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EXHIBIT 99.1
EXECUTION COPY
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LOAN AND SECURITY AGREEMENT
Dated as of September 30, 1996
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
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and
BANKAMERICA BUSINESS CREDIT, INC.
as the Agent
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and
HILLS DEPARTMENT STORE COMPANY
as Borrower
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C.R.H. INTERNATIONAL, INC.
as Borrower
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and
THE OTHER LOAN PARTIES NAMED HEREIN
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TABLE OF CONTENTS
Section Page
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ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions.....................................................1
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1.2 Accounting Terms...............................................26
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1.3 Interpretive Provisions........................................26
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ARTICLE 2
LOANS AND LETTERS OF CREDIT
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2.1 Total Facility.................................................27
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2.2 Revolving Loans................................................28
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2.3 Letters of Credit..............................................34
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ARTICLE 3
INTEREST AND FEES
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3.1 Interest.......................................................42
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3.2 Conversion and Continuation Elections..........................43
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3.3 Maximum Interest Rate..........................................44
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3.4 Facility Fee...................................................45
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3.5 Unused Line Fee................................................45
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3.6 Letter of Credit Fee...........................................45
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3.7 Administration Fee.............................................46
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ARTICLE 4
PAYMENTS AND PREPAYMENTS
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4.1 Revolving Loans................................................46
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4.2 Termination of Facility........................................46
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4.3 Payments by the Borrowers......................................47
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4.4 Payments as Revolving Loans....................................48
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4.5 Apportionment, Application and Reversal of Payments............48
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4.6 Indemnity for Returned Payments................................49
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4.7 Agent's and Lenders' Books and Records; Monthly Statements.....49
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ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
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5.1 Taxes..........................................................49
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Section Page
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5.2 Illegality.....................................................51
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5.3 Increased Costs and Reduction of Return........................51
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5.4 Funding Losses.................................................52
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5.5 Inability to Determine Rates...................................52
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5.6 Certificates of Lenders........................................53
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5.7 Survival.......................................................53
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ARTICLE 6
COLLATERAL
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6.1 Grant of Security Interest.....................................53
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6.2 Perfection and Protection of Security Interest.................54
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6.3 Location of Collateral.........................................55
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6.4 Title to, Liens on, and Sale and Use of Collateral.............56
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6.5 Appraisals.....................................................56
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6.6 Access and Examination; Confidentiality........................56
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6.7 Collateral Reporting...........................................57
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6.8 [Intentionally Omitted.........................................58
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6.9 Collection of Accounts, Inventory and Other Amounts............58
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6.10 Inventory......................................................59
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6.11 [Intentionally Omitted]........................................59
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6.12 [Intentionally Omitted]........................................59
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6.13 Documents, Instruments, and Chattel Paper......................59
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6.14 Right to Cure..................................................60
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6.15 Power of Attorney..............................................60
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6.16 The Agent's and Lenders' Rights, Duties and Liabilities........60
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ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
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7.1 Books and Records..............................................61
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7.2 Financial Information..........................................61
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7.3 Notices to the Lenders.........................................63
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ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
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8.1 Authorization, Validity, and Enforceability of
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this Agreement and the Loan Documents .........................66
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8.2 Validity and Priority of Security Interest.....................66
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8.3 Organization and Qualification.................................67
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8.4 Corporate Name; Prior Transactions.............................67
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8.5 Subsidiaries...................................................67
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Section Page
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8.6 Financial Statements and Projections...........................67
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8.7 Capitalization.................................................68
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8.8 Solvency.......................................................68
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8.9 Debt...........................................................68
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8.10 Distributions..................................................68
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8.11 Title to Property..............................................68
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8.12 Real Estate; Leases............................................69
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8.13 Proprietary Rights.............................................69
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8.14 Trade Names....................................................69
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8.15 Litigation.....................................................70
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8.16 Restrictive Agreements.........................................70
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8.17 Labor Disputes.................................................70
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8.18 Environmental Laws.............................................70
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8.19 No Violation of Law............................................71
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8.20 No Default.....................................................71
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8.21 ERISA Compliance...............................................71
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8.22 Taxes..........................................................72
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8.23 Regulated Entities.............................................72
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8.24 Use of Proceeds; Margin Regulations............................72
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8.25 Copyrights, Patents, Trademarks and Licenses, etc..............72
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8.26 No Material Adverse Change.....................................73
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8.27 Full Disclosure................................................73
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8.28 Parent Activity................................................73
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8.29 Senior Debt....................................................73
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8.30 Bankruptcy.....................................................73
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ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
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9.1 Taxes and Other Obligations....................................74
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9.2 Corporate Existence and Good Standing..........................74
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9.3 Compliance with Law; Maintenance of Licenses...................74
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9.4 Maintenance of Property........................................75
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9.5 Insurance......................................................75
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9.6 Condemnation...................................................76
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9.7 Environmental Laws.............................................76
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9.8 Compliance with ERISA..........................................77
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9.9 Mergers, Consolidations or Sales...............................77
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9.10 Restricted Investments; Capital Change; Distributions..........78
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9.11 Transactions Affecting Collateral or Obligations...............78
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9.12 [Intentionally Omitted]........................................78
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9.13 Debt...........................................................78
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9.14 Prepayment.....................................................79
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Section Page
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9.15 Transactions with Affiliates...................................80
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9.16 Investment Banking and Finder's Fees...........................80
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9.17 Standstill Agreement...........................................80
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9.18 Business Conducted.............................................80
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9.19 Liens..........................................................81
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9.20 Sale and Leaseback Transactions................................81
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9.21 New Subsidiaries...............................................81
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9.22 Fiscal Year....................................................81
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9.23 Adjusted Tangible Net Worth....................................81
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9.24 Cash Flow Test.................................................82
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9.25 Cleanup........................................................82
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9.26 Use of Proceeds................................................82
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9.27 Senior Note Documents and Deferred Tax Obligations.............82
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9.28 Store Closings.................................................82
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9.29 Indemnity Payments.............................................82
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9.30 Further Assurances.............................................83
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ARTICLE 10
CONDITIONS OF LENDING
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10.1 Conditions Precedent to Making of Loans on the Closing Date....83
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10.2 Conditions Precedent to Each Loan..............................85
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ARTICLE 11
DEFAULT; REMEDIES
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11.1 Events of Default..............................................86
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11.2 Remedies.......................................................88
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ARTICLE 12
TERM AND TERMINATION
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12.1 Term and Termination...........................................90
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ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
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13.1 No Waivers; Cumulative Remedies................................90
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13.2 Amendments and Waivers.........................................91
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13.3 Assignments; Participations....................................91
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Section Page
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ARTICLE 14
THE AGENT
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14.1 Appointment and Authorization..................................94
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14.2 Delegation of Duties...........................................94
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14.3 Liability of Agent.............................................95
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14.4 Reliance by Agent..............................................95
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14.5 Notice of Default..............................................95
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14.6 Credit Decision................................................96
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14.7 Indemnification................................................96
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14.8 Agent in Individual Capacity...................................97
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14.9 Successor Agent................................................97
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14.10 Withholding Tax................................................97
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14.11 Co-Agents......................................................98
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14.12 Collateral Matters.............................................99
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14.13 Restrictions on Actions by Lenders; Sharing of Payments.......100
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14.14 Agency for Perfection.........................................100
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14.15 Payments by Agent to Lenders..................................100
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14.16 Concerning the Collateral and the Related Loan Documents......101
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14.17 Field Audit and Examination Reports; Disclaimer by Lenders....101
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14.18 Relation Among Lenders........................................102
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ARTICLE 15
GUARANTEES
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ARTICLE 16
MISCELLANEOUS
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16.1 Cumulative Remedies; No Prior Recourse to Collateral..........103
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16.2 Severability..................................................103
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16.3 Governing Law; Choice of Forum; Service of Process;
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Jury Trial Waiver ............................................104
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16.4 WAIVER OF JURY TRIAL..........................................104
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16.5 Survival of Representations and Warranties....................105
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16.6 Other Security and Guaranties.................................105
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16.7 Fees and Expenses.............................................105
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16.8 Notices.......................................................106
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16.9 Waiver of Notices.............................................107
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16.10 Binding Effect................................................107
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16.11 Indemnity of the Agent and the Lenders by the Loan Parties....108
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16.12 Limitation of Liability.......................................108
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16.13 Final Agreement...............................................108
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Section Page
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16.14 Counterparts..................................................108
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16.15 Captions......................................................109
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16.16 Right of Setoff...............................................109
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16.17 Joint and Several Liability...................................109
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EXHIBITS AND SCHEDULES
EXHIBIT A - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT B - LIST OF CLOSING DOCUMENTS
EXHIBIT C - NOTICE OF BORROWING
EXHIBIT D - NOTICE OF CONVERSION/CONTINUATION
EXHIBIT E - [FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE A - ADDRESSES FOR NOTICES TO LENDERS AND WIRE
TRANSFER INFORMATION FOR LENDERS
SCHEDULE 6.3 - LOCATIONS OF COLLATERAL
SCHEDULE 8.3 - CORPORATE ORGANIZATION AND QUALIFICATION
SCHEDULE 8.12 - REAL ESTATE; LEASES
SCHEDULE 8.13 - REGISTERED PROPRIETARY RIGHTS
SCHEDULE 8.14 - TRADE NAMES
SCHEDULE 8.18 - ENVIRONMENTAL LAWS
SCHEDULE 8.21 - ERISA
SCHEDULE 9.13 - DEBT
SCHEDULE 9.19 - LIENS
SCHEDULE 9.20 - SALE AND LEASEBACK TRANSACTIONS
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LOAN AND SECURITY AGREEMENT
Loan and Security Agreement, dated as of September 30, 1996, among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), BankAmerica Business Credit, Inc., a Delaware corporation ("BABC")
with an office at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as agent for
the Lenders (in its capacity as agent, together with any successor in such
capacity, the "Agent"), Hills Stores Company, a Delaware corporation with
offices at 00 Xxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("Parent"), Hills Department
Store Company, a Delaware corporation with offices at 00 Xxx Xxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 ("HDSC"), C.R.H. International, Inc., an Ohio corporation
with offices at 00 Xxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("CRH" and, together
with HDSC, each a "Borrower" and collectively, the "Borrowers"), and the other
Loan Parties named herein and signatories hereto.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrowers have requested that the Lenders make available to
the Borrowers a revolving line of credit for loans and letters of credit in an
aggregate amount not to exceed $300,000,000, which extensions of credit the
Borrowers will use to refinance certain existing debt and for their working
capital needs and general corporate purposes not prohibited hereby;
WHEREAS, the Lenders have agreed to make available to the Borrowers a
revolving credit facility upon the terms and conditions set forth in this
Agreement;
WHEREAS, the Parent and its Subsidiaries will each derive substantial
benefits from the execution, delivery and performance of this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Lenders, the Agent, the Borrowers,
the Parent and the other Loan Parties hereby agree as follows:
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
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"ACCOUNTS" means, with respect to any Loan Party, all of such Loan
Party's now owned or hereafter acquired or arising accounts, and any other
rights of such Loan Party to payment for the sale or lease of goods or rendition
of services, whether or not they have been earned by performance.
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"ACCOUNT DEBTOR" means each Person obligated in any way on or in
connection with an Account.
"ADJUSTED TANGIBLE NET WORTH" means, at any date, all amounts which
would be included under either common or preferred shareholders' equity on a
consolidated balance sheet of the Parent and its Subsidiaries determined on a
consolidated basis in accordance with GAAP as at such date, LESS unamortized
value in excess of amounts allocable to identifiable assets (goodwill), PLUS any
non-cash writedowns of assets of the Parent or any of its Subsidiaries due to
compliance by the Parent and its Subsidiaries with Statement of Financial
Accounting Standards No. 121: "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of". Adjusted Tangible Net Worth
shall specifically exclude any actual charge (to a maximum of $10,000,000) in
excess of the then current accrual as reflected on the monthly financial
statements of the Parent and its Subsidiaries required to be delivered pursuant
to SECTION 7.2(b) for the impact of Federal or state income tax audits with
respect to the Parent or any of its Subsidiaries.
"AFFILIATE" means, as to any Person, (i) any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person or which owns, directly or indirectly, ten percent
(10%) or more of the outstanding equity interest of such Person or (ii) any
director of such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
"AGENT" means BankAmerica Business Credit, Inc., solely in its
capacity as agent for the Lenders, and any successor agent.
"AGENT ADVANCES" has the meaning specified in SECTION 2.2(I).
"AGENT'S LIENS" means the Liens granted to the Agent, for the
ratable benefit of the Lenders, BABC and Agent pursuant to this Agreement and
the other Loan Documents.
"AGENT-RELATED PERSONS" means the Agent and any successor agent,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"AGREEMENT" means this Loan and Security Agreement.
"ANNIVERSARY DATE" means each anniversary of the Closing Date.
"APPLICABLE MARGIN" means, with respect to any Loan or Letter of
Credit, as appropriate, except as otherwise provided in the immediately
succeeding sentence the amount set forth below which corresponds to the Coverage
Ratio set forth below for the twelve (12) fiscal month period of the Parent
ended with the most recent fiscal quarter of the Parent for which the
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Agent receives the financial statements and Coverage Ratio Certificate required
below, determined and adjusted as provided herein. On the Closing Date and
thereafter until the first day of the first full calendar month after the
delivery to the Agent of the financial statements of the Parent and its
Subsidiaries as at the end of and for the fiscal month of the Parent ended
November 2, 1996 required pursuant to SECTION 7.2(b) together with the
corresponding Coverage Ratio Certificate for the twelve (12) fiscal month period
ended on such date, the Libor Applicable Margin shall be 2.25%, the Base Rate
Applicable Margin shall be .50% and the Letter of Credit Applicable Margin shall
be 2.00% and each shall thereafter be adjusted after each delivery to the Agent
of the monthly financial statements of the Parent and its Subsidiaries required
pursuant to SECTION 7.2(b) for each month which ends on the last day of each
fiscal quarter of the Parent together with the corresponding Coverage Ratio
Certificate for the twelve (12) fiscal month period ending on the last day of
such fiscal quarter, each such adjustment to be effective on the first day of
the first full calendar month after each such delivery.
Libor Applicable Base Rate Letter of Credit
Coverage Ratio Margin Applicable Margin Applicable Margin
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Equal to or greater 1.50% zero (0) 1.50%
than 1.60 to 1.00
Equal to or greater 1.75% zero (0) 1.50%
than 1.45 to 1.00 but
less than 1.60 to 1.00
Equal to or greater 2.00% .25% 1.75%
than 1.30 to 1.00 but
less than 1.45 to 1.00
Equal to or greater 2.25% .50% 2.00%
than 1.00 to 1.00 but
less than 1.30 to 1.00
Less than 1.00 to 1.00 2.50% .75% 2.25%
Notwithstanding anything in this definition to the contrary, (i) in
the event that the Agent shall fail to receive any such financial statements and
the related Coverage Ratio Certificate for the last fiscal month in any fiscal
quarter of the Parent within thirty (30) days following the end of such fiscal
month (within ninety (90) days following the end of such fiscal month if such
fiscal month is the last fiscal month of any Fiscal Year), then the Applicable
Margin shall, at the end of such thirtieth or ninetieth day, as appropriate,
immediately and without notice or further action be the highest Applicable
Margin provided herein (such Applicable Margin to be in effect until the first
day of the first full calendar month after the Agent receives the monthly
financial statements of the Parent and its Subsidiaries required under SECTION
7.2(b) for the last fiscal month of the most recent fiscal quarter of the Parent
and the related Coverage Ratio Certificate) and (ii) in the event that, with
respect to any twelve (12) fiscal month period of the Parent which shall be a
Fiscal Year, the audited financial statements of the Parent and its Subsidiaries
required under SECTION 7.2(a) for such Fiscal Year shall indicate a Coverage
Ratio for such twelve (12) fiscal month period (as determined by the Agent) less
than that reflected in the Coverage Ratio
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Certificate delivered to the Agent for such twelve (12) fiscal month period, the
Applicable Margin shall be adjusted retroactively (to the effective date of the
Applicable Margin which as determined based upon the delivery of such Coverage
Ratio Certificate and the related monthly financial statements of the Parent and
its Subsidiaries delivered pursuant to SECTION 7.2(b) for the last month of such
twelve (12) fiscal month period) to reflect an Applicable Margin based upon the
Coverage Ratio determined from the audited financial statements and each of the
Borrowers shall make payments to the Agent on behalf of the Lenders to reflect
such adjustment.
"ASSIGNEE" has the meaning specified in SECTION 13.3(a).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in
SECTION 13.3(a).
"ATTORNEY COSTS" means and includes all reasonable and documented
(to the satisfaction of the Agent) fees, expenses and disbursements of any law
firm or other external counsel engaged by the Agent, the reasonable and
documented (to the satisfaction of the Agent) allocated cost of internal legal
services of the Agent and all reasonable and documented (to the satisfaction of
the Agent) expenses and disbursements of internal counsel of the Agent.
"BABC" means BankAmerica Business Credit, Inc.
"BABC LOAN" and "BABC LOANS" have the meanings specified in SECTION
2.2(h).
"BANK OF AMERICA" means Bank of America National Trust and Savings
Association, a national banking association, or any successor entity thereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code
(11 U.S.C. Section 101 ET SEQ.).
"BANKRUPTCY PLAN" means the Parent's First Amended Consolidated Plan
of Reorganization approved by the United States Bankruptcy Court for the
Southern District of New York on September 10, 1993.
"BASE RATE" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by Bank of America in San
Francisco, California, as its "reference rate" (the "reference rate" being a
rate set by Bank of America based upon various factors including Bank of
America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate). Any change in the reference
rate announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change. Each Interest
Rate based upon the Base Rate shall be adjusted simultaneously with any change
in the Base Rate.
"BASE RATE LOANS" means the Base Rate Revolving Loans.
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"BASE RATE REVOLVING LOAN" means a Revolving Loan during any period
in which it bears interest based on the Base Rate.
"BOOK VALUE" means at any time, as to any Inventory of a Borrower in
respect of which such amount is to be determined, the lower of (a) cost at such
time (determined in accordance with GAAP on a first-in, first-out basis) or (b)
market value at such time.
"BORROWERS" has the meaning specified in the introductory paragraph
to this Agreement.
"BORROWING" means a borrowing hereunder consisting of Revolving
Loans made on the same day by the Lenders (or by BABC in the case of a Borrowing
funded by BABC Loans or by the Agent in the case of a Borrowing consisting of an
Agent Advance) to a Borrower.
"BORROWING BASE CERTIFICATE" means a certificate by a Responsible
Officer of each of the Parent and the Borrowers, substantially in the form of
EXHIBIT A (or another form acceptable to the Agent) setting forth the
calculation of the Combined Availability, including a calculation of each
component thereof, as of the close of business no more than five (5) Business
Days prior to the date of such certificate, all in such detail as shall be
satisfactory to the Agent. All calculations of the Combined Availability in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by the Parent and each of the Borrowers and certified to the
Agent; provided, that the Agent shall have the right to review and adjust, in
the exercise of its reasonable credit judgment, any such calculation (1) to
reflect its reasonable estimate of declines in value of any of the Eligible
Inventory described therein, and (2) to the extent that such calculation is not
in accordance with this Agreement.
"BUSINESS DAY" means (a) any day that is not a Saturday, Sunday, or
a day on which banks in San Francisco, California, New York, New York or Boston,
Massachusetts are required or permitted to be closed, and (b) with respect to
all notices, determinations, fundings and payments in connection with the LIBOR
Rate or LIBOR Rate Loans, any day that is a Business Day pursuant to clause (a)
above and that is also a day on which trading is carried on by and between banks
in the London interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"CAPITAL EXPENDITURES" means all expenditures (except interest
capitalized during construction) that, in accordance with GAAP, are required to
be included in property, plant or equipment or a similar fixed asset account and
shall in any event include all Capital Leases.
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"CAPITAL LEASE" means any lease of property by the Parent or any of
its Subsidiaries which, in accordance with GAAP, is or should be reflected as a
capital lease on the consolidated balance sheet of the Parent and its
Subsidiaries.
"CASH REQUIREMENTS" means, for any period, the sum of (a) Net Capex
for such period; (b) cash interest paid by the Parent and its Subsidiaries
during such period, net of cash interest income received by the Parent and its
Subsidiaries during such period, but excluding from this clause (b) in any event
(x) amortization of one-time placement, syndications, work and similar fees in
connection with this Agreement or in connection with other Debt For Borrowed
Money or any other financing issued by the Parent or any of its Subsidiaries
(including the Senior Notes), (y) fees paid with respect to letters of credit
under SECTION 3.6 or under the loan facility related to the Existing Bank Debt
(in each instance under this clause (y), such fees are to be deducted in
determining the amount in clause (a) of the definition of EBITDA for such
period), and (z) monitoring expenses or unused line fees payable under this
Agreement or under the loan facility related to the Existing Bank Debt (in each
instance under this clause (z), such fees or expenses are to be deducted in
determining the amount in clause (a) of the definition of EBITDA for such
period); (c) cash taxes paid by the Parent and its Subsidiaries during such
period, less cash tax refunds received by the Parent and its Subsidiaries during
such period, but excluding from cash taxes paid any assessment paid by the
Parent or any of its Subsidiaries as a result of Federal or state income tax
audits with respect to the Parent or any of its Subsidiaries; and (d) the Debt
Reduction Amount for such period.
"CHANGE OF CONTROL" means (i) the occurrence of a "Change of
Control" as defined in the Senior Indenture or (ii) the occurrence of any of the
following after the date hereof:
(a) any person (other than, in the case of clause (2) below,
Xxxxxxxxx Partners Inc. and investment funds that it controls (as such term is
defined in the definition of Affiliate) or otherwise has the sole power to
manage), together with its affiliates and associates (as defined in Rule 12b-2
under the Exchange Act or any successor rule thereto),
(1) shall file with the Securities and Exchange Commission and
deliver to the Parent a report under or in response to Schedule 13D or
14D-1 (or any successor schedule, form or report) pursuant to the Exchange
Act disclosing that such person has become the beneficial owner (as
defined in Rule 13D-3 under the Exchange Act, or any successor provisions)
of more than 25% (or, in the case of Xxxxxxxxx Partners Inc. and
investment funds that it controls or otherwise has the sole power to
manage, 50%) of the total voting power of all classes of voting stock of
the Parent or
(2) shall succeed in having a sufficient number of its nominees
elected to the board of directors of the Parent such that such nominees so
elected (whether new or continuing as directors) shall constitute a
majority of the board of directors of the Parent;
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(b) any person or group (within the meaning of such Rule
13d-5) other than the Parent shall own directly, beneficially or of record, any
shares of the issued and outstanding capital stock of HDSC; or
(c) any person or group other than the Parent or any wholly
owned Subsidiary of the Parent shall otherwise directly control HDSC or CRH.
Notwithstanding the foregoing clauses (a), (b) and (c), the election
or re-election of directors nominated by the board of directors of the Parent at
any annual or special meeting of stockholders, or the election or appointment of
directors to fill vacancies in the board of directors (including as a result of
an increase in the size of the board of directors of the Parent), shall not
constitute a "Change of Control" under this clause (ii) unless such election or
appointment is part of a plan to effect a change of control of the Parent. For
purposes of this definition, the term "person" shall have the meaning set forth
in or for purposes of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act,
or any successor provisions to either of the foregoing, including any "group"
acting for the purpose of acquiring, holding or disposing of securities within
the meaning of Rule 13d-5(b)(1) under the Exchange Act.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute, and regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in SECTION 6.1.
"COMBINED AVAILABILITY" of the Borrowers means, at any time:
(a) the lesser of (i) the Maximum Revolver Amount or (ii) the sum of
(x) up to fifty-five percent (55%) of the Book Value of Eligible Inventory of
the Borrowers (excluding Inventory referred to in clause (y) below) plus (y) up
to fifty percent (50%) of the cost of finished goods not in the possession of
the Borrowers as to which a documentary Letter of Credit has been issued and
which, if in the possession of a Borrower, would be treated as Eligible
Inventory of a Borrower, but only if (1) title to such goods shall have passed
to a Borrower and (2) such goods are insured to the extent of 100% of CIF value,
MINUS
(b) the sum of (i) the aggregate unpaid balance of all Revolving
Loans made to the Borrowers at such time, (ii) the aggregate amount of all
Pending Revolving Loans to be made to the Borrowers at such time, (iii) the
aggregate undrawn amount of all outstanding Letters of Credit, (iv) the
aggregate amount of any unpaid reimbursement obligations in respect of Letters
of Credit, (v) reserves for accrued interest on the Obligations, (vi) reserves
for Shipping Release Indemnities (as defined in SECTION 2.3(k)) and (vii) all
other reserves which the Agent deems necessary in the exercise of its reasonable
credit judgment to maintain as a result of matters which the Agent determines,
in the exercise of such judgment, may affect the value of any Eligible
Inventory, the priority of the ien of the Agent thereon or the ability of the
Agent to realize on
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any such Inventory, including, without limitation, reserves for landlords liens
with respect to real properties leased by a Borrower, reserves for shrinkage and
markdowns and reserves for any amounts which the Agent or any Lender is
reasonably expected to be obligated to pay in the future for the account of any
Borrower.
