EXHIBIT 10.3
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REIMBURSEMENT AGREEMENT
between
XXXXXXXX-SONOMA, INC.
and
FLEET NATIONAL BANK
dated as of
July 2, 2002
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TABLE OF CONTENTS
ARTICLE 1 - Interpretation of this Agreement..........................................................1
Section 1.1 Definitions.....................................................................1
Section 1.2 Other Interpretive Provisions................................................. 10
Section 1.3 Accounting Terms and Determinations............................................11
ARTICLE 2 - Credit Facility..........................................................................11
Section 2.1 The Letter of Credit Commitment................................................11
Section 2.2 Requesting Letter of Credit Actions............................................11
Section 2.3 Reimbursement of Payments Under Letters of Credit..............................12
Section 2.4 Nature of Bank's Funding; Interest on Unreimbursed Drawings....................12
Section 2.5 Obligations Absolute...........................................................12
Section 2.6 Role of the Bank...............................................................13
Section 2.7 Applicability of UCP...........................................................14
Section 2.8 Letter of Credit Fees and Expenses.............................................14
Section 2.9 Termination....................................................................14
ARTICLE 3 - Taxes....................................................................................14
Section 3.1 Withholding Taxes..............................................................14
Section 3.2 Stamp Taxes; Etc...............................................................15
Section 3.3 Tax Indemnification............................................................15
ARTICLE 4 - Guaranties...............................................................................15
Section 4.1 Guaranties.....................................................................15
Section 4.2 New Guarantors.................................................................16
ARTICLE 5 - Conditions Precedent.....................................................................16
Section 5.1 Initial Letter of Credit Action................................................16
Section 5.2 All Letter of Credit Actions...................................................18
ARTICLE 6 - Representations and Warranties...........................................................19
Section 6.1 Power and Authority............................................................19
Section 6.2 Financial Condition............................................................19
Section 6.3 Corporate and Similar Action; No Breach........................................19
Section 6.4 Operation of Business..........................................................20
Section 6.5 Litigation and Judgments.......................................................20
Section 6.6 Rights in Properties; Liens....................................................20
Section 6.7 Enforceability.................................................................20
Section 6.8 Approvals......................................................................20
Section 6.9 Debt...........................................................................20
Section 6.10 Taxes..........................................................................20
Section 6.11 Margin Securities..............................................................21
Section 6.12 ERISA..........................................................................21
Section 6.13 Disclosure.....................................................................21
Section 6.14 Subsidiaries; Capitalization...................................................21
Section 6.15 Material Agreements............................................................22
Section 6.16 Compliance with Laws...........................................................22
Section 6.17 Investment Company Act.........................................................22
Section 6.18 Public Utility Holding Company Act.............................................22
Section 6.19 Environmental Matters..........................................................22
Section 6.20 Broker's Fees..................................................................23
Section 6.21 Employee Matters...............................................................24
Section 6.22 Solvency.......................................................................24
ARTICLE 7 - Covenants................................................................................24
Section 7.1 Credit Agreement Covenants.....................................................24
Section 7.2 Changes to Other Reimbursement Agreements......................................24
Section 7.3 Further Assurances.............................................................24
ARTICLE 8 - Default..................................................................................25
Section 8.1 Events of Default..............................................................25
Section 8.2 Remedies.......................................................................27
Section 8.3 Performance by the Bank........................................................27
Section 8.4 Set-off........................................................................28
Section 8.5 Continuance of Default.........................................................28
ARTICLE 9 - Miscellaneous............................................................................28
Section 9.1 Expenses.......................................................................28
Section 9.2 Indemnity by the Parent........................................................28
Section 9.3 Limitation of Liability........................................................29
Section 9.4 No Duty........................................................................29
Section 9.5 No Fiduciary Relationship......................................................29
Section 9.6 Equitable Relief...............................................................29
Section 9.7 No Waiver; Cumulative Remedies.................................................30
Section 9.8 Binding Effect; Successors; Participations and Assignments.....................30
Section 9.9 Survival.......................................................................30
Section 9.10 Entire Agreement...............................................................30
Section 9.11 Amendments and Waivers.........................................................31
Section 9.12 Maximum Interest Rate..........................................................31
Section 9.13 Notices........................................................................31
Section 9.14 Governing Law; Venue; Service of Process.......................................31
Section 9.15 Counterparts...................................................................32
Section 9.16 Severability...................................................................32
Section 9.17 Headings.......................................................................32
Section 9.18 Construction...................................................................32
Section 9.19 Independence of Covenants......................................................32
Section 9.20 Waiver of Jury Trial...........................................................32
Section 9.21 Confidentiality................................................................33
Section 9.22 Termination of Credit Agreement................................................33
EXHIBITS:
Exhibit A - Form of Subsidiary Guaranty
Exhibit B - Form of Joinder Agreement
SCHEDULES:
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
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 9.13 - Addresses for Notices
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT, dated as of July 2, 2002, is between
XXXXXXXX-SONOMA, INC., a corporation duly organized and validly existing under
the laws of the State of California (the "Parent") and FLEET NATIONAL BANK, a
national banking association, (the "Bank").
