copy of each regular, periodic, or
special report, registration statement, or prospectus filed by the
Parent or any Subsidiary of the Parent with any securities exchange or
the Securities and Exchange Commission or any successor agency;
(i) Intercompany Contracts. Promptly upon entering into any such
arrangement or contract (to the extent permitted by Section 8.7), copies
or detailed descriptions of all tax sharing, cost allocation, overhead
attribution, and any similar contracts or arrangements between the
Parent and any of its Affiliates at any time existing; and
(j) General Information. Promptly, such other information
concerning the Parent or any Subsidiary of the Parent as the Agent or
any Bank may from time to time reasonably request.
With respect to any notice or reporting required to be given or delivered by the
Parent to the Agent and the Banks pursuant to this Section 7.1, to the extent
the Parent gives or delivers the same notice or reporting to the Agent and the
Banks as required pursuant to the Credit Agreement, such notice or reporting
given or delivered pursuant to the Credit Agreement shall satisfy the
requirement for giving or delivering such notice or reporting in accordance with
the terms of this Agreement.
Page 35
41
Section 7.2 Maintenance of Existence; Conduct of Business. Except as
permitted by Section 8.2, the Parent will, and will cause each Subsidiary of the
Parent to, preserve and maintain (a) its corporate existence and (b) all of its
leases, privileges, Permits, franchises, qualifications, and rights that are
necessary in the ordinary conduct of its business. The Parent will, and will
cause each Subsidiary of the Parent to, conduct its business in an orderly and
efficient manner in accordance with good business practices.
Section 7.3 Maintenance of Properties. Except as otherwise permitted by
this Agreement, the Parent will, and will cause each Subsidiary of the Parent
to, maintain, keep, and preserve all of its material Properties necessary in the
conduct of its business in good working order and condition, ordinary wear and
tear excepted.
Section 7.4 Taxes and Claims. The Parent will, and will cause each
Subsidiary of the Parent to, pay or discharge at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments, and governmental charges
imposed on it or its income or profits or any of its property, and (b) all
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its property; provided that neither the Parent nor any
Subsidiary of the Parent shall be required to pay or discharge any tax, levy,
assessment, or governmental charge or charge for labor, material, and supplies
(i) which is being contested in good faith by appropriate actions or proceedings
diligently pursued, and for which adequate reserves in accordance with GAAP have
been established and (ii) if the failure to pay the same would not result in a
Lien on the Property of the Parent or a Subsidiary of the Parent other than a
Permitted Lien.
Section 7.5 Insurance. The Parent will, and will cause each of its
Subsidiaries to, keep insured by financially sound and reputable insurers all
Property of a character usually insured by responsible businesses engaged in the
same or a similar business similarly situated against loss or damage of the
kinds and in the amounts customarily insured against by such corporations or
entities and carry such other insurance as is usually carried by such
businesses, provided that in any event the Parent and each of its Subsidiaries
(as appropriate) will maintain:
(a) Property Insurance. Insurance against loss or damage
covering substantially all of the tangible real and personal Property
and improvements of the Parent and each of its Subsidiaries by reason of
any Peril (as defined below) in such amounts (subject to any deductibles
as shall be reasonably satisfactory to the Agent) as shall be reasonable
and customary and sufficient to avoid the insured named therein from
becoming a co-insurer of any loss under such policy, but in any event in
such amounts reasonably acceptable to the Agent and as are reasonably
available as determined by the independent insurance broker of the
Parent or its applicable Subsidiary;
(b) Automobile Liability Insurance for Bodily Injury and
Property Damage. Insurance in respect of all vehicles (whether owned,
hired, or rented by the Parent or any of its Subsidiaries) at any time
located at, or used in connection with, their respective Properties or
operations against liabilities for bodily injury and Property damage in
such amounts as are then customary for vehicles used in connection with
similar Properties and businesses, but in any event to the extent
required by applicable law;
Page 36
42
(c) Comprehensive General Liability Insurance. Insurance against
claims for bodily injury, death, or Property damage occurring on, in or
about the Property (and adjoining streets, sidewalks, and waterways) of
the Parent or any of its Subsidiaries, in such amounts as are then
customary for Property similar in use in the jurisdictions where such
Properties are located; and
(d) Worker's Compensation Insurance. Worker's compensation
insurance (including, without limitation, employers' liability
insurance) to the extent required by applicable law, which may be
self-insurance to the extent permitted by applicable law.
Such insurance shall be written by financially responsible companies selected by
the applicable Person and having an A.M. Best Rating of "A-" or better and being
in a financial size category of "VI" or larger, or by other companies reasonably
acceptable to the Agent. For purposes hereof, the term "Peril" shall mean,
collectively, fire, lightning, flood (to the extent required by applicable law),
windstorm, hail, explosion, riot and civil commotion, vandalism and malicious
mischief, damage from aircraft, vehicles and smoke, and other perils covered by
the "all-risk" endorsement then in use in the jurisdictions where the Properties
of the Parent and its Subsidiaries are located.
Section 7.6 Inspection Rights. The Parent will, and will cause each of
its Subsidiaries to, permit representatives and agents of the Agent and each
Bank, during normal business hours and upon reasonable notice to the Parent, to
examine, copy, and make extracts from the Parent's or any of such Subsidiaries'
books and records, to visit and inspect the Parent's or any of such
Subsidiaries' Properties and to discuss the Parent's or any of such
Subsidiaries' business, operations, and financial condition with its officers
and independent certified public accountants. The Parent will, and will cause
each of its Subsidiaries to, authorize its accountants in writing (with a copy
to the Agent) to comply with this Section. The Agent or its representatives may,
at any time and from time to time at the Parent's expense, conduct field exams
for such purposes as the Agent or the Required Banks may reasonably request.
Section 7.7 Keeping Books and Records. The Parent will, and will cause
each of its Subsidiaries to, maintain proper books of record and account in
which full, true, and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.
Section 7.8 Compliance with Laws. The Parent will, and will cause each
of its Subsidiaries to, comply in all material respects with all applicable laws
(including, without limitation, all Environmental Laws, ERISA, the Code,
Regulation U, and Regulations T and X of the Board of Governors of the Federal
Reserve System), rules, regulations, orders, and decrees of a material nature of
any Governmental Authority or arbitrator other than any such laws, rules,
regulations, orders, and decrees contested by appropriate actions or proceedings
diligently pursued, if adequate reserves in conformity with GAAP and
satisfactory to the Agent are established with respect thereto and except for
violations which could not be expected to have a Material Adverse Effect.
Page 37
43
Section 7.9 Compliance with Agreements. The Parent will, and will cause
each of its Subsidiaries to, comply with all agreements, contracts, and
instruments binding on it or affecting its properties or business other than
such noncompliance which could not reasonably be expected to have a Material
Adverse Effect.
Section 7.10 Further Assurances.
(a) Further Assurance. The Parent will, and will cause each of
its Subsidiaries to, execute and/or deliver pursuant to this clause (a)
such further documentation and take such further action as may be
reasonably requested by the Required Banks to carry out the provisions
and purposes of the Transaction Documents.
(b) Subsidiary Joinder. The Parent shall, and shall cause each
domestic Subsidiary of the Parent to, execute and deliver to the Agent
such documentation, including, without limitation, a Joinder Agreement,
as the Agent may require to cause each such domestic Subsidiary to
become a party to the Subsidiary Guaranty as required by Article 4.
Section 7.11 ERISA. With respect to each Plan, the Parent will, and will
cause each of its Subsidiaries to, comply with all minimum funding requirements
and all other material requirements of ERISA so as not to give rise to any
liability in excess of $1,000,000.
ARTICLE 8
Negative Covenants
The Parent covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, the
Parent will perform and observe the following covenants:
Section 8.1 Debt. The Parent will not, nor will it permit any Subsidiary
of the Parent to, incur, create, assume, or permit to exist any Debt, except:
(a) Debt to the Agent and the Banks pursuant to the Transaction
Documents;
(b) Debt described on Schedule 6.9, and any extensions,
renewals, or refinancings of such existing Debt so long as (i) the
principal amount of such Debt after such renewal, extension, or
refinancing shall not exceed the principal amount of such Debt which was
outstanding immediately prior to such renewal, extension, or refinancing
and (ii) such Debt shall not be secured by any assets other than assets
securing such Debt, if any, prior to such renewal, extension, or
refinancing;
(c) Debt of a Subsidiary Guarantor owed to the Parent or another
Subsidiary Guarantor; provided that such Debt must according to its
terms be fully subordinate in all respects to any of such Subsidiary
Guarantor's indebtedness, liabilities, or obligations to the Agent and
the Banks pursuant to any Transaction Document;
Page 38
44
(d) Guaranties and other Debt incurred in the ordinary course of
business with respect to surety and appeal bonds, performance and
return-of-money bonds, banker's acceptances, and other similar
obligations;
(e) Debt of the Parent or any Subsidiary of the Parent
constituting purchase money Debt (including, without limitation, Capital
Lease Obligations) and secured by purchase money Liens, such Debt, in
the aggregate, not to exceed at any time an amount equal to five percent
(5.0%) of the Parent's Tangible Net Worth;
(f) Debt of the Parent or any Subsidiary of the Parent of the
type described in clause (l) of the definition of Debt, such Debt, in
aggregate principal or principal equivalent amount, not to exceed at any
time an amount equal to twenty percent (20.0%) of the Parent's Tangible
Net Worth.
(g) Debt constituting obligations to reimburse worker's
compensation insurance companies for claims paid by such companies on
behalf of the Parent or any Subsidiary of the Parent in accordance with
the policies issued to the Parent or any such Subsidiary;
(h) Debt secured by the Liens permitted by Section 8.2(d) and
Section 8.2(e);
(i) unsecured Debt arising under, created by, and consisting of
Hedge Agreements; provided, (i) such Hedge Agreements shall have been
entered into for the purpose of hedging actual risk and not for
speculative purposes and (ii) that each counterparty to such Hedge
Agreement shall be a "Lender" (as defined in the Credit Agreement) or
shall be rated at least AA- by Standard and Poor's Rating Service or Aa3
by Xxxxx'x Investors Service, Inc.;
(j) Debt arising from endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business of the Parent or a Subsidiary of the Parent;
(k) Debt of a Subsidiary of the Parent acquired after the
Closing Date and Debt of a Person merged or consolidated with or into
the Parent or a Subsidiary of the Parent after the Closing Date, (i)
which Debt in each case exists at the time of such acquisition, merger,
or consolidation, (ii) which Debt was not created or incurred in
contemplation of such acquisition, merger, or consolidation, (iii) where
such acquisition, merger, or consolidation is not prohibited under this
Agreement, (iv) where the aggregate principal of all such Debt at any
time outstanding does not exceed an amount equal to ten percent (10.0%)
of the Parent's Tangible Net Worth, and (v) Guarantees of Debt permitted
under this Section 8.1;
(l) In addition to the Debt described in the foregoing clauses
(a) through (k), Debt which when combined with the Debt described in
clause (k) preceding does not exceed twelve and one-half percent (12.5%)
of the Parent's Tangible Net Worth in aggregate principal amount at any
time outstanding;
Page 39
45
(m) Debt consisting of letters of credit and reimbursement
obligations therefor where the aggregate face amount of such letters of
credit do not at any time exceed the sum of (i) the aggregate amount of
the "Commitments" (as defined in the Credit Agreement) then in effect
thereunder plus (ii) $20,000,000; provided that Debt permitted hereunder
which consists of standby letters of credit and reimbursement
obligations therefor shall not at any time exceed an aggregate face
amount of $20,000,000; and
(n) Debt arising under the Credit Agreement, and any extensions,
renewals, or refinancings of such existing Debt so long as the aggregate
amount of "Commitments" (as defined in the Credit Agreement) after such
renewal, extension, or refinancing shall not exceed the aggregate amount
of "Commitments" (as defined in the Credit Agreement) immediately prior
to such renewal, extension, or refinancing.
Section 8.2 Mergers, Etc. The Parent will not, nor will it permit any
Subsidiary of the Parent to, become a party to a merger or consolidation or
purchase or otherwise acquire all or a substantial part of the business or
Property of any Person or all or a substantial part of the business or Property
of a division or branch of a Person or a majority interest in the Capital Stock
of any Person, or wind-up, dissolve, or liquidate itself; provided that
notwithstanding the foregoing or any other provision of this Agreement as long
as no Default exists or would result therefrom and provided the Parent gives the
Agent and the Banks prior written notice:
(a) a Subsidiary of the Parent may wind-up, dissolve, or
liquidate if its Property is transferred to the Parent or a Wholly-Owned
Subsidiary;
(b) any Subsidiary of the Parent, may merge or consolidate with
the Parent (provided the Parent is the surviving entity) or a
Wholly-Owned Subsidiary (provided the Wholly-Owned Subsidiary is the
surviving entity);
(c) the Parent or any Wholly-Owned Subsidiary may make Permitted
Acquisitions; and
(d) to the extent the Required Banks agree in writing, the
Parent or any Wholly-Owned Subsidiary may make additional acquisitions
not included in Permitted Acquisitions.
Section 8.3 Restricted Payments. The Parent will not, nor will it permit
any Subsidiary of the Parent to, (a) make any prepayment of any Debt other than
(i) the Obligations, (ii) any Debt owed to the Parent or a Subsidiary of the
Parent, (iii) regularly scheduled payments of principal and interest under the
Note Agreement, and (iv) the "Obligations" (as defined in the Credit Agreement)
outstanding under the Credit Agreement.
Section 8.4 Investments. The Parent will not, nor will it permit any
Subsidiary of the Parent to, make or permit to remain outstanding any advance,
loan, extension of credit, or capital contribution to or investment in any
Person, or purchase or own any stocks, bonds, notes, debentures, or other
Securities of any Person, or be or become a joint venturer with or partner of
any Person (all the foregoing, herein "Investments"), except:
Page 40
46
(a) Permitted Acquisitions;
(b) the Parent or any Wholly-Owned Subsidiary may make
Investments in domestic Subsidiaries;
(c) the Parent may make Investments in foreign Subsidiaries,
(subject to the requirements of Section 8.1 and Section 8.3); provided
that (i) the aggregate amount of all Investments in foreign Subsidiaries
shall not exceed an amount equal to ten percent (10.0%) of the Parent's
assets at the time of making any such Investment and (ii) such
Investments in foreign Subsidiaries which constitute advances, loans,
extensions of credit, bonds, notes, or debentures owed to the Parent
shall at all times be subordinate in all respects to the Obligations or
any indebtedness, liability, or obligation of such foreign Subsidiary to
the Agent and the Banks (if any) under any Loan Document and must
otherwise be in compliance with Section 8.1 and Section 8.3;
(d) the Parent may, up to an aggregate amount at any time
outstanding of not more than $10,000,000, make equity investments in
Affiliates and other Persons and related businesses, excluding
Subsidiaries of the Parent;
(e) readily marketable direct obligations of the U.S. or any
agency thereof with maturities of one year or less from the date of
acquisition;
(f) fully insured certificates of deposit with maturities of one
year or less from the date of acquisition issued by any commercial bank
operating in the U.S. having capital and surplus in excess of
$250,000,000 and repurchase and reverse repurchase obligations entered
into with any such commercial bank;
(g) commercial paper of a domestic issuer and equity or debt
Securities of a domestic issuer if at the time of purchase such paper or
debt Securities of such issuer is rated in one of the two highest rating
categories of Standard and Poor's Rating Service or Xxxxx'x Investors
Service, Inc. or any successor thereto and shares of any mutual fund
company substantially all the assets of which consist of cash and the
Investments of the type described in clause (d), clause (e), and this
clause (g);
(h) Investments received in connection with the settlement of
delinquent obligations of, and disputes with, customers and suppliers,
and other trade debtors arising in the ordinary course of business;
(i) extensions of trade credit in the ordinary course of
business;
(j) the Parent and any Wholly-Owned Subsidiary may make loans
and advances to officers, directors, and employees in the ordinary
course of business and consistent with past practices up to an aggregate
amount at any time outstanding of not more than $2,500,000;
Page 41
47
(k) Investments existing on the Closing Date and listed on
Schedule 8.4; and
(l) Investments consisting of purchases of debt Securities or
other extensions of credit by the Parent or any Subsidiary of the Parent
to the lessor/purchaser in connection with Permitted Sale-Leasebacks.
The amount of Investments pursuant to clause (c) preceding shall be the amount
of all cash or other Property invested, loaned, advanced, or otherwise
contributed to all foreign Subsidiaries of the Parent whether such Investments
are made as a single transaction or as one of a series of transactions, and such
amount shall be determined at the time of making of each Investment, or portion
thereof if in connection with a series of transactions.
Section 8.5 Limitation on Issuance of Capital Stock of Subsidiaries. The
Parent will not permit any Subsidiary of the Parent to, at any time issue, sell,
assign, or otherwise dispose of, except to the Parent or a Wholly-Owned
Subsidiary or in connection with a Permitted Acquisition, (a) any Capital Stock
of a Subsidiary of the Parent, (b) any Securities exchangeable for or
convertible into or carrying any rights to acquire any Capital Stock of a
Subsidiary of the Parent, or (c) any option, warrant, or other right to acquire
any Capital Stock of a Subsidiary of the Parent.
Section 8.6 Transactions with Affiliates. The Parent will not, nor will
it permit any Subsidiary of the Parent to, enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate (as used in this Section 8.7
the term "Affiliate" shall exclude any Subsidiary of the Parent) of the Parent
or such Subsidiary of the Parent, except in the ordinary course of and pursuant
to the reasonable requirements of the Parent's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Parent or such
Subsidiary than would be obtained in a comparable arms-length transaction with a
Person not an Affiliate of the Parent or such Subsidiary.