"COMMITMENT" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"COMMITMENT" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 13.3, as such Commitment
may be adjusted from time to time in accordance with the provisions of SECTION
13.3, and "Commitments" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"CONTAMINANT" means any pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any hazardous or toxic constituent of any such substance or waste.
"CONVERSION/CONTINUATION DATE" means the date of any conversion or
continuation of a Base Rate Loan or LIBOR Rate Loan, or portion thereof, as
contemplated by SECTION 3.2.
"COVERAGE RATIO" means, for any period, the ratio of (a) EBITDA for
such period to (b) Cash Requirements for such period.
"COVERAGE RATIO CERTIFICATE" means a certificate of a Responsible
Officer of the Parent setting forth the Coverage Ratio for the twelve (12)
fiscal month period of the Parent ending on the last day of each fiscal quarter
of the Parent, together with such supporting documentation and calculations as
the Agent may reasonably request with respect to such Coverage Ratio.
"CREDIT SUPPORT" has the meaning specified in SECTION 2.3(a).
"CRH" has the meaning specified in the introductory paragraph to
this Agreement.
"DEBT" means, as to any Person, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sales or
other title retention agreements relating to property or assets purchased by
such Person, (e) all obligations of such Person issued or assumed as the
deferred purchase price of property or services, (f) all Debt of others secured
by (or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed, (g)
all Guaranties by such Person of Debt of others, (h) all obligations under
Capital Leases of
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such Person, (i) all obligations of such Person in respect of Rate Protection
Agreements or foreign currency exchange agreements, other exchange rate hedging
agreements, interest rate or commodity swaps and any similar derivative
transactions (valued at its marked-to-market value), (j) all obligations of such
Person as an account party in respect of letters of credit and bankers'
acceptances or otherwise with respect to the reimbursement of drawings or
payments under letters of credit or bankers acceptances or credit support for
any of the foregoing and (k) all equity interests of such Person that, by their
respective terms (or by the terms of any security into which any such equity
interest is convertible or for which it is exchangeable at the option of the
holder thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is five (5) years after the Stated Termination Date. The Debt of any Person
shall include the Debt of any partnership in which such Person is a general
partner. Notwithstanding the foregoing, the term "Debt" shall not include
liabilities incurred in the ordinary course of business classified as trade
payables or other payables or accrued expenses in accordance with GAAP.
"DEBT FOR BORROWED MONEY" means, as to any Person, Debt for
borrowed money or as evidenced by notes, bonds, debentures or similar evidences
of any such Debt of such Person, the deferred and unpaid purchase price of any
property or business and all obligations under Capital Leases.
"DEBT REDUCTION AMOUNT" means for any period that amount which is
(1) the aggregate amount of payments of principal made during such period on
Debt For Borrowed Money (other than the Obligations and the Existing Bank Debt)
of the Parent and its Subsidiaries, Debt under sale-leaseback arrangements of
the Parent and its Subsidiaries permitted hereunder and other similar Debt of
the Parent and its Subsidiaries permitted hereunder LESS (2) any cumulative
additions to all such Debt after May 1, 1996 not included in clause (2)(ii) of
the definition "Net Capex" for such period; provided, that except for the
calculation of the EBITDA Carryforward Amount, the Debt Reduction Amount for any
period shall in no event be less than zero.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"DEFAULT RATE" means a fluctuating per annum interest rate at all
times equal to the sum of (a) the otherwise applicable Interest Rate plus (b)
two percent (2.00%). Each Default Rate shall be adjusted simultaneously with any
change in the applicable Interest Rate. In addition, with respect to Letters of
Credit, the Default Rate shall mean an increase in the Letter of Credit Fee by
2.00 percentage points.
"DEFAULTING LENDER" has the meaning specified in SECTION 2.2(g)(ii).
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"DEFERRED TAX OBLIGATIONS" means the obligations of HDSC to Federal,
state and local taxing authorities in an aggregate principal amount not in
excess of $4,000,000 being paid on an installment basis pursuant to the
Bankruptcy Plan.
"DISTRIBUTION" means, in respect of any corporation: (a) the payment
or making of any dividend or other distribution of property in respect of
capital stock (or any options or warrants for such stock) of such corporation,
other than distributions in common stock or capital stock (or any options or
warrants for such stock) of the same class; or (b) the redemption or other
acquisition of any capital stock (or any options or warrants for such stock) of
such corporation.
"DOL" means the United States Department of Labor or any successor
department or agency.
"DOLLAR" and "$" means dollars in the lawful currency of the United
States.
"EBITDA" means for any period, the sum of:
(a) the net income of the Parent and its Subsidiaries on a
consolidated basis after provision for income taxes for such period, as
determined in accordance with GAAP and reported on the Financial Statements for
such period, excluding any and all of the following included in such net income:
(i) gain or loss arising from the sale of any capital assets; (ii) gain arising
from any write-up in the book value of any asset; (iii) earnings or loss of any
corporation, substantially all the assets of which have been acquired by the
Parent or any of its Subsidiaries in any manner, to the extent realized by such
other corporation prior to the date of acquisition; (iv) earnings of any
business entity in which the Parent or any of its Subsidiaries has an ownership
interest unless (and only to the extent) such earnings shall actually have been
received by the Parent or any of its Subsidiaries in the form of cash
distributions; (v) earnings or loss of any Person to which assets of the Parent
or any of its Subsidiaries shall have been sold, transferred or disposed of, or
into which the Parent or any of its Subsidiaries shall have been merged, or
which has been a party with the Parent or any of its Subsidiaries to any
consolidation or other form of reorganization, prior to the date of such
transaction; (vi) gain or loss arising from the acquisition of debt or equity
securities of the Parent or any of its Subsidiaries or from cancellation or
forgiveness of Debt; and (vii) gain (net of losses) arising from extraordinary
items, as determined in accordance with GAAP, or from other non-recurring
transactions;
(b) the sum of the provision for income taxes, interest expense,
depreciation and amortization expense, other non-cash charges, the effect of
accounting changes and extraordinary items, in each case to the extent deducted
in determining such net income for such period; PLUS
(c) except for the calculation of the Coverage Ratio for any period,
if such period ends after February 28, 1997 fifty percent (50%) of the EBITDA
Carryforward Amount (but only if positive) for the period commencing on February
3, 1996 and ending on the day immediately preceding the first day of such
period,
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in each of the foregoing cases for the Parent and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"EBITDA CARRYFORWARD AMOUNT" means, for any period, the amount, if
any, by which EBITDA for such period shall exceed Cash Requirements for such
period.
"ELIGIBLE INVENTORY" of a Borrower means Inventory of such Borrower
(including Purchase Accrual Inventory and Layaway Inventory) that constitutes
first quality finished goods and that, unless the Agent in its sole discretion
elects: (a) is not, in the Agent's reasonable opinion, obsolete, slow moving,
unmerchantable or out-of-season seasonal Inventory (other than pre-seasonal
"forward buy" Inventory); (b) is located at premises owned or leased by such
Borrower or on premises otherwise reasonably acceptable to the Agent (it being
agreed by the Agent that the locations set forth on SCHEDULE 6.3 as in effect on
the Closing Date are acceptable to the Agent) or is in transit between HDSC's
distribution center and its stores or between its stores; (c) upon which the
Agent for the benefit of the Lenders has a first priority perfected security
interest; (d) is not work-in-process, snack bar Inventory, spare parts,
packaging and shipping materials, supplies, xxxx- and-hold Inventory, returned
or defective Inventory, Inventory delivered to such Borrower on consignment or
Inventory being held by a consolidator (other than a consolidator at a location
listed on SCHEDULE 6.3 as in effect on the Closing Date or another consolidator
from whom the Agent shall have received a bailee letter, in form and substance
satisfactory to the Agent, duly executed by such consolidator); and (e) the
Agent, in the exercise of its reasonable commercial discretion, deems eligible
as the basis for Revolving Loans based on such collateral and credit criteria as
the Agent may from time to time establish. If any Inventory at any time ceases
to be Eligible Inventory, such Inventory shall promptly be excluded from the
calculation of Eligible Inventory.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for Release or injury
to the environment.
"ENVIRONMENTAL LAWS" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health or safety matters.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
Authority for (1) any liability under any Environmental Laws, or (2) damages
arising from, or costs incurred by such Governmental Authority in response to, a
Release or threatened Release of a Contaminant into the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable
requirement of law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any property or the
transfer, sale or lease of any property or deed or title for any
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property for environmental reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible Property Transfer
Acts."
"EQUIPMENT" means, with respect to any Loan Party, all of such Loan
Party's now owned and hereafter acquired machinery, equipment, furniture,
furnishings, fixtures, and other tangible personal property (except Inventory),
including motor vehicles with respect to which a certificate of title has been
issued, aircraft, dies, tools, jigs, and office equipment, as well as all of
such types of property leased by such Loan Party and all of such Loan Party's
rights and interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future additions
and accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with any Loan Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any Loan Party or any ERISA
Affiliate from a Multi-employer Plan or notification that a Multi- employer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi- employer Plan; (e) an event or condition which might reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multi-employer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon any Loan Party or any ERISA Affiliate.
"EVENT OF DEFAULT" has the meaning specified in SECTION 11.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"EXISTING BANK DEBT" means all indebtedness, obligations and
liabilities under or in connection with the Credit Agreement, dated as of August
21, 1995, among the Parent, HDSC,
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the lenders party thereto and Chemical Bank, as Administrative Agent and
Fronting Bank, as the foregoing shall be amended, restated, modified and
supplemented from time to time to the Closing Date.
"FACILITY FEE" has the meaning specified in SECTION 3.4.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"FINANCIAL STATEMENTS" means, according to the context in which it
is used, the financial statements referred to in SECTION 8.6(a) or any other
financial statements required to be given to the Lenders or the Agent pursuant
to this Agreement.
"FISCAL YEAR" means the fiscal year of the Parent and its
Subsidiaries for financial accounting purposes. The current Fiscal Year of the
Parent and its Subsidiaries will end on February 1, 1997.
"FIXED ASSETS" means, with respect to any Loan Party, Equipment and
Real Estate of such Loan Party.
"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession); PROVIDED, HOWEVER, that for the purpose of determining Book Value
of Eligible Inventory, the Coverage Ratio and compliance with SECTIONS 9.23 and
9.24, "GAAP" means generally accepted accounting principles as in effect as of
the Closing Date and consistent with those applied in the preparation of the
unaudited August 3, 1996 Financial Statements which are part of the Parent's
Quarterly Report on Form 10Q for the fiscal quarter of the Parent ended on such
date; and PROVIDED, FURTHER, that if (i) any changes in accounting
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principles from those in effect on the Closing Date are hereafter occasioned by
promulgation of rules, regulations, pronouncements or opinions by or are
otherwise required by the Accounting Principles Board, the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession) or (ii) any Loan Party shall after the Closing Date
otherwise change any of the accounting principles it utilizes and such change is
permitted under GAAP and any of such changes in clauses (i) or (ii) above
results in a change in the method of calculation of, or affects the results of
such calculation of, Book Value of Eligible Inventory, the Coverage Ratio or any
of the financial covenants set forth in SECTIONS 9.23 and 9.24, then the Loan
Parties, the Agent and the Lenders agree to enter into and diligently pursue in
good faith negotiations in order to amend such valuation and financial covenants
and tests (or the terms used therein or the calculation thereof) so as to
equitably reflect such accounting changes with the desired result that the
criteria for evaluating the Book Value of Eligible Inventory and the financial
condition and results of operations of the Parent and its Subsidiaries based
upon such financial covenants and tests shall be the same after such accounting
changes as if such accounting changes had not been made (and, to the extent that
the Loan Parties, the Agent and the Lenders shall fail to agree in writing to
any such amendment, then for purposes of such valuation and financial covenants
and tests, GAAP shall be generally accepted accounting principles as in effect
as of the Closing Date and consistent with those applied in the preparation of
the unaudited August 3, 1996 Financial Statements which are part of the Parent's
Quarterly Report on Form 10Q for the fiscal quarter of the Parent ended on such
date or as otherwise previously agreed to in writing by the Loan Parties, the
Agent and the Lenders).
"GENERAL INTANGIBLES" means, with respect to any Loan Party, all of
such Loan Party's now owned or hereafter acquired general intangibles, choses in
action and causes of action and all other intangible personal property of such
Loan Party of every kind and nature (other than Accounts), including, without
limitation, all contract rights, Proprietary Rights, corporate or other business
records, inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, claims or rights to any funds which may become
due to such Loan Party in connection with the termination of any Plan or other
employee benefit plan or any rights thereto and any other amounts payable to
such Loan Party from any Plan or other employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives of
key employees on which such Loan Party is beneficiary, and any letter of credit,
guarantee, claim, security interest or other security held by or granted to such
Loan Party.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
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"GUARANTORS" means the Parent and each of its Subsidiaries.
"GUARANTY" means, with respect to any Person, all obligations of
such Person which in any manner directly or indirectly guarantee or assure, or
in effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity securities
or other property or services.
"HDSC" has the meaning specified in the introductory paragraph to
this Agreement.
"INTERCOMPANY ACCOUNTS" means all assets and liabilities, however
arising, which are due to the Parent and/or any of its Subsidiaries from, which
are due from the Parent and/or any of its Subsidiaries to, or which otherwise
arise from any transaction by the Parent and/or any of its Subsidiaries with,
any Affiliate of the Parent or any of its Subsidiaries.
"INTEREST PERIOD" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six months (to the extent available as
determined by the Agent) thereafter as selected by the relevant Borrower in its
Notice of Borrowing or Notice of Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated
Termination Date.
"INTEREST RATE" means each or any of the interest rates, including
the Default Rate, set forth in SECTION 3.1.
"INVENTORY" means, with respect to any Loan Party, all of such Loan
Party's now owned and hereafter acquired inventory, goods and merchandise,
wherever located, to be furnished under any contract of service or held for sale
or lease, all returned goods, raw materials,
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other materials and supplies of any kind, nature or description which are or
might be consumed in such Loan Party's business or used in connection with the
packing, shipping, advertising, selling or finishing of such goods, merchandise
and such other personal property, and all documents of title or other documents
representing them.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"LATEST PROJECTIONS" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to SECTION 7.2(f), the
projections of the consolidated financial condition, results of operations and
cash flow of the Parent and its Subsidiaries for the Parent's current Fiscal
Year delivered to the Agent prior to the Closing Date; and (b) thereafter, the
projections most recently received by the Agent pursuant to SECTION 7.2(f).
"LAYAWAY INVENTORY" means Inventory of HDSC that a customer of HDSC
intends to purchase and has placed in HDSC's layaway program, but only if (a)
title to such Inventory remains with HDSC, (b) such Inventory is physically
segregated from other Inventory of the Borrowers or is otherwise identified as
layaway inventory of HDSC and (c) such layaway program is generally consistent
with HDSC's historical layaway practices.
"LENDER" and "LENDERS" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of any
Agent Advance outstanding and BABC to the extent of any BABC Loan outstanding;
PROVIDED that no such Agent Advance or BABC Loan shall be taken into account in
determining any Lender's Pro Rata Share or in determining the Majority Lenders.
"LETTER OF CREDIT" means a letter of credit issued or caused to be
issued for the account of a Borrower pursuant to SECTION 2.3.
"LETTER OF CREDIT FEE" has the meaning specified in SECTION 3.6.
"LIBOR INTEREST PAYMENT DATE" means, with respect to a LIBOR Rate
Loan, the last day of each Interest Period applicable to such Loan, and, in the
case of a LIBOR Rate Loan with an Interest Period of more than three months'
duration, each day that would have been a LIBOR Interest Payment Date had
successive Interest Periods of three months' duration been applicable to such
Loan.
"LIBOR RATE" means, for any Interest Period, with respect to LIBOR
Rate Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the next 1/1000th of 1.0%) determined by the Agent as
follows:
LIBOR Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
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where:
"EURODOLLAR RESERVE PERCENTAGE" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on such
day (whether or not applicable to any Lender) under regulations
issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum (rounded upward
to the next 1/16th of 1%) notified to the Agent by Bank of America
as the rate of interest at which dollar deposits in the approximate
amount of the Loan to be made or continued as, or converted into, a
LIBOR Rate Loan and having a maturity comparable to such Interest
Period would be offered by Bank of America's applicable lending
office to major banks in the London eurodollar market at
approximately 11:00 a.m. (London time) two Business Days prior to
the commencement of such Interest Period.
"LIBOR RATE LOANS" means the LIBOR Revolving Loans.
"LIBOR REVOLVING LOAN" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"LIEN" means: (a) any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute, or contract, and including
without limitation, a security interest, charge, claim, or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; and (b) to the extent
not included under clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting property. Notwithstanding the foregoing,
under no circumstance shall the term "LIEN" be construed to include the interest
that any retail buyer may have in Layaway Inventory.
"LOAN ACCOUNT" means, with respect to a Borrower, the loan account
of such Borrower, which account shall be maintained by the Agent.
"LOAN DOCUMENTS" means this Agreement, the Pledge Agreement, the
Trade xxxx Agreement, and any other agreements, instruments, and documents
heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise
relating to the Obligations, the Collateral, or any other aspect of the
transactions contemplated by this Agreement.
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"LOANS" means, collectively, all loans and advances provided for in
ARTICLE 2.
"LOAN PARTY" shall refer to each of HDSC, CRH, the Parent and each
of the other Guarantors.
"MAJORITY LENDERS" means at any time Lenders whose Pro Rata shares
aggregate more than 50% of the Commitments or, if no Commitments shall then be
in effect, Lenders who hold more than 50% of the aggregate principal amount of
the Loans then outstanding.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, profits, properties,
condition (financial or otherwise) or prospects of the Parent and its
Subsidiaries taken as a whole or any material portion of the Collateral; (b) a
material impairment of the ability of the Parent or any of its Subsidiaries to
perform under any Loan Document and to avoid any Event of Default; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against the Parent or any of its Subsidiaries of any Loan
Document.
"MAXIMUM REVOLVER AMOUNT" means $300,000,000.
"MULTI-EMPLOYER PLAN" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by any Loan Party or
any ERISA Affiliate.
"NET CAPEX" means, for any period, that amount which is (1) the
greater of (a) the product of $1,000,000 and the number of fiscal months of the
Parent (or portion thereof) comprising such period or (b) the aggregate amount
of Capital Expenditures (including, without limitation, any Capital Expenditures
that would arise from any acquisition described in clause (m) of the definition
Restricted Investment) made by the Parent and its Subsidiaries during such
period, less (2) the aggregate amount of (i) Net Cash Proceeds received by the
Parent or any of its Subsidiaries during such period from the sale or other
disposition to non-Affiliates of Equipment permitted to be sold or disposed of
hereunder and (ii) Debt For Borrowed Money incurred by the Parent or any of its
Subsidiaries during such period which is permitted hereunder in connection with
the financing (but not refinancing) of Capital Expenditures made in such period
or made at any time prior to the beginning of such period.
"NET CASH PROCEEDS" means, with respect to any sale of assets of a
Loan Party, cash (freely convertible into U.S. dollars) received by such Loan
Party from such sale (including cash received as consideration for the
assumption or incurrence of liabilities incurred in connection with or in
anticipation of such sale), after (a) provision for all title, recording or
other taxes measured by or resulting from such sale, (b) payment of all
reasonable brokerage commissions, investment banking and legal fees and other
fees and expenses related to such sale,
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(c) deduction of appropriate amounts to be provided by such Loan Party as a
reserve, in accordance with GAAP, against any liabilities associated with the
assets sold or disposed of in such transaction and retained by such Loan Party
after such transaction, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with the assets
sold or disposed of in such transaction and (d) amounts paid to satisfy Debt
(other than the Obligations) which are required to be repaid in connection with
any such sale.
"NOTICE OF BORROWING" has the meaning specified in SECTION 2.2(b).
"NOTICE OF CONVERSION/CONTINUATION" has the meaning specified in
SECTION 3.2(b).
"OBLIGATIONS" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by any Borrower or
other Loan Party to the Agent and/or any Lender, arising under or pursuant to
this Agreement or any of the other Loan Documents, whether or not evidenced by
any note, or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment from others, and any participation by
the Agent and/or any Lender in any Borrower's debts owing to others), absolute
or contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all principal, interest, charges,
expenses, fees, attorneys' fees, filing fees and any other sums chargeable to
any Borrower hereunder or under any of the other Loan Documents. "Obligations"
includes, without limitation, all debts, liabilities, and obligations now or
hereafter owing from any Borrower to the Agent and/or any Lender under or in
connection with the Letters of Credit or Credit Support.
"OTHER TAXES" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Documents.
"PARENT" has the meaning specified in the introductory paragraph to
this Agreement.
"PARTICIPATING LENDER" means any Person who shall have been granted
the right by any Lender to participate in the financing provided by such Lender
under this Agreement, and who shall have entered into a participation agreement
in form and substance satisfactory to such Lender.
"PAYMENTS" has the meaning specified in SECTION 6.9(a).
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
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"PENDING REVOLVING LOANS" means, with respect to a Borrower, at any
time, the aggregate principal amount of all Revolving Loans requested by such
Borrower in any Notice(s) of Borrowing received by the Agent which have not yet
been advanced.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which any Loan Party sponsors, maintains, or
to which it makes, is making, or is obligated to make contributions, or in the
case of a Multiple- employer Plan has made contributions at any time during the
immediately preceding five (5) plan years.
"PERMITTED LIENS" means:
(a) Liens for taxes not delinquent or statutory Liens for
taxes in an amount not to exceed $2,500,000 provided that the payment of such
taxes which are due and payable is being contested in good faith and by
appropriate proceedings diligently pursued and as to which adequate financial
reserves have been established on the relevant Loan Party's books and records
and a stay of enforcement of any such Lien is in effect.
(b) the Agent's Liens;
(c) deposits under worker's compensation, unemployment
insurance, social security and other similar laws, or to secure the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure indemnity, performance or other similar bonds for the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(d) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons arising in
the ordinary course of business, PROVIDED that (1) if any such Lien arises from
the nonpayment by the Parent or any of its Subsidiaries of such claims or demand
when due and such Lien covers any Inventory, such claims or demands do not
exceed $1,000,000 in the aggregate and (2) if any such Lien arises from the
nonpayment by the Parent or any of its Subsidiaries of such claims or demands
when due and such Lien does not cover any Inventory, HDSC agrees to obtain a
bond to fully secure the payment of such claims or demands within thirty days
after the date such payment was due or to use reasonable efforts to take or
cause to be taken such other steps to remove such Lien within thirty days after
the date such payment was due;
(e) reservations, exceptions, encroachments, easements, rights
of way, covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate; PROVIDED that they do not in the
aggregate materially detract from the value of the Real Estate or materially
interfere with its use in the ordinary conduct of any Loan Party's business;
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(f) judgment and other similar Liens arising in connection
with court proceedings to the extent the attachment or enforcement of such Liens
would not result in an Event of Default hereunder;
(g) purchase money Liens (other than Liens on Inventory),
PROVIDED that, in any event, the principal amount of the Debt secured by any
item of property shall not exceed 100% of the cost thereof;
(h) Liens on property or assets (other than Inventory) of the
Parent and any of its Subsidiaries existing on the Closing Date and listed on
SCHEDULE 9.19, PROVIDED that such Liens shall secure only those obligations that
they secure on the Closing Date;
(i) any Lien existing on any property (other than Inventory or
proceeds thereof) prior to the acquisition thereof by the Parent or any of its
Subsidiaries, PROVIDED that (A) such Lien is not created in contemplation of or
in connection with such acquisition, (B) such Lien does not apply to any other
property or assets of the Parent or any of its Subsidiaries and (C) such
acquisition is permitted hereunder;
(j) leases, subleases and license agreements arising in the
ordinary course of business and not otherwise prohibited under this Agreement;
(k) financing statements filed under any Uniform Commercial
Code or comparable law of any jurisdiction in respect of operating leases and
consignments and not otherwise prohibited under this Agreement;
(l) Liens (other than on Inventory) in favor of HDSC's credit
card processing company securing obligations of HDSC to such processing company
incurred in the ordinary course of business in connection with HDSC's credit
card receivables collection process;
(m) Liens on Inventory of a Borrower created under agreements
entered into by it in the ordinary course of business with customs brokers, but
only to the extent such Liens secure amounts owing by such Borrower to such
customs brokers for customs services provided by such brokers;
(n) Liens on Real Estate owned by HDSC securing Debt permitted
to be incurred by it hereunder, PROVIDED that, in any event, the aggregate
principal amount of the Debt secured by such property shall not exceed 100% of
the fair market value of such property at each date any such Debt is incurred;
(o) Liens on store fixtures and store Equipment of HDSC
securing Debt permitted to be incurred by it hereunder, PROVIDED that, in any
event, the aggregate principal amount of the Debt secured by such property shall
not exceed 100% of the fair market value of such property at each date any such
Debt is incurred;
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(p) Liens on other Equipment of the Loan Parties securing Debt
permitted pursuant to SECTION 9.13(n), provided that, in any event, the
aggregate principal amount of the Debt secured by such property shall not exceed
100% of the fair market value of such property at each date any such Debt is
incurred;
(q) Liens on property in connection with transactions
permitted pursuant to SECTION 9.20; and
(r) extensions and replacements of any Liens referred to in
clauses (g), (h), (n), (o), (p) and (q) above, PROVIDED that any such extension
or replacement Lien is limited to the property or asset covered by the Lien
extended or replaced and does not secure any Debt in addition to that secured
immediately prior to such extension or replacement.