R E C I T A L S:
A. The Parent has requested that the Bank extend a $32,500,000 unsecured
credit facility to the Parent for the issuance of commercial letters of credit.
B. The Bank is 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 Bank be deemed an Affiliate of the Parent or any Subsidiary of the Parent.
"Agreement" means this Reimbursement Agreement, as it may be amended,
restated, or otherwise modified.
"Agent" has the meaning specified in the Credit Agreement.
"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.
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"Bank-Related Persons" means the Bank, each of the Bank's Affiliates, and
the officers, directors, employees, agents, and attorneys-in-fact of such
Persons and Affiliates.
"Bankruptcy Code" has the meaning specified in Section 8.1(d).
"Base Rate" means for any day the greater of (a) the variable per annum
rate of interest so designated from time to time by the Bank as its "prime rate"
or (b) the Federal Funds Rate plus one- half percent (0.50%) per annum (rounded
upwards, if necessary, to the next one-eighth of one percent (0.125%)). The Base
Rate is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer by the Bank.
"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 Massachusetts.
"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.
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"Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of August 23, 2000, among the Parent, Bank of America,
National Association (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 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; (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 Bank 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 employee benefit 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.
"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.
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"Dollars" and "$" mean lawful money of the U.S.
"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
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 8.1.
"Existing Letter of Credit Exposure" means the portion of the Bank's
"Commitment" (as defined in the Existing Reimbursement Agreement) that is
outstanding, whether drawn or undrawn, as of any date of determination.
"Existing Reimbursement Agreement" means that certain Reimbursement
Agreement dated as of July 11, 2001, among Parent, Bank of America, National
Association, as administrative agent, and the banks party thereto, as amended
from time to time.
"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 the Bank on such day on such
transactions as determined by the Bank.
"Fee Letter" has the meaning specified in Section 2.8.
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"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, 2003.
"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 Bank 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.
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"Guaranty" means the Subsidiary Guaranty or any other guaranty agreement
executed and delivered by a Person in favor of the Bank, and any and 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 9.2.
"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 B.
"Letter of Credit" means any commercial letter of credit issued or
outstanding hereunder. A Letter of Credit may be issued by the Bank 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 Bank.
"Letter of Credit Cash Collateral Account" means a blocked deposit
account maintained by the Parent with the Bank in which the Parent hereby grants
a security interest to the Bank 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 Bank may reasonably request to further assure and confirm
such security interest.
"Letter of Credit Expiration Date" means the date which is one hundred
fifty (150) days 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.
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"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 Bank 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 9.12.
"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.
"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 Bank, 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.
"Other Reimbursement Agreements" means (a) that certain Reimbursement
Agreement dated as of July 2, 2002, between the Parent and Bank of America,
National Association, 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,
and (b) that certain Reimbursement Agreement dated as of July 2, 2002, between
the Parent and The Bank of New York, and each other agreement, document, or
instrument entered into or
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delivered in connection therewith, as such agreements, documents, and
instruments may be amended, restated, or otherwise modified from time to time,
and "Other Reimbursement Agreement" means any one of such agreements, documents,
and instruments.
"Other Taxes" has the meaning specified in Section 3.2.
"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.
"Permitted Liens" means any Liens permitted under the Credit Agreement.
"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 Bank, located at 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx.
"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.
"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.
"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.
"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
Page 8
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.
"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, 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, (a) if
the holders of such Capital Stock (i) 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 (ii) 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 (b) in the case of Capital Stock which is not
issued by a corporation, if such ownership interests constitute a majority
voting interest.
"Subsidiary Guarantor" means a domestic Subsidiary of the Parent which
is, or is required to be, a Guarantor hereunder.
"Subsidiary Guaranty" means a guaranty agreement executed and delivered
by each of the Subsidiary Guarantors in favor of the Bank, in substantially the
form of Exhibit A, as such guaranty agreement may be amended, restated, or
otherwise modified from time to time.