Section 8.7 Lines of Business. The Parent will not, nor will it permit
any Subsidiary of the Parent to, engage in any line or lines of business
activity other than the business activities in which they are engaged on the
Closing Date or a business reasonably related or complementary thereto.
Section 8.8 Limitations on Restrictions Affecting the Parent and its
Subsidiaries. Neither the Parent nor any Subsidiary of the Parent shall enter
into or assume any agreement (other than the Transaction Documents and the "Loan
Documents" (as defined in the Credit Agreement)) prohibiting the creation or
assumption of any Lien upon its Properties, whether now owned or hereafter
acquired, other than pursuant to non-assignment provisions of a Permitted Lien,
operating lease, or of Debt of the type described in clause (l) of the
definition of Debt and which are restricted solely to the Property which is the
subject of such Permitted Lien or such lease transaction and which does not
prohibit the Parent or any Subsidiary of the Parent from granting Liens to the
Agent or any Bank as collateral for the Obligations. Except as provided herein
and in the Credit Agreement, the Parent will not, nor will it permit any
Subsidiary of the Parent to, directly or indirectly create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of the Parent or any Subsidiary of the Parent to (a) pay
dividends or make any
Page 42
48
other distribution on any of its Capital Stock, (b) pay any Debt owed to the
Parent or any Subsidiary of the Parent, (c) make loans or advances to the Parent
or any Subsidiary of the Parent, (d) transfer any Property of the Parent or any
Subsidiary of the Parent to any other Person, except pursuant to non-assignment
provisions of Permitted Liens, leases, and licenses entered into in the ordinary
course of business, or (e) make any prepayment of any of the Obligations.
Section 8.9 Environmental Protection. The Parent will not, nor will it
permit any Subsidiary of the Parent to, (a) use (or permit any tenant to use)
any of its Properties for the handling, processing, storage, transportation, or
disposal of any Hazardous Material except in compliance with applicable
Environmental Laws, (b) generate any Hazardous Material except in compliance
with applicable Environmental Laws, (c) conduct any activity that is likely to
cause a Release or threatened Release of any Hazardous Material in violation of
any Environmental Law, or (d) otherwise conduct any activity or use any of its
Properties in any manner, that in any material respect violates or is likely to
violate any Environmental Law or create any Environmental Liabilities for which
the Parent or any Subsidiary of the Parent would be responsible that could be
expected to have a Material Adverse Effect.
Section 8.10 ERISA. The Parent will not, nor will it permit any
Subsidiary of the Parent to:
(a) allow, or take (or permit any ERISA Affiliate to take) any
action which would cause, any unfunded or unreserved liability for
benefits under any Plan (exclusive of any Multiemployer Plan) in excess
of $1,000,000 to exist or to be created; or
(b) with respect to any Multiemployer Plan, allow or take (or
permit any ERISA Affiliate to take) any action which would cause any
unfunded or unpaid liability by the Parent or any ERISA Affiliate to any
Multiemployer Plan in excess of $1,000,000 to exist or to be created,
either individually as to any such Plan or in the aggregate as to all
such Plans.
ARTICLE 9
Financial Covenants
The Parent covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, it will
perform and observe the following financial covenants:
Section 9.1 Leverage Ratio. As of the end of each Fiscal Quarter, the
Parent shall not permit the Leverage Ratio, calculated as of the Fiscal Quarter
ending April 29, 2001, and as of the end of each Fiscal Quarter thereafter, for
the preceding twelve (12) Fiscal Periods then ending, to exceed the ratio set
forth in the table following corresponding to such date.
Page 43
49
Period Maximum Leverage Ratio
------ ----------------------
From April 29, 2001 through and
including October 28, 2001 4.00 to 1.00
From February 3, 2002 through and
including November 3, 2002 3.75 to 1.00
From February 2, 2003 and thereafter 3.50 to 1.00
Section 9.2 Fixed Charge Coverage Ratio. As of the end of each Fiscal
Quarter, the Parent shall not permit the Fixed Charge Coverage Ratio, calculated
as of the Fiscal Quarter ending April 29, 2001, and as of the end of each Fiscal
Quarter thereafter, for the preceding four (4) Fiscal Quarter period then
ending, to be less than the ratio set forth in the table following corresponding
to such date.
Minimum Fixed Charge
Period Coverage Ratio
------ --------------
From April 29, 2001 through and
including October 28, 2001 2.00 to 1.00
From February 3, 2002 through and
including November 3, 2002 2.10 to 1.00
From February 2, 2003 through and
including May 3, 2003 2.25 to 1.00
From August 3, 2003 and thereafter 2.50 to 1.00
Section 9.3 Minimum Tangible Net Worth. As of the end of each Fiscal
Quarter, the Parent shall not permit its Tangible Net Worth to be less than (a)
$335,000,000, plus (b) seventy-five percent (75.0%) of the Parent's positive Net
Income for each Fiscal Quarter completed after April 30, 2000, plus (c) one
hundred percent (100%) of any increase in Tangible Net Worth attributable to
issuance of equity Securities of the Parent or any Subsidiary of the Parent
after April 30, 2000.
Section 9.4 Capital Expenditures. Beginning with the Fiscal Year ending
February 3, 2002, as of the end of each Fiscal Year, the aggregate amount of all
Capital Expenditures of the Parent and its Subsidiaries for such Fiscal Year
shall not exceed eight and one-half percent (8.5%) of gross revenue of the
Parent for such Fiscal Year, plus fifty percent (50.0%) of the amount by which
eight and one-half percent (8.5%) of gross revenue of the Parent for the prior
Fiscal Year (provided that Capital Expenditures were subject to the terms of
this Section 9.4 during such prior Fiscal Year) exceeded Capital Expenditures
during such prior Fiscal Year.
Page 44
50
ARTICLE 10
Default
Section 10.1 Events of Default. Each of the following shall be deemed an
"Event of Default":
(a) the Parent shall fail to pay (i) when due the amount of any
drawing under any Letter of Credit; (ii) within three (3) Business Days
of the date due any fees payable under the Transaction Documents or any
part thereof; or (iii) within three (3) Business Days after the date the
Parent receives written notice of the failure to pay when due, any other
Obligation or any part thereof;
(b) any representation, warranty, or certification made or
deemed made by the Parent or any Subsidiary of the Parent (or any of
their respective officers) in any Transaction Document or in any
certificate, report, notice, or financial statement furnished at any
time in connection with any Transaction Document shall be false,
misleading, or erroneous in any material respect when made or deemed to
have been made;
(c) the Parent or any Subsidiary of the Parent shall fail to
perform, observe, or comply with any covenant, agreement, or term
contained in Section 7.1, Section 7.2, Section 7.6, Section 7.10,
Article 8, or Article 9;
(d) the Parent or any Subsidiary of the Parent shall fail to
perform, observe, or comply with any other agreement or term contained
in any Transaction Document (other than as described in Section 10.1(a),
Section 10.1(b), or Section 10.1(c)) and (i) such failure shall continue
for a period of thirty (30) days after the earlier of (A) the date the
Agent provides the Parent with notice thereof or (B) the date the Parent
should have notified the Agent thereof in accordance with Section 7.1(e)
or (ii) as otherwise specifically provided by any other Transaction
Document;
(e) the Parent or any Subsidiary of the Parent shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner, liquidator, or the like of
itself or of all or a substantial part of its Property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect, the "Bankruptcy Code"), (iv) institute any
proceeding or file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under
the Bankruptcy Code, (vi) admit in writing its inability to, or be
generally unable to pay its debts as such debts become due, or (vii)
take any corporate action for the purpose of effecting any of the
foregoing;
Page 45
51
(f) (i) a proceeding or case shall be commenced, without the
application, approval, or consent of the Parent or any Subsidiary of the
Parent in any court of competent jurisdiction, seeking (A) its
reorganization, liquidation, dissolution, arrangement, or winding-up, or
the composition or readjustment of its debts, (B) the appointment of a
receiver, custodian, trustee, examiner, liquidator, or the like of the
Parent or such Subsidiary or of all or any substantial part of its
Property, or (C) similar relief in respect of the Parent or such
Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment, or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of sixty (60)
or more days or (ii) an order for relief against the Parent or any
Subsidiary shall be entered in an involuntary case under the Bankruptcy
Code;
(g) the Parent or any Subsidiary of the Parent shall fail within
a period of thirty (30) days after the commencement thereof to discharge
or obtain a stay of any attachment, sequestration, forfeiture, or
similar proceeding or proceedings involving an aggregate amount in
excess of $10,000,000 against any of its assets or Properties;
(h) A final judgment or judgments for the payment of money in
excess of $10,000,000 in the aggregate (to the extent not paid or fully
covered by insurance acknowledged by a carrier reasonably acceptable to
the Agent) shall be rendered by a court or courts against the Parent or
any Subsidiary of the Parent and the same shall not be satisfied,
discharged, or dismissed (or provision shall not be made for such
satisfaction, discharge, or dismissal), or a stay of execution or other
stay of enforcement thereof shall not be procured, within sixty (60)
days from the date of entry thereof and the Parent or any Subsidiary of
the Parent, as applicable, shall not, within said period of sixty (60)
days, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal;
(i) (i) the Parent or any Subsidiary of the Parent shall fail to
pay when due any principal of or interest on any Debt (other than the
Obligations) beyond the period of grace (if any) if the aggregate
principal amount of the affected Debt equals or exceeds $10,000,000, or
the maturity of any such Debt shall have been accelerated or shall have
been required to be prepaid prior to the stated maturity thereof, (ii)
any event shall have occurred with respect to any Debt in the aggregate
principal amount equal to or in excess of $10,000,000 that permits the
holder or holders of such Debt or any Person acting on behalf of such
holder or holders to accelerate the maturity thereof or require any
prepayment thereof, (iii) any event of default shall have occurred under
the Credit Agreement, or (iv) any event of default shall have occurred
under the Note Agreement;
(j) this Agreement or any other Transaction Document shall cease
to be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
the Parent or any Subsidiary, or the Parent or any Subsidiary shall deny
that it has any further liability or obligation under any of the
Transaction Documents;
Page 46
52
(k) Any of the following events shall occur or exist with
respect to the Parent, any Subsidiary of the Parent, or any ERISA
Affiliate and in each case, such event or condition, together with all
other such events or conditions, if any, have subjected or could in the
reasonable opinion of the Agent or the Required Banks subject the Parent
or any Subsidiary of the Parent (or any combination thereof) to any tax,
penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC,
or otherwise (or any combination thereof) which in the aggregate could
reasonably be expected to exceed $1,000,000: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect
to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan; (iv) any
event or circumstance that could reasonably be expected to constitute
grounds entitling the PBGC to institute proceedings under Section 4042
of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such
proceedings; or (v) complete or partial withdrawal under Section 4201 or
4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency, or termination of any Multiemployer Plan;
(l) The occurrence of any event or condition which constitutes a
Material Adverse Effect and thirty (30) days shall have passed since
written notification thereof to the Parent by the Agent (therein
identifying such event or condition) without such event or condition
having been remedied, cured, or waived; or
(m) The occurrence of a Change of Control.
Section 10.2 Remedies. If any Event of Default shall occur and be
continuing, the Agent may (and if directed by the Required Banks, shall) do any
one or more of the following:
(a) Acceleration. By notice to the Parent, declare all
outstanding amounts payable by the Parent under the Transaction
Documents immediately due and payable, and the same shall thereupon
become immediately due and payable, without further notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest, or other formalities of any kind, all of
which are hereby expressly waived by the Parent except as where required
by the specific terms of this Agreement or the other Transaction
Documents;
(b) Termination of Commitments. Terminate the Commitments
without notice to the Parent or any other Person;
(c) Judgment. Reduce any claim to judgment;
(d) Rights. Exercise any and all rights and remedies afforded by
the laws of the State of California, or any other jurisdiction governing
any of the Transaction Documents, by equity, or otherwise;
Page 47
53
(e) Cash Collateral. The Agent may demand immediate payment by
the Parent of an amount equal to the aggregate amount of all outstanding
Letter of Credit Usage to be held in a Letter of Credit Cash Collateral
Account; and
(f) Refusal of Requests for Letter of Credit Action. The Agent
may, without notice to the Parent or any other Person, refuse any
request by the Parent for any Letter of Credit Action;
provided, however, that, upon the occurrence of an Event of Default under
Section 10.1(e) or Section 10.1(f) with respect to the Parent or any Guarantor,
the obligation of the Agent to take any Letter of Credit Action shall
automatically terminate and all amounts payable by the Parent or any other party
under the Transaction Documents to the Agent and the Banks shall thereupon
become immediately due and payable, and an amount equal to the aggregate amount
of all outstanding Letter of Credit Usage shall be immediately due and payable
to the Agent to be held in a Letter of Credit Cash Collateral Account, without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Parent.
Section 10.3 Performance by the Agent. Upon the occurrence of a Default,
if the Parent or any Guarantor shall fail to perform any agreement in accordance
with the terms of the Transaction Documents, the Agent may, and at the direction
of the Required Banks shall, perform or attempt to perform such agreement on
behalf of the Parent or such Guarantor, as applicable. In such event, at the
request of the Agent, the Parent shall promptly pay any amount expended by the
Agent or the Banks in connection with such performance or attempted performance,
to the Agent at the Principal Office together with interest thereon at the
Default Rate from and including the date of such expenditure to but excluding
the date such expenditure is paid in full. Notwithstanding the foregoing, it is
expressly agreed that neither the Agent nor any Bank shall have any liability or
responsibility for the performance of any obligation of the Parent or any
Guarantor under any Transaction Document.
Section 10.4 Set-off. If an Event of Default shall have occurred and be
continuing, each Bank is hereby authorized at any time and from time to time,
without notice to the Parent or any other Person (any such notice being hereby
expressly waived), to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of the Parent against any and all of the Obligations now or hereafter existing
under any Transaction Document, irrespective of whether or not the Agent or such
Bank shall have made any demand under such Transaction Documents and although
the Obligations may be unmatured. Each Bank agrees promptly to notify the Parent
(with a copy to the Agent) after any such set-off and application, provided that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights and remedies of each Bank hereunder are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which such Bank may have.
Page 48
54
Section 10.5 Continuance of Default. For purposes of all Transaction
Documents, a Default shall be deemed to have continued and exist until the Agent
shall have actually received evidence satisfactory to the Agent that such
Default shall have been remedied.
ARTICLE 11
The Agent
Section 11.1 Appointment and Authorization of the Agent. Each Bank
hereby irrevocably (subject to Section 11.9) appoints, designates, and
authorizes the Agent to take such action on its behalf under the provisions of
this Agreement and each other Transaction Document and to exercise such powers
and perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Transaction Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Transaction Document, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this
Agreement or any other Transaction Document or otherwise exist against the
Agent. Without limiting the generality of the foregoing sentence, the use of the
term "agent" in this Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.
Section 11.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Transaction Document by or through
agents, employees, or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects in the absence of gross negligence or willful misconduct.
Section 11.3 Liability of the Agent. No Agent-Related Person shall (a)
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Transaction Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct in connection with its duties expressly set forth herein) or (b) be
responsible in any manner to any Bank or participant for any recital, statement,
representation, or warranty made by the Parent or any other party to any
Transaction Document, or any officer thereof, contained in this Agreement or in
any other Transaction Document, or in any certificate, report, statement, or
other document referred to or provided for in, or received by the Agent under or
in connection with, this Agreement or any other Transaction Document, or the
validity, effectiveness, genuineness, enforceability, or sufficiency of this
Agreement or any other Transaction Document, or for any failure of the Parent or
any other party to any Transaction Document to perform its obligations hereunder
or thereunder. No Agent-Related Person shall be under any obligation to any Bank
or participant to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Transaction Document, or to inspect the properties, books, or records of
the Parent or any Subsidiary or Affiliate thereof.
Page 49
55
Section 11.4 Reliance by the Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex, or telephone message, statement, or
other document or conversation believed by it to be genuine and correct
and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to
the Parent or any other Person party to any Transaction Document),
independent accountants, and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action
under any Transaction Document unless it shall first receive such advice
or concurrence of the Required Banks as the Agent deems appropriate and,
if the Agent so requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense
which may be incurred by the Agent by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Transaction Document in accordance with a request or consent of the
Required Banks or all Banks, if required hereunder, and such request and
any action taken or failure to act pursuant thereto shall be binding
upon all of the Banks and participants. Where this Agreement expressly
permits or prohibits an action unless the Required Banks otherwise
determine, the Agent shall, and in all other instances, the Agent may,
but shall not be required to, initiate any solicitation for the consent
or a vote of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Article 5, each Bank shall be deemed to have consented to,
approved or accepted, or to be satisfied with, each document or other
matter either sent by the Agent to each Bank for consent, approval,
acceptance, or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to a Bank.
Section 11.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of amounts required to be paid to the
Agent, unless the Agent shall have received written notice from a Bank or the
Parent referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default". The Agent will notify the
Banks of its receipt of any such notice. The Agent shall take such action with
respect to such Default or Event of Default as may be directed by the Required
Banks; provided, however, that unless and until the Agent has received any such
direction, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
Section 11.6 Credit Decision; Disclosure of Information by the Agent.