"PERSON" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
Governmental Authority, or any other entity.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Loan Party sponsors or maintains or to which such Loan Party
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement to be entered into on
the Closing Date among the Parent, the Borrowers and the Agent with respect to
any equity interests, now or hereafter owned by such Loan Party, in any
Subsidiaries of the Parent.
"PRO RATA SHARE" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders.
"PROPRIETARY RIGHTS" means, with respect to a Loan Party, all of
such Loan Party's now owned and hereafter arising or acquired: licenses,
franchises, permits, patents, patent rights, copyrights, works which are the
subject matter of copyrights, trademarks, service marks, trade names, trade
styles, patent, trademark and service xxxx applications, and all licenses and
rights related to any of the foregoing, including, without limitation, those
patents, trademarks, service marks, trade names and copyrights set forth on
SCHEDULE 8.13 hereto, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present and future infringement of any of the foregoing.
"PURCHASE ACCRUAL INVENTORY" of HDSC means, at any time, Inventory
located on the premises of HDSC's distribution center in Columbus, Ohio and
retail stores or in-transit to
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such locations (a) title to which shall have passed to HDSC, (b) that is subject
to a first priority perfected security interest in favor of the Agent for the
benefit of the Agent and the Lenders and (c) that has not yet been recorded in
HDSC's stock ledger due to the timing of processing invoices or receiving
documents. Any such Inventory which HDSC acquires from CRH shall no longer
constitute Purchase Accrual Inventory if, 45 days after any such Inventory
arrives in the United States, such Inventory remains unrecorded in HDSC's stock
ledger.
"RATE PROTECTION AGREEMENTS" means interest rate swap, cap, collar
or floor arrangements or other similar agreements entered into by HDSC to
provide protection against fluctuations in interest rates. Each Rate Protection
Agreement shall be on terms satisfactory to the Agent with a counterparty
satisfactory to the Agent.
"REAL ESTATE" means all of the present and future interests of any
Loan Party, as owner, lessee, or otherwise, in any real property or any
improvements thereon, including, without limitation, any interest arising from
an option to purchase or lease any such real property or improvements or any
portion thereof.
"RELEASE" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater, Real Estate or other property.
"REPORTABLE EVENT" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"RESPONSIBLE OFFICER" means the chief executive officer or the
president of the Parent or any Borrower, as appropriate, or any other officer
having substantially the same authority and responsibility; or, with respect to
compliance with financial covenants and the preparation of the Borrowing Base
Certificate, the chief financial officer, the treasurer or the controller of the
Parent and each Borrower, or any other officer having substantially the same
authority and responsibility.
"RESTRICTED INVESTMENT" means any acquisition by the Parent or any
of its Subsidiaries of an interest in another Person or of assets of another
Person comprising all or a substantial part of the assets or any business of
such Person or which assets are material in relation to the assets of the
acquiror (whether in one transaction or a series of related transactions) in
exchange for cash or other property, whether in the form of an acquisition of
stock, debt, or
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other indebtedness or obligation or otherwise, or the purchase
or acquisition of a loan, advance, capital contribution, or subscription, except
for the following:
(a) Equipment to be used in the business of HDSC;
(b) Inventory of a Borrower in the ordinary course of
business;
(c) pledges and deposits described under clause (c) of the
definition of Permitted Liens;
(d) direct obligations of the United States of America, or any
agency thereof, or obligations guaranteed by the United States of America,
PROVIDED that such obligations mature within six months from the date of
acquisition thereof;
(e) certificates of deposit maturing within six months from
the date of acquisition, bankers' acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with a bank or
trust company organized under the laws of the United States or any state thereof
having capital and surplus aggregating at least $500,000,000;
(f) commercial paper given a rating of "A2" or better by
Standard & Poor's Corporation or "P2" or better by Xxxxx'x Investors Service,
Inc. and maturing not more than 90 days from the date of creation thereof or any
liquid investment which the Agent approves in writing as being of substantially
equal quality (which approval shall not be unreasonably withheld);
(g) in the case of the Parent, common equity investments in
the capital stock of HDSC;
(h) in the case of HDSC, (1) investments by HDSC existing on
the date hereof in the capital stock of its Subsidiaries and (2) loans to the
Parent permitted pursuant to Section 9.13(k);
(i) loans or advances in the ordinary course of business
consistent with past practices to any wholly-owned Subsidiary of HDSC by (1)
HDSC or (2) any other Subsidiary of HDSC;
(j) loans and advances to HDSC by any Subsidiary of HDSC in
the ordinary course of business consistent with past practices;
(k) loans to officers and employees of HDSC in the ordinary
course of business consistent with past practices not to exceed $5,000,000 in
aggregate outstanding principal amount (and no more than $1,000,000 in aggregate
outstanding principal amount to any single officer or employee);
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(l) individual store deposit accounts with local depository
banks required in the ordinary course of business and concentration deposit
accounts, in each instance, that are maintained in accordance with SECTION 6.9;
(m) so long as no Default or Event of Default shall exist at
the time of acquisition (or after giving effect thereto) and subject to SECTION
9.18, acquisitions by HDSC of assets of a business of a non-Affiliated Person
not to exceed in purchase price (whether in the form of cash, property, stock,
Debt, assumption of liabilities or otherwise) $15,000,000 individually or
$30,000,000 in the aggregate for all such acquisitions during the term of this
Agreement; and
(n) Rate Protection Agreements entered into by HDSC.
Upon the request of the Agent or if an Event of Default shall be
continuing, HDSC shall pledge in favor of the Agent for the benefit of the Agent
and the Lenders all of HDSC's investments under clauses (d), (e) and (f) above
pursuant to pledge agreements in form and substance satisfactory to the Agent,
as a result of which the Agent shall have a first priority perfected security
interest therein.
"REVOLVING LOANS" has the meaning specified in SECTION 2.2 and
includes each Agent Advance and BABC Loan.
"SENIOR INDENTURE" means the Indenture, dated as of April 19, 1996,
among the Parent, certain of its Subsidiaries and Fleet National Bank, as
trustee, as amended, modified or supplemented from time to time in accordance
with the terms thereof and hereof.
"SENIOR NOTE DOCUMENTS" means the Senior Indenture, the Senior Notes
and any and all guarantees executed in connection therewith from time to time,
each as amended, modified or supplemented from time to time in accordance with
the terms thereof and hereof.
"SENIOR NOTES" means any and all promissory notes at any time issued
and outstanding under or pursuant to the Senior Indenture, as amended, modified,
supplemented, replaced or substituted for from time to time in accordance with
the terms thereof and hereof.
"SETTLEMENT" and "SETTLEMENT DATE" have the meanings specified in
SECTION 2.2(j)(i).
"STATED TERMINATION DATE" means the third anniversary of the
Closing Date.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Parent.
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"TAXES" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by each Lender's
net income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Lender or the Agent, as the case may be, is organized or
maintains a lending office.
"TERMINATION DATE" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrowers pursuant to SECTION 4.2 or by the Majority Lenders pursuant to SECTION
11.2 or automatically as provided in the proviso to Section 11.2(a), and (iii)
the date this Agreement is otherwise terminated for any reason whatsoever.
"TOTAL FACILITY" has the meaning specified in SECTION 2.1.
"TRADEMARK AGREEMENT" means the Trademark Security Agreement, dated
as of the Closing Date, executed and delivered by the Loan Parties to the Agent
to evidence and perfect the Agent's security interest in each of the Loan
Parties' present and future trademarks and related rights, for the benefit of
the Agent and the Lenders.
"UCC" means the Uniform Commercial Code (or any successor statute)
of the State of New York or of any other state the laws of which are required by
Section 9-103 thereof to be applied in connection with the issue of perfection
of security interests.
"UNUSED LETTER OF CREDIT SUBFACILITY" means an amount equal to
$200,000,000 minus the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit plus (b) the aggregate unpaid reimbursement
obligations with respect to all Letters of Credit.
"UNUSED LINE FEE" has the meaning specified in SECTION 3.5.
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
1.2 ACCOUNTING TERMS. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements.
1.3 INTERPRETIVE PROVISIONS. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
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(b) The words "hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including," the
words "to" and "until" each mean "to but excluding" and the word "through" means
"to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Loan
Parties and the other parties, and are the products of all parties. Accordingly,
they shall not be construed against the Lenders or the Agent merely because of
the Agent's or Lenders' involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
---------------------------
2.1 TOTAL FACILITY. Subject to all of the terms and conditions of this
Agreement, the Lenders severally agree to make available a total credit facility
of up to $300,000,000 (the "Total Facility") for the Borrowers' use from time to
time during the term of this Agreement. The Total Facility shall be comprised of
a revolving line of credit for the Borrowers consisting of revolving loans and
letters of credit up to the limits of the Combined Availability as described in
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SECTIONS 2.2 and 2.3. Notwithstanding anything contained in this Agreement
(including, without limitation, ARTICLE 2), CRH may not request any financial
accommodations hereunder other than (i) the issuance of documentary Letters of
Credit to be issued for its account to secure the payment by CRH of the purchase
of finished goods Inventory purchased by CRH in the ordinary course of business,
(ii) the provision of Credit Support for such Letters of Credit or (iii)
Revolving Loans, the proceeds of which are used to reimburse drawings under such
Letters of Credit or payments made with respect to any such Credit Support;
PROVIDED that the foregoing shall in no event restrict or invalidate the making
to CRH of Agent Advances or Revolving Loans deemed requested by CRH under
SECTION 2.3(e)(2) or SECTION 4.4.
2.2 REVOLVING LOANS.
(a) AMOUNTS. Subject to the satisfaction of the conditions precedent
set forth in ARTICLE 10, each Lender severally agrees, upon a Borrower's request
from time to time on any Business Day during the period from the Closing Date to
the Termination Date, to make revolving loans (the "Revolving Loans") to such
Borrower, in amounts not to exceed for the Borrowers on an aggregate basis
(except for BABC with respect to BABC Loans or Agent Advances) such Lender's Pro
Rata Share of the Combined Availability. The Lenders, however, in their
discretion, may elect to make Revolving Loans to the Borrowers or participate
(as provided for in SECTION 2.3(f)) in the credit support or enhancement
provided through the Agent to the issuers of Letters of Credit in excess of the
Combined Availability on one or more occasions, but if they do so, neither the
Agent nor the Lenders shall be deemed thereby to have changed the limits of the
Maximum Revolver Amount or the Combined Availability or to be obligated to
exceed such limits on any other occasion. If the sum of (i) the aggregate
outstanding Revolving Loans to the Borrowers, (ii) the aggregate amount of
Pending Revolving Loans to the Borrowers, (iii) the aggregate undrawn amount of
outstanding Letters of Credit and (iv) any unpaid reimbursement obligations in
respect of Letters of Credit exceeds the Combined Availability (with Combined
Availability determined as if clauses (b)(i) through (iv) of such definition
were zero), the Lenders may refuse to make or otherwise restrict the making of
Revolving Loans to a Borrower as the Lenders determine until such excess has
been eliminated, subject to the Agent's authority, in its sole discretion, to
make Agent Advances pursuant to the terms of SECTION 2.2(i).
(b) PROCEDURE FOR BORROWING. (1) Each Borrowing by a Borrower shall
be made upon such Borrower's irrevocable written notice delivered to the Agent
in the form of a Notice of Borrowing (substantially in the form of EXHIBIT C or
another form acceptable to the Agent) together with a Borrowing Base Certificate
reflecting sufficient Combined Availability, which must be received by the Agent
prior to 12:00 noon (New York City time) (i) three Business Days prior to the
requested Funding Date, in the case of LIBOR Rate Loans and (ii) no later than
12:00 noon on the requested Funding Date, in the case of Base Rate Loans,
specifying:
(A) the amount of the Borrowing by such Borrower
(which Borrowing, in case of the request for LIBOR Rate Loans, shall be in the
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof);
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(B) the requested Funding Date, which shall be a
Business Day;
(C) whether the Revolving Loans requested by such
Borrower are to be Base Rate Revolving Loans or LIBOR Revolving Loans; and
(D) the duration of the Interest Period if the
requested Revolving Loans are to be LIBOR Revolving Loans. If the Notice of
Borrowing fails to specify the duration of the Interest Period for any Borrowing
comprised of LIBOR Rate Loans, such Interest Period shall be three months;
provided, however, that with respect to any Borrowing to be made on the Closing
Date, such Borrowing will consist of Base Rate Revolving Loans only.
(2) After giving effect to any Borrowing by a Borrower, there
may not be more than nine different Interest Periods in effect for the Borrowers
in the aggregate.
(3) With respect to any request for Base Rate Revolving Loans,
in lieu of delivering the above-described Notice of Borrowing, a Borrower may
give the Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice but the Agent shall be entitled to rely on the telephonic notice in
making such Revolving Loans.
(c) RELIANCE UPON AUTHORITY. On or prior to the Closing Date and
thereafter prior to any change with respect to any of the information contained
in the following clauses (i) and (ii), the applicable Borrower shall deliver to
the Agent a writing setting forth (i) the account of such Borrower to which the
Agent is authorized to transfer the proceeds of the Revolving Loans requested by
such Borrower pursuant to this SECTION 2.2, and (ii) the names of the officers
authorized to request Revolving Loans on behalf of such Borrower, and shall
provide the Agent with a specimen signature of each such officer. The Agent
shall be entitled to rely conclusively on such officer's authority to request
Revolving Loans on behalf of the applicable Borrower, the proceeds of which are
to be transferred to any of the accounts of the applicable Borrower specified by
such Borrower pursuant to the immediately preceding sentence, until the Agent
receives written notice to the contrary. The Agent shall have no duty to verify
the identity of any individual representing him or herself as one of the
officers authorized by the applicable Borrower to make such requests on its
behalf.
(d) NO LIABILITY. The Agent shall not incur any liability to any
Borrower as a result of acting upon any notice referred to in SECTIONS 2.2(b)
and (c), which notice the Agent believes in good faith to have been given by an
officer duly authorized by such Borrower to request Revolving Loans on its
behalf or for otherwise acting in good faith under this SECTION 2.2, and the
crediting of Revolving Loans to the applicable Borrower's deposit account, or
transmittal to such Person as the applicable Borrower shall direct, shall
conclusively establish the obligation of such Borrower to repay such Revolving
Loans as provided herein.
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(e) NOTICE IRREVOCABLE. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made by a Borrower pursuant to SECTION 2.2(b) shall be
irrevocable and such Borrower shall be bound to borrow the funds requested
therein in accordance therewith.
(f) AGENT'S ELECTION. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to SECTION 2.2(b), the
Agent shall elect, in its discretion, (i) to have the terms of SECTION 2.2(g)
apply to such requested Borrowing, or (ii) to request BABC to make a BABC Loan
pursuant to the terms of SECTION 2.2(h) in the amount of the requested
Borrowing; PROVIDED, HOWEVER, that if BABC declines in its sole discretion to
make a BABC Loan pursuant to SECTION 2.2(h), the Agent shall elect to have the
terms of SECTION 2.2(g) apply to such requested Borrowing.
(g) MAKING OF REVOLVING LOANS. (i) In the event that the Agent shall
elect to have the terms of this SECTION 2.2(g) apply to a requested Borrowing as
described in SECTION 2.2(f), then promptly after receipt of a Notice of
Borrowing or telephonic notice pursuant to SECTION 2.2(b), the Agent shall
notify the Lenders by telecopy, telephone or other similar form of transmission,
of the requested Borrowing. Each Lender shall make the amount of such Lender's
Pro Rata Share of the requested Borrowing available to the Agent in same day
funds, to such account of the Agent as the Agent may designate, not later than
1:00 p.m. (New York City time), on the Funding Date applicable thereto. After
the Agent's receipt of the proceeds of such Revolving Loans, upon satisfaction
of the applicable conditions precedent set forth in ARTICLE 10, the Agent shall
make the proceeds of such Revolving Loans available to the applicable Borrower
on the applicable Funding Date by transferring same day funds equal to the
proceeds of such Revolving Loans received by the Agent to an account of such
Borrower, designated in writing by such Borrower and acceptable to the Agent;
PROVIDED, HOWEVER, that the amount of Revolving Loans or Letters of Credit so
made or issued to or for the account of the Borrowers on any date shall in no
event exceed the Combined Availability on such date.
(ii) Unless the Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing (or with
respect to Base Rate Loans for which notice of such borrowings is given to the
Agent by the applicable Borrower on the same day as the requested date for the
making of such borrowings, not later than 1:00 p.m. (New York City time) on such
requested date for the making of such borrowings), that such Lender will not
make available as and when required hereunder to the Agent for the account of
the applicable Borrower the amount of that Lender's Pro Rata Share of the
Borrowing for such Borrower, the Agent may assume that each Lender has made such
amount available to the Agent in immediately available funds on the Funding Date
and the Agent may (but shall not be so required), in reliance upon such
assumption, make available to such Borrower on such date a corresponding amount.
If and to the extent any Lender shall not have made its full amount available to
the Agent in immediately available funds and the Agent in such circumstances has
made available to the applicable Borrower such amount, that Lender shall on the
Business Day following such Funding Date make such amount available to the
Agent, together with interest at the Federal Funds Rate for each day during such
period. A notice of the Agent submitted to any Lender with respect to amounts
owing under this
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subsection shall be conclusive, absent manifest error. If such amount is so made
available, such payment to the Agent shall constitute such Lender's Loan to the
applicable Borrower on the date of Borrowing for all purposes of this Agreement.
If such amount is not made available to the Agent on the Business Day following
the Funding Date, the Agent will notify the applicable Borrower of such failure
to fund and, upon demand by the Agent, such Borrower shall pay such amount to
the Agent for the Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing. The
failure of any Lender to make any Loan on any Funding Date (any such Lender,
prior to the cure of such failure, being hereinafter referred to as a
"Defaulting Lender") shall not relieve any other Lender of any obligation
hereunder to make a Loan on such Funding Date, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by any Borrower to the Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. The Agent may hold and, in its
discretion, re-lend to any Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. Any amounts so re-lent
to any Borrower shall bear interest at the rate applicable to Base Rate
Revolving Loans and for all other purposes of this Agreement shall be treated as
if they were Revolving Loans, provided, however, that for purposes of voting or
consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender" and
such Lender's Commitment shall be deemed to be zero (-0-). Until a Defaulting
Lender cures its failure to fund its Pro Rata Share of any Borrowing (1) such
Defaulting Lender shall not be entitled to any portion of the Unused Line Fee
and (2) the Unused Line Fee shall accrue in favor of the Lenders which have
funded their respective Pro Rata Shares of such requested Borrowing, shall be
allocated among such performing Lenders ratably based upon their relative
Commitments, and shall be calculated based upon the average amount by which the
aggregate Commitments of such performing Lenders exceeds the sum of outstanding
Revolving Loans and the undrawn face amount of all outstanding Letters of
Credit. This section shall remain effective with respect to such Lender until
such time as the Defaulting Lender shall no longer be in default of any of its
obligations under this Agreement. The terms of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by any Borrower of its duties and obligations
hereunder.
(h) MAKING OF BABC LOANS. (i) In the event the Agent shall elect,
with the consent of BABC, to have the terms of this SECTION 2.2(h) apply to a
requested Borrowing as described in SECTION 2.2(f), BABC shall make a Revolving
Loan in the amount of such Borrowing (any such Revolving Loan made solely by
BABC pursuant to this SECTION 2.2(h) being referred to as a "BABC Loan" and such
Revolving Loans being referred to collectively as "BABC Loans") available to the
applicable Borrower on the Funding Date applicable thereto by transferring same
day funds to an account of such Borrower, designated in writing by such Borrower
and acceptable to the Agent. Each BABC Loan is a Revolving Loan hereunder and
shall be subject to all the
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terms and conditions applicable to other Revolving Loans except that all
payments thereon shall be payable to BABC solely for its own account (and for
the account of the holder of any participation interest with respect to such
Revolving Loan). The Agent shall not request BABC to make any BABC Loan if (i)
the Agent shall have received written notice from any Lender, or otherwise has
actual knowledge, that one or more of the applicable conditions precedent set
forth in ARTICLE 10 will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (ii) the requested Borrowing would exceed the Combined
Availability on such Funding Date. BABC shall not otherwise be required to
determine whether the applicable conditions precedent set forth in ARTICLE 10
have been satisfied or the requested Borrowing would exceed the Combined
Availability on the Funding Date applicable thereto prior to making, in its sole
discretion, any BABC Loan.
(ii) The BABC Loans shall be secured by the Collateral, shall
constitute Revolving Loans and Obligations hereunder, and shall bear interest at
the rate applicable to the Revolving Loans from time to time.
(i) AGENT ADVANCES. (i) Subject to the limitations set forth in the
provisos contained in this SECTION 2.2(i), the Agent is hereby authorized by the
Borrowers and the Lenders, from time to time in the Agent's sole discretion, (1)
after the occurrence of a Default or an Event of Default, or (2) at any time
that any of the other applicable conditions precedent set forth in Article 10
have not been satisfied, to make Revolving Loans to any of the Borrowers on
behalf of the Lenders which the Agent, in its reasonable business judgment,
deems necessary or desirable (A) to preserve or protect the Collateral, or any
portion thereof, (B) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (C) to pay any other amount
chargeable to any Borrower pursuant to the terms of this Agreement, including,
without limitation, costs, fees and expenses as described in SECTION 16.7 (any
of the advances described in this SECTION 2.2(i) being hereinafter referred to
as "Agent Advances"); PROVIDED, that (i) the Majority Lenders may at any time
revoke the Agent's authorization contained in this SECTION 2.2(i) to make Agent
Advances, any such revocation to be in writing and to become effective
prospectively upon the Agent's receipt thereof, and (ii) immediately after
giving effect to the making of the Agent Advances, the sum of (x) the aggregate
unpaid balance of all Revolving Loans made to the Borrowers at such time, (y)
the aggregate undrawn amount of all outstanding Letters of Credit and (z) the
aggregate amount of any unpaid reimbursement obligations in respect of Letters
of Credit shall not exceed the Maximum Revolver Amount or $25,000,000 in excess
of clause (a)(ii) of the definition of Combined Availability at such time.
(ii) The Agent Advances shall be repayable on demand and secured
by the Collateral, shall constitute Revolving Loans and Obligations hereunder,
and shall bear interest at the rate applicable to the Revolving Loans from time
to time. The Agent shall notify each Lender in writing of each such Agent
Advance.