"Taxes" has the meaning specified in Section 3.1.
Page 9
"Transaction Documents" means this Agreement, each Letter of Credit
Application, each Guaranty (including, without limitation, the Subsidiary
Guaranty), the Fee Letter, 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 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 New York.
"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).
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 "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.
Page 10
(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
Bank by way of consent, approval, or waiver shall be deemed modified by
the phrase "in its 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. The provisions of
Section 1.3 of the Credit Agreement, as such Section is in effect on the Closing
Date, are hereby incorporated herein by this reference the same as if fully
stated herein.
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 Bank 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 Bank shall take such Letter
of Credit Actions (other than issuing Letters of Credit) as the Parent may from
time to time request; provided, however, that (i) the Letter of Credit Usage
shall not exceed $32,500,000 at any time, and (ii) the sum of the Letter of
Credit Usage plus the Existing Letter of Credit Exposure shall not exceed
$35,000,000 at any time. Unless consented to by the Bank, no Letter of Credit
may have an expiration date more than one hundred fifty (150) days 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
Dollars by delivering a Letter of Credit Application therefor to the Bank by
notice delivered in accordance with Section 9.13 (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 12:00 noon (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 Bank in its sole discretion, including, without limitation, the current form
of Letter of Credit Application in use by the Bank. The Bank 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.
Page 11
Section 2.3 Reimbursement of Payments Under Letters of Credit. Promptly
upon receiving notice of any drawing under a Letter of Credit, the Bank shall
notify the Parent. Within one (1) Business Day of such notification from the
Bank to the Parent, the Parent shall reimburse the Bank for any payment that the
Bank makes under a Letter of Credit. The Bank may, but shall 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 Bank.
Section 2.4 Nature of Bank's Funding; Interest on Unreimbursed Drawings.
If the Parent fails to reimburse the Bank for a drawing under a Letter of
Credit, the funding by the Bank shall be deemed to be a loan by the Bank to the
Parent. Any amount funded by the Bank hereunder shall be payable by the Parent
upon demand of the Bank, and shall bear interest, from the date of such drawing
through but excluding the date that payment is made, at a rate per annum equal
to the Default Rate.
Section 2.5 Obligations Absolute. The obligation of the Parent to pay to
the Bank the amount of any payment made by the Bank 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;
(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 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 Bank 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 Bank 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;
Page 12
(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 Bank, or any delay or interruption in
any such message;
(k) any error, neglect, or default of any correspondent of the
Bank 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 Bank;
(m) so long as the Bank 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 Bank in connection with such
Letter of Credit; and
(n) any other circumstances whatsoever where the Bank has acted in
good faith.
In addition, the Parent will examine within three (3) Business Days 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 Bank in writing. The Parent
shall be conclusively deemed to have waived any such claim against the Bank and
its correspondents unless such notice is given as aforesaid.
Section 2.6 Role of the Bank. The Parent agrees that, in paying any
drawing under a Letter of Credit, the Bank 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. 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 Bank-
Page 13
Related Person, nor any of the respective correspondents, participants, or
assignees of the Bank, shall be liable or responsible for any of the matters
described in Section 2.5. In furtherance and not in limitation of the foregoing,
the Bank 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 Bank 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 2.7 Applicability of UCP. Subject to applicable law, unless
otherwise expressly agreed by the Bank and the Parent when a Letter of Credit is
issued, performance under Letters of Credit by the Bank, its correspondents, and
beneficiaries will be governed by 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).
Section 2.8 Letter of Credit Fees and Expenses. The Parent shall pay
directly to the Bank for its sole account its customary documentary and
processing charges in accordance with that certain letter agreement between the
Parent and the Bank dated as of the date hereof (as such letter agreement may be
amended, restated or otherwise modified from time to time, the "Fee Letter").
Such fees and charges are nonrefundable.
Section 2.9 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 Bank 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 Bank 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.
ARTICLE 3
Taxes
Section 3.1 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 the Bank 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 taxes imposed on or measured by the
Bank's income, and franchise taxes imposed on the Bank, by the jurisdiction
under the laws of which the Bank is organized, located, or doing business or any
political subdivision thereof (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 the Bank, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including, without limitation,
Page 14
deductions applicable to additional sums payable under this Section 3.1 and
Section 3.2) the Bank 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 Bank the original or a certified
copy of a receipt evidencing payment thereof.
Section 3.2 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").