Each Bank acknowledges that no Agent-Related Person has made any representation
or warranty to such Bank, and that no act by the Agent hereinafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of the Parent or any of its Subsidiaries or Affiliates, shall be deemed
to constitute any representation or warranty by any Agent-Related Person to any
Bank as to
Page 50
56
any matter, including whether any Agent-Related Person has disclosed material
information in its possession. Each Bank, including any Bank by assignment,
represents to the Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition, and
creditworthiness of the Parent and its Subsidiaries and Affiliates, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and each such Bank has made its own decision to enter into this
Agreement and to extend credit to the Parent hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as such Bank
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Transaction Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition, and creditworthiness of the Parent and its
Subsidiaries and Affiliates. Except for notices, reports, and other documents
expressly required to be furnished to the Banks by the Agent herein, the Agent
shall not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition, or creditworthiness of the Parent or any of its
Subsidiaries or Affiliates which may come into the possession of any Agent-
Related Person.
Section 11.7 Indemnification of the Agent. Whether or not the
transactions contemplated hereby are consummated, the Banks shall indemnify upon
demand each Agent-Related Person (to the extent not reimbursed by or on behalf
of the Parent and without limiting the obligation of the Parent to do so), pro
rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Bank shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting from such Person's gross negligence or willful
misconduct; provided, however, that no action taken in accordance with the
directions of the Required Banks shall be deemed to constitute gross negligence
or willful misconduct for purposes of this Section. Without limitation of the
foregoing, each Bank shall reimburse the Agent upon demand for such Bank's
ratable share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings, or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Transaction
Document, or any document contemplated by or referred to herein, to the extent
that the Agent is not reimbursed for such expenses by or on behalf of the
Parent. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
Section 11.8 The Agent in Individual Capacity. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with the
Parent and its Affiliates as though Bank of America were not the Agent hereunder
and without notice to or consent of the Banks. The Banks acknowledge that,
pursuant to such activities, Bank of America or its Affiliates may receive
information regarding the Parent and its Affiliates (including information that
may be subject to confidentiality obligations in favor of the
Page 51
57
Parent or such Affiliate) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Commitment,
Bank of America shall have the same rights and powers under this Agreement as
any other Bank and may exercise the same as though it were not the Agent.
Section 11.9 Resignation of the Agent. The Agent may, and at the request
of the Required Banks shall, resign as the Agent upon thirty (30) days notice to
the Banks. If the Agent resigns under this Agreement, the Required Banks shall
appoint from among the Banks a successor administrative agent for the Banks
which successor administrative agent shall be consented to by the Parent at all
times other than during the existence of an Event of Default (which approval of
the Parent shall not be unreasonably withheld or delayed). If no successor
administrative agent is appointed prior to the effective date of the resignation
of the Agent, the Agent may appoint, after consulting with the Banks and the
Parent, a successor administrative agent from among the Banks. Upon the
acceptance of its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights, powers, and
duties of the retiring Agent and the term "Agent" shall mean such successor
administrative agent and the retiring Agent's appointment, powers, and duties as
the Agent shall be terminated. After any retiring Agent's resignation hereunder
as the Agent, the provisions of this Article 11, Section 12.1, and Section 12.2
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Agent under this Agreement. If no successor administrative
agent has accepted appointment as the Agent by the date which is thirty (30)
days following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Required Banks appoint a successor agent as provided for above.
ARTICLE 12
Miscellaneous
Section 12.1 Expenses. The Parent hereby agrees to pay promptly after
presentation of supporting documentation, without duplication: (a) all
reasonable costs and expenses of the Agent arising in connection with the
preparation, negotiation, execution, delivery, syndication, and administration
of the Transaction Documents and all amendments, waivers, or other modifications
to the Transaction Documents, including, without limitation, Attorney Costs of
the Agent; (b) all costs and expenses of the Agent in connection with any
Default and the enforcement of any Transaction Document or collection of the
Obligations, including, without limitation, Attorney Costs of the Agent; (c) all
fees, costs, and expenses of any Bank arising in connection with an Event of
Default and the enforcement of any Transaction Document or collection of the
Obligations during the existence of an Event of Default; (d) all transfer,
stamp, documentary, or other similar taxes, assessments, or charges (including,
without limitation, the Taxes and any penalties or interest) levied by any
Governmental Authority in respect of any Transaction Document or the
transactions contemplated thereby; (e) all reasonable costs, expenses,
assessments, and other charges incurred in connection with any filing,
registration, recording, or perfection of any security interest or other Lien
contemplated by any Transaction Document; and (f) all other reasonable costs and
expenses incurred by the Agent in connection with any Transaction Document. The
Attorney Costs of the Agent that the Parent has agreed to pay hereunder include,
without limitation, the Attorney Costs of
Page 52
58
the Agent arising in connection with advice given to the Agent as to its rights
and responsibilities hereunder.
Section 12.2 Indemnity by the Parent. Whether or not the transactions
contemplated hereby are consummated, the Parent agrees to indemnify, save and
hold harmless each Agent-Related Person and each Bank and their respective
Affiliates, directors, officers, agents, attorneys, and employees (collectively
the "Indemnitees") from and against: (a) any and all claims, demands, actions,
or causes of action that are asserted against any Indemnitee by any Person
(other than the Agent or any Bank) relating directly or indirectly to a claim,
demand, action, or cause of action that such Person asserts or may assert
against the Parent, any of its Affiliates, or any of their respective officers
or directors; (b) any and all claims, demands, actions, or causes of action
arising out of or relating to, the Transaction Documents, the Commitments, the
use or contemplated use of any Letter of Credit, or the relationship of the
Parent, the Agent and the Banks under this Agreement; (c) any administrative or
investigative proceeding by any Governmental Authority arising out of or related
to a claim, demand, action, or cause of action described in clause (a) or clause
(b) preceding; and (d) any and all liabilities (including liabilities under
indemnities), losses, costs, or expenses (including Attorney Costs) that any
Indemnitee suffers or incurs as a result of the assertion of any foregoing
claim, demand, action, cause of action, or proceeding, or as a result of the
preparation of any defense in connection with any foregoing claim, demand,
action, cause of action, or proceeding, in all cases, whether or not arising out
of the negligence of an Indemnitee, whether or not an Indemnitee is a party to
such claim, demand, action, cause of action, or proceeding (all the foregoing,
collectively, the "Indemnified Liabilities"); provided that no Indemnitee shall
be entitled to indemnification for any loss caused by its own gross negligence
or willful misconduct or for any loss asserted against it by another Indemnitee.
The agreements in this Section shall survive repayment of all Obligations.
Section 12.3 Limitation of Liability. No Agent-Related Person, Bank, or
any Affiliate, officer, director, employee, attorney, or agent thereof shall
have any liability with respect to the Parent for and, by the execution of the
Transaction Documents to which it is a party, each other party to any
Transaction Document, hereby waives, releases, and agrees not to xxx any of them
upon, any claim for, any special, indirect, incidental, consequential, or
punitive damages suffered or incurred by any such Person in connection with,
arising out of, or in any way related to any of the Transaction Documents, or
any of the transactions contemplated by any of the Transaction Documents.
Section 12.4 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Agent or any Bank shall
have the right to act exclusively in the interest of the Agent and the Banks and
shall have no duty of disclosure, duty of loyalty, duty of care, or other duty
or obligation of any type or nature whatsoever to the Parent or any Guarantor,
any shareholders of the Parent or any Guarantor, or any other Person.
Section 12.5 No Fiduciary Relationship. The relationship between the
Parent and the Guarantors on the one hand and the Agent and the Banks on the
other is solely that of debtor and creditor, and neither the Agent nor any Bank
has any fiduciary or other special relationship with the Parent or any
Guarantor, and no term or condition of any of the Transaction Documents shall be
Page 53
59
construed so as to deem the relationship between the Parent and the Guarantors
on the one hand and the Agent and each Bank on the other to be other than that
of debtor and creditor.
Section 12.6 Equitable Relief. The Parent recognizes that in the event
the Parent or any Guarantor fails to pay, perform, observe, or discharge any or
all of the Obligations under the Transaction Documents, any remedy at law may
prove to be inadequate relief to the Agent and the Banks. The Parent therefore
agrees that the Agent and the Banks, if the Agent or the Required Banks so
request, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
Section 12.7 No Waiver; Cumulative Remedies. No failure on the part of
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under any Transaction
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege under any Transaction Document
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The rights and remedies provided for in the
Transaction Documents are cumulative and not exclusive of any rights and
remedies provided by law.
Section 12.8 Binding Effect; Successors; Assignment.
(a) This Agreement and the other Transaction Documents to which
the Parent is a party will be binding upon and inure to the benefit of
the Parent, the Agent, the Banks, and their respective successors and
assigns, except that, the Parent may not assign its rights hereunder or
thereunder or any interest herein or therein without the prior written
consent of all of the Banks and any such attempted assignment shall be
void.
(b) From time to time following the Closing Date, each Bank may
assign to one or more Eligible Assignees all or any portion of its
Commitment; provided that (i) such assignment, if not to a Bank or an
Affiliate of the assigning Bank, shall be consented to by the Parent at
all times other than during the existence of a Default or Event of
Default (which approval shall not be unreasonably withheld or delayed)
and by the Agent, (ii) a copy of a duly signed and completed Assignment
and Acceptance shall be delivered to the Agent, (iii) except in the case
of an assignment (A) to an Affiliate of the assigning Bank or to another
Bank or (B) of the entire remaining Commitment of the assigning Bank,
the portion of the Commitment assigned shall not be less than
$10,000,000, and (iv) the effective date of any such assignment shall be
as specified in the Assignment and Acceptance, but not earlier than the
date which is five (5) Business Days after the date the Agent has
received the Assignment and Acceptance. Upon obtaining any consent
required as set forth in the prior sentence, any forms required by
Section 12.22 and payment of the requisite fee described below, the
assignee named therein shall be a Bank for all purposes of this
Agreement to the extent of the Assigned Interest (as defined in such
Assignment and Acceptance), and the assigning Bank shall be released
from any further obligations under this Agreement to the extent of such
Assigned Interest. The Agent's consent to any assignment shall not be
deemed to constitute any representation or warranty by any Agent-Related
Person as to any matter. The Agent shall record the information
contained in the Assignment and Acceptance
Page 54
60
in the Register. For purposes hereof, each mutual fund that is an
Affiliate of a Bank shall be deemed to be a single Eligible Assignee,
whether or not such fund is managed by the same fund manager as other
mutual funds that are Affiliates of the same Bank.
(c) After receipt of a completed Assignment and Acceptance, and
receipt of an assignment fee of $3,500 from such Eligible Assignee
and/or such assigning Bank (including in the case of assignments to
Affiliates of assigning Banks or assignments from one Bank to another
Bank), the Agent shall, promptly following the effective date thereof,
provide to the Parent and the Banks a revised Schedule 12.13 giving
effect thereto.
(d) Amendment of Commitments. Upon execution, delivery, and
acceptance of an Assignment and Acceptance, the signature pages of the
Banks shall be deemed to be automatically amended to reflect the
resulting Commitments of the Banks after giving effect to such
Assignment and Acceptance; provided that the Commitments of the Banks
not a party to such Assignment and Acceptance shall not be affected as a
result of such amendment.
(e) Register.
(i) The Agent shall maintain, at the Agent's Office, a
register for the recordation of the names and addresses of the
Banks and the Commitment of each Bank from time to time (the
"Register"). The Register shall be available for inspection by
the Parent or any Bank at any reasonable time and from time to
time upon reasonable prior notice. The Agent shall maintain the
Register as agent for the Parent (it being acknowledged and
agreed that the Agent and each Agent-Related Person, in such
capacity, shall constitute Indemnitees under Section 12.2).
(ii) The Agent shall record in the Register the
Commitment from time to time of each Bank. Any recordation shall
be conclusive and binding on the Parent and each Bank, absent
manifest error; provided, however, that the failure to make any
such recordation, or any error in such recordation, shall not
affect any Bank's Commitment.
(iii) The Parent, the Agent, and the Banks shall deem
and treat the Persons listed as Banks in the Register as the
holders and owners of the corresponding Commitments listed
therein for all purposes hereof, and no assignment or transfer
of any such Commitment shall be effective, in each case, unless
and until an Assignment and Acceptance effecting the assignment
or transfer thereof shall have been accepted by the Agent and
recorded in the Register. Prior to such recordation, all amounts
owed with respect to the applicable Commitment or Obligations
shall be owed to the Bank listed in the Register as the owner
thereof, and any request, authority or consent of any Person
who, at the time of making such request or giving such authority
or consent, is listed in the Register as the Bank shall be
conclusive and binding on any subsequent holder, assignee, or
transferee of the corresponding Commitments or Obligations.
Page 55
61
(f) Delivery of Information. Any Bank may furnish any
information concerning the Parent or any Affiliate of the Parent in the
possession of such Bank from time to time to assignees (including,
without limitation, prospective assignees) subject to such Persons
agreeing to being bound by the provisions of Section 12.21.
Section 12.9 Survival. All representations and warranties made by the
Parent or any Guarantor in any Transaction Document or in any document,
statement, or certificate furnished in connection with any Transaction Document
shall survive the execution and delivery of the Transaction Documents and no
investigation by the Agent or any Bank or any closing shall affect the
representations and warranties or the right of the Agent and the Banks to rely
upon them. Without prejudice to the survival of any other obligation of the
Parent hereunder, the obligations under Section 11.7, Section 12.1, and Section
12.2 shall survive termination of the Commitments.
Section 12.10 Entire Agreement. This Agreement, together with the other
Transaction Documents and any letter agreements referred to herein, comprises
the complete and integrated agreement of the parties on the subject matter
hereof and supersedes all prior agreements, written or oral, on the subject
matter hereof. In the event of any conflict between the provisions of this
Agreement and those of any other Transaction Document, the provisions of this
Agreement shall control and govern; provided that the inclusion of supplemental
rights or remedies in favor of the Agent or the Banks in any other Transaction
Document shall not be deemed a conflict with this Agreement. Each Transaction
Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.
Section 12.11 Amendments and Waivers. Any provision of any Transaction
Document may be amended or waived and any consent to any departure by the Parent
therefrom may be granted if, but only if, such amendment, waiver, or consent is
in writing and is signed by the Parent, and the Required Banks (and, if Article
11 or the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment, waiver, or consent applicable to:
(a) a Commitment which has the effect of
(i) increasing such Commitment,
(ii) reducing any amounts payable hereunder with respect
to such Commitment,
(iii) postponing any date fixed for the payment of any
amounts payable hereunder with respect to any Commitment, or
(iv) postponing any date fixed for termination of such
Commitment,
shall be effective unless also signed by each Bank holding the
Commitment being modified; and
Page 56
62
(b) any change (including a waiver):
(i) in the definition of Required Banks or the
provisions of this Section 12.11;
(ii) which has the effect of releasing the Parent, any
Subsidiary of the Parent, or any Guarantor in a transaction
which is not otherwise permitted hereby; or
(iii) which releases all or substantially all of the
Guarantors of their obligations under the Subsidiary Guaranty;
shall not be effective unless signed by all Banks.
Section 12.12 Maximum Interest Rate. Notwithstanding anything to the
contrary contained in any Transaction Document, any interest paid or agreed to
be paid under the Transaction Documents shall not exceed the maximum rate of
non-usurious interest permitted by applicable law (the "Maximum Rate"). If the
Agent or any Bank shall receive interest in an amount that exceeds the Maximum
Rate, the excessive interest shall be applied to the principal of the
Obligations or, if it exceeds the unpaid principal, refunded to the Parent. In
determining whether the interest contracted for, charged, or received by the
Agent or a Bank exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations.
Section 12.13 Notices. All notices and other communications provided for
in any Transaction Document to which the Parent is a party shall be given or
made in writing and telecopied, mailed by certified mail return receipt
requested, or delivered to the intended recipient at the "Address for Notices"
specified in Schedule 12.13, or with respect to a Bank not a party to this
Agreement on the Closing Date, in its Assignment and Acceptance, or, as to any
party at such other address as shall be designated by such party in a notice to
each other party given in accordance with this Section. Except as otherwise
provided in any Transaction Document, all such communications shall be deemed to
have been duly given when transmitted by telecopy, subject to telephone
confirmation of receipt, or when personally delivered or, in the case of a
mailed notice, three (3) Business Days after being duly deposited in the mails,
in each case given or addressed as aforesaid; provided, however, notices to the
Agent pursuant to Section 2.2 shall not be effective until received by the
Agent. Any agreement of the Agent and the Banks herein to receive certain
notices by telephone or telecopy is solely for the convenience and at the
request of the Parent. The Agent and the Banks shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the Parent to
give such notice and neither the Agent nor any Bank shall have any liability to
the Parent or any other Person on account of any action taken or not taken by
the Agent or any Bank in reliance upon such telephonic or telecopy notice. The
obligation of the Parent to repay all amounts drawn under Letters of Credit
shall not be affected in any way or to any extent by any failure of the Agent or
any Bank to receive written confirmation of any telephonic or telecopy notice or
the receipt
Page 57
63
by the Agent or any Bank of a confirmation which is at variance with the terms
understood by the Agent or such Bank to be contained in such telephonic or
telecopy notice.
Section 12.14 Governing Law; Venue; Service of Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED
THAT THE AGENT AND EACH BANK SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR SUCH STATE, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PARENT, THE AGENT, AND
EACH BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE PARENT, THE AGENT, AND
EACH BANK IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY TRANSACTION DOCUMENT
OR OTHER DOCUMENT RELATED THERETO. THE PARENT, THE AGENT, AND EACH BANK
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAWS OF SUCH
STATE.
Section 12.15 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 12.16 Severability. Any provision of any Transaction Document
held by a court of competent jurisdiction to be invalid or unenforceable shall
not impair or invalidate the remainder of such Transaction Document and the
effect thereof shall be confined to the provision held to be invalid or illegal.