(j) SETTLEMENT. It is agreed that each Lender's funded portion of
the Revolving Loan is intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such
agreement, the Agent, BABC, and the other
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Lenders agree (which agreement shall not be for the benefit of or enforceable by
any Borrower) that in order to facilitate the administration of this Agreement
and the other Loan Documents, settlement among them as to the Revolving Loans,
the BABC Loans and the Agent Advances shall take place on a periodic basis in
accordance with the following provisions:
(i) The Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by the
Agent, (1) on behalf of BABC, with respect to each outstanding BABC Loan, (2)
for itself, with respect to each Agent Advance, and (3) with respect to
collections received, in each case, by notifying the Lenders of such requested
Settlement by telecopy, telephone or other similar form of transmission, of such
requested Settlement, no later than 12:00 noon (New York City time) on the date
of such requested Settlement (the "Settlement Date"). Each Lender (other than
BABC, in the case of BABC Loans) shall make the amount of such Lender's Pro Rata
Share of the outstanding principal amount of the BABC Loans and Agent Advances
with respect to which Settlement is requested available to the Agent, for itself
or for the account of BABC, in same day funds, to such account of the Agent as
the Agent may designate, not later than 3:00 p.m. (New York City time), on the
Settlement Date applicable thereto, regardless of whether the applicable
conditions precedent set forth in ARTICLE 10 have then been satisfied. Such
amounts made available to the Agent shall be applied against the amounts of the
applicable BABC Loan or Agent Advance and, together with the portion of such
BABC Loan or Agent Advance representing BABC's Pro Rata Share thereof, shall
constitute Revolving Loans of such Lenders. If any such amount is not made
available to the Agent by any Lender on the Settlement Date applicable thereto,
the Agent shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the first three (3)
days from and after the Settlement Date and thereafter at the Interest Rate then
applicable to the Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to a BABC Loan or Agent Advance),
each other Lender shall irrevocably and unconditionally purchase and receive
from BABC or the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such BABC Loan or Agent Advance to the
extent of such Lender's Pro Rata Share thereof by paying to the Agent, in same
day funds, an amount equal to such Lender's Pro Rata Share of such BABC Loan or
Agent Advance. If such amount is not in fact made available to the Agent by any
Lender, the Agent shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after such demand and thereafter at the Interest Rate
then applicable to the Revolving Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any BABC Loan or Agent
Advance pursuant to subsection (ii) above, the Agent shall promptly distribute
to such Lender at such address as such Lender may request in writing, such
Lender's Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such BABC Loan or
Agent Advance.
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(iv) Between Settlement Dates, the Agent, to the extent no Agent
Advances or BABC Loans are outstanding, may pay over to BABC any payments
received by Agent, which in accordance with the terms of this Agreement would be
applied to the reduction of the Revolving Loans, for application to BABC's other
outstanding Revolving Loans. If, as of any Settlement Date, collections received
since the then immediately preceding Settlement Date have been applied to BABC's
other outstanding Revolving Loans other than to BABC Loans or Agent Advances, as
provided for in the previous sentence, BABC shall pay to the Agent for the
account of the Lenders, to be applied to the outstanding Revolving Loans of such
Lenders, an amount such that each Lender shall, upon receipt of such amount,
have, as of such Settlement Date, its Pro Rata Share of the Revolving Loans.
During the period between Settlement Dates, BABC with respect to BABC Loans, the
Agent with respect to Agent Advances, and each Lender with respect to the
Revolving Loans other than BABC Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on the
actual average daily amount of funds employed by BABC, the Agent and the other
Lenders.
(k) NOTATION. The Agent shall record on its books the principal
amount of the Revolving Loans owing by each Borrower to each Lender, including
the BABC Loans owing by each Borrower to BABC, and the Agent Advances owing by
each Borrower to the Agent, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Revolving Loans to each Borrower in
its books and records, including computer records, such books and records
constituting rebuttably presumptive evidence, absent manifest error, of the
accuracy of the information contained therein.
(l) LENDERS' FAILURE TO PERFORM. All Loans (other than BABC Loans
and Agent Advances) shall be made by the Lenders simultaneously and in
accordance with their Pro Rata Shares. It is understood that (a) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Loans hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligation to make any Loans hereunder, (b) no failure by any Lender to perform
its obligation to make any Loans hereunder shall excuse any other Lender from
its obligation to make any Loans hereunder, and (c) the obligations of each
Lender hereunder shall be several, not joint and several.
2.3 Letters of Credit.
-----------------
(a) AGREEMENT TO CAUSE ISSUANCE. Subject to the terms and conditions
of this Agreement, and in reliance upon the representations and warranties of
the Loan Parties herein set forth, the Agent agrees to take reasonable steps to
cause to be issued for the account of any Borrower and to provide credit support
or other enhancement to banks acceptable to the Agent and the Borrowers
(initially, Bank of America), which issue Letters of Credit for the account of
any Borrower (any such credit support or enhancement being herein referred to a
"Credit Support") in accordance with this SECTION 2.3 from time to time during
the term of this Agreement.
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(b) AMOUNTS; OUTSIDE EXPIRATION DATE. The Agent shall not have any
obligation to take steps to cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit at any time if: (1) the maximum
undrawn amount of the requested Letter of Credit is greater than the Unused
Letter of Credit Subfacility at such time; (2) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due from the
applicable Borrower in connection with the opening thereof exceed the Combined
Availability at such time; or (3) such (a) documentary Letter of Credit has an
expiration date later than the Stated Termination Date or more than one-hundred
and eighty (180) days from the date of issuance or (b) standby Letter of Credit
has an expiration date later than the Stated Termination Date or more than
twelve (12) months from the date of issuance; PROVIDED, HOWEVER, that standby
Letters of Credit may have "evergreen" clauses providing for automatic annual
renewals unless terminated by the Agent (or issuer of the Letter of Credit at
the request of the Agent) by written notice to the beneficiary of such standby
Letter of Credit no less than thirty (30) days prior to an annual renewal date.
(c) OTHER CONDITIONS. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in ARTICLE 10, the
obligation of the Agent to take reasonable steps to cause to be issued any
Letter of Credit or to provide Credit Support for any Letter of Credit is
subject to the following conditions precedent having been satisfied in a manner
satisfactory to the Agent:
(1) The applicable Borrower shall have delivered to the
proposed issuer of such Letter of Credit, at such times and in such manner as
such proposed issuer may prescribe, an application in form and substance
satisfactory to such proposed issuer and the Agent for the issuance of the
Letter of Credit and such other documents as may be required pursuant to the
terms thereof, and the form and terms of the proposed Letter of Credit shall be
satisfactory to the Agent and such proposed issuer; and
(2) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the type
and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed issuer of such Letter of Credit refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit.
(d) Issuance of Letters of Credit.
-----------------------------
(1) REQUEST FOR ISSUANCE. The Borrower for whose account the
Letter of Credit is to be issued shall give the Agent two (2) Business Days'
prior written notice of such Borrower's request for the issuance of a Letter of
Credit. Such notice shall be irrevocable and shall specify the original face
amount of the Letter of Credit requested, the effective date (which date shall
be a Business Day) of issuance of such requested Letter of Credit, whether such
Letter
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of Credit may be drawn in a single or in partial draws, the date on which such
requested Letter of Credit is to expire (which date shall be a Business Day),
the purpose for which such Letter of Credit is to be issued, and the beneficiary
of the requested Letter of Credit. The applicable Borrower shall attach to such
notice the proposed form of the Letter of Credit.
(2) RESPONSIBILITIES OF THE AGENT; ISSUANCE. The Agent shall
determine, as of the Business Day immediately preceding the requested effective
date of issuance of the Letter of Credit set forth in the notice from the
applicable Borrower pursuant to SECTION 2.3(d)(1), (i) the amount of the
applicable Unused Letter of Credit Subfacility and (ii) the Combined
Availability as of such date. If (i) the undrawn amount of the requested Letter
of Credit is not greater than the applicable Unused Letter of Credit Subfacility
and (ii) the issuance of such requested Letter of Credit and all commissions,
fees, and charges due from the applicable Borrower in connection with the
opening thereof would not exceed the Combined Availability, the Agent shall,
subject to the terms and conditions hereof, take reasonable steps to cause the
intended issuer of the Letter of Credit to issue the requested Letter of Credit
on such requested effective date of issuance.
(3) NOTICE OF ISSUANCE. On each Settlement Date the Agent
shall give notice to each Lender of the issuance of all Letters of Credit issued
since the last Settlement Date.
(4) NO EXTENSIONS OR AMENDMENT. The Agent shall not be
obligated to cause any Letter of Credit to be extended or amended unless the
requirements of this SECTION 2.3(d) are met as though a new Letter of Credit
were being requested and issued. With respect to any Letter of Credit which
contains any "evergreen" or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless any such Lender
shall have provided to the Agent, not less than 30 days prior to the last date
on which the applicable issuer can in accordance with the terms of the
applicable Letter of Credit decline to extend or renew such Letter of Credit,
written notice that it declines to consent to any such extension or renewal,
provided, that if all of the requirements of this SECTION 2.3 are met and no
Default or Event of Default exists, no Lender shall decline to consent to any
such extension or renewal.
(e) Payments Pursuant to Letters of Credit and Shipping Release
-----------------------------------------------------------
Indemnities.
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(1) PAYMENT OF LETTER OF CREDIT OBLIGATIONS. Each Borrower
agrees to reimburse the issuer for any draw under any Letter of Credit issued
for such Borrower's account and the Agent for the account of the Lenders upon
any payment pursuant to any Credit Support issued for such Borrower's account
immediately upon demand, and to pay the issuer of the Letter of Credit the
amount of all other obligations and other amounts payable to such issuer under
or in connection with any Letter of Credit issued for such Borrower's account
immediately when due, irrespective of any claim, setoff, defense or other right
which such Borrower may have at any time against such issuer or any other
Person.
(2) REVOLVING LOANS TO SATISFY REIMBURSEMENT OBLIGATIONS. In
the event that the issuer of any Letter of Credit honors a draw under such
Letter of Credit or makes any
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payment with respect to any Shipping Release Indemnity (as defined in SECTION
2.3(k)) or the Agent shall have made any payment pursuant or with respect to any
Credit Support or Shipping Release Indemnity and the applicable Borrower shall
not have repaid such amount to the issuer of such Letter of Credit or Shipping
Release Indemnity or the Agent, as applicable, pursuant to SECTION 2.3(e)(1) or
2.3(k)(2), as appropriate, the Agent shall, upon receiving notice of such
failure, notify each Lender of such failure, and each Lender shall
unconditionally pay to the Agent, for the account of such issuer or the Agent,
as applicable, as and when provided hereinbelow, an amount equal to such
Lender's Pro Rata Share of the amount of such payment in Dollars and in same day
funds. If the Agent so notifies the Lenders prior to 12:00 noon (New York City
time) on any Business Day, each Lender shall make available to the Agent the
amount of such payment, as provided in the immediately preceding sentence, on
such Business Day. Such amounts paid by the Lenders to the Agent shall
constitute Revolving Loans which shall be deemed to have been requested by the
applicable Borrower pursuant to SECTION 2.2 as set forth in SECTION 4.4.
(f) PARTICIPATIONS.
(1) PURCHASE OF PARTICIPATIONS. Immediately upon issuance of
any Letter of Credit in accordance with SECTION 2.3(d) or of any Shipping
Release Indemnity in accordance with SECTION 2.3(k), each Lender shall be deemed
to have irrevocably and unconditionally purchased and received without recourse
or warranty, an undivided interest and participation in the Letter of Credit or
the Credit Support provided through the Agent to such issuer in connection with
the issuance of such Letter of Credit or in the Shipping Release Indemnity, as
appropriate, equal to such Lender's Pro Rata Share of the face amount of such
Letter of Credit or the amount of such Credit Support or the liability under or
with respect to such Shipping Release Indemnity (including, without limitation,
all obligations of the applicable Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
(2) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS. Whenever
the Agent receives a payment from any Borrower on account of reimbursement
obligations in respect of a Letter of Credit, Credit Support or Shipping Release
Indemnity as to which the Agent has previously received for the account of the
issuer thereof payment from a Lender pursuant to SECTION 2.3(e)(2), the Agent
shall promptly pay to such Lender such Lender's Pro Rata Share of such payment
from such Borrower in Dollars. Each such payment shall be made by the Agent on
the Business Day on which the Agent receives immediately available funds paid to
such Person pursuant to the immediately preceding sentence, if received prior to
12:00 noon (New York City time) on such Business Day and otherwise on the next
succeeding Business Day.
(3) DOCUMENTATION. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, reimbursement
agreements executed in connection therewith, application for any Letter of
Credit and credit support or enhancement provided through the Agent in
connection with the issuance of any Letter of Credit, copies of any Shipping
Release Indemnity and such other documentation as may reasonably be requested by
such Lender.
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(4) OBLIGATIONS IRREVOCABLE. The obligations of each Lender to
make payments to the Agent with respect to any Letter of Credit or with respect
to any Credit Support provided through the Agent with respect to a Letter of
Credit or with respect to any Shipping Release Indemnity, and the obligations of
the Borrowers to make payments to the Agent, for the account of the Lenders,
shall be irrevocable, not subject to any qualification or exception whatsoever,
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or
other right which any Borrower may have at any time against a beneficiary named
in a Letter of Credit or Shipping Release Indemnity or any transferee of any
Letter of Credit or Shipping Release Indemnity (or any Person for whom any such
transferee may be acting), any Lender, the Agent, the issuer of such Letter of
Credit or Shipping Release Indemnity, or any other Person, whether in connection
with this Agreement, any Letter of Credit or Shipping Release Indemnity, the
transactions contemplated herein or any unrelated transactions (including any
underlying transactions between any Borrower or any other Person and the
beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other document
presented under the Letter of Credit or with respect to any Shipping Release
Indemnity proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the Loan Documents;
or
(v) the occurrence of any Default or Event of Default.
(g) RECOVERY OR AVOIDANCE OF PAYMENTS. In the event any payment by
or on behalf of any Borrower received by the Agent with respect to any Letter of
Credit or Shipping Release Indemnity or Credit Support provided for any Letter
of Credit (or any guaranty by any Borrower or reimbursement obligation of any
Borrower relating thereto) and distributed by the Agent to the Lenders on
account of their respective participations therein is thereafter set aside,
avoided or recovered from the Agent in connection with any receivership,
liquidation or bankruptcy proceeding, the Lenders shall, upon demand by the
Agent, pay to the Agent their respective Pro Rata Shares of such amount set
aside, avoided or recovered, together with interest at the rate required to be
paid by the Agent upon the amount required to be repaid by it.
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(h) Compensation for Letters of Credit.
----------------------------------
(1) LETTER OF CREDIT FEE. Each Borrower agrees to pay to the
Agent with respect to each Letter of Credit issued for such Borrower's account,
for the account of the Lenders, the Letter of Credit Fee specified in, and in
accordance with the terms of, SECTION 3.6.
(2) ISSUER FEES AND CHARGES. Each Borrower shall pay to the
issuer of any Letter of Credit issued for such Borrower's account, or to the
Agent, for the account of the issuer of any such Letter of Credit, solely for
such issuer's account, such fees and other charges as are charged by such issuer
for letters of credit issued by it, including, without limitation, its standard
fees for issuing, administering, amending, renewing, paying and canceling
letters of credit and all other fees associated with issuing or servicing
letters of credit, as and when assessed.
(i) Indemnification; Exoneration; Power of Attorney.
-----------------------------------------------
(1) INDEMNIFICATION. In addition to amounts payable as
elsewhere provided in this SECTION 2.3, each Borrower hereby agrees to protect,
indemnify, pay and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which any Lender or the Agent
may incur or be subject to as a consequence, direct or indirect, of the issuance
of any Letter of Credit for the account of such Borrower or the provision of any
credit support or enhancement in connection therewith; PROVIDED, that the
Borrowers shall have no obligation to the Agent or any Lender under this clause
(1) with respect to any such claims, demands, liabilities, damages, losses,
costs, charges and expenses to the extent resulting from the gross negligence or
wilful misconduct of such Lender or the Agent. The agreement in this SECTION
2.3(i)(1) shall survive payments of all Obligations.
(2) ASSUMPTION OF RISK BY THE BORROWERS. As among the
Borrowers, the Lenders, and the Agent, each Borrower assumes all risks of the
acts and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Lenders and the Agent shall not be responsible
for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any Person in connection with the application for
and issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Letter of Credit to comply
duly with conditions required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order make a
drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the proceeds
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of any drawing under such Letter of Credit; or (H) any consequences arising from
causes beyond the control of the Lenders or the Agent, including, without
limitation, any act or omission, whether rightful or wrongful, of any present or
future DE JURE or DE FACTO Governmental Authority. None of the foregoing shall
affect, impair or prevent (i) the vesting of any rights or powers of the Agent
or any Lender under this SECTION 2.3(i) or (ii) any action that might be brought
by a Borrower against an issuer of a Letter of Credit with respect to the
foregoing.
(3) EXONERATION. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action taken or
omitted by the Agent or any Lender under or in connection with any of the
Letters of Credit or any related certificates, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not put the Agent or
any Lender under any resulting liability to any Borrower or relieve any Borrower
of any of its obligations hereunder to any such Person.
(4) POWER OF ATTORNEY. In connection with all Inventory
financed by Letters of Credit, each Borrower hereby appoints the Agent, or the
Agent's designee, as its attorney, with full power and authority: (a) to sign
and/or endorse such Borrower's name upon any warehouse or other receipts; (b) to
sign such Borrower's name on bills of lading and other negotiable and
non-negotiable documents; (c) to clear Inventory through customs in the Agent's
or such Borrower's name, and to sign and deliver to customs officials powers of
attorney in such Borrower's name for such purpose; (d) to complete in such
Borrower's or the Agent's name, any order, sale, or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds thereof;
and (e) to do such other acts and things as are necessary in order to enable the
Agent to obtain possession of the Inventory and to obtain payment of the
Obligations. Neither the Agent nor its designee, as any Borrower's attorney,
will be liable for any acts or omissions, nor for any error of judgement or
mistakes of fact or law. This power, being coupled with an interest, is
irrevocable until all Obligations have been paid and satisfied.
(5) ACCOUNT PARTY. Each Borrower hereby authorizes and directs
any issuer of a Letter of Credit for the account of such Borrower to name such
Borrower as the "Account Party" therein and to deliver to the Agent all
instruments, documents and other writings and property received by the issuer
pursuant to the Letter of Credit, and to accept and rely upon the Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit or the application therefor.
(6) CONTROL OF INVENTORY. In connection with all Inventory
financed by Letters of Credit, each Borrower will, at the Agent's request,
instruct all suppliers, carriers, forwarders, warehouses or others receiving or
holding cash, checks, Inventory, documents or instruments in which the Agent
holds a security interest to deliver them to the Agent and/or subject to the
Agent's order, and if they shall come into such Borrower's possession, to
deliver them, upon request, to the Agent in their original form. Each Borrower
shall also, at the Agent's request, designate the Agent as the consignee on all
bills of lading and other negotiable and non-negotiable documents. In the event
the Agent is designated as consignee hereunder, at the applicable Borrower's
request, the Agent will use best efforts to send promptly to such Borrower a
copy of the consigned documents.
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(j) CASH COLLATERAL. If, notwithstanding the provisions of SECTION
2.3(b) and Section 12.1 any Letter of Credit is outstanding upon the termination
of this Agreement, then upon such termination the applicable Borrower shall
deposit with the Agent, for the ratable benefit of the Agent and the Lenders,
with respect to each Letter of Credit issued for the account of such Borrower
then outstanding, cash in amounts necessary to reimburse the Agent and the
Lenders for payments made by the Agent or the Lenders under such Letter of
Credit or under any credit support or enhancement provided through the Agent
with respect thereto and any fees and expenses associated with such Letter of
Credit. Such deposit of cash shall be held by the Agent, for the ratable benefit
of the Agent and the Lenders, as security for, and to provide for the payment
of, the aggregate undrawn amount of such Letters of Credit remaining
outstanding.
(k) AIRWAY BILLS, ETC. Each Borrower hereby confirms and agrees that
(i) from time to time such Borrower may request the Agent to issue or cause to
be issued Letters of Credit providing for direct consignment of goods to the
Agent or the issuer of a Letter of Credit and providing that the original bills
of lading, airway bills and other documents be forwarded directly to the Agent
or any such issuer, (ii) such Borrower may request that the Agent or any such
issuer from time to time endorse the bills of lading or other shipping documents
and deliver them to such Borrower so as to permit such Borrower to obtain the
goods covered by the Letters of Credit without first waiting for the bank that
issued the Letter of Credit to examine the documents to be submitted by the
beneficiary of the Letter of Credit to determine whether the documents conform
to the terms of the Letter of Credit, and (iii) such Borrower may request that
the Agent or the issuer of a Letter of Credit from time to time issue letters of
indemnity, guarantees, air releases, and/or other documents (each a "Shipping
Release Indemnity") to steamship companies, air freight companies and other
shippers in order to permit such Borrower to take possession of the goods
covered by Letters of Credit without production and surrender to the shipper of
the original xxxx of lading, airway xxxx or other shipping documents. In
connection with the foregoing, each Borrower hereby expressly and irrevocably:
(1) represents and warrants that it is otherwise entitled
to the delivery of the goods and no other person or entity has any claim to its
delivery;
(2) agrees to indemnify the Agent, the Lenders and any issuer
of a Shipping Release Indemnity and to hold the Agent, the Lenders and any such
issuer harmless from and against any and all claims, actions and suits, whether
groundless or otherwise, and from and against all liabilities, losses, damages,
judgments, attorney fees (including any in-house counsel costs and expenses) and
other expenses of every nature and character, by reason of the Agent or any such
issuer of a Shipping Release Indemnity (i) issuing its Shipping Release
Indemnities to steamship companies, freight companies or other shippers and (ii)
endorsing and/or delivering to such Borrower the bills of lading and other
documents so as to permit such Borrower to obtain possession of the goods
covered by the Letters of Credit; agrees to reimburse the Agent, the Lenders and
each issuer of a Shipping Release Indemnity on demand for any and all payments
of or with respect to the foregoing which the Agent or any issuer of a Shipping
Release Indemnity is required to make by any of such actions or in accordance
with the terms or provisions of said Shipping Release Indemnities, regardless of
any offsets, counterclaims or other defenses thereto
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which the Agent, any Lender or any issuer of a Shipping Release Indemnity might
have or be entitled to assert, all of which offsets, counterclaims or other
defenses the Agent, each Lender and each issuer of a Shipping Release Indemnity
is hereby expressly and irrevocably authorized to waive at its discretion; and
further agrees that upon the Agent's request such Borrower shall appear and
defend, represented by counsel satisfactory to the Agent and at such Borrower's
cost and expense, any action or proceeding which may be commenced against the
Agent, any Lender or the issuer in connection with any of the aforementioned
actions; PROVIDED, that the Borrowers shall have no obligation to the Agent, any
Lender or any issuer of a Shipping Release Indemnity under this clause (2) with
respect to any such liabilities, losses, damages, judgments, attorneys' fees and
other expenses to the extent resulting from the gross negligence or wilful
misconduct of the Agent, such Lender or such issuer.
(3) authorizes and requests the Agent and the issuer of any
Letters of Credit to honor and pay any drawing under the Letters of Credit
covering the shipment notwithstanding the absence of any or all documents
required thereunder or any discrepancy, defect or omission which may exist at
the time of presentment in any of the required documents, all of which
deficiencies, discrepancies, defects and omissions such Borrower hereby
expressly and irrevocably waives. Such Borrower further authorizes the Agent to
charge its Loan Account for all amounts drawn plus any applicable charges;
(4) agrees to pay on demand or to reimburse to the Agent, each
Lender and each issuer of a Shipping Release Indemnity upon demand all freight
and other charges which may be due or may appear to be due and chargeable to the
said goods;
(5) agrees to procure and to subsequently surrender to the
Agent all original bills of lading and other negotiable documents relating to
the shipment of goods properly endorsed; and
(6) agrees to execute such other documents and indemnities
relating to the foregoing as the Agent may from time to time reasonably request.
ARTICLE 3
INTEREST AND FEES
-----------------
3.1 INTEREST.
(a) INTEREST RATES. All outstanding Obligations shall bear interest
on the unpaid principal amount thereof (including, to the extent permitted by
law, on interest thereon not paid when due) from the date made until paid in
full in cash at a rate determined by reference to the Base Rate or the LIBOR
Rate and SECTIONS 3.1(a)(i) or (ii), as applicable, but not to exceed the
Maximum Rate described in SECTION 3.3. Subject to the provisions of SECTION 3.2,
any of the Loans may be converted into, or continued as, Base Rate Loans or
LIBOR Rate Loans in the
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manner provided in SECTION 3.2. If at any time Loans are outstanding with
respect to which notice has not been delivered to the Agent in accordance with
the terms of this Agreement specifying the basis for determining the interest
rate applicable thereto, then those Loans shall be Base Rate Loans and shall
bear interest at a rate determined by reference to the Base Rate until notice to
the contrary has been given to the Agent in accordance with this Agreement and
such notice has become effective. Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:
(i) For all Base Rate Revolving Loans and other Obligations
(other than LIBOR Revolving Loans) at a fluctuating per annum rate equal to the
Base Rate plus the Applicable Margin therefor; and
(ii) For all Libor Revolving Loans at a per annum rate equal
to the LIBOR Rate PLUS the Applicable Margin therefor.
Each change in the Base Rate shall be reflected in the interest rate described
in (i) above as of the effective date of such change. All interest charges shall
be computed on the basis of a year of 360 days and actual days elapsed (which
results in more interest being paid than if computed on the basis of a 365-day
year). Interest accrued on all Loans (other than LIBOR Rate Loans) will be
payable in arrears on the first day of each month hereafter and at maturity
(whether by acceleration or otherwise) and thereafter upon demand. Interest
accrued on LIBOR Rate Loans will be payable in arrears on each LIBOR Interest
Payment Date therefor and at maturity (whether by acceleration or otherwise) and
thereafter upon demand.