Section 3.3 Tax Indemnification. THE PARENT AGREES TO INDEMNIFY THE BANK
AND THE BANK-RELATED PERSONS FOR THE FULL AMOUNT OF TAXES AND OTHER TAXES
(INCLUDING, WITHOUT LIMITATION, ANY "TAXES" OR "OTHER TAXES" IMPOSED OR ASSERTED
BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER SECTION 3.1 AND SECTION 3.2) PAID
BY THE BANK OR ANY BANK-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 THE BANK OR BANK-RELATED PERSON.
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.
Page 15
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) of the Credit Agreement, execute and deliver
to the Bank 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 Bank may reasonably request.
ARTICLE 5
Conditions Precedent
Section 5.1 Initial Letter of Credit Action. The obligation of the Bank
to take any Letter of Credit Action under this Agreement is subject to the
following conditions precedent:
(a) Deliveries. The Bank 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 Bank:
(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, 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 of such Person in such state;
(iv) Reimbursement Agreement. This Agreement, together with
all Schedules, Exhibits, and other attachments (if any), duly
executed by the Parent and the Bank;
(v) Subsidiary Guaranty. The Subsidiary Guaranty executed by
each of the Subsidiary Guarantors;
Page 16
(vi) Fee Letter. The Fee Letter, duly executed by the Parent
and the Bank;
(vii) 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 Bank 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
(viii) Opinions of Counsel. Satisfactory opinions of legal
counsel to the Parent and the Guarantors as to such matters as
the Bank may request.
(b) Attorney Costs. The Attorney Costs referred to in Section 9.1
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 February 3, 2002 or (ii) in the facts and information regarding
such Persons disclosed to the Bank 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 before or
after giving effect to this Agreement) under any Capital Stock or Debt of
the Parent or any Subsidiary of the Parent.
Page 17
(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 Bank on the Closing
Date and, thereafter, shall not have changed in any material respect
unless such change is reasonably satisfactory to the Bank.
(i) Additional Documentation. The Bank shall have received such
additional approvals, opinions, or other documentation as the Bank may
reasonably request to effectuate the purpose hereof.
Section 5.2 All Letter of Credit Actions. The obligation of the Bank 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 February 3, 2002; and
(e) Letter of Credit Application. The Parent shall have delivered
to the Bank a duly completed Letter of Credit Application as required by
Section 2.2 and such other documentation related thereto as the Bank
shall reasonably request.
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 Bank prior to the date of
such requested Letter of Credit Action as of the date of such requested Letter
of Credit Action).
Page 18
ARTICLE 6
Representations and Warranties
To induce the Bank 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 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. The Parent has delivered to the Bank the
audited financial statements of the Parent and its Subsidiaries as of and for
the Fiscal Years ended January 30, 2000, January 28, 2001, and February 3, 2002.
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 February 3, 2002. Since the date of the
financial statements dated as of February 3, 2002, 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).
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.
Page 19
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 reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 6.4, since February 3,
2002, 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.
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 of the Credit Agreement.
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 of the Credit Agreement,
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 of the
Credit Agreement, there is no
Page 20
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).
Section 6.13 Disclosure. All factual information furnished by or on
behalf of the Parent or any Subsidiary of the Parent to the 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 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
Page 21
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 "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 in 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
Page 22
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 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
Page 23
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
Covenants
The Parent covenants and agrees that, as long as this Agreement shall
remain in effect or any Obligations shall remain outstanding, it will perform
and observe the following covenants:
Section 7.1 Credit Agreement Covenants. The Parent will comply fully with
each of the covenants contained in Article 7, Article 8, and Article 9 of the
Credit Agreement (each of such covenants being incorporated herein by this
reference the same as if fully stated herein) whether or not such Credit
Agreement remains in full force and effect. The Parent shall, within one (1)
Business Day thereof, notify the Bank of any amendment, restatement, or other
modification to Article 7, Article 8, or Article 9 of the Credit Agreement,
provided that, notwithstanding the first sentence of this Section 7.1, any such
amendment, restatement, or other modification shall not be effective hereunder
unless consented to in writing by the Bank (any such consent not to be
unreasonably withheld).
Section 7.2 Changes to Other Reimbursement Agreements. The Parent shall,
within three (3) Business Days thereof, notify the Bank of any amendment,
restatement or other modification to any Other Reimbursement Agreement.
Section 7.3 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 Bank 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 Bank
such documentation, including, without limitation, a Joinder Agreement,
as the Bank may require to cause each such domestic Subsidiary to become
a party to the Subsidiary Guaranty as required by Article 4.