Section 12.17 Headings. The headings, captions, and arrangements used in
this Agreement are for convenience of reference only and shall not affect the
interpretation of this Agreement.
Section 12.18 Construction. The Parent, each Guarantor (by its execution
of the Transaction Documents to which it is a party), the Agent and each Bank
acknowledges that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review the Transaction Documents
with its legal counsel and that the Transaction Documents shall be construed as
if jointly drafted by the parties thereto.
Page 58
64
Section 12.19 Independence of Covenants. All covenants under the
Transaction Documents shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of a Default if such action
is taken or such condition exists.
Section 12.20 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION ARISING UNDER ANY TRANSACTION DOCUMENT OR IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO ANY TRANSACTION DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE, AND EACH PARTY HERETO HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
Section 12.21 Confidentiality. The Agent, each Bank and each participant
shall use any confidential non-public information concerning the Parent and its
Subsidiaries that is furnished to the Agent or such Bank by or on behalf of the
Parent and its Subsidiaries in connection with the Transaction Documents
(collectively, "Confidential Information") solely for the purpose of evaluating
and providing products and services to them and administering and enforcing the
Transaction Documents, and it will hold the Confidential Information in
confidence. Notwithstanding the foregoing, the Agent and each Bank may disclose
Confidential Information (a) to their Affiliates or any of their or their
Affiliates' directors, officers, employees, auditors, counsel, advisors, or
representatives (collectively, the "Representatives") whom it determines need to
know such information for the purposes set forth in this Section, (b) to any
bank or financial institution or other entity to which such Bank has assigned or
desires to assign an interest in the Transaction Documents or the Obligations,
provided that any such foregoing recipient of such Confidential Information
agrees to keep such Confidential Information confidential as specified herein,
(c) to any Governmental Authority having or claiming to have authority to
regulate or oversee any aspect of the Agent's or such Bank's business or that of
their Representatives in connection with the exercise of such authority or
claimed authority, (d) to the extent necessary or appropriate to effect or
preserve the Agent's or such Bank's or any of their Affiliates' security (if
any) for any Obligation or to enforce any right or remedy or in connection with
any claims asserted by or against the Agent or such Bank or any of their
Representatives, and (e) pursuant to any subpoena or any similar legal process.
For purposes hereof, the term "Confidential Information" shall not include
information that (x) is in the Agent's or a Bank's possession prior to its being
provided by or on behalf of the Parent or any of its Subsidiaries, provided that
such information is not known by the Agent or such Bank to be subject to another
confidentiality agreement with, or other legal or contractual obligation of
confidentiality to, the Parent or any of its Subsidiaries, (y) is or becomes
publicly available (other than through a breach hereof by the Agent or such
Bank), or (z) becomes available to the Agent or
Page 59
65
such Bank on a nonconfidential basis, provided that the source of such
information was not known by the Agent or such Bank to be bound by a
confidentiality agreement or other legal or contractual obligation of
confidentiality with respect to such information.
Section 12.22 Foreign Banks. Each Foreign Bank shall deliver to the
Agent, prior to receipt of any payment subject to withholding under the Code (or
after accepting an assignment of an interest herein), two (2) duly signed
completed copies of either IRS Form W-8BEN or any successor thereto (relating to
such Foreign Bank and entitling it to an exemption from, or reduction of,
withholding tax on all payments to be made to such Foreign Bank by the Parent
pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Foreign Bank by the Parent pursuant
to this Agreement) or such other evidence satisfactory to the Parent and the
Agent that such Foreign Bank is entitled to an exemption from, or reduction of,
U.S. withholding tax. Thereafter and from time to time, each such Foreign Bank
shall (a) promptly submit to the Agent such additional duly completed and signed
copies of one of such forms (or such successor forms as shall be adopted from
time to time by the relevant U.S. taxing authorities) as may then be available
under then current U.S. laws and regulations to avoid, or such evidence as is
satisfactory to the Parent and the Agent of any available exemption from or
reduction of, U.S. withholding taxes in respect of all payments to be made to
such Foreign Bank by the Parent pursuant to this Agreement, (b) promptly notify
the Agent of any change in circumstances which would modify or render invalid
any claimed exemption or reduction, and (c) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Foreign
Bank, and as may be reasonably necessary (including the re-designation of its
Applicable Lending Office) to avoid any requirement of applicable laws that the
Parent make any deduction or withholding for taxes from amounts payable to such
Foreign Bank. If such Foreign Bank fails to deliver the above forms or other
documentation, then the Agent may withhold from any payment to such Foreign Bank
an amount equivalent to the applicable withholding tax imposed by Sections 1441
and 1442 of the Code, without reduction. If any Governmental Authority asserts
that the Agent did not properly withhold any tax or other amount from payments
made in respect of such Foreign Bank, such Foreign Bank shall indemnify the
Agent therefor, including all penalties and interest, any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, and costs
and expenses (including Attorney Costs) of the Agent. The obligation of the
Banks under this Section shall survive the payment of all Obligations and the
resignation or replacement of the Agent.
[Remainder of page intentionally left blank]
Page 60
66
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
PARENT:
XXXXXXXX-SONOMA, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
-----------------------------------
Title: SVP and Chief Financial Officer
----------------------------------
Page 61
67
AGENT:
BANK OF AMERICA, NATIONAL
ASSOCIATION, as the Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Page 62
68
BANKS:
BANK OF AMERICA, NATIONAL
ASSOCIATION
Commitment:
$50,000,000
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Page 63
69
FLEET NATIONAL BANK
Commitment:
$25,000,000
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Page 64
00
XXX XXXX XX XXX XXXX
Commitment:
$25,000,000
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Page 65
71
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
Exhibit A, Cover Page
72
ASSIGNMENT AND ACCEPTANCE
,
----------- -----
Reference is made to that certain Reimbursement Agreement, dated as of
July 11, 2001 (as such agreement may be amended, restated, or otherwise modified
in writing from time to time, the "Reimbursement Agreement") between
Xxxxxxxx-Sonoma, Inc. (the "Parent"), the Banks from time to time party thereto,
and Bank of America, National Association, as administrative agent (the
"Agent"). Terms defined in the Reimbursement Agreement which are used herein
shall have the meaning provided in the Reimbursement Agreement.
The assignor identified on the signature page hereto (the "Assignor")
and the assignee identified on the signature page hereto (the "Assignee") agree
as follows:
1. (a) Subject to paragraph 11 hereof, effective as of the date
written on Schedule 1 hereto (referred to herein as the "Effective
Date"), the Assignor irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the
Assignor, the interest (the "Assigned Interest") described on Schedule 1
hereto in and to the Assignor's rights and obligations under the
Reimbursement Agreement.
(b) From and after the Effective Date, (i) the Assignee shall be
a party under the Reimbursement Agreement and will have all the rights
and obligations of a Bank for all purposes under the Transaction
Documents to the extent of the Assigned Interest and shall be bound by
the provisions thereof, and (ii) the Assignor shall relinquish its
rights and be released from its obligations under the Reimbursement
Agreement to the extent of the Assigned Interest. The Assignor and/or
the Assignee, as agreed by the Assignor and the Assignee, shall deliver,
in immediately available funds, the assignment fee required under
Section 12.8(c) of the Reimbursement Agreement.
2. On the Effective Date, the Assignee shall pay to the Assignor, in
immediately available funds, an amount equal to the purchase price of the
Assigned Interest as agreed upon by the Assignor and the Assignee.
3. The Assignor and the Assignee agree that all payments of principal,
interest, fees, and other amounts in respect of the Assigned Interest accruing
from and after the Effective Date shall be for the account of the Assignee, and
all payments of such amounts in respect of the Assigned Interest accruing prior
to the Effective Date shall remain for the account of the Assignor. The Assignor
and the Assignee hereby agree that if either receives any payment of such
amounts which is for the account of the other, it shall hold the same in trust
for such party and shall promptly pay the same to such party.
ASSIGNMENT AND ACCEPTANCE - Page 1
73
4. The Assignor represents and warrants to the Assignee that:
(a) the Assignor is the legal and beneficial owner of the
Assigned Interest, and the Assigned Interest is free and clear of any
adverse claim;
(b) the Assigned Interest listed on Schedule 1 accurately and
completely sets forth the amount of all the Obligations relating to the
Assigned Interest outstanding as of the Effective Date;
(c) the Assignor has the power and authority and the legal right
to make, deliver, and perform, and has taken all necessary action, to
authorize the execution, delivery, and performance of this Assignment
and Acceptance, and any and all other documents delivered by the
Assignor in connection herewith and to fulfill the Assignor's
obligations under, and to consummate the transactions contemplated by,
this Assignment and Acceptance and the Transaction Documents, and no
consent or authorization of, filing with, or other act by or in respect
of any Governmental Authority, is required in connection herewith or
therewith; and
(d) this Assignment and Acceptance constitutes the legal, valid,
and binding obligation of the Assignor.
The Assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Parent or the performance by the
Parent of its obligations under the Transaction Documents, and assumes no
responsibility with respect to any statements, warranties, or representations
made under or in connection with any Transaction Document or the execution,
legality, validity, enforceability, genuineness, sufficiency, or value of any
Transaction Document other than as expressly set forth above.
5. The Assignee represents and warrants to the Assignor and the Agent
that:
(a) the Assignee is an Eligible Assignee;
(b) the Assignee has the power and authority and the legal right
to make, deliver, and perform, and has taken all necessary action, to
authorize the execution, delivery, and performance of this Assignment
and Acceptance, and any and all other documents delivered by the
Assignee in connection herewith and to fulfill the Assignee's
obligations under, and to consummate the transactions contemplated by,
this Assignment and Acceptance and the Transaction Documents, and no
consent or authorization of, filing with, or other act by or in respect
of any Governmental Authority, is required in connection herewith or
therewith;
(c) this Assignment and Acceptance constitutes the legal, valid,
and binding obligation of the Assignee;
(d) under applicable law no tax will be required to be withheld
by the Agent or the Parent with respect to any payments to be made to
the Assignee hereunder or under any Transaction Document, and prior to
or concurrently with the Agent's receipt of this
Page 2
74
Assignment and Acceptance, the Assignee has delivered to the Agent any
tax forms required by Section 12.22 of the Reimbursement Agreement; and
(e) the Assignee has received a copy of the Reimbursement
Agreement, together with copies of the most recent financial statements
of the Parent delivered pursuant thereto, and such other documents and
information as the Assignee has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and
Acceptance. The Assignee has independently and without reliance upon the
Assignor or the Agent and based on such information as the Assignee has
deemed appropriate, made its own credit analysis and decision to enter
into this Assignment and Acceptance. The Assignee will, independently
and without reliance upon the Agent or any Bank, and based upon such
documents and information as the Assignee shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under the Reimbursement Agreement.
6. The Assignee appoints and authorizes the Agent to take such action as
agent on the Assignee's behalf and to exercise such powers and discretion under
the Reimbursement Agreement, the other Transaction Documents, or any other
instrument or document furnished pursuant hereto or thereto as are delegated to
the Agent by the terms thereof, together with such powers as are incidental
thereto.
7. The Assignor and the Assignee agree to execute and deliver such other
instruments, and take such other action, as either party may reasonably request
in connection with the transactions contemplated by this Assignment and
Acceptance.
8. This Assignment and Acceptance shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns; provided,
however, that the Assignee shall not assign its rights or obligations hereunder
without the prior written consent of the Assignor and any purported assignment,
absent such consent, shall be void.
9. This Assignment and Acceptance may be executed by facsimile
signatures with the same force and effect as if manually signed and may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This
Assignment and Acceptance shall be governed by and construed in accordance with
the laws of the state specified in the Reimbursement Agreement.
10. The effectiveness of the assignment described herein is subject to:
(a) if such consent is required by the Reimbursement Agreement,
the Assignor and the Assignee obtaining the consent of the Agent and/or
the Parent to the assignment described herein. By delivering a duly
executed and delivered copy of this Assignment and Acceptance to the
Agent, the Assignor and the Assignee hereby request any such required
consent and request that the Agent register the Assignee as a Bank under
the Reimbursement Agreement effective as of the Effective Date.
Page 3
75
(b) receipt by the Agent of (or other arrangements acceptable to
the Agent with respect to) any applicable assignment fee referred to in
Section 12.8(c) of the Reimbursement Agreement and any tax forms
required by Section 12.22 of the Reimbursement Agreement.
By signing below, the Agent agrees to register the Assignee as a Bank under the
Reimbursement Agreement, effective as of the Effective Date with respect to the
Assigned Interest and will adjust the registered Commitment Percentage of the
Assignor under the Reimbursement Agreement to reflect the assignment of the
Assigned Interest.
11. Attached hereto as Schedule 2 is all contact, address, account, and
other administrative information relating to the Assignee.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers.
THE ASSIGNOR:
-----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[ ] Tax forms required by THE ASSIGNEE:
Section 12.22 of the
Credit Agreement
included -----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Page 4
76
In accordance with and subject to Section 12.8 of the Reimbursement Agreement,
the undersigned consent (if required) to the foregoing assignment as of the
Effective Date:
THE PARENT:
XXXXXXXX-SONOMA, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE AGENT:
BANK OF AMERICA, NATIONAL ASSOCIATION, as the Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Page 5
77
Schedule 1
to
Assignment and Acceptance
The Assigned Interest
Effective Date:
----------------------------------
Assigned Commitment Amount of Obligations Assigned Commitment
Assigned Percentage
------------------- --------------------- -------------------
$ $ %
----------- ----------- -----------
Schedule 1 -- Solo Page
78
Schedule 2
to
Assignment and Acceptance
Contact Information
Schedule 2 - Solo Page
79
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
EXHIBIT B - Cover Page
80
COMPLIANCE CERTIFICATE
The undersigned, duly appointed and acting chief financial officer or
Vice President, Finance (as the case may be) of Xxxxxxxx-Sonoma, Inc. (the
"Parent"), being duly authorized, hereby delivers this Compliance Certificate to
the Agent and the Banks, pursuant to Section 7.1(c) of that certain
Reimbursement Agreement, dated as of July 11, 2001, among the Parent, Bank of
America, National Association, in its capacity as administrative agent (the
"Agent"), and the Banks party thereto, as such agreement may be amended,
restated, or otherwise modified from time to time, reference to which hereby is
made (the "Reimbursement Agreement"). Terms defined in the Reimbursement
Agreement which are used herein shall have the meaning provided in the
Reimbursement Agreement.
1. The Parent hereby delivers to the Agent and the Banks [check as
applicable]: ____ the audited Fiscal Year end financial statements and the
unaudited consolidating financial statements required by Section 7.1(a); or
____ the Fiscal Quarter end financial statements required by Section 7.1(b),
dated as of ________, ____. Such financial statements are complete and correct
in all material respects and have been prepared in accordance with GAAP (as
applicable) applied consistently throughout the periods reflected therein,
except for year-end audit adjustments and the inclusion of footnotes for any
financial statements delivered pursuant to Section 7.1(b).
2. The undersigned represents and warrants to the Agent and the Banks
that, except as may have been previously or concurrently disclosed to the Agent
and the Banks in writing by the Parent, the representations and warranties
contained in Article 6 of the Reimbursement Agreement are true and correct on
and as of the date of this Compliance Certificate as if made on and as of the
date hereof (except to the extent that such representations and warranties are
expressly by their terms made only as of the Closing Date or another specified
date).
3. The undersigned hereby states that, to the best of his or her
knowledge and based upon an examination sufficient to enable an informed
statement [check as applicable]:
[ ] No Default exists as of the date hereof.
[ ] One or more Defaults have occurred or exist as of the date
hereof. Included within Exhibit A attached hereto is a written
description specifying each such Default, its nature, when it
occurred, whether it is continuing as of the date hereof and the
steps being taken by the Parent with respect thereto. Except as
so specified, no Default exists as of the date hereof.
4. Exhibit B attached hereto sets forth the calculations necessary to
establish the status of the Parent's compliance with the covenants contained in
Article 9 of the Reimbursement Agreement as of the effective date of the
financial statements referenced in paragraph 1 above.
COMPLIANCE CERTIFICATE - Page 1
81
Date of execution of this Compliance Certificate: , .
----------- -----
XXXXXXXX-SONOMA, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Page 2
82
EXHIBIT A
to
COMPLIANCE CERTIFICATE
dated
,
----------- -----
The following is attached to and made a part of the above referenced Compliance
Certificate.
[specify Defaults]
EXHIBIT A - Defaults
83
EXHIBIT B
to
COMPLIANCE CERTIFICATE
dated
,
----------- -----
The following is attached to and made a part of the above referenced Compliance
Certificate.
1. Leverage Ratio - Section 9.1: Compliance
(a) Total Adjusted Funded Debt:
(i) Average Funded Debt(1), plus $
--------
(ii) (A) all lease and rent expense for any real Property $
for the preceding four (4) Fiscal Quarters, --------
multiplied by
(B) eight, plus x 8 $
--------
(iii) (A) all lease and rent expense for any personal $
Property for the preceding four (4) Fiscal --------
Quarters, multiplied by
(B) three x 3 $
--------
(iv) Total Adjusted Funded Debt $
[1(a)(i) + 1(a)(ii)(B) + 1(a)(iii)(B)] --------
(b) EBITDAR:
(i) Net Income, plus (or less any benefit from) $
--------
(ii) Income or franchise taxes to the extent included in the $
determination of Net Income, plus --------
(iii) Interest Expense to the extent included in the $
determination of Net Income, plus --------
(iv) amortization and depreciation expense to the extent $
included in the determination of Net Income, plus --------
(v) Other non-cash, non-recurring charges to the extent $
included in the determination of Net Income, minus --------
(vi) Other non-recurring gains to the extent included in the $
determination of Net Income, plus --------
(vii) All lease and rent expense for any real Property or $
personal Property to the extent included in the --------
determination of Net Income
(viii) Total EBITDAR [sum of 2(b)(i) through 2(b)(vii)] $
--------
(c) Actual Leverage Ratio [1(a)(iii) / 1(b)(viii)] to 1.00
---
(d) Required Maximum Leverage Ratio(2) to 1.00 Yes No
---
----------
(1) The average of all Funded Debt as of the end of each of the immediately
preceding twelve (12) Fiscal Periods.