(b) DEFAULT RATE. If any Event of Default occurs and is continuing
then, while any such Event of Default is outstanding, all of the Obligations
shall bear interest at the Default Rate applicable thereto.
3.2 CONVERSION AND CONTINUATION ELECTIONS. (a) The applicable Borrower
may, upon irrevocable written notice to the Agent in accordance with Subsection
3.2(b):
(i) elect, as of any Business Day (a "Conversion/Continuation
Date"), in the case of Base Rate Loans made to it to convert any such Loans (or
any part thereof) in an amount equal to $5,000,000 or an integral multiple of
$1,000,000 in excess thereof into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable Interest
Period (a "Conversion/Continuation Date"), to continue any LIBOR Rate Loans made
to it having Interest Periods expiring on such day (or any part thereof) in an
amount equal to $5,000,000 or an integral multiple of $1,000,000 in excess
thereof;
PROVIDED, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $5,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, and on
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and after such date the right of the applicable Borrower to continue such Loans
as, and convert such Loans into, LIBOR Rate Loans, as the case may be, shall
terminate.
(b) The applicable Borrower shall deliver a Notice of
Conversion/Continuation (substantially in the form of EXHIBIT D or another form
acceptable to Agent) to be received by the Agent not later than 12:00 noon (New
York City time) at least three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as LIBOR Rate Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans owing by such Borrower to
be converted or renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Rate Loans, the applicable Borrower has failed to select timely a new
Interest Period to be applicable to LIBOR Rate Loans or if any Default or Event
of Default then exists, the applicable Borrower shall be deemed to have elected
to convert such LIBOR Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt of a
Notice of Conversion/Continuation. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.
(e) During the existence of a Default or Event of Default, the
Borrowers may not elect to have a Loan converted into or continued as a LIBOR
Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than nine different Interest Periods in effect with
respect to the Borrowers in the aggregate.
3.3 MAXIMUM INTEREST RATE. In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by the Lenders under
applicable law for loans of the type provided for hereunder (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest which would have been paid
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if the same had not been limited by the Maximum Rate. In the event that, upon
payment in full of the Obligations, the total amount of interest paid or accrued
under the terms of this Agreement is less than the total amount of interest
which would, but for this SECTION 3.3, have been paid or accrued if the interest
rates otherwise set forth in this Agreement had at all times been in effect,
then the applicable Borrower shall, to the extent permitted by applicable law,
pay the Agent, for the account of the Lenders, an amount equal to the difference
between (a) the lesser of (i) the amount of interest which would have been
charged to such Borrower if the Maximum Rate had, at all times, been in effect
or (ii) the amount of interest owing by such Borrower which would have accrued
had the interest rates otherwise set forth in this Agreement, at all times, been
in effect and (b) the amount of interest actually paid or accrued by such
Borrower under this Agreement. In the event that a court determines that the
Agent and/or any Lender has received interest and other charges hereunder in
excess of the Maximum Rate, such excess shall be deemed received on account of,
and shall automatically be applied to reduce, the Obligations other than
interest, in the inverse order of maturity, and if there are no Obligations
outstanding, the Agent and/or such Lender shall refund to the applicable
Borrower such excess.
3.4 FACILITY FEE. The Borrowers agree, jointly and severally, to pay to
BABC, for its own account, on the Closing Date the facility fee (the "Facility
Fee") set forth in the fee letter dated the Closing Date between the Borrowers
and the BABC, which Facility Fee shall be paid with the proceeds of Loans to be
made on the Closing Date.
3.5 UNUSED LINE FEE. Until the Obligations have been paid in full and this
Agreement is terminated, the Borrowers agree, jointly and severally, to pay, on
the first day of each month and on the Termination Date, to the Agent, for the
ratable account of the Lenders, an unused line fee equal to three-eighths of one
percent (0.375%) per annum on the average daily amount by which the Maximum
Revolver Amount exceeded the sum of the average daily outstanding amount of
Revolving Loans and the undrawn face amount of all outstanding Letters of
Credit, during the immediately preceding month or shorter period if calculated
on the Termination Date. The unused line fee shall be computed on the basis of a
360-day year for the actual number of days elapsed. All payments received by the
Agent as proceeds of Collateral shall be deemed to be credited to the Borrowers'
Loan Accounts immediately upon receipt for purposes of calculating the unused
line fee pursuant to this SECTION 3.5.
3.6 LETTER OF CREDIT FEE. Each Borrower agrees to pay to the Agent, for
the ratable account of the Lenders, for each Letter of Credit issued for the
account of such Borrower, a per annum fee (the "Letter of Credit Fee") equal to
the Applicable Margin for Letters of Credit (as determined pursuant to the
definition of "Applicable Margin" in this Agreement) of the average undrawn
amount of such Letter of Credit, PLUS all out-of-pocket costs, fees and expenses
incurred by the Agent in connection with the application for, issuance of, or
amendment to any Letter of Credit, which costs, fees and expenses could include
a "fronting fee" required to be paid by the Agent to such issuer for the
assumption of the settlement risk in connection with the issuance of such Letter
of Credit; The Letter of Credit Fee shall be payable by each Borrower monthly in
arrears on the first day of each month following any month in which a Letter of
Credit issued for the account of such Borrower was issued and/or in which a
Letter of Credit issued for the account
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of such Borrower remains outstanding. The Letter of Credit Fee shall be computed
on the basis of a 360-day year for the actual number of days elapsed.
3.7 ADMINISTRATION FEE. The Borrowers agree, jointly and severally, to
pay to the Agent, for its own account, on the Closing Date and on each
Anniversary Date a non-refundable administration fee in the amount of $200,000.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
------------------------
4.1 REVOLVING LOANS. Each Borrower shall repay the outstanding principal
balance of the Revolving Loans made to it, plus all accrued but unpaid interest
thereon, on the Termination Date. Each Borrower may prepay Revolving Loans at
any time, and reborrow subject to the terms of this Agreement; PROVIDED,
HOWEVER, that with respect to any LIBOR Revolving Loans prepaid by any Borrower
prior to the expiration date of the Interest Period applicable thereto, such
Borrower promises to pay to the Agent for account of the Lenders the amounts
described in SECTION 5.4. In addition, and without limiting the generality of
the foregoing, upon demand each Borrower promises to pay to the Agent, for the
account of the Lenders, the amount, without duplication, by which the sum of (i)
the aggregate outstanding Revolving Loans owing by the Borrowers, (ii) the
aggregate amount of Pending Revolving Loans to be made to the Borrowers, (iii)
the aggregate undrawn amount of all outstanding Letters of Credit and (iv) the
amount of all unpaid reimbursement obligations with respect to Letters of Credit
exceeds the Combined Availability (with Combined Availability determined as if
clauses (b)(i) through (iv) of such definition were zero). If after repaying in
full its Revolving Loans as provided in the immediately preceding sentence any
portion of such excess still remains, then the Borrowers shall deposit cash in
the amount thereof in a cash collateral account with the Agent to be held in
such account on terms satisfactory to the Agent.
4.2 TERMINATION OF FACILITY. The Borrowers may jointly (but not
individually) terminate this Agreement upon at least three (3) Business Days'
joint notice to the Agent and the Lenders, upon (a) the payment in full of all
outstanding Revolving Loans, together with accrued interest thereon, and the
cancellation of all outstanding Letters of Credit (or delivery to the Agent of
cash collateral therefor as required by SECTION 2.3(j)), (b) the payment of the
early termination fee set forth in the next sentence, (c) the payment in full in
cash of all other Obligations together with accrued interest thereon, and (d)
with respect to any LIBOR Rate Loans prepaid in connection with such termination
prior to the expiration date of the Interest Period applicable thereto, the
payment of the amounts described in SECTION 5.4. If this Agreement is terminated
at any time on or prior to the second Anniversary Date, whether pursuant to this
Section or pursuant to SECTION 11.2, the Borrowers shall pay to the Agent, for
the account of the Lenders, an early termination fee determined in accordance
with the following table:
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PERIOD DURING WHICH EARLY
EARLY TERMINATION OCCURS TERMINATION FEE
------------------------ ---------------
On or prior to the first 0.50% of the Total
Anniversary Date Facility. Facility.
After the first 0.25% of the Total
Anniversary Date but on Facility.
or prior to the second
Anniversary Date
PROVIDED, HOWEVER, that the early termination fee described in this SECTION 4.2
shall not be payable in the event that the Borrowers terminate this Agreement
(x) and repay all amounts required under this SECTION 4.2 using the proceeds of
a loan facility not secured by any Inventory; (y) in connection with the
acquisition by a Borrower of all the capital stock or all or a substantial part
of the assets of another Person that is not an Affiliate which requires the
refinancing of the Total Facility and such acquisition is actually consummated;
and/or (z) after ten (10) days prior written notice to the Agent as a result of
mutual dissatisfaction between the Agent or the Lenders, on the one hand, and
the Borrowers, on the other hand, resulting in an inability to agree on
executory elements of this Agreement following good faith negotiation.
4.3 PAYMENTS BY THE BORROWERS. (a) All payments to be made by any Borrower
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by any Borrower shall be made to the
Agent for the account of the Lenders at the Agent's address set forth in SECTION
16.8, and shall be made in Dollars and in immediately available funds, no later
than 12:00 noon (New York City time) on the date specified herein. Any payment
received by the Agent later than 12:00 noon (New York City time) shall be deemed
to have been received on the following Business Day and any applicable interest
or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from a Borrower prior to the
date on which any payment is due from such Borrower to the Lenders that such
Borrower will not make such payment in full as and when required, the Agent may
assume that such Borrower has made such payment in full to the Agent on such
date in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender from such Borrower.
If and to the extent a Borrower has not made such payment in full to the Agent,
each Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the
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Federal Funds Rate for each day from the date such amount is distributed to such
Lender until the date repaid.
4.4 PAYMENTS AS REVOLVING LOANS. All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit, fees, premiums
and other sums payable hereunder, including all reimbursement for expenses
pursuant to SECTION 16.7, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this SECTION 4.4, be paid from the
proceeds of Revolving Loans made hereunder to the applicable Borrower, whether
made following a request by a Borrower pursuant to SECTION 2.2 or a deemed
request as provided in this SECTION 4.4. Each Borrower hereby irrevocably
authorizes the Agent to charge its Loan Account for the purpose of paying
principal, interest, reimbursement obligations in connection with Letters of
Credit, fees, premiums and other sums payable hereunder by such Borrower,
including reimbursing expenses pursuant to SECTION 16.7, and agrees that all
such amounts charged shall constitute Revolving Loans (including BABC Loans and
Agent Advances) to such Borrower and that all such Revolving Loans so made to
such Borrower shall be deemed to have been requested by such Borrower pursuant
to SECTION 2.2.
4.5 APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS. Aggregate
principal and interest payments of a Borrower shall be apportioned ratably among
the Lenders (according to the unpaid principal balance of the Loans to which
such payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders. All payments shall be
remitted to the Agent and all such payments not relating to principal or
interest of specific Loans, or not constituting payment of specific fees, and
all proceeds of Collateral received by the Agent (including all payments
received by the Agent with respect to Collateral as loss payee under insurance
policies of the Borrowers), shall be applied, ratably, subject to the provisions
of this Agreement, FIRST, to pay any fees, indemnities or expense reimbursements
then due to the Agent from the applicable Borrower; SECOND, to pay any fees or
expense reimbursements then due to the Lenders from the applicable Borrower;
THIRD, to pay interest due in respect of all Revolving Loans owing by any
Borrower, including BABC Loans and Agent Advances; FOURTH, to pay or prepay
principal of the BABC Loans and Agent Advances owing by any Borrower; FIFTH, to
pay or prepay principal of the Revolving Loans (other than BABC Loans and Agent
Advances) and unpaid reimbursement obligations in respect of Letters of Credit
owing by any Borrower; SIXTH, to the payment of any other Obligation due to the
Agent or any Lender by any Borrower; SEVENTH, to be paid over to such Person or
Persons as may be required by law (including pursuant to SECTION 9-504 of the
UCC) or by court order; and EIGHTH, to be paid to the Borrowers by transfer to
bank accounts designated by either of them in writing. Notwithstanding anything
to the contrary contained in this Agreement, unless so directed by the
applicable Borrower, or unless an Event of Default is outstanding, neither the
Agent nor any Lender shall apply any payments which it receives to any LIBOR
Revolving Loan, except (a) on the expiration date of the Interest Period
applicable to any such LIBOR Rate Loan, or (b) in the event, and only to the
extent, that there are no outstanding Base Rate Revolving Loans. The Agent shall
promptly distribute to each Lender, pursuant to the applicable wire transfer
instructions received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided for in SECTION
2.2(j). The Agent and the Lenders shall have the continuing and exclusive
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right to apply and reverse and reapply any and all such proceeds and payments to
any portion of the Obligations.
4.6 INDEMNITY FOR RETURNED PAYMENTS. If, after receipt of any payment of,
or proceeds applied to the payment of, all or any part of the Obligations, the
Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person, because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continue and this Agreement shall continue in full force as
if such payment or proceeds had not been received by the Agent or such Lender,
and the applicable Borrower shall be liable to pay to the Agent, and hereby do
indemnify the Agent and the Lenders and hold the Agent and the Lenders harmless
for, the amount of such payment or proceeds surrendered. The provisions of this
SECTION 4.6 shall be and remain effective notwithstanding any contrary action
which may have been taken by the Agent or any Lender in reliance upon such
payment or application of proceeds, and any such contrary action so taken shall
be without prejudice to the Agent's and the Lenders' rights under this Agreement
and shall be deemed to have been conditioned upon such payment or application of
proceeds having become final and irrevocable. The provisions of this SECTION 4.6
shall survive the termination of this Agreement.
4.7 AGENT'S AND LENDERS' BOOKS AND RECORDS; MONTHLY STATEMENTS. Each
Borrower agrees that the Agent's and each Lender's books and records showing the
Obligations owing by it and the transactions pursuant to this Agreement and the
other Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute rebuttably presumptive proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note or
other instrument. The Agent will provide to the Borrowers a monthly statement of
Loans, payments, and other transactions pursuant to this Agreement. Such
statement shall be deemed correct, accurate, and binding on the Borrowers and an
account stated (except for reversals and reapplications of payments made as
provided in SECTION 4.5 and corrections of errors discovered by the Agent),
unless the Borrowers notify the Agent in writing to the contrary within ninety
(90) days after such statement is rendered. In the event a timely written notice
of objections is given by the Borrowers, only the items to which exception is
expressly made will be considered to be disputed by the Borrowers.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
5.1 TAXES. (a) Any and all payments by any Borrower to each Lender or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for any Taxes. In addition, the
Borrowers shall, jointly and severally, pay all Other Taxes.
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(b) Each Borrower agrees, jointly and severally, to indemnify and
hold harmless each Lender and the Agent for the full amount of Taxes or Other
Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by the Lender or the Agent and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within 30
days after the date the Lender or the Agent makes written demand therefor.
(c) If any Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then:
(i) the sum payable shall be increased (the amount of such
increase, an "additional amount") as necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable to
additional sums payable under this Section) such Lender or the Agent, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made;
(ii) such Borrower shall make such deductions and
withholdings;
(iii) such Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) such Borrower shall also pay to each Lender or the Agent
for the account of such Lender, at the time interest is paid, all additional
amounts which the respective Lender specifies as necessary to preserve the
after-tax yield the Lender would have received if such Taxes or Other Taxes had
not been imposed.
(d) As soon as practicable after the date of any payment by any
Borrower of Taxes or Other Taxes, such Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If any Borrower is required to pay additional amounts to any
Lender or the Agent pursuant to subsection (c) of this Section, then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its lending office so as to eliminate any such
additional payment by such Borrower which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.
(f) If a Lender (or Assignee) or the Agent receives a refund in
respect of any Taxes or Other Taxes as to which it has been indemnified by a
Borrower or with respect to which a Borrower has paid additional amounts
pursuant to this SECTION 5.1, it shall within 30 days from the date of such
receipt pay over such refund to such Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by such Borrower under this
SECTION 5.1 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all reasonable and
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documented (to the satisfaction of the Agent) out-of-pocket expenses of (and all
Taxes and Other Taxes that may be imposed by virtue of the receipt of such tax
refund by) such Lender (or Assignee) or the Agent and without interest (other
than interest paid by the relevant Governmental Authority with respect to such
refund); PROVIDED, HOWEVER, that such Borrower, upon the request of such Lender
(or Assignee) or the Agent, agrees to repay the amount paid over to such
Borrower (plus penalties, interest or other charges) to such Lender (or
Assignee) or the Agent in the event such Lender (or Assignee) or the Agent is
required to repay such refund to such Governmental Authority.
(g) Each Lender which is a "foreign corporation, partnership or
trust" within the meaning of the Code claiming exemption from, or a reduction
of, U.S. withholding tax under Section 1441 or 1442 of the Code shall deliver to
the Borrowers all tax forms it delivers to the Agent from time to time under
SECTION 14.10(a), such delivery to the Borrowers to be concurrent with the
delivery of such tax forms to the Agent.
5.2 ILLEGALITY. (a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable lending office to make
LIBOR Rate Loans, then, on notice thereof by the Lender to the Borrowers through
the Agent, any obligation of that Lender to make LIBOR Rate Loans shall be
suspended until the Lender notifies the Agent and the Borrowers that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines in its reasonable judgment that it is
unlawful to maintain any LIBOR Rate Loan, each Borrower shall, upon its receipt
of notice of such fact and demand from such Lender (with a copy to the Agent),
prepay in full such LIBOR Rate Loans of that Lender owing by such Borrower then
outstanding, together with interest accrued thereon and amounts required under
SECTION 5.4, either on the last day of the Interest Period thereof, if the
Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if the Lender may not lawfully continue to maintain such LIBOR Rate
Loan. If any Borrower is required to so prepay any LIBOR Rate Loan, then
concurrently with such prepayment, such Borrower shall borrow from the affected
Lender, in the amount of such repayment, a Base Rate Loan.
5.3 INCREASED COSTS AND REDUCTION OF RETURN. (a) If any Lender determines
that, due to either (i) the introduction of or any change in the interpretation
of any law or regulation or (ii) the compliance by that Lender with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or maintaining any
LIBOR Rate Loans, then the applicable Borrower shall be liable for, and shall
from time to time, upon demand (with a copy of such demand to be sent to the
Agent), pay to the Agent for the account of such Lender, additional amounts as
are sufficient to compensate such Lender for such increased costs.
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(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Lender or any corporation or other entity controlling the Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Lender or any corporation or other
entity controlling the Lender and (taking into consideration such Lender's or
such corporation's or other entity's policies with respect to capital adequacy
and such Lender's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon demand of such Lender to the
Borrowers through the Agent, the Borrowers shall, jointly and severally, pay to
the Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender for such increase.
5.4 FUNDING LOSSES. Each Borrower shall reimburse each Lender and hold
each Lender harmless from any loss or expense which the Lender may sustain or
incur as a consequence of:
(a) the failure of such Borrower to make on a timely basis any
payment of principal of any LIBOR Rate Loan owing by such Borrower;
(b) the failure of such Borrower to borrow, continue or convert a
Loan after such Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the prepayment or other payment (including after acceleration
thereof) by such Borrower of a LIBOR Rate Loan on a day that is not the last day
of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained.
5.5 INABILITY TO DETERMINE RATES. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will promptly so notify the Borrowers and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, each Borrower may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If any
Borrower does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by such Borrower, in the amount specified in the
applicable notice submitted by such Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
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5.6 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation under this Article 5 shall deliver to the applicable Borrower (with
a copy to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Lender hereunder, together with reasonable supporting
documentation, to the extent available with respect to the circumstances giving
rise to such claim for reimbursement or compensation (and then only to the
extent any of the information which would need to be included on such supporting
documentation is not confidential to such Lender as reasonably determined by
such Lender), and such certificate and documentation shall be conclusive and
binding on the Borrowers in the absence of manifest error.
5.7 SURVIVAL. The agreements and obligations of the Borrowers in this
Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL
----------
6.1 GRANT OF SECURITY INTEREST. (a) As security for all present and future
Obligations, each Loan Party hereby grants to the Agent, for the ratable benefit
of the Agent and the Lenders, a continuing security interest in, lien on, and
right of set-off against, all of the following property of such Loan Party,
whether now owned or existing or hereafter acquired or arising, regardless of
where located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights, letters of credit, chattel paper,
instruments, notes, documents, and documents of title;
(iv) all General Intangibles;
(v) all Equipment (other than store fixtures and store
equipment);
(vi) all money, investment property, securities, security
entitlements, securities accounts and other property of any kind of such Loan
Party in the possession or under the control of the Agent or any Lender, any
assignee of or participant in the Obligations, or a bailee of any such party or
such party's affiliates;
(vii) all deposit accounts, credits and balances with and other
claims against the Agent or any Lender or any of its affiliates or any other
financial institution in which such Loan Party maintains deposits;
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(viii) all books, records and other property related to or
referring to any of the foregoing, including, without limitation, books,
records, account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any of
the foregoing; and
(ix) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not limited to,
proceeds of any insurance policies, claims against third parties, and
condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with all other property of any Loan Party in
which the Agent or any Lender may at any time be purportedly granted a Lien, is
herein collectively referred to as the "Collateral."
(b) All of the Obligations shall be secured by all of the
Collateral.
6.2 PERFECTION AND PROTECTION OF SECURITY INTEREST. (a) Each Loan Party
shall, at its expense, perform all steps requested by the Agent at any time to
perfect, maintain, protect, and enforce the Agent's Liens, including, without
limitation: (i) executing, delivering and/or filing and recording of the
Trademark Agreement and the Pledge Agreement and executing and filing financing
or continuation statements, and amendments thereof, in form and substance
satisfactory to the Agent; (ii) delivering to the Agent the originals of all
instruments, documents, and chattel paper, and all other Collateral of which the
Agent determines it should have physical possession in order to perfect and
protect the Agent's security interest therein, duly pledged, endorsed or
assigned to the Agent without restriction; (iii) delivering to the Agent
warehouse receipts covering any portion of the Collateral located in warehouses
and for which warehouse receipts are issued; (iv) delivering to the Agent all
letters of credit on which such Loan Party is named beneficiary; and (v) taking
such other steps as are deemed necessary or desirable by the Agent to maintain
and protect the Agent's Liens. To the extent permitted by applicable law, the
Agent may file, without any Loan Party's signature, one or more financing
statements disclosing the Agent's Liens. Each Loan Party agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or control
of any warehouseman, bailee or any of any Loan Party's agents or processors
(other than the consolidators listed in SCHEDULE 6.3), then the applicable Loan
Party shall notify the Agent thereof and shall notify such Person of the Agent's
security interest in such Collateral and, upon the Agent's request, instruct
such Person to hold all such Collateral for the Agent's account subject to the
Agent's instructions. Each Loan Party agrees to use its best efforts to deliver
to the Agent an executed bailee letter in form and substance satisfactory to the
Agent from each warehouseman, bailee, agent, processor and consolidator which
has possession or control of any Inventory of a Loan Party.
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(c) From time to time, each Loan Party shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to the
Agent, for the ratable benefit of the Agent and the Lenders, the Collateral with
respect to such Loan Party, but any Loan Party's failure to do so shall not
affect or limit the Agent's security interest or the Agent's other rights in and
to the Collateral with respect to such Loan Party. So long as this Agreement is
in effect and until all Obligations have been fully satisfied, the Agent's Liens
shall continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Combined Availability or as the
basis for any advance, loan, extension of credit, or other financial
accommodation).