Page 24
ARTICLE 8
Default
Section 8.1 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 Article 7;
(d) 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;
(e) (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
Page 25
or (ii) an order for relief against the Parent or any Subsidiary shall be
entered in an involuntary case under the Bankruptcy Code;
(f) 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;
(g) 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 Bank) 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;
(h) (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, (iv) any event of default shall have occurred under
the Note Agreement or (v) any event of default shall have occurred under
any Other Reimbursement Agreement;
(i) 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;
(j) 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 Bank (therein
identifying such event or condition) without such event or condition
having been remedied, cured, or waived; or
(k) The occurrence of a Change of Control.
Page 26
Section 8.2 Remedies. If any Event of Default shall occur and be
continuing, the Bank may 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) Refusal of Requests for Letter of Credit Action. The Bank
may, without notice to the Parent or any other Person, refuse any request
by the Parent for any Letter of Credit Action;
(c) Judgment. Reduce any claim to judgment;
(d) Rights. Exercise any and all rights and remedies afforded by
the laws of the state of New York, or any other jurisdiction governing
any of the Transaction Documents, by equity, or otherwise; and
(e) Cash Collateral. The Bank 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;
provided, however, that, upon the occurrence of an Event of Default under
Section 8.1(d) or Section 8.1(e) with respect to the Parent or any Guarantor,
the obligation of the Bank 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 Bank 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 Bank 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 8.3 Performance by the Bank. 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 Bank may 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 Bank, the Parent shall promptly pay any
amount expended by the Bank in connection with such performance or attempted
performance, to the Bank 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 the Bank shall not have any liability or
responsibility for the performance of any obligation of the Parent or any
Guarantor under any Transaction Document.
Page 27
Section 8.4 Set-off. If an Event of Default shall have occurred and be
continuing, the 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 the 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 Bank shall
have made any demand under such Transaction Documents and although the
Obligations may be unmatured. The Bank agrees promptly to notify the Parent
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 Bank hereunder are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Bank may
have.
Section 8.5 Continuance of Default. For purposes of all Transaction
Documents, a Default shall be deemed to have continued and exist until the Bank
shall have actually received evidence satisfactory to the Bank that such Default
shall have been remedied.
ARTICLE 9
Miscellaneous
Section 9.1 Expenses. The Parent hereby agrees to pay promptly after
presentation of supporting documentation, without duplication: (a) all
reasonable costs and expenses of the Bank 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 Bank; (b) all costs and expenses of the Bank in connection with any Default
and the enforcement of any Transaction Document or collection of the
Obligations, including, without limitation, Attorney Costs of the Bank; (c) all
fees, costs, and expenses of the 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 Bank in connection with any Transaction Document. The
Attorney Costs of the Bank that the Parent has agreed to pay hereunder include,
without limitation, the Attorney Costs of the Bank arising in connection with
advice given to the Bank as to its rights and responsibilities hereunder.
Section 9.2 Indemnity by the Parent. Whether or not the transactions
contemplated hereby are consummated, the Parent agrees to indemnify, save and
hold harmless each Bank-Related Person 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 relating
directly or indirectly to a claim, demand,
Page 28
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 and the Bank
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 9.3 Limitation of Liability. Neither the Bank, any Bank-Related
Person, nor 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 9.4 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Bank shall have the right
to act exclusively in the interest of the Bank 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 9.5 No Fiduciary Relationship. The relationship between the
Parent and the Guarantors on the one hand and the Bank on the other is solely
that of debtor and creditor, and the Bank has no fiduciary or other special
relationship with the Parent or any Guarantor, and no term or condition of any
of the Transaction Documents shall be construed so as to deem the relationship
between the Parent and the Guarantors on the one hand and the Bank on the other
to be other than that of debtor and creditor.
Section 9.6 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 Bank. The Parent therefore agrees that the Bank
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
Page 29
Section 9.7 No Waiver; Cumulative Remedies. No failure on the part of the
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 9.8 Binding Effect; Successors; Participations and Assignments.
(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 Bank, and their respective successors, participants and
assigns, except that, the Parent may not participate or assign its rights
hereunder or thereunder or any interest herein or therein without the
prior written consent of the Bank and any such attempted assignment shall
be void.
(b) Notwithstanding any other provision in this Agreement, the
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of
any Federal Reserve Bank in accordance with Regulation A of the FRB or
U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted
under applicable law.
Section 9.9 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 Bank or any closing shall affect the representations and
warranties or the right of the Bank to rely upon them. Without prejudice to the
survival of any other obligation of the Parent hereunder, the obligations under
Section 9.1 and Section 9.2 shall survive termination of this Agreement.