(2) From April 29, 2001 through and including October 28, 2001, less than or
equal to 4.00 to 1.00; from February 3, 2002 through and including November 3,
2002, less than or equal to 3.75 to 1.00; and from February 2, 2003 and
thereafter, less than or equal to 3.50 to 1.00.
84
Compliance
2. Fixed Charge Coverage Ratio - Section 9.2
(a) EBITDAR [1(b)(viii)] $
--------
(b) Fixed Charges
(i) Interest Expense to the extent included in the $
determination of Net Income [1(b)(iii)], plus ---------
(ii) lease and rent expense for any real Property or $
personal Property, plus ---------
(iii) scheduled principal payments on long term Debt $
(including Capital Leases) ---------
(iv) Total fixed charges $
[2(b)(i) + 2(b)(ii) + 2(b)(iii)] --------
(c) Actual Fixed Charge Coverage Ratio to 1.00
[2(a) / 2(b)(iv)] ---
(d) Required Minimum Fixed Charge Coverage Ratio(3) to 1.00 Yes No
---
3. Minimum Tangible Net Worth - Section 9.3
(a) Shareholder's Equity, minus $
--------
(b) Intangible assets $
--------
(c) Actual Tangible Net Worth [3(a) - 3(b)] $
--------
(d) Required Minimum Tangible Net Worth(4) $ Yes No
--------
4. Capital Expenditures - Section 9.4(5)
(a) Actual Capital Expenditures $
--------
(b) Gross revenue, multiplied by $
--------
(c) Eight and one-half percent, plus x 0.085
(d) 50% of remaining allowable Capital Expenditures for the $
preceding Fiscal Year --------
(e) Maximum Capital Expenditures $ Yes No
--------
----------
(3) From April 29, 2001 through and including October 28, 2001, greater than
or equal to 2.00 to 1.00; from February 3, 2002 through and including November
3, 2002, greater than or equal to 2.10 to 1.00; from February 2, 2003 through
and including May 3, 2003, greater than or equal to 2.25 to 1.00; and from
August 3, 2003 and thereafter, greater than or equal to 2.50 to 1.00.
(4) The sum of (a) $335,000,000, plus (b) seventy-five percent (75.0%) of
the Borrower's positive Net Income for each Fiscal Quarter completed after April
30, 2000, plus (c) one hundred percent (100%) of any increase in Tangible Net
Worth attributable to issuance of equity Securities of the Borrower or any
Subsidiary of the Borrower after April 30, 2000.
(5) Beginning with the Fiscal Year ending February 3, 2002 and as of the end
of each Fiscal Year thereafter.
EXHIBIT B - Covenant Calculations
85
EXHIBIT C
FORM OF SUBSIDIARY GUARANTY
EXHIBIT C - Cover Page
86
GUARANTY AGREEMENT
(Subsidiary)
This GUARANTY AGREEMENT ("Guaranty"), dated as of July 11, 2001, is
executed and delivered by each of the undersigned (collectively and individually
referred to herein as the "Guarantor"), to and in favor of the Agent (as defined
below).
RECITALS:
X. Xxxxxxxx-Sonoma, Inc. (the "Parent"), the Banks party thereto
(together with their successors and assigns, the "Banks"), and Bank of America,
National Association, as administrative agent for the Banks (the "Agent"), are,
concurrently herewith entering into that certain Reimbursement Agreement dated
as of July 11, 2001 (such Reimbursement Agreement, as it may hereafter be
amended, restated, or otherwise modified from time to time, being hereinafter
referred to as the "Reimbursement Agreement"; capitalized terms not otherwise
defined herein shall have the same meaning as set forth for such terms in the
Reimbursement Agreement).
B. The Guarantor has directly and indirectly benefited and will directly
and indirectly benefit from the Letters of Credit issued pursuant to the
Reimbursement Agreement.
C. The execution and delivery of this Guaranty is required by the
Reimbursement Agreement and is a condition to the Agent's taking any Letter of
Credit Action under the Reimbursement Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Guarantor hereby irrevocably and
unconditionally guarantees to the Agent, for the benefit of the Agent and the
Banks, the full and prompt payment and performance of the Guaranteed
Indebtedness (as defined below) upon the following terms:
1. The term "Guaranteed Indebtedness", as used herein means all of the
"Obligations", as defined in the Reimbursement Agreement and shall include,
without limitation, any and all post-petition interest and expenses (including,
without limitation, Attorney Costs) whether or not allowed under any bankruptcy,
insolvency, or other similar law; provided that, notwithstanding anything to the
contrary contained in this Guaranty, the Guaranteed Indebtedness shall be
limited to an aggregate amount equal to the greatest amount that would not
render the Guarantor's indebtedness, liabilities, or obligations hereunder
subject to avoidance under Sections 544, 548, or 550 of the Bankruptcy Code or
subject to being set aside or annulled under any applicable state law relating
to fraud on creditors; provided, further, that, for purposes of the immediately
preceding clauses, it shall be presumed that the Guaranteed Indebtedness
hereunder does not equal or exceed any aggregate amount which would render the
Guarantor's indebtedness, liabilities, or obligations hereunder subject to being
so avoided, set aside, or annulled, and the burden of proof to the contrary
shall be on the party asserting to the contrary. Subject to but without limiting
the generality of the foregoing sentence, the provisions of this Guaranty are
severable and, in any legally binding action or proceeding involving any state
corporate law or any bankruptcy, insolvency, fraudulent transfer, or other laws
of general application relating to the enforcement of creditors' rights and
general
Page 1
87
principles of equity, if the indebtedness, liabilities, or obligations of the
Guarantor hereunder would otherwise be held or determined to be void, invalid,
or unenforceable on account of the amount of its indebtedness, liabilities, or
obligations hereunder, then, notwithstanding any other provision of this
Guaranty to the contrary, the amount of such indebtedness, liabilities, or
obligations shall, for purposes of determining the Guarantor's obligations under
this Guaranty, without any further action by the Guarantor or any other Person,
be automatically limited and reduced to the greatest amount which is valid and
enforceable as determined in such action or proceeding.
2. The Guarantor, together with each guarantor under any other guaranty
(and specifically including each Guarantor hereunder), if any, relating to the
Reimbursement Agreement (the "Related Guaranties") which contain a contribution
provision similar to that set forth in this paragraph 2, agrees that it and all
such other guarantors (collectively, the "Contributing Guarantors") together
desire to allocate among themselves, in a fair and equitable manner, their
obligations arising under this Guaranty and the Related Guaranties. Accordingly,
in the event any payment or distribution is made by the Guarantor under this
Guaranty or a guarantor under a Related Guaranty (a "Funding Guarantor") that
exceeds its Fair Share (as defined below), that Funding Guarantor shall be
entitled to a contribution from each of the other Contributing Guarantors in the
amount of such other Contributing Guarantor's Fair Share Shortfall (as defined
below), with the result that all such contributions will cause each Contributing
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share;
provided, however, that the obligations to or from any Funding Guarantor as
described in this paragraph 2 shall be subordinate to the obligation of the
Guarantor to pay the Guaranteed Indebtedness as more fully set forth in
paragraph 11 hereof. "Fair Share" means, with respect to a Contributing
Guarantor as of any date of determination, an amount equal to (a) the ratio of
(i) the Adjusted Maximum Amount (as defined below) with respect to such
Contributing Guarantor to (ii) the aggregate of the Adjusted Maximum Amounts
with respect to all Contributing Guarantors, multiplied by (b) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty and the Related Guaranties in respect of the obligations
guaranteed. "Fair Share Shortfall" means, with respect to a Contributing
Guarantor as of any date of determination, the excess, if any, of the Fair Share
of such Contributing Guarantor over the Aggregate Payments of such Contributing
Guarantor. "Adjusted Maximum Amount" means, with respect to a Contributing
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Contributing Guarantor under this Guaranty or a Related
Guaranty, in each case determined in accordance with the provisions hereof and
thereof; provided that, solely for purposes of calculating the "Adjusted Maximum
Amount" with respect to any Contributing Guarantor for purposes of this
paragraph 2, the assets or liabilities arising by virtue of any rights to or
obligations of contribution hereunder or under any similar provision contained
in a Related Guaranty shall not be considered as assets or liabilities of such
Contributing Guarantor. "Aggregate Payments" means, with respect to a
Contributing Guarantor as of any date of determination, the aggregate amount of
all payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty and the Related Guaranties (including,
without limitation, in respect of this paragraph 2 or any similar provision
contained in a Related Guaranty). The amounts payable as contributions hereunder
and under similar provisions in the Related Guaranties shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Contributing Guarantors of their
obligations as set forth in this paragraph 2 or any similar provision contained
in a Related Guaranty
Page 2
88
shall not be construed in any way to limit the liability of any Contributing
Guarantor hereunder or under a Related Guaranty. Each Contributing Guarantor
under a Related Guaranty is a third party beneficiary to the contribution
agreement set forth in this paragraph 2.
3. This Guaranty shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance and not a guaranty of
collection, and the Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness. No
set-off, counterclaim, recoupment, reduction, or diminution of any obligation,
or any defense of any kind or nature (other than payment or performance) which
the Parent may have against the Agent, any Bank, or any other party, or which
the Guarantor may have against the Parent, the Agent, any Bank, or any other
party, shall be available to, or shall be asserted by, the Guarantor against the
Agent, any Bank, or any subsequent holder of the Guaranteed Indebtedness or any
part thereof or against payment of the Guaranteed Indebtedness or any part
thereof.
4. If the Guarantor becomes liable for any indebtedness owing by the
Parent to the Agent or any Bank by endorsement or otherwise, other than under
this Guaranty, such liability shall not be in any manner impaired or affected
hereby, and the rights of the Agent and the Banks hereunder shall be cumulative
of any and all other rights that the Agent and the Banks may ever have against
the Guarantor. The exercise by the Agent and the Banks of any right or remedy
hereunder or under any other instrument, or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
5. In the event of default by the Parent in payment or performance of
the Guaranteed Indebtedness, or any part thereof, when such Guaranteed
Indebtedness becomes due, whether by its terms, by acceleration, or otherwise,
the Guarantor shall promptly pay the amount due thereon to the Agent, for the
benefit of the Agent and the Banks, without notice or demand in lawful currency
of the U.S., and it shall not be necessary for the Agent or any Bank, in order
to enforce such payment by the Guarantor, first to institute suit or exhaust its
remedies against the Parent or others liable on such Guaranteed Indebtedness, or
to enforce any rights against any collateral which shall ever have been given to
secure such Guaranteed Indebtedness. In the event such payment is made by the
Guarantor, then the Guarantor shall be subrogated to the rights then held by the
Agent and the Banks with respect to the Guaranteed Indebtedness to the extent to
which the Guaranteed Indebtedness was discharged by the Guarantor and, in
addition, upon payment by the Guarantor of any sums to the Agent hereunder, all
rights of the Guarantor against the Parent, any other guarantor of the
Guaranteed Indebtedness, or any collateral arising as a result therefrom by way
of right of subrogation, reimbursement, or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full of the Guaranteed Indebtedness and no such right or remedy of subrogation,
reimbursement or otherwise shall be exercised or otherwise entered (except that
proofs of claim may be filed in a bankruptcy or insolvency proceeding) unless
and until the Guaranteed Indebtedness has been indefeasibly paid in full.
6. If acceleration of the time for payment of any amount payable by the
Parent under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of the Parent, all such amounts otherwise subject
to acceleration under the terms of the Guaranteed Indebtedness
Page 3
89
shall nonetheless be payable by the Guarantor hereunder forthwith on demand by
the Agent or any Bank.
7. The Guarantor hereby agrees that its obligations under this Guaranty
shall not be released, discharged, diminished, impaired, reduced, or affected
for any reason or by the occurrence of any event, including, without limitation,
one or more of the following occurrences or events, whether or not with notice
to or the consent of the Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b) any partial release of
the liability of the Guarantor hereunder, or the full or partial release of any
other guarantor of the Guaranteed Indebtedness from liability for any or all of
the Guaranteed Indebtedness; (c) any disability of the Parent, or the
dissolution, insolvency, or bankruptcy of the Parent, the Guarantor, or any
other party at any time liable for the payment of any or all of the Guaranteed
Indebtedness; (d) any renewal, extension, modification, waiver, amendment, or
rearrangement of any or all of the Guaranteed Indebtedness or any instrument,
document, or agreement evidencing, securing, or otherwise relating to any or all
of the Guaranteed Indebtedness; (e) any adjustment, indulgence, forbearance,
waiver, or compromise that may be granted or given by the Agent or any Bank to
the Parent, the Guarantor, or any other party ever liable for any or all of the
Guaranteed Indebtedness; (f) any neglect, delay, omission, failure, or refusal
of the Agent or any Bank to take or prosecute any action for the collection of
any of the Guaranteed Indebtedness or to foreclose or take or prosecute any
action in connection with any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Guaranteed Indebtedness;
(g) the unenforceability or invalidity of any or all of the Guaranteed
Indebtedness or of any instrument, document, or agreement evidencing, securing,
or otherwise relating to any or all of the Guaranteed Indebtedness; (h) any
payment by the Parent or any other party to the Agent or any Bank is held to
constitute a preference under applicable bankruptcy or insolvency law or if for
any other reason the Agent or any Bank is required to refund any payment or pay
the amount thereof to someone else; (i) the settlement or compromise of any of
the Guaranteed Indebtedness; (j) the non-perfection of any Lien securing any or
all of the Guaranteed Indebtedness; (k) any impairment of any collateral
securing any or all of the Guaranteed Indebtedness; (l) the failure of the Agent
or any Bank to sell any collateral securing any or all of the Guaranteed
Indebtedness in a commercially reasonable manner or as otherwise required by
law; (m) any change in the corporate existence, structure, or ownership of the
Parent; or (n) any other circumstance which might otherwise constitute a defense
available to, or discharge of, the Parent, the Guarantor, or any other party at
any time liable for the payment of any or all of the Guaranteed Indebtedness
other than payment of the Guaranteed Indebtedness.
8. The Guarantor represents and warrants as follows:
(a) All of the representations and warranties in the
Reimbursement Agreement relating to the Guarantor are true and correct
as of the date hereof and on each date the representations and
warranties hereunder are restated pursuant to the Transaction Documents
with the same force and effect as if such representations and warranties
had been made on and as of such date except to the extent that such
representations and warranties relate specifically to another date or to
the extent that a fact, event, or circumstance has occurred
Page 4
90
that makes such representation or warranty untrue but which is not
prohibited to occur or exist (or which does not cause a Default or an
Event of Default) under the Transaction Documents.
(b) The value of the consideration received and to be received
by the Guarantor as a result of the Parent, the Agent, and the Banks
entering into the Reimbursement Agreement and the Guarantor's executing
and delivering this Guaranty and the other Transaction Documents to
which it is a party is reasonably worth at least as much as the
liability and obligation of the Guarantor hereunder and thereunder, and
the Reimbursement Agreement and the extension of credit to the Parent
thereunder have benefitted and may reasonably be expected to benefit the
Guarantor directly or indirectly. Execution and delivery of this
Guaranty and the other Transaction Documents to which the Guarantor is a
party is necessary or convenient to the conduct, promotion, and
attainment of the business of the Guarantor.
(c) The Guarantor has, independently and without reliance upon
the Agent or any Bank and based upon such documents and information as
the Guarantor has deemed appropriate, made its own analysis and decision
to enter into the Transaction Documents to which it is a party.
(d) The Guarantor has adequate means to obtain from the Parent
on a continuing basis information concerning the financial condition and
assets of the Parent, and the Guarantor is not relying upon the Agent or
the Banks to provide (and neither the Agent nor any Bank shall have any
duty to provide) any such information to the Guarantor either now or in
the future.
9. The Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or any Bank has any commitment
under the Reimbursement Agreement, the Guarantor will comply with all covenants
set forth in the Reimbursement Agreement specifically applicable to the
Guarantor, the terms of which are incorporated herein by reference.
10. During the existence of an Event of Default, the Agent and the Banks
shall have the right to set-off and apply against this Guaranty or the
Guaranteed Indebtedness or both, at any time and without notice to the
Guarantor, any and all deposits (general or special, time or demand, provisional
or final, but excluding any account established by the Guarantor as a fiduciary
for another party) or other sums at any time credited by or owing from the Agent
and the Banks to the Guarantor whether or not the Guaranteed Indebtedness is
then due and irrespective of whether or not the Agent or any Bank shall have
made any demand under this Guaranty. Each Bank agrees promptly to notify the
Parent (with a copy to the Agent) after any such set-off and application;
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights and remedies of the Agent and the Banks
hereunder are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Agent or any Bank may have.