6.3 LOCATION OF COLLATERAL. Each Loan Party represents and warrants to the
Agent and the Lenders that: (a) SCHEDULE 6.3 sets forth as of the Closing Date a
correct and complete list of such Loan Party's chief executive office, the
location of its books and records, the locations of the Collateral (and, with
respect to Collateral constituting Inventory, the locations of such Collateral
granted by such Loan Party set forth separately from the locations of Collateral
constituting Inventory granted by each of the other Loan Parties), and the
locations of all of its other places of business; and (b) SCHEDULE 6.3 correctly
identifies as of the Closing Date any of such facilities and locations that as
of the Closing Date are not owned by such Loan Party and sets forth as of the
Closing Date the names of the lessors or sublessors of such facilities and
locations. Each Loan Party covenants and agrees that it will not (i) maintain
any Collateral (other than (x) finished goods not in the possession of the
Borrowers as to which a documentary Letter of Credit has been issued for the
account of one of the Borrowers and which, if in the possession of one of the
Borrowers, would constitute Inventory of such Borrower or (y) Collateral in
transit between the locations listed on SCHEDULE 6.3) at any location other than
those locations listed for such Loan Party on SCHEDULE 6.3, (ii) otherwise
change or add to any of such locations, or (iii) change the location of its
chief executive office from the location identified in SCHEDULE 6.3, unless,
with respect to each of clauses (i) through (iii) above, it uses its best
efforts to give the Agent at least thirty (30) days' prior written notice
thereof (and in any event it shall give the Agent at least fifteen (15) days'
prior written notice thereof) (any such written notice timely received by the
Agent to be deemed an amendment to SCHEDULE 6.3 unless such notice shall be with
respect to any Inventory to be stored or held at a consolidator not described on
SCHEDULE 6.3 as in effect on the Closing Date, in which case such notice shall
be deemed to constitute an amendment to SCHEDULE 6.3 only if the Agent shall
have received a bailee letter, in form and substance satisfactory to the Agent,
duly executed by such consolidator) and executes any and all financing
statements and other documents that the Agent requests in connection therewith.
Without limiting the foregoing, each Loan Party represents that all of its
Inventory (other than Inventory in transit) is, and covenants that all of
its Inventory (other than Inventory in transit) will be, located either (a) on
premises owned by such Loan Party, (b) on premises leased by such Loan Party or
(c) in a public warehouse (as to which such Loan Party shall give the Agent
prompt written notice), provided that, with respect to this clause (c), either
the Agent has received an executed bailee letter from the applicable public
warehouseman in form and substance satisfactory to the Agent or, if the Agent
shall not receive such an executed bailee letter with respect to a public
warehouse, then the Loan Parties, the Agent and the Lenders agree that the
Inventory of any Borrower located therein shall not be Eligible Inventory.
Notwithstanding the foregoing, to the extent that any Loan
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Party maintains Inventory at any location other than those locations listed on
SCHEDULE 6.3, such non-compliance with this SECTION 6.3 shall not constitute a
Default so long as (x) such Inventory is temporarily being held by a
consolidator and awaiting shipment to a location listed on SCHEDULE 6.3 (other
than that of another consolidator), (y) such Inventory is not reported as
Eligible Inventory on any reports provided to the Agent or any Lender and (z)
promptly upon a Responsible Officer of a Loan Party receiving actual knowledge
thereof, the relevant particulars are included in the collateral reporting
materials to be delivered to the Agent in accordance with SECTION 6.7.
6.4 TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Loan Party
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) all of the Collateral in which it purportedly granted
a Lien in favor of the Agent is and will continue to be owned by such Loan Party
(or, with respect to Equipment, owned by such Loan Party or subject to a valid
leasehold interest in favor of such Loan Party), free and clear of all Liens
whatsoever, except for Permitted Liens; (b) the Agent's Liens in such Collateral
will not be subject to any prior Lien except for Permitted Liens; (c) such Loan
Party will use, store, and maintain such Collateral with all reasonable care and
will use such Collateral for lawful purposes only; and (d) such Loan Party will
not sell or dispose of or permit the sale or disposition of any of such
Collateral except for sales of Inventory in the ordinary course of business or
as otherwise permitted hereunder; and upon the disposition of Collateral
permitted pursuant to this clause (d) (other than sales of Inventory from CRH to
HDSC) and receipt by the Agent of the Net Cash Proceeds thereof to the extent
required by this Agreement, the security interest in such Collateral shall be
released. The inclusion of proceeds in the Collateral shall not be deemed to
constitute the Agent's or any Lender's consent to any sale or other disposition
of the Collateral except as expressly permitted herein.
6.5 APPRAISALS. Whenever a Default or Event of Default exists, and at such
other times not more frequently than once a year as the Agent requests if the
Agent has reasonable cause or need to do so, the Borrowers shall, upon the
Agent's request and at the Borrowers' expense (but at the Borrowers' expense
only if the Agent's request is made during the continuance of a Default or Event
of Default and at the Agent's expense at all other times), provide the Agent
with appraisals or updates thereof of any or all of the Inventory of the
Borrowers from an appraiser, and prepared on a basis, satisfactory to the Agent,
such appraisals and updates to include, without limitation, information required
by applicable law and regulation and by the internal policies of the Lenders.
6.6 ACCESS AND EXAMINATION; CONFIDENTIALITY. (a) The Agent, accompanied by
any Lender which so elects, may at all reasonable times during regular business
hours (and at any time when a Default or Event of Default exists) have access
to, examine, audit, make extracts from or copies of and inspect any or all of
any Loan Party's records, files, and books of account and the Collateral, and
discuss any Loan Party's affairs with such Loan Party's officers and management;
PROVIDED that the Agent may not conduct more than three audits in any Fiscal
Year (except that there shall be no limit to the number of audits commenced
during the continuance of a Default or Event of Default and any audits commenced
during the continuance of a Default or Event of
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Default shall not count towards such limit of three audits in any Fiscal Year).
Each Loan Party will deliver to the Agent any instrument necessary for the Agent
to obtain records from any service bureau maintaining records for such Loan
Party. The Agent may, and at the direction of the Majority Lenders shall, at any
time when a Default or Event of Default exists, and at the Borrowers' expense,
make copies of all of the books and records of any Loan Party, or require each
Loan Party to deliver such copies to the Agent. The Agent may, without expense
to the Agent, use such of each Loan Party's personnel, supplies, and premises as
may be reasonably necessary for maintaining or enforcing the Agent's Liens. The
Agent shall have the right, at any time, in the Agent's name or in the name of a
nominee of the Agent, to verify the validity, amount or any other matter
relating to the Accounts, Inventory, or other Collateral, by mail, telephone, or
otherwise.
(b) Each Loan Party agrees that, subject to such Loan Party's prior
consent for uses other than in a traditional tombstone, which consent shall not
be unreasonably withheld or delayed, the Agent and each Lender may use each Loan
Party's name in advertising and promotional material and in conjunction
therewith disclose the general terms of this Agreement. The Agent and each
Lender agree to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information provided to the Agent or such
Lender by or on behalf of such Loan Party, under this Agreement or any other
Loan Document, and neither the Agent, nor such Lender nor any of their
respective Affiliates shall use any such information other than in connection
with or in enforcement of this Agreement and the other Loan Documents, except to
the extent that such information (i) was or becomes generally available to the
public other than as a result of disclosure by the Agent or such Lender, (ii)
was or becomes available on a nonconfidential basis from a source other than a
Loan Party, provided that such source is not bound by a confidentiality
agreement with a Loan Party known to the Agent or such Lender, or (iii) was
pre-cleared by any Loan Party as not confidential or as being permitted to be
disclosed to others; PROVIDED, HOWEVER, that the Agent and any Lender may
disclose such information (1) at the request or pursuant to any requirement of
any Governmental Authority to which the Agent or such Lender is subject or in
connection with an examination of the Agent or such Lender by any such
Governmental Authority; (2) pursuant to subpoena or other court process; (3)
when required to do so in accordance with the provisions of any applicable
requirement of law; (4) to the extent reasonably required in connection with any
litigation or proceeding (including, but not limited to, any bankruptcy
proceeding) to which the Agent, any Lender or their respective Affiliates may be
party; (5) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document; (6) to the Agent's or
such Lender's independent auditors, accountants, attorneys and other
professional advisors; (7) to any prospective Participating Lender or assignee
under any Assignment and Acceptance, actual or potential, provided that such
prospective Participating Lender or assignee agrees to keep such information
confidential to the same extent required of the Agent and the Lenders hereunder;
(8) as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which a Loan Party is party or is deemed party with
the Agent or such Lender, and (9) to its Affiliates.
6.7 COLLATERAL REPORTING. Each Borrower shall provide the Agent with the
following documents at the following times in form satisfactory to the Agent:
(a) by Friday of each week,
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a Borrowing Base Certificate for the seven-day period ended the Saturday of the
prior week; (b) on a monthly basis, a distribution service center stock ledger
with detail by department, a whole chain stock ledger with detail by department
and a stock ledger of all departments combined, detailed by store; (c) on a
monthly basis, a trial balance of each Borrower and of the Parent and its
Subsidiaries on a consolidated basis; (d) on a monthly basis, a consolidated
inventory schedule reconciling the stock ledger to the monthly financial
statements required by SECTION 7.2(b); (e) on a monthly basis, the total from
the last page of the accounts payable trial balance; (f) on a monthly basis, a
listing of the top 10 vendors (by dollar amount) of each Borrower as of the end
of such month; (g) weekly roll-forward inventory reports (at other than month
end) with such supporting documentation as reasonably requested by the Agent;
(h) such other reports as to the Collateral of such Borrower or any other Loan
Party as the Agent shall reasonably request from time to time; and (i) with the
delivery of each of the foregoing, a certificate of such Borrower executed by an
officer thereof certifying as to the accuracy and completeness of the foregoing
(subject to the minor and routine errors inherent in the accounting systems and
processes of the Borrowers).
6.8 [Intentionally Omitted].
-----------------------
6.9 COLLECTION OF ACCOUNTS, INVENTORY AND OTHER AMOUNTS. (a) Each Borrower
will, at its own cost and expense, cause all payments received by such Borrower
on account of Accounts, Inventory and other Collateral and all other payments
received by any Borrower from whatever source (other than cash needed to operate
such Borrower's stores in the ordinary course of business consistent with past
practice), whether in the form of cash, checks, notes, drafts, bills of
exchange, money orders or otherwise (referred to herein as "Payments"), (i) to
be deposited not less often than once each Business Day in one or more bank
accounts maintained by such Borrower and which meet criteria acceptable to the
Agent and (ii) to be transferred on each Business Day from the accounts referred
to in clause (i) to one or more concentration accounts designated by a Borrower
with a bank which meets criteria acceptable to the Agent. Each bank requested by
the Agent at which an account referred to in clause (i) of the first sentence of
this SECTION 6.9(a) is maintained and each bank at which a concentration account
referred to in clause (ii) of such sentence shall execute and deliver to the
Agent such agreements, in form and substance satisfactory to the Agent, as the
Agent shall request with respect to such accounts, including, without
limitation, with respect to prohibitions on such Borrower, upon notice from the
Agent to the bank, withdrawing funds from such accounts or otherwise directing
or modifying actions with respect to such accounts. Each agreement with a bank
at which a concentration account is established shall provide, among other
things, that, upon notice from the Agent to such bank, all funds deposited into
such account shall be transferred directly to the Agent on a daily basis (it
being agreed that the Agent may give such notice if a Default or Event of
Default is continuing or if Combined Availability is less than $30,000,000). The
Agent or the Agent's designee may, at any time after the occurrence of a Default
or an Event of Default, notify Account Debtors that the Accounts have been
assigned to the Agent and of the Agent's security interest therein, and may
collect them directly and charge the collection costs and expenses to the
applicable Borrower's Loan Account as a Revolving Loan. Upon the written request
of the
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Agent, the Loan Parties agree to provide to the Agent a complete and
accurate list of all bank accounts maintained by any Loan Party with any bank or
other financial institution.
(b) All payments, including immediately available funds received by
the Agent at a bank designated by it, received by the Agent on account of
Accounts or as proceeds of other Collateral will be the Agent's sole property
for its benefit and the benefit of the Lenders and will be credited to the
applicable Borrower's Loan Account (conditional upon final collection) after
allowing one (1) Business Day for collection (except that collected funds
received by the Agent on or prior to 12:00 noon (New York City time) on any
Business Day will be credited to the applicable Borrower's Loan Account on such
Business Day); PROVIDED, HOWEVER, that such payments shall be deemed to be
credited to the applicable Borrower's Loan Account immediately upon receipt for
purposes of (i) determining Combined Availability, (ii) calculating the unused
line fee pursuant to SECTION 3.5, and (iii) calculating the amount of interest
to be distributed by the Agent to the Lenders (but not the amount of interest
payable by the Borrowers).
(c) In the event the Borrowers repay all of the Obligations upon the
termination of this Agreement or upon acceleration of the Obligations, other
than through the Agent's receipt of payments on account of the Accounts or
proceeds of the other Collateral, such payment will be credited (conditional
upon final collection) to the Borrowers' Loan Account one (1) Business Day after
the Agent's receipt of such funds.
6.10 INVENTORY. Each Borrower represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that all of the Inventory
owned by such Borrower is and will be held for sale or lease, or to be furnished
in connection with the rendition of services, in the ordinary course of such
Borrower's business, and is and will be fit for such purposes. Each Borrower
represents, warrants and covenants that it keeps and will keep, at its own
expense, its Inventory in good and marketable condition consistent with current
practices, including those practices regarding damaged and returnable Inventory.
Each Borrower represents and warrants that all its Eligible Inventory is in good
and marketable condition. No Borrower will acquire or accept any Inventory on
consignment or approval (none of which Inventory shall in any event be Eligible
Inventory), except on a basis consistent with its historical business practices.
Each Borrower agrees that all Inventory manufactured by any Loan Party in the
United States will be produced in accordance with the Federal Fair Labor
Standards Act of 1938, as amended, and all rules, regulations, and orders
thereunder. The Borrowers will conduct a physical count of the Inventory of the
Borrowers at least once per Fiscal Year, and after and during the continuation
of an Event of Default, at such other times as the Agent reasonably requests.
6.11 [Intentionally Omitted].
-----------------------
6.12 [Intentionally Omitted].
-----------------------
6.13 DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Loan Party represents
and warrants to the Agent and the Lenders that (a) all documents, instruments,
and chattel paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon,
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are and will be complete, valid, and genuine, and (b) all goods evidenced by
such documents, instruments, and chattel paper are and will be owned by such
Loan Party, free and clear of all Liens other than Permitted Liens.
6.14 RIGHT TO CURE. The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount, subject to SECTION 2.2(i), or
do any act required of any Loan Party hereunder or under any other Loan Document
in order to preserve, protect, maintain or enforce the Obligations, the
Collateral or the Agent's Liens therein, and which any Loan Party fails to pay
or do after reasonable notice to such Loan Party by the Agent (except that no
notice shall be required if a Default or Event of Default is continuing at the
time), including, without limitation, payment of any judgment against any Loan
Party, any insurance premium, any warehouse charge, any finishing or processing
charge, any landlord's claim, and any other Lien upon or with respect to the
Collateral. All payments that the Agent makes under this SECTION 6.14 and all
out-of-pocket costs and expenses that the Agent pays or incurs in connection
with any action taken by it hereunder shall be charged to the Borrowers' Loan
Accounts as a Revolving Loan. Any payment made or other action taken by the
Agent under this SECTION 6.14 shall be without prejudice to any right to assert
an Event of Default hereunder and to proceed thereafter as herein provided.
6.15 POWER OF ATTORNEY. Each Loan Party hereby appoints the Agent and the
Agent's designee as such Loan Party's attorney, with power: (a) to endorse such
Loan Party's name on any checks, notes, acceptances, money orders, or other
forms of payment or security that come into the Agent's or any Lender's
possession; (b) to sign such Loan Party's name on any invoice, xxxx of lading,
warehouse receipt or other document of title relating to any Collateral, on
drafts against customers, on assignments of Accounts, on notices of assignment,
financing statements and other public records; (c) to send requests for
verification of Accounts to customers or Account Debtors; (d) to clear
Inventory, the purchase of which was financed with Letters of Credit, through
customs in such Loan Party's name, the Agent's name or the name of the Agent's
designee, and to sign and deliver to customs officials powers of attorney in
such Loan Party's name for such purpose; and (e) to do all things necessary to
carry out this Agreement. Each Loan Party ratifies and approves all acts of such
attorney. None of the Lenders or the Agent nor their attorneys will be liable
for any acts or omissions or for any error of judgment or mistake of fact or
law. This power, being coupled with an interest, is irrevocable until this
Agreement has been terminated and the Obligations have been fully satisfied.
6.16 THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES. The Loan
Parties assume all responsibility and liability arising from or relating to the
use, sale or other disposition of the Collateral. The Obligations shall not be
affected by any failure of the Agent or any Lender to take any steps to perfect
the Agent's Liens or to collect or realize upon the Collateral, nor shall loss
of or damage to the Collateral release any Loan Party from any of the
Obligations. Following the occurrence and continuation of an Event of Default,
the Agent may (but shall not be required to), and at the direction of the
Majority Lenders shall, without notice to or consent from any Loan Party, xxx
upon or otherwise collect, extend the time for payment of, modify or amend the
terms of, compromise or settle for cash, credit, or otherwise upon any terms,
grant other indulgences,
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extensions, renewals, compositions, or releases, and take or omit to take any
other action with respect to the Collateral, any security therefor, any
agreement relating thereto, any insurance applicable thereto, or any Person
liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of any Loan Party for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Agent and/or any Lender and any Loan Party.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
-------------------------------------------------
7.1 BOOKS AND RECORDS. Each Loan Party shall maintain, at all times,
books, records and accounts in which complete, correct and timely entries are
made of its transactions in accordance with GAAP. Each Loan Party shall
maintain at all times and in reasonable detail books and records pertaining to
the Collateral owned by it in such form and scope as is customary for companies
of established reputation engaged in the same or similar business and similarly
situated and of a similar size, including, but not limited to, records of (a)
all payments received and all credits and extensions granted with respect to the
Accounts; (b) the return, rejections, repossession, stoppage in transit, loss,
damage, or destruction of any Inventory; and (c) all other dealings affecting
the Collateral.
7.2 FINANCIAL INFORMATION. Each Loan Party shall promptly furnish to each
Lender all such financial information as the Agent or any Lender shall
reasonably request. Without limiting the foregoing, the Parent and the Borrowers
will furnish to the Agent, in sufficient copies for distribution by the Agent to
each Lender, in such detail as the Agent or the Lenders shall request, the
following:
(a) As soon as reasonably practical, but in any event not later than
ninety-five (95) days after the close of each Fiscal Year, audited consolidated
balance sheets, and consolidated statements of operations, cash flows and common
shareholders' equity for the Parent and its Subsidiaries for such Fiscal Year,
and the accompanying notes thereto, setting forth in each case in comparative
form figures for the previous Fiscal Year, fairly presenting the financial
position and the results of operations of the Parent and its consolidated
Subsidiaries as at the date thereof and for the Fiscal Year then ended in
accordance with GAAP. Such consolidated statements shall be examined in
accordance with generally accepted auditing standards by and accompanied by a
report thereon unqualified as to scope of independent certified public
accountants selected by the Parent and reasonably satisfactory to the Agent. At
the written request of the Agent for each Fiscal Year, the Parent,
simultaneously with retaining such independent public accountants to conduct
such annual audit, shall send a letter (in form acceptable to the Agent) to such
accountants, with a copy to the Agent and the Lenders, notifying such
accountants substantially to the effect that one of the primary purposes for
retaining such accountants' services and having audited financial statements
prepared by them is for use by the Agent and the Lenders.
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(b) As soon as reasonably practicable, but in any event not later
than thirty (30) days (ninety (90) days for the last fiscal month of each Fiscal
Year) after the end of each fiscal month, consolidated unaudited balance sheets
of the Parent and its consolidated Subsidiaries as at the end of such month, and
consolidated unaudited statements of operations and cash flow for the Parent and
its consolidated Subsidiaries for such fiscal month and for the period from the
beginning of the Fiscal Year to the end of such fiscal month, fairly presenting
the financial position and results of operations of the Parent and its
consolidated Subsidiaries as at the date thereof and for such periods. The
Parent shall certify by a certificate signed by a Responsible Officer that all
such statements have been prepared in accordance with GAAP as applicable to
interim periods and present fairly, subject to the addition of year-end
schedules and notes and normal year-end adjustments, the financial position of
the Parent and its consolidated Subsidiaries as at the dates thereof and the
results of operations of the Parent and its consolidated Subsidiaries for the
periods then ended.
(c) As soon as reasonably practicable, but in any event not later
than fifty (50) days after the close of each of the first three fiscal quarters
of each Fiscal Year, consolidated unaudited balance sheets of the Parent and its
consolidated Subsidiaries as at the end of such quarter, and consolidated
unaudited statements of operations and cash flows for the Parent and its
Subsidiaries for such quarter and for the period from the beginning of the
Fiscal Year to the end of such quarter, fairly presenting the financial position
and results of operation of the Parent and its Subsidiaries as at the date
thereof and for such periods. The Parent shall certify by a certificate signed
by a Responsible Officer that all such statements have been prepared in
accordance with GAAP as applicable to interim periods and present fairly,
subject to the addition of year-end schedules and notes and normal year-end
adjustments, the financial position of the Parent and its consolidated
Subsidiaries as at the dates thereof and the results of operations of the Parent
and its consolidated Subsidiaries for the periods then ended.
(d) As soon as reasonably practical, but in any event not later than
ninety-five (95) days after the close of each Fiscal Year, a certificate of the
independent certified public accountants that examined the audited Financial
Statements for such Fiscal Year delivered pursuant to SECTION 7.2(a) (which
certificate may be limited to accounting matters only and may disclaim
responsibility for legal interpretation), to the effect that they have reviewed
and are familiar with this Agreement and that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default, except for those, if any, described
in reasonable detail in such certificate.
(e) With each of the annual audited Financial Statements delivered
pursuant to SECTION 7.2(a), and within fifty (50) days after the end of each of
the first three fiscal quarters of each Fiscal Year, a certificate of a
Responsible Officer of the Parent (i) setting forth in reasonable detail the
calculations required to establish that the Loan Parties were in compliance with
the covenants set forth in SECTIONS 9.23 and 9.24 during the period covered in
such Financial Statements and as at the end thereof and setting forth the
calculation of the Coverage Ratio for the twelve fiscal month period of the
Parent ended with such fiscal quarter or Fiscal Year, as appropriate, and (ii)
stating that, except as explained in reasonable detail in such certificate,
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(A) all of the representations and warranties of the Loan Parties contained in
ARTICLES 6 and 8 of this Agreement and in the other Loan Documents are correct
in all material respects as at the date of such certificate as if made at such
time (except to the extent such representations and warranties expressly relate
to a specified prior date), (B) each Loan Party is, at the date of such
certificate, in compliance in all material respects with all of its respective
covenants and agreements in this Agreement and the other Loan Documents and (C)
no Default or Event of Default then exists or existed during the period covered
by such Financial Statements. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant has
not been complied with, or that a Default or Event of Default existed or exists,
such certificate shall set forth what action the Parent has taken or proposes to
take with respect thereto.
(f) No later than 30 days after the beginning of each Fiscal Year,
annual projections (to include projected consolidated balance sheets and
consolidated statements of operations and cash flow) for the Parent and its
Subsidiaries as at the end of and for each month of such Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of each
annual report or other filing filed with respect to each Plan of any Loan Party.
(h) Promptly upon the filing thereof, copies of all reports, if any,
to or other documents filed by the Parent or any of its Subsidiaries with the
Securities and Exchange Commission under the Exchange Act, and all reports,
notices, or statements sent or received by the Parent or any of its Subsidiaries
to or from the holders of any equity interests of the Parent (other than routine
or non-material correspondence sent by shareholders of the Parent to the Parent)
or any such Subsidiary or of any Debt For Borrowed Money of the Parent or any of
its Subsidiaries registered under the Securities Act of 1933 or to or from the
trustee under any indenture under which the same is issued.
(i) As soon as available, but in any event not later than 15 days
after any Loan Party's receipt thereof, a copy of all final management reports
of the independent certified public accountants of any Loan Party regarding
material weaknesses of internal controls, if any.
(j) Upon written request of the Agent, promptly after filing with
the IRS, a copy of each federal tax return filed by the Parent or by any of its
Subsidiaries.
(k) Such additional information as the Agent and/or any Lender may
from time to time reasonably request regarding the financial and business
affairs of the Parent or any Subsidiary thereof.
7.3 NOTICES TO THE LENDERS. The Loan Parties shall notify the Agent,
in writing of the following matters at the following times:
(a) Promptly, but in any event not later than three (3) Business
Days, after becoming aware of any Default or Event of Default.
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(b) Promptly, but in any event not later than three (3) Business
Days, after becoming aware of the assertion by the holder of any Debt in excess
of $250,000 that a default exists with respect thereto or that any Loan Party is
not in compliance with the terms thereof, or the threat or commencement by such
holder of any enforcement action because of such asserted default or
non-compliance.
(c) Promptly, but in any event not later than three (3) Business
Days, after becoming aware of any Material Adverse Effect.
(d) Promptly, but in any event not later than three (3) Business
Days, after becoming aware of any pending or threatened action, suit,
proceeding, or counterclaim by any Person, or any pending or threatened
investigation by a Governmental Authority, that could reasonably be expected to
have a Material Adverse Effect.