Section 9.10 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 Bank 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 9.11 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 Bank (any such consent not to be
unreasonably withheld). In the event of amendment by the parties to the
Page 30
Credit Agreement to any provisions of the Credit Agreement that have been
incorporated herein by reference, such provisions will not be deemed to be
amended hereunder without the written consent of the Bank to the amendment of
such provisions hereunder.
Section 9.12 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
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 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 9.13 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 9.13, 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 Bank pursuant to Section 2.2 shall not be
effective until received by the Bank. Any agreement of the Bank herein to
receive certain notices by telephone or telecopy is solely for the convenience
and at the request of the Parent. The Bank 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 the Bank shall not have any liability to the Parent or any
other Person on account of any action taken or not taken by the 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 Bank to receive written confirmation of any
telephonic or telecopy notice or the receipt by the Bank of a confirmation which
is at variance with the terms understood by the Bank to be contained in such
telephonic or telecopy notice.
Section 9.14 Governing Law; Venue; Service of Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED
THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
Page 31
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATES OF CALIFORNIA OR NEW YORK OR OF THE UNITED STATES FOR SUCH STATES,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PARENT AND THE BANK
EACH CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE PARENT AND THE BANK EACH
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 AND THE BANK EACH WAIVES PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT, OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY THE LAWS OF ANY SUCH STATE.
Section 9.15 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 9.16 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 9.17 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 9.18 Construction. The Parent, each Guarantor (by its execution
of the Transaction Documents to which it is a party), and the Bank each
acknowledges that it 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.
Section 9.19 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 9.20 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
Page 32
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 9.21 Confidentiality. The Bank shall use any confidential
non-public information concerning the Parent and its Subsidiaries that is
furnished to the 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 Bank may disclose Confidential Information (a) to its Affiliates
or any of its or its 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 Governmental Authority having or claiming to have authority
to regulate or oversee any aspect of the Bank's business or that of their
Representatives in connection with the exercise of such authority or claimed
authority, (c) to the extent necessary or appropriate to effect or preserve the
Bank's or any of its 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 Bank or any of its Representatives, and (d) 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 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 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 Bank),
or (z) becomes available to the Bank on a nonconfidential basis, provided that
the source of such information was not known by the Bank to be bound by a
confidentiality agreement or other legal or contractual obligation of
confidentiality with respect to such information.
Section 9.22 Termination of Credit Agreement. In the event that the
Credit Agreement is terminated for any reason whatsoever, the covenants set
forth in Article 7, Article 8, and Article 9 thereof and the events of default
set forth in Article 10 thereof, together with all of the definitions of all the
defined terms used therein and all other portions of the Credit Agreement to
which reference is made in such Articles, in each case as of such termination
date, will be incorporated by reference herein and the same shall be applicable
herein, mutadis mutandis, and will be deemed to continue in effect until this
Agreement is terminated and all Obligations under this Agreement are fully paid
and performed.
Page 33
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
-----------------------------------
Xxxxxx X. XxXxxxxx
Senior Vice President and Chief
Financial Officer
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
Assistant Secretary
Page 34
BANK:
FLEET NATIONAL BANK
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx
Managing Director
Page 35
EXHIBIT A
Form of Subsidiary Guaranty
Exhibit A, Cover Page
EXHIBIT B
Form of Joinder Agreement
Exhibit B, Cover Page
Schedule 5.2
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Governmental Restrictions
Schedule 5.2 - Cover Page
Schedule 6.4
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Operation of Business
Schedule 6.4 - Cover Page
Schedule 6.5
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Litigation and Judgments
Schedule 6.5 - Cover Page
Schedule 6.9
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Debt
Schedule 6.9 - Cover Page
Schedule 6.10
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Taxes
Schedule 6.10 - Cover Page
Schedule 6.12
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
ERISA
Schedule 6.12 - Cover Page
Schedule 6.14
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Subsidiaries; Capitalization
Schedule 6.14 - Cover Page
Schedule 6.15
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Material Agreements
Schedule 6.15 - Cover Page
Schedule 6.19
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Environmental Matters
Schedule 6.19 - Cover Page
Schedule 6.20
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Broker's Fees
Schedule 6.20 - Cover Page
Schedule 6.21
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Employee Matters
Schedule 6.21, Cover Page
Schedule 9.13
to
Xxxxxxxx-Sonoma, Inc.
Reimbursement Agreement
Addresses for Notices
Schedule 9.13, Cover Page