Page 5
91
11. (a) The Guarantor hereby agrees that the Subordinated Indebtedness
(as defined below) shall be subordinate and junior in right of payment
to the prior indefeasible payment in full of all Guaranteed Indebtedness
as herein provided. The Subordinated Indebtedness shall not be payable,
and no payment of principal, interest, or other amounts on account
thereof, and no property or guarantee of any nature to secure or pay the
Subordinated Indebtedness or any part thereof shall be made or given,
directly or indirectly by or on behalf of any Debtor (as defined below)
or received, accepted, retained, or applied by the Guarantor unless and
until the Guaranteed Indebtedness shall have been indefeasibly paid in
full in cash; except that prior to occurrence of an Event of Default,
the Guarantor shall have the right to receive payments on the
Subordinated Indebtedness made in the ordinary course of business
unless, and except to the extent that, the payment or receipt of such
payments is prohibited or otherwise restricted by the Reimbursement
Agreement or another Transaction Document other than this Guaranty.
During the existence of a Default, no payments of principal or interest
may be made or given, directly or indirectly, by or on behalf of any
Debtor or received, accepted, retained, or applied by the Guarantor,
except for payments in Securities subordinated at least to the same
extent as the Subordinated Indebtedness, unless and until the Guaranteed
Indebtedness shall have been indefeasibly paid in full in cash. If any
sums shall be paid to the Guarantor by any Debtor or any other Person on
account of the Subordinated Indebtedness when such payment is not
permitted hereunder, such sums shall be held in trust by the Guarantor
for the benefit of the Agent (for the benefit of the Agent and the
Banks) and shall forthwith be paid to the Agent without affecting the
liability of the Guarantor under this Guaranty and may be applied by the
Agent against the Guaranteed Indebtedness in accordance with the terms
of the Reimbursement. Upon the request of the Agent, the Guarantor shall
execute, deliver, and endorse to the Agent such documentation as the
Agent may request to perfect, preserve, and enforce its rights
hereunder. For purposes of this Guaranty, the term "Subordinated
Indebtedness" means all indebtedness, liabilities, and obligations of
the Parent or any other party obligated at any time to pay any of the
Guaranteed Indebtedness other than the Guarantor (the Parent and such
other obligated parties (including, without limitation, any Contributing
Guarantors) are referred to herein as the "Debtors") to the Guarantor,
whether such indebtedness, liabilities, and obligations now exist or are
hereafter incurred or arise, or are direct, indirect, contingent,
primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such indebtedness, liabilities, or obligations
are evidenced by a note, contract, open account, or otherwise, and
irrespective of the Person or Persons in whose favor such indebtedness,
obligations, or liabilities may, at their inception, have been, or may
hereafter be created, or the manner in which they have been or may
hereafter be acquired by the Guarantor.
(b) The Guarantor agrees that any and all Liens (including,
without limitation, any judgment liens), upon any Debtor's assets
securing payment of any Subordinated Indebtedness shall be and remain
inferior and subordinate to any and all Liens, if any, upon any Debtor's
assets securing payment of the Guaranteed Indebtedness, or any part
thereof, regardless of whether such Liens in favor of the Guarantor, the
Agent, or any Bank presently exist or are hereafter created or attached.
Without the prior written consent of the Agent, until final repayment in
full of all Guaranteed Indebtedness, the Guarantor shall not (i) file
suit against any Debtor or exercise or enforce any other creditor's
right it may have against
Page 6
92
any Debtor (provided that the Guarantor may file proofs of claim against
the Parent or any other Debtor in any bankruptcy or insolvency
proceeding), or (ii) foreclose, repossess, sequester, or otherwise take
steps or institute any action or proceedings (judicial or otherwise,
including, without limitation, the commencement of, or joinder in, any
liquidation, bankruptcy, rearrangement, debtor's relief, or insolvency
proceeding) to enforce any obligations of any Debtor to the Guarantor or
any Liens held by the Guarantor on assets of any Debtor.
(c) In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency
proceeding involving any Debtor as debtor, the Agent shall have the
right to prove and vote any claim under the Subordinated Indebtedness
and to receive directly from the receiver, trustee, or other court
custodian all dividends, distributions, and payments made in respect of
the Subordinated Indebtedness, except payments in Securities
subordinated at least to the same extent as the Subordinated
Indebtedness, until the Guaranteed Indebtedness has been indefeasibly
paid in full in cash. The Agent may apply any such dividends,
distributions, and payments against the Guaranteed Indebtedness in
accordance with the terms of the Reimbursement Agreement.
(d) The Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated
Indebtedness shall contain a specific written notice thereon that the
indebtedness evidenced thereby is subordinated under the terms of this
Guaranty.
12. No amendment or waiver of any provision of this Guaranty or consent
to any departure by the Guarantor therefrom shall in any event be effective
unless the same shall be in writing and signed by the Agent and the Required
Banks except as otherwise provided in the Reimbursement Agreement. No failure on
the part of the Agent or any Bank to exercise, and no delay in exercising, any
right, power, or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
13. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by the Parent or others (including, without
limitation, any guarantor of the Guaranteed Indebtedness), with respect to any
of the Guaranteed Indebtedness shall, if the statute of limitations in favor of
the Guarantor against the Agent or any Bank shall have commenced to run, toll
the running of such statute of limitations and, if the period of such statute of
limitations shall have expired, prevent the operation of such statute of
limitations.
14. This Guaranty is for the benefit of the Agent (for the benefit of
the Agent and the Banks) and its successors and assigns, and in the event of an
assignment of the Guaranteed Indebtedness, or any part thereof, the rights and
benefits hereunder, to the extent applicable to the indebtedness so assigned,
may be transferred with such indebtedness. This Guaranty is binding not only on
the Guarantor, but on the Guarantor's successors and assigns.
Page 7
93
15. The Guarantor recognizes that the Agent and the Banks are relying
upon this Guaranty and the undertakings of the Guarantor hereunder and under the
other Transaction Documents to which the Guarantor is a party in making
extensions of credit to the Parent under the Reimbursement Agreement and further
recognizes that the execution and delivery of this Guaranty and the other
Transaction Documents to which the Guarantor is a party is a material inducement
to the Agent and the Banks in entering into the Reimbursement Agreement and
continuing to extend credit thereunder. The Guarantor hereby acknowledges that
there are no conditions to the full effectiveness of this Guaranty or any other
Transaction Document to which it is a party.
16. Any notice or demand to the Guarantor under or in connection with
this Guaranty or any other Transaction Document to which it is a party shall be
deemed effective if given to the Guarantor, at the address of the Parent in
accordance with the notice provisions in the Reimbursement Agreement.
17. The Guarantor shall pay on demand all Attorney Costs and all other
reasonable costs and expenses incurred by the Agent and the Banks in connection
with the administration, enforcement, or collection of this Guaranty.
18. The Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty, presentment, notice of protest, notice of dishonor,
notice of the incurring by the Parent of additional indebtedness, and all other
notices and demands with respect to the Guaranteed Indebtedness and this
Guaranty.
19. The Reimbursement Agreement, and all of the terms thereof, are
incorporated herein by reference the same as if stated verbatim herein, and the
Guarantor agrees that the Agent and the Banks may exercise any and all rights
granted to any of them under the Reimbursement Agreement and the other
Transaction Documents without affecting the validity or enforceability of this
Guaranty.
20. Notwithstanding any provision of this Guaranty to the contrary:
(a) The Guarantor understands and acknowledges that if the Agent
or any Bank forecloses, either by judicial foreclosure or by exercise of
power of sale, any deed of trust securing the indebtedness, that
foreclosure could impair or destroy any ability that the Guarantor may
have to seek reimbursement, contribution, or indemnification from the
Parent or others based on any right the Guarantor may have of
subrogation, reimbursement, contribution, or indemnification for any
amounts paid by the Guarantor under this Guaranty. The Guarantor further
understands and acknowledges that in the absence of this paragraph, such
potential impairment or destruction of the Guarantor's rights, if any,
may entitle the Guarantor to assert a defense to this Guaranty based on
Section 580d of the California Code of Civil Procedure as interpreted in
Union Bank x. Xxxxxxx, 265 Cal. App. 2d 40 (1968). By executing this
Guaranty, the Guarantor freely, irrevocably, and unconditionally (i)
waives and relinquishes that defense and agrees that the Guarantor will
be fully liable under this Guaranty even though the Agent or any Bank
may foreclose, either by judicial foreclosure or by exercise of power of
sale, any deed of trust securing the Guaranteed Indebtedness,
Page 8
94
(ii) agrees that the Guarantor will not assert that defense in any
action or proceeding which the Agent or any Bank may commence to enforce
this Guaranty, (iii) acknowledges and agrees that the rights and
defenses waived by the Guarantor in this Guaranty include any right or
defense that the Guarantor may have or be entitled to assert based upon
or arising out of any one or more of Sections 580a, 580b, 580d, or 726
of the California Code of Civil Procedure or Section 2848 of the
California Code, and (iv) acknowledges and agrees that the Agent or any
Bank is relying on this waiver in creating the Guaranteed Indebtedness,
and that this waiver is a material part of the consideration which the
Agent or any Bank is receiving for creating the Guaranteed Indebtedness.
(c) The Guarantor waives any rights and defenses that are or may
become available to the Guarantor by reason of Sections 2787 to 2855,
inclusive, of the California Civil Code.
(d) The Guarantor waives all rights and defenses that the
Guarantor may have because any of the indebtedness is secured by real
property. This means, among other things: (i) the Agent or any Bank may
collect from the Guarantor without first foreclosing on any real or
personal property collateral pledged by the Parent; and (ii) if the
Agent or any Bank forecloses on any real property collateral pledged by
the Parent (1) the amount of the indebtedness may be reduced only by the
price for which that collateral is sold at the foreclosure sale, even if
the collateral is worth more than the sale price, and (2) the Agent or
any Bank may collect from the Guarantor even if the Agent or any Bank,
by foreclosing on the real property collateral, has destroyed any right
the Guarantor may have to collect from the Parent. This is an
unconditional and irrevocable waiver of any rights and defenses the
Guarantor may have because any of the indebtedness is secured by real
property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.
21. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF THE GUARANTOR
WITH RESPECT TO THE GUARANTOR'S GUARANTY OF THE GUARANTEED INDEBTEDNESS AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.
THIS GUARANTY IS INTENDED BY THE GUARANTOR AS A FINAL AND COMPLETE EXPRESSION OF
THE TERMS OF THIS GUARANTY, AND NO COURSE OF DEALING AMONG THE GUARANTOR, THE
AGENT, AND THE BANKS, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY,
SUPPLEMENT, OR MODIFY ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS
AMONG THE GUARANTOR, THE AGENT, AND THE BANKS.
22. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA AND THE APPLICABLE LAWS OF THE U.S.
Page 9
95
EXECUTED as of the 11th day of July, 2001.
THE GUARANTOR:
XXXXXXXX-SONOMA STORES, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
XXXXXXXX-SONOMA DIRECT, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
XXXXXXXX-SONOMA RETAIL SERVICES, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
POTTERY BARN, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
POTTERY BARN KIDS, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
Page 10
96
XXXXXXXX CATALOG COMPANY, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
HOLD EVERYTHING, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
XXXXXXXX-SONOMA STORES, LLC
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
XXXXXXXX-SONOMA PUBLISHING, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
ELM STREET CATALOG COMPANY, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
Page 11
97
EXHIBIT D
FORM OF JOINDER AGREEMENT
EXHIBIT D - Cover Page
98
JOINDER AGREEMENT
This JOINDER AGREEMENT (the "Agreement") dated as of ____________, 200_,
is executed by the undersigned (the "Debtor") for the benefit of BANK OF
AMERICA, NATIONAL ASSOCIATION, in its capacity as administrative agent for the
Banks party to the hereafter identified Reimbursement Agreement (the "Agent")
and for the benefit of the Banks in connection with that certain Reimbursement
Agreement, dated as of July 11, 2001, among Xxxxxxxx-Sonoma, Inc. (the
"Parent"), the Agent, and the Banks from time to time party thereto (as such
agreement may be amended, restated, or otherwise modified, the "Reimbursement
Agreement"; capitalized terms not otherwise defined herein shall have the same
meaning as set forth in the Reimbursement Agreement).
RECITALS:
A. The Debtor is a Subsidiary of the Parent.
B. Proceeds of the Letters of Credit under the Reimbursement Agreement
will, in part, be utilized by the Debtor in connection with its business
operations.
C. As consideration for the benefits derived by the Debtor as described
in Recital B, the Debtor has agreed to become a party as a "Guarantor" to that
certain Guaranty Agreement, dated as of July 11, 2001, entered into by each of
the Guarantors pursuant to the terms of the Reimbursement Agreement for the
benefit of the Agent (the "Guaranty Agreement"). The Debtor now desires to
become a "Guarantor" under the Guaranty Agreement as required by the
Reimbursement Agreement.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Debtor hereby agrees as follows:
AGREEMENT:
1. The Debtor hereby assumes all the obligations of a "Guarantor" under
the Guaranty Agreement and agrees that it is a "Guarantor" and bound as a
"Guarantor" under the terms of the Guaranty Agreement as if it had been a
signatory thereto. In accordance with the foregoing and for valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Debtor irrevocably and unconditionally guarantees to the Agent and the Banks the
full and prompt payment and performance of the Guaranteed Indebtedness (as
defined in the Guaranty Agreement) upon the terms and conditions set forth in
the Guaranty Agreement.
2. This Agreement shall be deemed to be part of, and a modification to,
the Guaranty Agreement and shall be governed by all the terms and provisions of
the Guaranty Agreement, which terms are incorporated herein by reference, are
ratified and confirmed and shall continue in full force and effect as valid and
binding agreements of the Debtor enforceable against the Debtor. The Debtor
hereby waives notice of the Agent's or any Lender's acceptance of this
Agreement.
JOINDER AGREEMENT - Page 1
99
IN WITNESS WHEREOF, the Debtor has executed this Agreement as of the day
and year first written above.
GUARANTOR:
-----------------------------------------
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
Page 2
100
CLOSING CERTIFICATE
The undersigned, duly appointed and acting officer, on behalf of
XXXXXXXX-SONOMA, INC., a California corporation (the "Parent"), being duly
authorized, hereby delivers this Closing Certificate to BANK OF AMERICA,
NATIONAL ASSOCIATION (the "Agent"), for the benefit of the Banks, pursuant to
the certain Reimbursement Agreement dated as of July 11, 2001, among the Parent,
the Agent, and the Banks party thereto, as such agreement may be amended from
time to time, reference to which hereby is made (the "Reimbursement Agreement").
Terms defined in the Reimbursement Agreement, wherever used herein, shall have
the same meanings as are prescribed by the Reimbursement Agreement.
The undersigned hereby certifies to the Agent that, to the best of
his/her knowledge and based on an examination sufficient to enable him/her to
make an informed statement:
(a) All of the representations and warranties made under the
Reimbursement Agreement are true and correct as of the Closing Date.
(b) No Default or Event of Default exists as of the date hereof.
(c) All conditions to the Banks' taking any Letter of Credit
Action under Section 5.1 of the Reimbursement Agreement have occurred.
(d) Attached hereto as Exhibit A are true and correct copies of
all material consents or waivers, if any, necessary for the execution,
delivery, and performance by the Parent and each of the Guarantors of
the Transaction Documents to which it is a party.
Executed as of the Closing Date.
XXXXXXXX-SONOMA, INC.
By: /s/ XXXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxxx X. XxXxxxxx
----------------------------------
Title: SVP and Chief Financial Officer
-----------------------------------
CLOSING CERTIFICATE - Page 1
101
Schedule 1.1
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Existing Letters of Credit
[TO BE COMPLETED PRIOR TO CLOSING]
102
Schedule 5.1
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Government Certificates
California
Florida
Illinois
Massachusetts
Mississippi
Nevada
New York
New Jersey
Oklahoma
Pennsylvania
Tennessee
103
Schedule 5.2
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Governmental Restrictions
The Parent is currently being audited by the U.S. Customs Department and has
created reserves to cover a potential assessment that might be made in
connection with the audit. There is no guarantee, however, that the audit will
not have a Material Adverse Effect.
104
Schedule 6.4
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Operation of Business
The Parent's documentary letter of credit facility under the Letter of Credit
Agreement was increased from $65,000,000 to $95,000,000 on June 11, 2001.
105
Schedule 6.5
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Litigation and Judgments
Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, et. xx x. Xxxxxxxx-Sonoma, Inc., The Ruffoni
Family, et. al., Case No. 301-563 (filed March 8, 2000), Superior Court of
California (San Francisco). The class action lawsuit filed against the Parent
alleges physical injuries and emotional distress suffered and is seeking
approximately $22,500,000 in damages. The Parent believes that the matter is
covered by insurance and has referred the matter to its insurance carrier.
Although the Parent believes it has strong defenses, litigation is inherently
unpredictable and there is no guarantee the Parent will prevail and that the
outcomes of the case would not have a Material Adverse Effect.
Xxxxxx X. Xxxxxxxx x. Xxxxxxxx-Sonoma, Inc., Case No. BS041086 (filed January
31, 0000), Xxxxxxxx Xxxxx of California, Small Claims Division, County of Contra
Costa. This lawsuit filed against the Parent alleged damages to floor, couch and
wall of Plaintiff's home and Plaintiff was seeking approximately $2,000 in
damages. The Parent believed that the matter was covered by insurance and
referred the matter to its insurance carrier. The Parent appeared in court on
March 19, 2001 and a judgment was issued in favor of the Plaintiff in the amount
of $1,196.00, which amount will be paid.
Mariposa Lease Dispute. Dispute between landlord and the Parent (Tenant) for
unpaid costs of tenant improvements. The landlord (0000 Xxxxxx Xxxxxx) alleges
that the Parent owes an additional $1.2 million. The Parent seeks an accounting
from the landlord and general contractor for tenant improvement charges. The
landlord disputes the Parent's right to an accounting and has filed a lawsuit
against the Parent. There is no guarantee that the Parent will prevail and that
the outcome of the case would not have a Material Adverse Effect.