(e) Promptly, but in any event not later than three (3) Business
Days, after becoming aware of any pending or threatened strike, work stoppage,
unfair labor practice claim, or other labor dispute affecting the Parent or any
of its Subsidiaries in a manner which could reasonably be expected to have a
Material Adverse Effect.
(f) Promptly, but in any event not later than three (3) Business
Days, after becoming aware of any violation of any law, statute, regulation, or
ordinance of a Governmental Authority affecting any Loan Party which could
reasonably be expected to have a Material Adverse Effect.
(g) Promptly, but in any event not later than three (3) Business
Days, after receipt of any notice of any violation by the Parent or any of its
Subsidiaries of any Environmental Law which could reasonably be expected to have
a Material Adverse Effect or that any Governmental Authority has asserted that
the Parent or any Subsidiary thereof is not in compliance with any Environmental
Law or is investigating the Parent's or such Subsidiary's compliance therewith,
the effect of such noncompliance with which could reasonably be expected to have
a Material Adverse Effect.
(h) Promptly, but in any event not later than three (3) Business
Days, after receipt of any written notice that the Parent or any of its
Subsidiaries is or may be liable to any Person as a result of the Release or
threatened Release of any Contaminant or that the Parent or any Subsidiary
thereof is subject to investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably likely to give
rise to liability which could have a Material Adverse Effect.
(i) Promptly, but in any event not later than three (3) Business
Days, after receipt by a Responsible Officer of any Loan Party of any written
notice of the imposition of any Environmental Lien against any property of the
Parent or any of its Subsidiaries.
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(j) Any change in any Loan Party's name, state of incorporation, or
form of organization or store names under which any Loan Party will sell
Inventory or create Accounts, or to which instruments in payment of Accounts may
be made payable, in each case at least thirty (30) days prior thereto.
(k) Within thirty (30) days after any Loan Party or any ERISA
Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the IRS, the DOL or
the PBGC with respect thereto.
(l) Upon written request, or, in the event that such filing reflects
a significant change with respect to the matters covered thereby, promptly after
the filing thereof with the PBGC, the DOL or the IRS, as applicable, copies of
the following: (i) each annual report (form 5500 series), including SCHEDULE B
thereto, filed with the PBGC, the DOL or the IRS with respect to each Plan, (ii)
a copy of each funding waiver request filed with the PBGC, the DOL or the IRS
with respect to any Plan and all communications received by any Loan Party or
any ERISA Affiliate from the PBGC, the DOL or the IRS with respect to such
request, and (iii) a copy of each other filing or notice filed with the PBGC,
the DOL or the IRS, with respect to each Plan of any Loan Party or any ERISA
Affiliate.
(m) Upon written request, copies of each actuarial report for any
Plan or Multi-employer Plan and annual report for any Multi-employer Plan; and
promptly after receipt thereof by any Loan Party or any ERISA Affiliate, copies
of the following: (i) any notices of the PBGC's intention to terminate a Plan or
to have a trustee appointed to administer such Plan; (ii) any favorable or
unfavorable determination letter from the IRS regarding the qualification of a
Plan under Section 401(a) of the Code; or (iii) any notice from a Multi-employer
Plan regarding the imposition of withdrawal liability.
(n) Promptly after the occurrence thereof: (i) any changes in the
benefits of any existing Plan which constitutes a tax-qualified or non-qualified
employee benefit plan or a retiree medical plan or program which increase any
Loan Party's annual costs with respect thereto by an amount in excess of
$5,000,000, or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Loan Party or any ERISA Affiliate was not
previously contributing; or (ii) any failure by any Loan Party or any ERISA
Affiliate to make a required installment or any other required payment under
Section 412 of the Code on or before the due date for such installment or
payment.
(o) Promptly after any Loan Party or any ERISA Affiliate knows or
has reason to know that any of the following events has or will occur: (i) a
Multi-employer Plan has been or will be terminated; (ii) the administrator or
plan sponsor of a Multi-employer Plan intends to terminate a Multi-employer
Plan; or (iii) the PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multi-employer Plan.
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Each notice given under this Section shall describe the subject
matter thereof in reasonable detail, and shall set forth the action that the
Loan Party or any ERISA Affiliate, as applicable, has taken or proposes to take
with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
--------------------------------------
Each of the Loan Parties warrants and represents to the Agent and the
Lenders that except as hereafter disclosed to and accepted by the Agent and the
Majority Lenders in writing:
8.1 AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT AND THE
LOAN DOCUMENTS. Each of the Loan Parties has the corporate power and authority
to execute, deliver and perform this Agreement and the other Loan Documents to
which it is a party, to incur the Obligations, and to grant to the Agent Liens
upon and security interests in the Collateral owned by it. Each of the Loan
Parties has taken all necessary corporate action (including without limitation,
obtaining approval of its stockholders if necessary) to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents to
which it is a party. No consent, approval, or authorization of, or declaration
or filing with, any Governmental Authority, and no consent of any other Person,
is required in connection with any of the Loan Parties' execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party, except for those already duly obtained. This Agreement and the other Loan
Documents have been duly executed and delivered by each of the Loan Parties
party thereto, and constitute the legal, valid and binding obligations of each
of the Loan Parties party thereto, enforceable against each such Loan Party in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles) without defense (other than of a payment in full), setoff
or counterclaim. Each of the Loan Parties' execution, delivery, and performance
of this Agreement and the other Loan Documents to which it is a party do not
and will not conflict with, or constitute a violation or breach of, or
constitute a default under, or, except for Liens created under the Loan
Documents, result in the creation or imposition of any Lien upon the property of
the Parent or any of its Subsidiaries by reason of the terms of (a) any
contract, mortgage, Lien, lease, agreement, indenture, or instrument to which
any Loan Party is a party or which is binding upon it, (b) any Requirement of
Law applicable to the Parent or any of its Subsidiaries, or (c) the charter or
by-laws of the Parent or any of its Subsidiaries.
8.2 VALIDITY AND PRIORITY OF SECURITY INTEREST. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of the Agent, for the ratable benefit of the Agent and the
Lenders, and, upon the filing of Uniform Commercial Code financing statements in
the appropriate governmental filing offices, such Liens constitute perfected and
continuing Liens on all the Collateral, having priority over all other Liens on
the
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Collateral (other than Permitted Liens), securing all the Obligations, and
enforceable against the Loan Parties and all third parties.
8.3 ORGANIZATION AND QUALIFICATION. Each Loan Party (a) is duly
incorporated and organized and validly existing in good standing under the laws
of the state of its incorporation, (b) is qualified to do business as a foreign
corporation and is in good standing in those jurisdictions in which the failure
to so qualify would have a Material Adverse Effect and (c) has all requisite
power and authority to conduct its business and to own its property. SCHEDULE
8.3 sets forth as of the Closing Date all jurisdictions in which each Loan Party
is qualified to do business as a foreign corporation and is in good standing.
8.4 CORPORATE NAME; PRIOR TRANSACTIONS. Since emerging from bankruptcy on
October 4, 1993, no Loan Party has been known by or used any other corporate or
fictitious name (other than HDS Transport, Inc. which was formerly known as
Frando, Inc.), or been a party to any merger or consolidation (except as
permitted by SECTION 9.9(vi)), or acquired all or substantially all of the
assets of any Person, or acquired any of its property outside of the ordinary
course of business.
8.5 SUBSIDIARIES. The Parent has no Subsidiaries other than the other Loan
Parties. SCHEDULE 8.3, in addition to the information required by SECTION 8.3,
is a correct and complete list of the name and relationship to the Parent of
each and all of the Parent's Subsidiaries and the state of incorporation of each
such Subsidiary and its capitalization and stock ownership.
8.6 FINANCIAL STATEMENTS AND PROJECTIONS. (a) The Parent has delivered to
the Agent the audited consolidated balance sheet and related consolidated
statements of operations, cash flows and changes in common shareholders' equity
for the Parent and its consolidated Subsidiaries as of February 3, 1996, and for
the Fiscal Year then ended, accompanied by the report thereon of the Parent's
independent certified public accountants. The Parent has also delivered to the
Agent the unaudited consolidated balance sheet and related statements of
operations and cash flows for the Parent and its consolidated Subsidiaries as of
August 3, 1996. All such financial statements have been prepared in accordance
with GAAP (in the case of the unaudited financial statements, as applicable to
interim periods) and present fairly the financial position of the Parent and its
consolidated Subsidiaries as at the dates thereof and their results of
operations for the periods then ended subject, in the case of the unaudited
statements, to the addition of year-end schedules and notes and normal year-end
adjustments.
(b) The Latest Projections when submitted to the Lenders as required
herein represent the Parent's estimates of the future financial performance of
the Parent and its consolidated Subsidiaries for the periods set forth therein.
The Latest Projections have been prepared on the basis of the assumptions set
forth therein, which the Parent believes are fair and reasonable at the time
when made in light of current and reasonably foreseeable business conditions.
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8.7 CAPITALIZATION. As of the Closing Date, the authorized capital stock
of the Parent consists of 50,000,000 shares of Common Stock, $0.01 par value
(the "Common Stock"), and 15,000,000 shares of Preferred Stock, $0.10 par value
(the "Preferred Stock"), of which 5,000,000 shares are designated Series A
Convertible Preferred Stock, $0.10 par value (the "Convertible Preferred Stock")
and 55,000 shares are designated Series B Participating Cumulative Preferred
Stock, $0.10 par value (the "Series B Preferred Stock"). As of close of business
on September 23, 1996, 10,201,981 shares of Common Stock, 1,012,154 shares of
Convertible Preferred Stock and no shares of Series B Preferred Stock were
issued and outstanding. All such shares of the Parent are duly and validly
issued, fully paid and nonassessable. The authorized capital stock of HDSC and
CRH consists of 1000 and 500 shares, respectively, of common stock, of which 100
and 250 shares, respectively, are validly issued and outstanding, fully paid and
non-assessable. The issued and outstanding shares of capital stock of HDSC and
CRH are owned by the Parent and HDSC, respectively.
8.8 SOLVENCY. Both prior to and after giving effect to the making of the
Revolving Loans to be made on the Closing Date and the issuance of the Letters
of Credit to be issued on the Closing Date, and at all times during the term of
this Agreement, the Borrowers on a consolidated basis are solvent on a going
concern balance sheet basis, are then able and expect to be able to pay their
debts (including, without limitation, contingent debts and other commitments) as
they mature and have capital sufficient to carry on their businesses as
conducted and as proposed to be conducted. For purposes of determining whether a
Borrower satisfies the foregoing, the amount of any contingent liability shall
be computed as the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
8.9 DEBT. After giving effect to the making of the Revolving Loans to be
made on the Closing Date, the Parent and its Subsidiaries have no Debt, except
(a) the Obligations, (b) Debt described on SCHEDULE 9.13, and (c) the other Debt
permitted by SECTION 9.13.
8.10 DISTRIBUTIONS. Since February 3, 1996, no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of the Parent or any of its Subsidiaries that would not be permitted
hereunder, except with respect to (i) the refinancing in April, 1996 of certain
10.25% senior notes of the Parent with proceeds of senior notes issued under the
Senior Indenture and (ii) the exchange in August, 1996 of the initial senior
notes issued under the Senior Indenture with the Senior Notes as contemplated by
the Senior Indenture.
8.11 TITLE TO PROPERTY. Each of the Loan Parties has good and marketable
title in fee simple to its real property owned as of the Closing Date, and each
Loan Party has good title (or, with respect to Fixed Assets, good title or valid
leasehold interests) to all of its Inventory and other material property
(including, without limitation, the assets reflected on the August 3, 1996
Financial Statements delivered to the Agent and the Lenders, except as disposed
of in the ordinary course of business since the date thereof) except, with
respect to property other than Inventory, for minor defects in title that do not
interfere with its ability to conduct its business as currently
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conducted or to utilize such properties for their intended purposes. All
Inventory and other material property of each Loan Party is free of all Liens
except Permitted Liens.
8.12 REAL ESTATE; LEASES. SCHEDULE 8.12 sets forth a correct and complete
list of all Real Estate owned in fee by the Parent or any of its Subsidiaries as
of the Closing Date and a list of all Real Estate leased or subleased by the
Parent or any of its Subsidiaries as of the Closing Date. Except as noted on
SCHEDULE 8.12 and except as promptly disclosed to the Agent in writing from time
to time after the Closing Date (but in any event within three (3) Business Days
after any of the following shall no longer be correct), (i) each of such leases
and subleases is valid and enforceable in accordance with its terms and is in
full force and effect, (ii) no material default by any Loan Party exists under
any such lease or sublease (with respect to which the landlord thereof has
threatened to terminate such lease or sublease or has taken action to terminate
such lease or sublease) and, (iii) to the knowledge of the Loan Parties, no
material default by any other party to any such lease or sublease exists;
PROVIDED, that, with respect to any event relating to clauses (i) or (ii) above
which is required to be so disclosed to the Agent, if the Agent shall, within
thirty (30) days after its receipt of any such disclosure, deliver to a Borrower
a written notice that the Agent has determined that the event described in such
disclosure is material then the relevant Loan Party shall cause such event to be
cured within the earlier of (1) thirty (30) days after receipt by a Borrower of
such notice from the Agent and (2) the date such lease or sublease is no longer
valid and enforceable in accordance with its terms or in full force and effort
(in the case of clause (i) above) or the date such lease or sublease is
terminated (in the case of clause (ii) above), or such failure to cure same
within such period of time shall constitute a Default.
8.13 PROPRIETARY RIGHTS. SCHEDULE 8.13, as updated in writing from time to
time (and in any event not less often than once each calendar quarter) by the
Parent to the Agent for any needed changes to such schedule, sets forth a
correct and complete list of all of the registered Proprietary Rights of the
Parent and its Subsidiaries which are material to their business or operations
(including, without limitation, the servicemark "Hills"). None of such
Proprietary Rights is subject to any licensing agreement or similar arrangement
except as set forth on SCHEDULE 8.13. To the Loan Parties' knowledge, none of
such Proprietary Rights infringes on or conflicts with any other Person's
property, and no other Person's property infringes on or conflicts with such
Proprietary Rights. The Proprietary Rights described on SCHEDULE 8.13 constitute
all of the property of such type necessary to the current and anticipated future
conduct of the Loan Parties' business.
8.14 TRADE NAMES. All registered trade names or styles under which the
Parent or any of its Subsidiaries will sell Inventory or create Accounts, or to
which instruments in payment of Accounts may be made payable, are listed on
SCHEDULE 8.14 as updated in writing from time to time by the Parent to the Agent
(it being agreed by the Parent that it shall use its best efforts to provide to
the Agent such an update at least thirty (30) days prior to any new registered
tradename or style so being utilized by the Parent or any of its Subsidiaries
(and in any event such update shall be delivered to the Agent not less than
fifteen (15) days prior to any such utilization), and the relevant Loan Party
shall execute any and all financing statements and other documents that the
Agent requests in connection therewith).
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8.15 LITIGATION. Except as described in the Parent's Annual Report on Form
10K filed with the Securities and Exchange Commission for the Fiscal Year ended
February 3, 1996 or in any of the Parent's Quarterly Reports on Form 10Q filed
thereafter with the Securities and Exchange Commission from time to time and
delivered to the Agent and the Lenders, there is no pending or (to the best of
the Loan Parties' knowledge) threatened action, suit, proceeding, or
counterclaim by any Person, or investigation by any Governmental Authority, or
any basis for any of the foregoing, which could reasonably be expected to cause
a Material Adverse Effect.
8.16 RESTRICTIVE AGREEMENTS. Neither the Parent nor any of its Subsidiaries
is a party to any contract or agreement, or subject to any charter or other
corporate restriction, which affects its ability to execute, deliver, and
perform the Loan Documents and repay the Obligations or which materially and
adversely affects or, insofar as the Loan Parties can reasonably foresee, could
reasonably be expected to materially and adversely affect, the property,
business, operations, profits, prospects or condition (financial or otherwise)
of the Loan Parties or such Subsidiary, or would in any respect cause a Material
Adverse Effect.
8.17 LABOR DISPUTES. As of the Closing Date, (a) there is no collective
bargaining agreement or other labor contract covering employees of the Parent or
any of its Subsidiaries, (b) no such collective bargaining agreement or other
labor contract is scheduled to expire during the term of this Agreement, (c) to
the knowledge of a Responsible Officer of the Parent or any of its Subsidiaries,
no union or other labor organization is seeking to organize, or to be recognized
as, a collective bargaining unit of employees of the Parent or any of its
Subsidiaries or for any similar purpose, and (d) to the knowledge of a
Responsible Officer of the Parent or any of its Subsidiaries, there is no
pending or threatened strike, work stoppage, material unfair labor practice
claim, or other material labor dispute against or affecting the Parent or its
Subsidiaries or their employees.
8.18 ENVIRONMENTAL LAWS. To the knowledge of each Responsible Officer of
the Parent or any of its Subsidiaries, except as otherwise disclosed on SCHEDULE
8.18 (as the same may be updated from time to time by written notice to the
Agent):
(a) the Parent and its Subsidiaries have complied in all material
respects with all Environmental Laws applicable to its Real Estate and business,
and neither the Parent nor any Subsidiary nor any of its present Real Estate or
operations, nor its past property or operations, is currently subject to any
enforcement order from or liability agreement with any Governmental Authority or
private Person respecting (i) compliance with any Environmental Law or (ii) any
potential liabilities and costs or remedial action arising from the Release or
threatened Release of a Contaminant.
(b) The Parent and its Subsidiaries have obtained all permits
necessary for their current operations under Environmental Laws, and all such
permits are in good standing and the Parent and its Subsidiaries are in material
compliance with all terms and conditions of such permits.
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(c) Neither the Parent nor any of its Subsidiaries has received any
summons, complaint, order or similar written notice that it is not currently in
material compliance with, or that any Governmental Authority is investigating
its compliance with, any Environmental Laws or that it is or may be liable in a
material amount to any other Person as a result of a Release or threatened
Release of a Contaminant.
(d) None of the present or past operations of the Parent and its
Subsidiaries is currently the subject of any investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to a
Release or threatened Release of a Contaminant.
(e) Neither the Parent nor any of its Subsidiaries has entered into
any negotiations or settlement agreements with any Person (including, without
limitation, the prior owner of its property) imposing material obligations or
liabilities on the Parent or any of its Subsidiaries with respect to any
remedial action in response to the Release of a Contaminant or environmentally
related claim.
(f) No Environmental Lien has attached to any Real Estate of the
Parent or any of its Subsidiaries.
8.19 NO VIOLATION OF LAW. Neither the Parent nor any of its Subsidiaries is
in violation of any law, statute, regulation, ordinance, judgment, order, or
decree applicable to it which violation could reasonably be expected to have a
Material Adverse Effect.
8.20 NO DEFAULT. Neither the Parent nor any of its Subsidiaries is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which the Parent or such Subsidiary is a party or by
which it is bound, which default could reasonably be expected to have a Material
Adverse Effect.
8.21 ERISA COMPLIANCE. Except as specifically disclosed in SCHEDULE 8.21
(as the same may be updated from time to time by written notice to the Agent):
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS within the time frame required
under applicable law and to the best knowledge of each Loan Party, nothing has
occurred which would cause the loss of such qualification. Each Loan Party and
each ERISA Affiliate has made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.
(b) There are no pending or, to the best knowledge of each
Responsible Officer of each Loan Party, threatened claims, actions or lawsuits,
or action by any Governmental Authority, with respect to any Plan which has
resulted or could reasonably be expected to result in a Material Adverse Effect.
There has been no prohibited transaction or violation of the
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fiduciary responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Events have occurred or are reasonably expected to
occur which are reasonably likely to result in liability to any Loan Party or
ERISA Affiliate in an amount exceeding $1,000,000 individually or in the
aggregate for all such events; (ii) no Pension Plan has any Unfunded Pension
Liability in excess of $1,000,000 individually or in the aggregate for all such
plans; (iii) neither any Loan Party nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plans (other than premiums due and not delinquent under Section
4007 of ERISA) in excess of $1,000,000 individually or in the aggregate for all
such plans; (iv) neither any Loan Party nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability in excess of $1,000,000 individually
or in the aggregate (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Section 4201
or 4243 of ERISA with respect to its Multi-employer Plans; and (v) neither any
Loan Party nor any ERISA Affiliate has engaged in any transactions that could be
subject to Section 4069 or 4212(c) of ERISA which are reasonably likely to
result in liability to a Loan Party or ERISA Affiliate in an amount exceeding
$1,000,000 individually or in the aggregate for all such transactions.
8.22 TAXES. The Parent and its Subsidiaries have filed all Federal and
other tax returns and reports required to be filed, and have paid all Federal
and other taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable (except for (i) the non-payment of any such taxes, assessments, fees and
other governmental charges permitted by SECTION 9.1 and (ii) the payment of the
Deferred Tax Obligations in accordance with the installment payment terms set
forth in the Bankruptcy Plan).
8.23 REGULATED ENTITIES. None of the Parent, any Person controlling the
Parent, or any Subsidiary of the Parent, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. Except for HDS Transport, Inc.
which is licensed by the Interstate Commerce Commission and subject to
regulation under the Interstate Commerce Act, neither the Parent nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state
public utilities code, or any other Federal or state statute or regulation
limiting its ability to incur indebtedness.
8.24 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans are to
be used solely to refinance the Existing Bank Debt and for working capital
purposes and other general corporate purposes of the Parent and its Subsidiaries
not prohibited hereby. Neither the Parent nor any Subsidiary thereof is engaged
in the business of purchasing or selling Margin Stock or extending credit for
the purpose of purchasing or carrying Margin Stock.
8.25 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. Each Loan Party
owns or is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade
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names, copyrights, contractual franchises, authorizations and other rights that
are reasonably necessary for the operation of its businesses, without material
conflict with the rights of any other Person. To the best knowledge of each Loan
Party, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Parent or any Subsidiary infringes upon any rights held by any
other Person, the result of which infringement could reasonably be expected to
have a Material Adverse Effect. No claim or litigation regarding any of the
foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of any Loan Party, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
8.26 NO MATERIAL ADVERSE CHANGE. No Material Adverse Effect has occurred
since the date of the Financial Statements referred to in SECTION 8.6(a).
8.27 FULL DISCLOSURE. None of the representations or warranties made by the
Parent or any Subsidiary thereof in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Parent or any Subsidiary thereof in connection with the
Loan Documents (including the offering and disclosure materials delivered by or
on behalf of any Loan Party to the Lenders prior to the Closing Date), contains
any untrue statement of a material fact or omits any material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.
8.28 PARENT ACTIVITY. The Parent owns no assets (other than the capital
stock of HDSC and such cash (not in excess of $1,000,000 book balance for any 5
consecutive Business Days, other than cash held by the trustee for the Senior
Notes for the payment of scheduled interest due on the Senior Notes) and other
de-minimis property as are needed in the conduct of its business as a publicly
traded holding company), has no Debt outstanding to any Person except as
otherwise permitted by this Agreement and engages in no business activity of any
kind, other than the holding of the capital stock of HDSC and other activities
associated with being a publicly-traded holding company.
8.29 SENIOR DEBT. All Revolving Loans, interest owing thereon (both before
and after the commencement of a proceeding in bankruptcy or insolvency with
respect to any Loan Party, whether or not such interest is an allowed claim in
any such proceeding), reimbursement obligations with respect to Letters of
Credit and Credit Support and guarantee obligations of Subsidiaries of the
Parent with respect to the Obligations (collectively, the foregoing, the "Senior
Debt Obligations") constitute, and at all times will continue to constitute,
"Senior Debt" (as defined in the Senior Indenture) under the Senior Indenture,
the Senior Notes and the guarantees issued from time to time pursuant to the
Senior Indenture.
8.30 BANKRUPTCY. Except for the payment of (a) the Deferred Tax
Obligations, (b) cash distributions remaining to be made to Class 6 and Class 7
claims holders (such distributions
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estimated to aggregate less than $2,000,000), and (c) resolution of certain
personal injury litigation (for which the Parent and its Subsidiaries have
insurance for each such item of litigation in excess of $250,000 per claim), the
Parent and its Subsidiaries have performed all of their respective material
obligations under or pursuant to the Bankruptcy Plan.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Each of the Loan Parties covenants to the Agent and each Lender that,
so long as any of the Obligations remain outstanding or this Agreement is in
effect:
9.1 TAXES AND OTHER OBLIGATIONS. The Parent shall, and shall cause each of
its Subsidiaries to, (a) file when due all tax returns and other reports which
it is required to file; (b) pay, or provide for the payment, when due, of all
taxes, fees, assessments and other governmental charges against it or upon its
property, income and franchises, make all required withholding and other tax
deposits, and establish adequate reserves in accordance with GAAP for the
payment of all such items, and provide to the Agent and the Lenders, upon
request, satisfactory evidence of its timely compliance with the foregoing; and
(c) pay when due all Debt owed by it and all claims of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, and all other
indebtedness owed by it and trade payables and rent payable under leases of real
property and perform and discharge in a timely manner all other material
obligations undertaken by it; PROVIDED, HOWEVER, neither the Parent nor any of
its Subsidiaries need pay any tax, fee, assessment, or governmental charge, that
(i) it is contesting in good faith by appropriate proceedings dili gently
pursued, (ii) the Parent or its Subsidiary, as the case may be, has established
proper reserves for as provided in GAAP, and (iii) no Lien (other than a
Permitted Lien) results from such non-payment.