106
Schedule 6.9
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Debt
1. $40,000,000 7.20% Senior Notes Due August 8, 2005 issued by the Parent
pursuant to that certain Note Agreement dated as of August 1, 1995. The
outstanding principal balance as of April 29, 2001 was $28,572,000.
2. $14,000,000 aggregate initial principal amount pursuant to that certain
Lease Intended as Security dated as of January 25, 2000, between the
Parent and Banc of America Leasing & Capital, LLC. (See Schedule 10.2
regarding the lien filed with the Federal Aviation Administration). As
of April 29, 2001, the remaining principal balance on the synthetic
lease was approximately $12,241,000.
3. Approximately $499,000 outstanding as of April 29, 2001 under capital
leases (excluding the capital lease described in Item 2 above).
4. Other Debt outstanding on the Closing Date in a principal amount not to
exceed in the aggregate, together with all other Debt listed on this
Schedule 6.9 and the amount shown on the Parent's most recent financial
statement delivered pursuant to Section 8.2 of the Credit Agreement,
plus $100,000.
5. $95,000,000 letter of credit facility pursuant to that certain Letter of
Credit Agreement, between the Parent and Bank of America, dated as of
June 1, 1997, as amended. As of April 29, 2001 there were approximately
$39,281,000 of letters of credit issued under such Letter of Credit
Agreement.
6. $10,052,000 pursuant to that certain Master Equipment Lease Agreement
dated as of April 20, 2001 between Xxxxxxxx-Sonoma Stores, Inc. and
Xxxxxxxx-Sonoma Stores, LLC, as lessee, and Fleet Capital Corporation,
as lessor.
107
Schedule 6.10
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Taxes
INCOME AND FRANCHISE TAX -- CURRENT AUDITS:
ARIZONA. Although no formal assessment has been issued by Department of Revenue,
the auditor has estimated approximately $52,000 in additional taxes. The Parent
is currently reviewing the strength of its position during the audit years to
determine if this amount can be reduced.
TENNESSEE. There has been no formal assessment issued. The auditor is currently
reviewing Parent's support for a jobs credit taken during the years under audit.
The Parent believes there will be no audit adjustment, but there can be no
assurance of no adjustment.
SALES AND USE TAX -- CURRENT AUDITS:
BATON ROUGE. A $6,400 assessment is being protested. The Parent expects to be
able to have the assessment either significantly reduced or eliminated, but
there can be no assurance of any such adjustment.
CALIFORNIA. No formal or proposed assessments have been issued. The Parent
believes that any liabilities (for the period of January 1, 1998 through May 25,
2001), from the issues identified so far by the auditor will not have a Material
Adverse Effect, but there can be no assurance that other issues will not be
identified or have a Material Adverse Effect.
CONNECTICUT. The audit is approximately 75% complete. The Parent believes the
exposure to be immaterial, but there can be no assurance as to this conclusion.
MASSACHUSETTS. The Parent has agreed to an assessment of approximately $40,000.
A final assessment statement is forthcoming.
Texas. A formal assessment was issued, assessing tax liabilities relating to two
issues. The Parent is pursuing all reasonable avenues to reduce the assessment.
There can be no assurance that the assessment will not have a Material Adverse
Effect.
TENNESSEE. A proposed tax assessment of $1,324,884 has been issued. The Parent
is pursuing all reasonable avenues to reduce the assessment; however, there can
be no assurance that the assessment will not have a Material Adverse Effect.
Page 1 of 2
108
OTHER TAXES -- CURRENT AUDITS:
FLORIDA. Potential exposure from the recent Florida intangible tax audit should
not exceed $10,000. Parent's position is that no tax is due, but there can be no
assurance of avoiding liability.
Page 2 of 2
109
Schedule 6.12
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
ERISA Matters
None.
110
Schedule 6.14
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Subsidiaries; Capitalization
1. SUBSIDIARIES: Xxxxxxxx-Sonoma Stores, Inc.
Xxxxxxxx-Sonoma Direct, Inc.
Xxxxxxxx-Sonoma Retail Services, Inc.
Pottery Barn, Inc.
Pottery Barn Kids, Inc.
Xxxxxxxx Catalog Company, Inc.
Hold Everything, Inc.
Xxxxxxxx-Sonoma Stores, LLC
Elm Street Catalog Company, Inc.
Xxxxxxxx-Sonoma Canada, Inc.
Xxxxxxxx-Sonoma Publishing, Inc.
2. CAPITALIZATION:
CORPORATIONS
State of Percentage
Issuer Incorporation Authorized Stock Issued Stock Shareholder Interest
------ ------------- ---------------- ------------ ----------- --------
Xxxxxxxx- California 126,562,500 shares of 55,802,785
Sonoma, Inc. Common Stock and shares of
N/A N/A
7,500,000 shares of Common
Preferred Stock Stock(1)
Xxxxxxxx-Sonoma California 100 shares of 100 shares of Xxxxxxxx-
Stores, Inc. Common Stock Common Sonoma, Inc. 100%
Stock
Xxxxxxxx-Sonoma California 1,000 shares of 100 shares of Xxxxxxxx-
Direct, Inc. Common Stock Common Sonoma, Inc. 100%
Stock
Xxxxxxxx-Sonoma California 1,000 shares of 1,000 shares of Xxxxxxxx-
Retail Services, Common Stock Common Sonoma, Inc. 100%
Inc. Stock
----------
(1) As of April 20, 2001
Page 1 of 2
111
State of Percentage
Issuer Incorporation Authorized Stock Issued Stock Shareholder Interest
------ ------------- ---------------- ------------ ----------- --------
Pottery Barn, California 1,000 shares of 100 shares of Xxxxxxxx-
Inc. Common Stock Common Sonoma, Inc. 100%
Stock
Pottery Barn California 1,000 shares of 1,000 shares of Xxxxxxxx-
Kids, Inc. Common Stock Common Sonoma, Inc. 100%
Stock
Xxxxxxxx Catalog California 100 shares of 100 shares of Xxxxxxxx-
Company, Inc. Common Stock Common Sonoma, Inc. 100%
Stock
Hold Everything, California 1,000 shares of 100 shares of Xxxxxxxx-
Inc. Common Stock Common Sonoma, Inc. 100%
Stock
Elm Street California 1,000 shares of 1,000 shares of Xxxxxxxx-
Catalog Common Stock Common Sonoma, Inc. 100%
Company, Stock
Inc.
Xxxxxxxx-Sonoma Ontario, Unlimited shares 100 shares of Xxxxxxxx-
Canada, Inc. Canada of Common Stock Common Sonoma, Inc. 100%
Stock
Xxxxxxxx-Sonoma California 1,000 shares of 1,000 shares of Xxxxxxxx-
Publishing, Inc. Common Stock Common Sonoma, Inc. 100%
Stock
LIMITED LIABILITY COMPANIES
State of
Issuer Formation Members Units Percentage
------ --------- ------- ----- ----------
Xxxxxxxx-Sonoma Delaware Xxxxxxxx-Sonoma
Stores, LLC Stores, Inc. 100 100%
3. OPTIONS, WARRANTS, VOTING AGREEMENTS:
As of May 29, 2001 there were options outstanding covering 7,315,495
shares of Common Stock of the Parent.
Page 2 of 2
112
Schedule 6.15
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Material Agreements
None.
113
Schedule 6.19
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Environmental Matters
None.
114
Schedule 6.20
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Broker's Fees
None.
115
Schedule 6.21
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Employee Matters
None.
116
Schedule 8.4
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Investments
1. 23,535 shares of Il Fornaio (America) Corporation common stock. The
total investment was valued at $282,420 on April 29, 2001.
2. 937,234 shares of Series J Preferred Stock of XxxxxxxXxxxxxx.xxx, Inc.,
a Delaware corporation. The total investment was valued at $1,750,002 on
April 29, 2001.
3. See Schedule 6.14, Section 1, regarding Subsidiaries of the Parent.
117
Schedule 12.13
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Addresses for Notices
XXXXXXXX - SONOMA, INC.:
Xxxxxxxx-Sonoma, Inc.
0000 Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx XxXxxxxx, Chief Financial Officer
Telecopy No.: 000-000-0000
Page 1 of 5
118
Schedule 12.13
(cont.)
BANK OF AMERICA, NATIONAL ASSOCIATION (as the Agent)
Letter of Credit Applications:
Trade Finance
CA9-703-19-23
000 X. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxx Mendon
Telecopy No.: 000-000-0000
cc: Commercial Agency Management
Other Notices:
Commercial Agency Management
WA1-501-37-20
000 Xxxxx Xxxxxx, Xxxxx 00
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telecopy No.: 000-000-0000
Agent's Payment Instructions:
Bank of America, National Association
ABA #11100012
Dallas, Texas
Acct. # Corporate FTA 3750836479
Attention: Xxxxxxx Xxxxxxx
Reference: Xxxxxxxx-Sonoma
Page 2 of 5
119
Schedule 12.13
(cont.)
BANK OF AMERICA, NATIONAL ASSOCIATION (as a Bank)
CA5-102-LL-13
000 Xxxxxxxxxx Xx.
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx Xxxxxxx
Telecopy No.: 000-000-0000
Page 3 of 5
120
Schedule 12.13
(cont.)
FLEET NATIONAL BANK
Funding Notices:
000 Xxxxxxx Xxxxxx
Mail Code: MA DE 10008F
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Credit Contact:
000 Xxxxxxx Xxxxxx
Mail Code: MA DE 10008F
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopy No.: 000-000-0000
Operations Contact:
000 Xxxxxxx Xxxxxx
Mail Code: MA DE 10008F
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy No.: 000-000-0000
Page 4 of 5
121
Schedule 12.13
(cont.)
THE BANK OF NEW YORK
Funding Notices:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Commercial Loan Servicing Department
Credit Contact:
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxx Fuiks
Telecopy No.: 000-000-0000
Operations Contact:
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy No.: 000-000-0000
Page 5 of 5
122
GUARANTY AGREEMENT
(Subsidiary)
This GUARANTY AGREEMENT ("Guaranty"), dated as of July 11, 2001, is
executed and delivered by each of the undersigned (collectively and individually
referred to herein as the "Guarantor"), to and in favor of the Agent (as defined
below).
RECITALS:
X. Xxxxxxxx-Sonoma, Inc. (the "Parent"), the Banks party thereto
(together with their successors and assigns, the "Banks"), and Bank of America,
National Association, as administrative agent for the Banks (the "Agent"), are,
concurrently herewith entering into that certain Reimbursement Agreement dated
as of July 11, 2000 (such Reimbursement Agreement, as it may hereafter be
amended, restated, or otherwise modified from time to time, being hereinafter
referred to as the "Reimbursement Agreement"; capitalized terms not otherwise
defined herein shall have the same meaning as set forth for such terms in the
Reimbursement Agreement).
B. The Guarantor has directly and indirectly benefitted and will
directly and indirectly benefit from the Letters of Credit issued pursuant to
the Reimbursement Agreement.
C. The execution and delivery of this Guaranty is required by the
Reimbursement Agreement and is a condition to the Agent's taking any Letter of
Credit Action under the Reimbursement Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Guarantor hereby irrevocably and
unconditionally guarantees to the Agent, for the benefit of the Agent and the
Banks, the full and prompt payment and performance of the Guaranteed
Indebtedness (as defined below) upon the following terms:
1. The term "Guaranteed Indebtedness", as used herein means all of the
"Obligations", as defined in the Reimbursement Agreement and shall include,
without limitation, any and all post-petition interest and expenses (including,
without limitation, Attorney Costs) whether or not allowed under any bankruptcy,
insolvency, or other similar law; provided that, notwithstanding anything to the
contrary contained in this Guaranty, the Guaranteed Indebtedness shall be
limited to an aggregate amount equal to the greatest amount that would not
render the Guarantor's indebtedness, liabilities, or obligations hereunder
subject to avoidance under Sections 544, 548, or 550 of the Bankruptcy Code or
subject to being set aside or annulled under any applicable state law relating
to fraud on creditors; provided, further, that, for purposes of the immediately
preceding clauses, it shall be presumed that the Guaranteed Indebtedness
hereunder does not equal or exceed any aggregate amount which would render the
Guarantor's indebtedness, liabilities, or obligations hereunder subject to being
so avoided, set aside, or annulled, and the burden of proof to the contrary
shall be on the party asserting to the contrary. Subject to but without limiting
the generality of the foregoing sentence, the provisions of this Guaranty are
severable and, in any legally binding action or proceeding involving any state
corporate law or any bankruptcy, insolvency, fraudulent transfer, or other laws
of general application relating to the enforcement of creditors' rights and
general
Page 1
123
principles of equity, if the indebtedness, liabilities, or obligations of the
Guarantor hereunder would otherwise be held or determined to be void, invalid,
or unenforceable on account of the amount of its indebtedness, liabilities, or
obligations hereunder, then, notwithstanding any other provision of this
Guaranty to the contrary, the amount of such indebtedness, liabilities, or
obligations shall, for purposes of determining the Guarantor's obligations under
this Guaranty, without any further action by the Guarantor or any other Person,
be automatically limited and reduced to the greatest amount which is valid and
enforceable as determined in such action or proceeding.
2. The Guarantor, together with each guarantor under any other guaranty
(and specifically including each Guarantor hereunder), if any, relating to the
Reimbursement Agreement (the "Related Guaranties") which contain a contribution
provision similar to that set forth in this paragraph 2, agrees that it and all
such other guarantors (collectively, the "Contributing Guarantors") together
desire to allocate among themselves, in a fair and equitable manner, their
obligations arising under this Guaranty and the Related Guaranties. Accordingly,
in the event any payment or distribution is made by the Guarantor under this
Guaranty or a guarantor under a Related Guaranty (a "Funding Guarantor") that
exceeds its Fair Share (as defined below), that Funding Guarantor shall be
entitled to a contribution from each of the other Contributing Guarantors in the
amount of such other Contributing Guarantor's Fair Share Shortfall (as defined
below), with the result that all such contributions will cause each Contributing
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share;
provided, however, that the obligations to or from any Funding Guarantor as
described in this paragraph 2 shall be subordinate to the obligation of the
Guarantor to pay the Guaranteed Indebtedness as more fully set forth in
paragraph 11 hereof. "Fair Share" means, with respect to a Contributing
Guarantor as of any date of determination, an amount equal to (a) the ratio of
(i) the Adjusted Maximum Amount (as defined below) with respect to such
Contributing Guarantor to (ii) the aggregate of the Adjusted Maximum Amounts
with respect to all Contributing Guarantors, multiplied by (b) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty and the Related Guaranties in respect of the obligations
guaranteed. "Fair Share Shortfall" means, with respect to a Contributing
Guarantor as of any date of determination, the excess, if any, of the Fair Share
of such Contributing Guarantor over the Aggregate Payments of such Contributing
Guarantor. "Adjusted Maximum Amount" means, with respect to a Contributing
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Contributing Guarantor under this Guaranty or a Related
Guaranty, in each case determined in accordance with the provisions hereof and
thereof; provided that, solely for purposes of calculating the "Adjusted Maximum
Amount" with respect to any Contributing Guarantor for purposes of this
paragraph 2, the assets or liabilities arising by virtue of any rights to or
obligations of contribution hereunder or under any similar provision contained
in a Related Guaranty shall not be considered as assets or liabilities of such
Contributing Guarantor. "Aggregate Payments" means, with respect to a
Contributing Guarantor as of any date of determination, the aggregate amount of
all payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty and the Related Guaranties (including,
without limitation, in respect of this paragraph 2 or any similar provision
contained in a Related Guaranty). The amounts payable as contributions hereunder
and under similar provisions in the Related Guaranties shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Contributing Guarantors of their
obligations as set forth in this paragraph 2 or any similar provision contained
in a Related Guaranty
Page 2
124
shall not be construed in any way to limit the liability of any Contributing
Guarantor hereunder or under a Related Guaranty. Each Contributing Guarantor
under a Related Guaranty is a third party beneficiary to the contribution
agreement set forth in this paragraph 2.
3. This Guaranty shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance and not a guaranty of
collection, and the Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness. No
set-off, counterclaim, recoupment, reduction, or diminution of any obligation,
or any defense of any kind or nature (other than payment or performance) which
the Parent may have against the Agent, any Bank, or any other party, or which
the Guarantor may have against the Parent, the Agent, any Bank, or any other
party, shall be available to, or shall be asserted by, the Guarantor against the
Agent, any Bank, or any subsequent holder of the Guaranteed Indebtedness or any
part thereof or against payment of the Guaranteed Indebtedness or any part
thereof.
4. If the Guarantor becomes liable for any indebtedness owing by the
Parent to the Agent or any Bank by endorsement or otherwise, other than under
this Guaranty, such liability shall not be in any manner impaired or affected
hereby, and the rights of the Agent and the Banks hereunder shall be cumulative
of any and all other rights that the Agent and the Banks may ever have against
the Guarantor. The exercise by the Agent and the Banks of any right or remedy
hereunder or under any other instrument, or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
5. In the event of default by the Parent in payment or performance of
the Guaranteed Indebtedness, or any part thereof, when such Guaranteed
Indebtedness becomes due, whether by its terms, by acceleration, or otherwise,
the Guarantor shall promptly pay the amount due thereon to the Agent, for the
benefit of the Agent and the Banks, without notice or demand in lawful currency
of the U.S., and it shall not be necessary for the Agent or any Bank, in order
to enforce such payment by the Guarantor, first to institute suit or exhaust its
remedies against the Parent or others liable on such Guaranteed Indebtedness, or
to enforce any rights against any collateral which shall ever have been given to
secure such Guaranteed Indebtedness. In the event such payment is made by the
Guarantor, then the Guarantor shall be subrogated to the rights then held by the
Agent and the Banks with respect to the Guaranteed Indebtedness to the extent to
which the Guaranteed Indebtedness was discharged by the Guarantor and, in
addition, upon payment by the Guarantor of any sums to the Agent hereunder, all
rights of the Guarantor against the Parent, any other guarantor of the
Guaranteed Indebtedness, or any collateral arising as a result therefrom by way
of right of subrogation, reimbursement, or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full of the Guaranteed Indebtedness and no such right or remedy of subrogation,
reimbursement or otherwise shall be exercised or otherwise entered (except that
proofs of claim may be filed in a bankruptcy or insolvency proceeding) unless
and until the Guaranteed Indebtedness has been indefeasibly paid in full.
6. If acceleration of the time for payment of any amount payable by the
Parent under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of the Parent, all such amounts otherwise subject
to acceleration under the terms of the Guaranteed Indebtedness
Page 3
125
shall nonetheless be payable by the Guarantor hereunder forthwith on demand by
the Agent or any Bank.
7. The Guarantor hereby agrees that its obligations under this Guaranty
shall not be released, discharged, diminished, impaired, reduced, or affected
for any reason or by the occurrence of any event, including, without limitation,
one or more of the following occurrences or events, whether or not with notice
to or the consent of the Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any collateral now or hereafter
securing any or all of the Guaranteed Indebtedness; (b) any partial release of
the liability of the Guarantor hereunder, or the full or partial release of any
other guarantor of the Guaranteed Indebtedness from liability for any or all of
the Guaranteed Indebtedness; (c) any disability of the Parent, or the
dissolution, insolvency, or bankruptcy of the Parent, the Guarantor, or any
other party at any time liable for the payment of any or all of the Guaranteed
Indebtedness; (d) any renewal, extension, modification, waiver, amendment, or
rearrangement of any or all of the Guaranteed Indebtedness or any instrument,
document, or agreement evidencing, securing, or otherwise relating to any or all
of the Guaranteed Indebtedness; (e) any adjustment, indulgence, forbearance,
waiver, or compromise that may be granted or given by the Agent or any Bank to
the Parent, the Guarantor, or any other party ever liable for any or all of the
Guaranteed Indebtedness; (f) any neglect, delay, omission, failure, or refusal
of the Agent or any Bank to take or prosecute any action for the collection of
any of the Guaranteed Indebtedness or to foreclose or take or prosecute any
action in connection with any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Guaranteed Indebtedness;
(g) the unenforceability or invalidity of any or all of the Guaranteed
Indebtedness or of any instrument, document, or agreement evidencing, securing,
or otherwise relating to any or all of the Guaranteed Indebtedness; (h) any
payment by the Parent or any other party to the Agent or any Bank is held to
constitute a preference under applicable bankruptcy or insolvency law or if for
any other reason the Agent or any Bank is required to refund any payment or pay
the amount thereof to someone else; (i) the settlement or compromise of any of
the Guaranteed Indebtedness; (j) the non-perfection of any Lien securing any or
all of the Guaranteed Indebtedness; (k) any impairment of any collateral
securing any or all of the Guaranteed Indebtedness; (l) the failure of the Agent
or any Bank to sell any collateral securing any or all of the Guaranteed
Indebtedness in a commercially reasonable manner or as otherwise required by
law; (m) any change in the corporate existence, structure, or ownership of the
Parent; or (n) any other circumstance which might otherwise constitute a defense
available to, or discharge of, the Parent, the Guarantor, or any other party at
any time liable for the payment of any or all of the Guaranteed Indebtedness
other than payment of the Guaranteed Indebtedness.
8. The Guarantor represents and warrants as follows:
(a) All of the representations and warranties in the
Reimbursement Agreement relating to the Guarantor are true and correct
as of the date hereof and on each date the representations and
warranties hereunder are restated pursuant to the Transaction Documents
with the same force and effect as if such representations and warranties
had been made on and as of such date except to the extent that such
representations and warranties relate specifically to another date or to
the extent that a fact, event, or circumstance has occurred
Page 4
126
that makes such representation or warranty untrue but which is not
prohibited to occur or exist (or which does not cause a Default or an
Event of Default) under the Transaction Documents.
(b) The value of the consideration received and to be received
by the Guarantor as a result of the Parent, the Agent, and the Banks
entering into the Reimbursement Agreement and the Guarantor's executing
and delivering this Guaranty and the other Transaction Documents to
which it is a party is reasonably worth at least as much as the
liability and obligation of the Guarantor hereunder and thereunder, and
the Reimbursement Agreement and the extension of credit to the Parent
thereunder have benefitted and may reasonably be expected to benefit the
Guarantor directly or indirectly. Execution and delivery of this
Guaranty and the other Transaction Documents to which the Guarantor is a
party is necessary or convenient to the conduct, promotion, and
attainment of the business of the Guarantor.
(c) The Guarantor has, independently and without reliance upon
the Agent or any Bank and based upon such documents and information as
the Guarantor has deemed appropriate, made its own analysis and decision
to enter into the Transaction Documents to which it is a party.
(d) The Guarantor has adequate means to obtain from the Parent
on a continuing basis information concerning the financial condition and
assets of the Parent, and the Guarantor is not relying upon the Agent or
the Banks to provide (and neither the Agent nor any Bank shall have any
duty to provide) any such information to the Guarantor either now or in
the future.
9. The Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or any Bank has any commitment
under the Reimbursement Agreement, the Guarantor will comply with all covenants
set forth in the Reimbursement Agreement specifically applicable to the
Guarantor, the terms of which are incorporated herein by reference.
10. During the existence of an Event of Default, the Agent and the Banks
shall have the right to set-off and apply against this Guaranty or the
Guaranteed Indebtedness or both, at any time and without notice to the
Guarantor, any and all deposits (general or special, time or demand, provisional
or final, but excluding any account established by the Guarantor as a fiduciary
for another party) or other sums at any time credited by or owing from the Agent
and the Banks to the Guarantor whether or not the Guaranteed Indebtedness is
then due and irrespective of whether or not the Agent or any Bank shall have
made any demand under this Guaranty. Each Bank agrees promptly to notify the
Parent (with a copy to the Agent) after any such set-off and application;
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights and remedies of the Agent and the Banks
hereunder are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Agent or any Bank may have.
Page 5
127
11. (a) The Guarantor hereby agrees that the Subordinated
Indebtedness (as defined below) shall be subordinate and junior in right
of payment to the prior indefeasible payment in full of all Guaranteed
Indebtedness as herein provided. The Subordinated Indebtedness shall not
be payable, and no payment of principal, interest, or other amounts on
account thereof, and no property or guarantee of any nature to secure or
pay the Subordinated Indebtedness or any part thereof shall be made or
given, directly or indirectly by or on behalf of any Debtor (as defined
below) or received, accepted, retained, or applied by the Guarantor
unless and until the Guaranteed Indebtedness shall have been
indefeasibly paid in full in cash; except that prior to occurrence of an
Event of Default, the Guarantor shall have the right to receive payments
on the Subordinated Indebtedness made in the ordinary course of business
unless, and except to the extent that, the payment or receipt of such
payments is prohibited or otherwise restricted by the Reimbursement
Agreement or another Transaction Document other than this Guaranty.
During the existence of a Default, no payments of principal or interest
may be made or given, directly or indirectly, by or on behalf of any
Debtor or received, accepted, retained, or applied by the Guarantor,
except for payments in Securities subordinated at least to the same
extent as the Subordinated Indebtedness, unless and until the Guaranteed
Indebtedness shall have been indefeasibly paid in full in cash. If any
sums shall be paid to the Guarantor by any Debtor or any other Person on
account of the Subordinated Indebtedness when such payment is not
permitted hereunder, such sums shall be held in trust by the Guarantor
for the benefit of the Agent (for the benefit of the Agent and the
Banks) and shall forthwith be paid to the Agent without affecting the
liability of the Guarantor under this Guaranty and may be applied by the
Agent against the Guaranteed Indebtedness in accordance with the terms
of the Reimbursement. Upon the request of the Agent, the Guarantor shall
execute, deliver, and endorse to the Agent such documentation as the
Agent may request to perfect, preserve, and enforce its rights
hereunder. For purposes of this Guaranty, the term "Subordinated
Indebtedness" means all indebtedness, liabilities, and obligations of
the Parent or any other party obligated at any time to pay any of the
Guaranteed Indebtedness other than the Guarantor (the Parent and such
other obligated parties (including, without limitation, any Contributing
Guarantors) are referred to herein as the "Debtors") to the Guarantor,
whether such indebtedness, liabilities, and obligations now exist or are
hereafter incurred or arise, or are direct, indirect, contingent,
primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such indebtedness, liabilities, or obligations
are evidenced by a note, contract, open account, or otherwise, and
irrespective of the Person or Persons in whose favor such indebtedness,
obligations, or liabilities may, at their inception, have been, or may
hereafter be created, or the manner in which they have been or may
hereafter be acquired by the Guarantor.
(b) The Guarantor agrees that any and all Liens (including,
without limitation, any judgment liens), upon any Debtor's assets
securing payment of any Subordinated Indebtedness shall be and remain
inferior and subordinate to any and all Liens, if any, upon any Debtor's
assets securing payment of the Guaranteed Indebtedness, or any part
thereof, regardless of whether such Liens in favor of the Guarantor, the
Agent, or any Bank presently exist or are hereafter created or attached.
Without the prior written consent of the Agent, until final repayment in
full of all Guaranteed Indebtedness, the Guarantor shall not (i) file
suit against any Debtor or exercise or enforce any other creditor's
right it may have against
Page 6
128
any Debtor (provided that the Guarantor may file proofs of claim against
the Parent or any other Debtor in any bankruptcy or insolvency
proceeding), or (ii) foreclose, repossess, sequester, or otherwise take
steps or institute any action or proceedings (judicial or otherwise,
including, without limitation, the commencement of, or joinder in, any
liquidation, bankruptcy, rearrangement, debtor's relief, or insolvency
proceeding) to enforce any obligations of any Debtor to the Guarantor or
any Liens held by the Guarantor on assets of any Debtor.
(c) In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency
proceeding involving any Debtor as debtor, the Agent shall have the
right to prove and vote any claim under the Subordinated Indebtedness
and to receive directly from the receiver, trustee, or other court
custodian all dividends, distributions, and payments made in respect of
the Subordinated Indebtedness, except payments in Securities
subordinated at least to the same extent as the Subordinated
Indebtedness, until the Guaranteed Indebtedness has been indefeasibly
paid in full in cash. The Agent may apply any such dividends,
distributions, and payments against the Guaranteed Indebtedness in
accordance with the terms of the Reimbursement Agreement.
(d) The Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated
Indebtedness shall contain a specific written notice thereon that the
indebtedness evidenced thereby is subordinated under the terms of this
Guaranty.
12. No amendment or waiver of any provision of this Guaranty or consent
to any departure by the Guarantor therefrom shall in any event be effective
unless the same shall be in writing and signed by the Agent and the Required
Banks except as otherwise provided in the Reimbursement Agreement. No failure on
the part of the Agent or any Bank to exercise, and no delay in exercising, any
right, power, or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
13. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by the Parent or others (including, without
limitation, any guarantor of the Guaranteed Indebtedness), with respect to any
of the Guaranteed Indebtedness shall, if the statute of limitations in favor of
the Guarantor against the Agent or any Bank shall have commenced to run, toll
the running of such statute of limitations and, if the period of such statute of
limitations shall have expired, prevent the operation of such statute of
limitations.
14. This Guaranty is for the benefit of the Agent (for the benefit of
the Agent and the Banks) and its successors and assigns, and in the event of an
assignment of the Guaranteed Indebtedness, or any part thereof, the rights and
benefits hereunder, to the extent applicable to the indebtedness so assigned,
may be transferred with such indebtedness. This Guaranty is binding not only on
the Guarantor, but on the Guarantor's successors and assigns.
Page 7
129
15. The Guarantor recognizes that the Agent and the Banks are relying
upon this Guaranty and the undertakings of the Guarantor hereunder and under the
other Transaction Documents to which the Guarantor is a party in making
extensions of credit to the Parent under the Reimbursement Agreement and further
recognizes that the execution and delivery of this Guaranty and the other
Transaction Documents to which the Guarantor is a party is a material inducement
to the Agent and the Banks in entering into the Reimbursement Agreement and
continuing to extend credit thereunder. The Guarantor hereby acknowledges that
there are no conditions to the full effectiveness of this Guaranty or any other
Transaction Document to which it is a party.
16. Any notice or demand to the Guarantor under or in connection with
this Guaranty or any other Transaction Document to which it is a party shall be
deemed effective if given to the Guarantor, at the address of the Parent in
accordance with the notice provisions in the Reimbursement Agreement.
17. The Guarantor shall pay on demand all Attorney Costs and all other
reasonable costs and expenses incurred by the Agent and the Banks in connection
with the administration, enforcement, or collection of this Guaranty.
18. The Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty, presentment, notice of protest, notice of dishonor,
notice of the incurring by the Parent of additional indebtedness, and all other
notices and demands with respect to the Guaranteed Indebtedness and this
Guaranty.
19. The Reimbursement Agreement, and all of the terms thereof, are
incorporated herein by reference the same as if stated verbatim herein, and the
Guarantor agrees that the Agent and the Banks may exercise any and all rights
granted to any of them under the Reimbursement Agreement and the other
Transaction Documents without affecting the validity or enforceability of this
Guaranty.
20. Notwithstanding any provision of this Guaranty to the contrary:
(a) The Guarantor understands and acknowledges that if the Agent
or any Bank forecloses, either by judicial foreclosure or by exercise of
power of sale, any deed of trust securing the indebtedness, that
foreclosure could impair or destroy any ability that the Guarantor may
have to seek reimbursement, contribution, or indemnification from the
Parent or others based on any right the Guarantor may have of
subrogation, reimbursement, contribution, or indemnification for any
amounts paid by the Guarantor under this Guaranty. The Guarantor further
understands and acknowledges that in the absence of this paragraph, such
potential impairment or destruction of the Guarantor's rights, if any,
may entitle the Guarantor to assert a defense to this Guaranty based on
Section 580d of the California Code of Civil Procedure as interpreted in
Union Bank x. Xxxxxxx, 265 Cal. App. 2d 40 (1968). By executing this
Guaranty, the Guarantor freely, irrevocably, and unconditionally (i)
waives and relinquishes that defense and agrees that the Guarantor will
be fully liable under this Guaranty even though the Agent or any Bank
may foreclose, either by judicial foreclosure or by exercise of power of
sale, any deed of trust securing the Guaranteed Indebtedness,
Page 8
130
(ii) agrees that the Guarantor will not assert that defense in any
action or proceeding which the Agent or any Bank may commence to enforce
this Guaranty, (iii) acknowledges and agrees that the rights and
defenses waived by the Guarantor in this Guaranty include any right or
defense that the Guarantor may have or be entitled to assert based upon
or arising out of any one or more of Sections 580a, 580b, 580d, or 726
of the California Code of Civil Procedure or Section 2848 of the
California Code, and (iv) acknowledges and agrees that the Agent or any
Bank is relying on this waiver in creating the Guaranteed Indebtedness,
and that this waiver is a material part of the consideration which the
Agent or any Bank is receiving for creating the Guaranteed Indebtedness.
(c) The Guarantor waives any rights and defenses that are or may
become available to the Guarantor by reason of Sections 2787 to 2855,
inclusive, of the California Civil Code.
(d) The Guarantor waives all rights and defenses that the
Guarantor may have because any of the indebtedness is secured by real
property. This means, among other things: (i) the Agent or any Bank may
collect from the Guarantor without first foreclosing on any real or
personal property collateral pledged by the Parent; and (ii) if the
Agent or any Bank forecloses on any real property collateral pledged by
the Parent (1) the amount of the indebtedness may be reduced only by the
price for which that collateral is sold at the foreclosure sale, even if
the collateral is worth more than the sale price, and (2) the Agent or
any Bank may collect from the Guarantor even if the Agent or any Bank,
by foreclosing on the real property collateral, has destroyed any right
the Guarantor may have to collect from the Parent. This is an
unconditional and irrevocable waiver of any rights and defenses the
Guarantor may have because any of the indebtedness is secured by real
property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.
21. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF THE GUARANTOR
WITH RESPECT TO THE GUARANTOR'S GUARANTY OF THE GUARANTEED INDEBTEDNESS AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.
THIS GUARANTY IS INTENDED BY THE GUARANTOR AS A FINAL AND COMPLETE EXPRESSION OF
THE TERMS OF THIS GUARANTY, AND NO COURSE OF DEALING AMONG THE GUARANTOR, THE
AGENT, AND THE BANKS, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY,
SUPPLEMENT, OR MODIFY ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS
AMONG THE GUARANTOR, THE AGENT, AND THE BANKS.
22. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA AND THE APPLICABLE LAWS OF THE U.S.
Page 9
131
EXECUTED as of the 11th day of July, 2001.
THE GUARANTOR:
XXXXXXXX-SONOMA STORES, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
XXXXXXXX-SONOMA DIRECT, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
XXXXXXXX-SONOMA RETAIL SERVICES, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
POTTERY BARN, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
POTTERY BARN KIDS, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
Page 10
132
XXXXXXXX CATALOG COMPANY, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
HOLD EVERYTHING, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
XXXXXXXX-SONOMA STORES, LLC
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
XXXXXXXX-SONOMA PUBLISHING, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
XXX XXXXXX CATALOG COMPANY, INC.
By:
-------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
Page 11