9.2 CORPORATE EXISTENCE AND GOOD STANDING. The Parent shall, and shall
cause each of its Subsidiaries to, maintain its corporate existence (except as
otherwise permitted under SECTION 9.9(vi)) and its qualification and good
standing in all jurisdictions (x) in which the failure to maintain such
qualification or good standing could reasonably be expected to have a Material
Adverse Effect and (y) additionally with respect to HDSC, where HDSC has any
stores or distribution centers.
9.3 COMPLIANCE WITH LAW; MAINTENANCE OF LICENSES. The Parent shall comply,
and shall cause each of its Subsidiaries to comply, with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business, the
failure to comply with which would have a Material Adverse Effect. The Parent
shall, and shall cause each of its Subsidiaries to, obtain and maintain all
licenses, permits, franchises, and governmental authorizations determined by the
Parent or its Subsidiary, in their respective good faith reasonable business
judgment, to be material to the ownership of its property and to the conduct of
its business as conducted on the Closing Date. The Parent shall not, and shall
not permit any of its Subsidiaries to, modify, amend
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or alter its charter or by-laws or any certificate of designation or other
documents establishing and setting forth the rights and terms of any of its
preferred stock other than in a manner which does not adversely affect the
rights of the Lenders or the Agent.
9.4 MAINTENANCE OF PROPERTY. The Parent shall, and shall cause each of its
Subsidiaries to, maintain all of its property necessary and useful in the
conduct of its business, in good operating condition and repair, ordinary wear
and tear excepted.
9.5 INSURANCE. (a) The Parent shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers having a
rating of at least A-VII or better by Best Rating Guide, its insurable
properties insured at all times; and shall maintain, and shall cause each of its
Subsidiaries to maintain, such other insurance or self-insurance, to such extent
and against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses, including public liability insurance against claims for personal
injury or death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by it and such
other insurance or self-insurance as may be required by law. Without limiting
the foregoing, the Parent shall also maintain, and shall cause each of its
Subsidiaries to maintain, flood insurance, in the event of a designation of the
area in which any Real Estate and any of the Equipment and Inventory located on
such Real Estate is located as "flood prone" or a "flood risk area" (hereinafter
"SFHA"), as defined by the Flood Disaster Protection Act of 1973, in an amount
to be reasonably determined by the Agent, and shall comply with the additional
requirements of the National Flood Insurance Program as set forth in said Act.
Upon the Majority Lenders' request, the Loan Parties shall maintain flood
insurance for its Inventory and Equipment which is, at any time, located in a
SFHA.
(b) The Loan Parties shall cause the Agent, for the ratable benefit
of the Agent and the Lenders, to be named in each such policy as secured party
or mortgagee and loss payee or additional insured, in a manner acceptable to the
Agent. Each Loan Party acknowledges and agrees that the Agent has a Lien on all
proceeds of Collateral (including all proceeds thereof representing payments on
insurance with respect to a casualty of any Collateral). The Agent, each Lender
and each Loan Party agree that (i) proceeds of insurance in an amount equal to
or less than $2,500,000 with respect to any individual casualty relating to
Collateral may be paid by the insurer directly to the relevant Loan Party and
(ii) any proceeds of insurance in excess of $2,500,000 with respect to any
individual casualty shall be paid by the insurer directly to the Agent. Each
policy of insurance shall contain a clause or endorsement requiring the insurer
to give not less than thirty (30) days' prior written notice to the Agent in the
event of cancellation of the policy for any reason whatsoever and a clause or
endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of the Parent or any of its Subsidiaries or
the owner of any premises for purposes more hazardous than are permitted by such
policy. All premiums for such insurance shall be paid by the Loan Parties when
due, and certificates of insurance and photocopies of the policies shall be
delivered to the Agent. If the Loan Parties fail to procure such insurance or to
pay the premiums therefor when due, the Agent
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may, and at the direction of the Majority Lenders shall, do so from the proceeds
of Revolving Loans.
(c) The Loan Parties shall promptly notify the Agent and the Lenders
of any substantial or total damage or destruction of any of its stores or any of
its distribution centers or of any loss, damage, or destruction to any portion
of the Collateral having a value in excess of $5,000,000, whether or not covered
by insurance. The Agent is hereby authorized, during the continuance of a
Default or an Event of Default, to collect all insurance proceeds directly, and
to apply or remit them as follows:
(i) With respect to insurance proceeds relating to property
other than Collateral, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent shall promptly remit to the applicable Loan Party such proceeds.
(ii) With respect to insurance proceeds relating to Collateral,
after deducting from such proceeds the reasonable expenses, if any, incurred by
the Agent in the collection or handling thereof, the Agent shall apply such
proceeds, ratably, to the reduction of the Obligations in the order provided for
in SECTION 4.5.
9.6 CONDEMNATION. The Loan Parties shall, promptly (but in any event within
three (3) Business Days) upon a Responsible Officer of any Loan Party learning
of the institution of any proceeding for the condemnation or other taking of any
of such Loan Party's leased Real Estate (but only if such proceeding or taking
would give the lessor the right to terminate the lease) or owned Real Estate
(but only if such proceeding or taking would have a material adverse effect on
the value of such Real Estate), notify the Agent of the pendency of such
proceeding, and agrees that the Agent may participate in any such proceeding,
and the Loan Parties from time to time will deliver to the Agent all instruments
reasonably requested by the Agent to permit such participation.
9.7 ENVIRONMENTAL LAWS. (a) The Parent shall, and shall cause each of its
Subsidiaries to (and shall use its best efforts to cause all tenants and
subtenants of the Parent or its Subsidiaries to), conduct its business in
compliance with all Environmental Laws applicable to it, including, without
limitation, those relating to the generation, handling, use, storage, and
disposal of any Contaminant, except to the extent that the failure so to comply
could not reasonably be expected to have a Material Adverse Effect. The Parent
shall, and shall cause each of its Subsidiaries to, take prompt and appropriate
action to respond to any material non-compliance with Environmental Laws and
shall regularly report to the Agent on such response.
(b) Without limiting the generality of the foregoing, the Parent
shall submit to the Agent and the Lenders annually, commencing on the first
Anniversary Date, and on each Anniversary Date thereafter, an update of the
status of each environmental compliance or liability issue. The Agent or any
Lender may request copies of non-attorney-client privileged technical reports
prepared by any Loan Party and its communications with any Governmental
Authority to
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determine whether the Parent or any of its Subsidiaries is proceeding reasonably
to correct, cure or contest in good faith any alleged non-compliance or
environmental liability. The Parent shall, at the Agent's or the Majority
Lenders' request and at the Parent's expense, (a) retain an independent
environmental engineer acceptable to the Agent to evaluate the site, including
tests if appropriate, where the material non-compliance or alleged material
non-compliance with Environmental Laws has occurred and prepare and deliver to
the Agent, in sufficient quantity for distribution by the Agent to the Lenders,
a report setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof, and (b) provide to the Agent and the Lenders a supplemental
report of such engineer whenever the scope of the environmental problems, or the
response thereto or the estimated costs thereof, shall change in any material
respect.
9.8 COMPLIANCE WITH ERISA. Each Loan Party shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; and (e) not engage in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
9.9 MERGERS, CONSOLIDATIONS OR SALES. Neither the Parent nor any of its
Subsidiaries shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing, except (i) for sales of Inventory and other assets in the
ordinary course of its business, (ii) for sales or other dispositions of
Equipment that are obsolete or no longer useable by a Loan Party, including the
sale of Equipment in connection with the closing of stores otherwise permitted
hereunder, (iii) other sales of assets (other than Inventory or in connection
with sale-leaseback transactions permitted hereunder) outside the ordinary
course of business having an aggregate sales price during the term of this
Agreement not in excess of $6,000,000, (iv) sales of assets permitted to be made
under SECTION 9.20 (provided that the Borrowers shall apply an amount equal to
100% of the Net Cash Proceeds of any transfer or other disposition pursuant to
clause (iii) or this clause (iv) to prepay, upon receipt of such Net Cash
Proceeds, the Obligations in the manner set forth in SECTION 4.5), (v) leases,
subleases and license agreements in the ordinary course of business and the sale
by HDSC of the Real Estate it owns on the Closing Date; and (vi) if at the time
thereof and immediately after giving effect thereto no Event of Default or
Default shall have occurred and be continuing (a) any wholly owned Subsidiary of
HDSC may merge into HDSC in a transaction in which HDSC is the surviving
corporation so long as the net worth of the survivor of such merger immediately
after such merger is greater than the net worth of HDSC immediately prior to
such merger, (b) any wholly owned Subsidiary of HDSC may merge into or
consolidate with any other wholly owned Subsidiary of HDSC in a transaction in
which the surviving entity is a wholly owned Subsidiary of HDSC, no person other
than HDSC or a wholly owned Subsidiary of HDSC received any consideration and if
such merger or consolidation involves CRH, CRH is the survivor and as such (and
immediately after giving effect thereto) the net worth of
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CRH as the survivor is greater than the net worth of CRH immediately prior to
such merger or consolidation, (c) any Subsidiary of HDSC may be liquidated as
long as pursuant to such liquidation all the assets or proceeds therefrom of
such Subsidiary are transferred to HDSC or any other wholly owned Subsidiary of
HDSC.
9.10 RESTRICTED INVESTMENTS; CAPITAL CHANGE; DISTRIBUTIONS. Neither the
Parent nor any of its Subsidiaries shall (i) make any change in its capital
structure which could have a Material Adverse Effect, (ii) make any Restricted
Investment or (iii) directly or indirectly declare or make, or incur any
liability to make, any Distribution, except (a) any Subsidiary of a Borrower may
declare and pay dividends or make other distributions to such Borrower, (b) so
long as no Default or Event of Default shall have occurred and be continuing or
result therefrom, HDSC may pay dividends in the ordinary course of its business
to the Parent in any Fiscal Year to the extent required to enable the Parent in
the ordinary course of its business to conduct the business of being a publicly
traded holding company, including to (I) make payments of interest on the Senior
Notes, (II) pay all Federal and state income and other taxes then due and owing,
(III) pay reasonable fees and expenses of directors of the Parent, (IV) pay
required listing fees, annual fees and registration fees to the Securities and
Exchange Commission, the New York Stock Exchange or any other national or
regional stock exchange or the National Association of Securities Dealers, Inc.,
in connection with registering, listing and maintaining the listing of the
capital stock and Senior Notes of the Parent, (V) pay reasonable legal and
accounting fees of the Parent, (VI) pay premiums on the Parent's directors' and
officers' liability insurance policy and (VII) satisfy obligations under its
charter or employment agreements to indemnify officers and directors of the
Parent; PROVIDED, HOWEVER, that with respect to indemnification obligations for
officers and directors of the Parent in connection with litigation arising out
of the 1995 change of control of the Parent, the aggregate amount that HDSC may
dividend to the Parent to pay same, together with the aggregate amount of any
loans by HDSC to the Parent for such purpose, during the term of this Agreement
shall not exceed $2,000,000 and (c) the Parent may repurchase the remaining
Series 1993 Stock Rights issued by it for shares of its common stock or for cash
and other property not exceeding in the aggregate for such cash and property
$100,000 in total value.
9.11 TRANSACTIONS AFFECTING COLLATERAL OR OBLIGATIONS. Neither the Parent
nor any of its Subsidiaries shall enter into any transaction which would be
reasonably expected to have a Material Adverse Effect.
9.12 [Intentionally Omitted].
-----------------------
9.13 DEBT. Neither the Parent nor any of its Subsidiaries shall incur,
maintain or guarantee any Debt, other than:
(a) the Obligations and the Debt under the Senior Note Documents;
(b) Rate Protection Agreements;
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(c) with the prior written consent of the Agent (which consent shall
not be unreasonably withheld), Debt referred to in clause (g) of Permitted
Liens, subject to the limitations set forth therein;
(d) other Debt (other than Debt For Borrowed Money) existing on the
Closing Date and reflected in the Financial Statements delivered by the
Borrowers to the Agent on or prior to the Closing Date;
(e) Debt For Borrowed Money outstanding on the Closing Date and
listed on SCHEDULE 9.13 (other than Debt For Borrowed Money permitted elsewhere
in this SECTION 9.13), but not any extensions, renewals or replacements of such
Debt;
(f) in the case of HDSC, the Deferred Tax Obligations;
(g) intercompany Debt described in clauses (i) and (j) of the
definition of Restricted Investment;
(h) in the case of HDSC, other Debt (other than under Capital
Leases) not to exceed $15,000,000;
(i) Debt permitted to be incurred under SECTION 9.20;
(j) Debt in connection with performance bonds (other than for the
repayment of Debt For Borrowed Money) arising in the ordinary course of
business;
(k) Debt of the Parent to HDSC incurred by the Parent and lent by
HDSC in the ordinary course of their respective businesses, the proceeds of
which are used for any action permitted by SECTION 9.10(III)(b);
(l) in the case of HDSC, Debt under Capital Leases entered into by
HDSC in the ordinary course of its business;
(m) Debt referred to in clauses (n) and (o) of Permitted Liens,
subject to the limitations set forth therein; and
(n) with the prior written consent of the Agent (which consent shall
not be unreasonably withheld), Debt referred to in clause (p) of Permitted
Liens, subject to the limitations set forth therein.
9.14 PREPAYMENT. Neither the Parent nor any of its Subsidiaries shall
voluntarily prepay, acquire or redeem any Debt, except the prepayment of
Obligations in accordance with the terms of this Agreement.
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9.15 TRANSACTIONS WITH AFFILIATES. Except as set forth below, neither the
Parent nor any of its Subsidiaries shall sell, transfer, distribute, or pay any
money or property, including, but not limited to, any fees or expenses of any
nature (including, but not limited to, any fees or expenses for management
services), to any Affiliate, or lend or advance money or prop erty to any
Affiliate, or invest in (by capital contribution or otherwise) or purchase or
repur chase any stock or indebtedness, or any property, of any Affiliate, or
become liable on any Guaranty of the indebtedness, dividends, or other
obligations of any Affiliate. Notwith standing the foregoing, so long as no
Default or Event of Default shall have occurred and be continuing the Parent and
its Subsidiaries may enter into transactions and agreements with Affiliates in
the ordinary course of business, in amounts and upon terms no less favor able to
the Parent and its Subsidiaries than would be obtained in a comparable
arm's-length transaction with a third party who is not an Affiliate, provided
that if any such transaction or series of transactions involves aggregate
payments in excess of $1,000,000 (other than intercompany payments between HDSC
and any of its Subsidiaries or between HDSC's wholly owned Subsidiaries), the
Board of Directors of HDSC, the Parent or such Subsidiary, as the case may be,
shall have determined that such transaction or series of transaction complies
with the foregoing and such determination shall be evidenced by a resolution of
such Board of Directors. Notwithstanding the foregoing, neither the Parent nor
any of its Subsidiaries may engage in any transactions permitted under this
SECTION 9.15 unless such transaction is also permitted by the other provisions
of this Agreement.
9.16 INVESTMENT BANKING AND FINDER'S FEES. Neither the Parent nor any of
its Subsidiaries shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement.
The Loan Parties shall defend and indemnify the Agent and the Lenders against
and hold them harmless from all claims of any Person that the Parent or any of
its Subsidiaries is obligated to pay for any such fees, and all costs and
expenses (including without limitation, attorneys' fees) incurred by the Agent
and/or any Lender in connection therewith.
9.17 STANDSTILL AGREEMENT. HDSC shall use its best efforts to obtain from
General Electric Capital Corporation a standstill agreement, in substantially
the form of the standstill agreement made by General Electric Capital
Corporation in favor of the administrative agent with respect to the Existing
Bank Debt or otherwise in form and substance satisfactory to the Agent, with
respect to the Equipment subject to the sale and leaseback arrangements between
General Electric Capital Corporation and HDSC.
9.18 BUSINESS CONDUCTED. The Parent shall not and shall not permit any of
its Subsidiaries to engage, directly or indirectly, in any line of business
other than the businesses in which the Parent or such Subsidiary is engaged on
the Closing Date; PROVIDED the Parent shall not and shall not permit any of its
Subsidiaries (other than the Borrowers) to own any Inventory and shall not
permit CRH to engage in any business other than the business of purchasing
Inventory for resale to HDSC. The Parent shall own no assets (other than the
capital stock of HDSC and such cash (not in excess of $1,000,000 book balance
for any 5 consecutive Business Days, other than cash held by the trustee for the
Senior Notes for payment of scheduled interest due on the
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Senior Notes) and other de-minimis property as are needed in the conduct of its
business as a publicly traded holding company), shall have no Debt outstanding
to any Person except as otherwise permitted by this Agreement and shall engage
in no business activity of any kind, other than the holding of the capital stock
of HDSC and other activities associated with being a publicly-traded holding
company.
9.19 LIENS. Neither the Parent nor any of its Subsidiaries shall create,
incur, assume, or permit to exist any Lien on any property now owned or
hereafter acquired by any of them, except Permitted Liens.
9.20 SALE AND LEASEBACK TRANSACTIONS. Neither the Parent nor any of its
Subsidiaries shall, directly or indirectly, enter into any arrangement with any
Person providing for the Parent or such Subsidiary to lease or rent property
that the Parent or such Subsidiary has sold or will sell or otherwise transfer
to such Person, except for the sale and leaseback transactions existing as of
the Closing Date described on SCHEDULE 9.20 and except that so long as no
Default or Event of Default exists at such time or immediately after giving
effect thereto the Borrowers may enter into such arrangements with respect to
store fixtures, store Equipment and Real Estate without the prior written
consent of the Agent or any Lender and may enter into other such arrangements
with the prior written consent of the Agent.
9.21 NEW SUBSIDIARIES. The Parent shall not, directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary other than those
listed on SCHEDULE 8.3.
9.22 FISCAL YEAR. The Parent shall not change, and shall not permit any of
its Subsidiaries to change, its Fiscal Year.
9.23 ADJUSTED TANGIBLE NET WORTH. The Parent will maintain Adjusted
Tangible Net Worth, determined as of the last day of each fiscal month of the
Parent, of not less than the following:
Fiscal Month Amount
------------ ------
December of any year $130,000,000
January of any year $130,000,000
February of any year $120,000,000
March of any year $120,000,000
April of any year $120,000,000
May of any year $110,000,000
June of any year $110,000,000
July of any year $110,000,000
August of any year $100,000,000
September of any year $100,000,000
October of any year $100,000,000
November of any year $110,000,000
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9.24 CASH FLOW TEST. The Parent will not permit for any period of twelve
consecutive fiscal months of the Parent (determined as of the last day of each
fiscal month of the Parent) EBITDA for such twelve fiscal month period to be
less than Cash Requirements for such twelve fiscal month period.
9.25 CLEANUP. The Borrowers will cause the outstanding principal balance of
the Revolving Loans (other than any Revolving Loans deemed to be made pursuant
to SECTION 2.3(e) provided that each such Revolving Loan shall have been repaid
in full not later than the Business Day following the making thereof) to be zero
for at least thirty (30) consecutive days during the period from December 1 of
each year to March 31 of the next year.
9.26 USE OF PROCEEDS. The Parent shall not, and shall not suffer or permit
any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly,
(i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of any Borrower or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.
9.27 SENIOR NOTE DOCUMENTS AND DEFERRED TAX OBLIGATIONS. The Parent shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
amend, modify, supplement, waive compliance with, or assert to non-compliance
with, (i) any material term or provision of the Deferred Tax Obligations if the
effect thereof is to impose additional or increased scheduled repayment
obligations in respect of such Debt or to require any scheduled payment to be
made in respect of the Deferred Tax Obligations prior to the date that such
payment would otherwise be due or the effect thereof is otherwise adverse in any
respect to the Lenders or (ii) any term or provision of any of the Senior Note
Documents. Without limiting the generality of the foregoing, with respect to the
Deferred Tax Obligations, it is understood that any increase in the interest,
fees or other amounts payable in connection therewith, or any amendment that
imposes additional covenants or events of default or makes more restrictive the
covenants or events of default contained therein, shall require the consent of
the Majority Lenders.
9.28 STORE CLOSINGS. HDSC shall not after the date hereof close any of its
stores in an aggregate amount in excess of fifteen percent (15%) of the number
of its stores on the date hereof unless at such time the Agent and the Lenders
shall have received an Inventory appraisal, at the expense of the Borrowers, by
an outside appraisal firm satisfactory to the Agent and the Lenders with respect
to the Inventory of the Borrowers, and the results of such appraisal shall be in
form and substance satisfactory to the Agent and the Lenders (including
confirming that the borrowing base based upon the advance rate with respect to
Eligible Inventory of the Borrowers at the stores of HDSC not being closed is
less than 85% of the orderly liquidation value of such Eligible Inventory).
9.29 INDEMNITY PAYMENTS. Neither of the Borrowers shall, directly or
indirectly, make any payments to satisfy obligations under its charter or
agreements, applicable law or otherwise to indemnify officers and/or directors
in connection with litigation arising from the 1995 change
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of control of the Parent in an aggregate amount for both Borrowers during the
term of this Agreement in excess of that amount which is $5,000,000 less the
aggregate amount of dividends and loans made by HDSC to the Parent under
SECTIONS 9.10(iii)(b)(VII) and 9.13(k) with respect to such litigation (all such
payments by each Borrower to be made in accordance with its charter, agreements
or applicable law, as appropriate).
9.30 FURTHER ASSURANCES. The Loan Parties shall execute and deliver, or
cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time, request to carry out the terms
and conditions of this Agreement and the other Loan Documents.
ARTICLE 10
CONDITIONS OF LENDING
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10.1 CONDITIONS PRECEDENT TO MAKING OF LOANS ON THE CLOSING DATE. The
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to cause to be issued or provide Credit
Support for any Letter of Credit on the Closing Date and the obligation of the
Lenders to participate in Letters of Credit issued on the Closing Date or in
Credit Support for any Letters of Credit, are subject to the following
conditions precedent having been satisfied in a manner satisfactory to the Agent
and each Lender:
(a) This Agreement and the other Loan Documents have been executed
by each party thereto and the Loan Parties shall have performed and complied
with all covenants, agreements and conditions contained herein and the other
Loan Documents which are required to be performed or complied with by the Loan
Parties before or on such Closing Date.
(b) Upon making the Revolving Loans and the issuance of Letters of
Credit and/or Credit Support on the Closing Date (including such Revolving Loans
made to finance the Facility Fee or otherwise pursuant to SECTION 4.4 as
reimbursement for fees, costs and expenses then payable under this Agreement)
and with all the Borrowers' obligations no more than thirty (30) days past due,
Combined Availability shall be in an amount no less than $35,000,000.
(c) All representations and warranties made hereunder and in the
other Loan Documents shall be true and correct as of the Closing Date as if made
on such date.
(d) No Default or Event of Default shall exist on the Closing Date,
or would exist after giving effect to the Loans to be made on such date.
(e) The Agent and the Lenders shall have received such opinions of
counsel for the Parent and its Subsidiaries as the Agent or any Lender shall
request, each such opinion to be in a form, scope, and substance satisfactory to
the Agent, the Lenders, and their respective counsel.
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(f) The Agent shall have received:
(i) acknowledgment copies of proper financing statements, duly
filed on or before the Closing Date under the UCC of all jurisdictions that the
Agent may deem necessary or desirable in order to perfect the Agent's Lien; and
(ii) duly executed UCC-3 Termination Statements and such other
instruments, in form and substance satisfactory to the Agent, as shall be
necessary to terminate and satisfy all Liens on the property of the Parent and
its Subsidiaries except Permitted Liens; and
(iii) the certificates representing all shares of capital stock
pledged under the Pledge Agreement, accompanied by undated stock powers endorsed
in blank.
(g) The Borrowers shall have paid all fees and expenses of the Agent
and BABC and the Attorney Costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby.
(h) The Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage as
required by this Agreement.
(i) All proceedings taken in connection with the execution of this
Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent and the
Lenders.
(j) In the judgment of the Agent and the Lenders, no Material
Adverse Effect shall have occurred since the date of the Financial Statements
referred to in SECTION 8.6(a). In no event shall EBITDA be less than $1,000,000
for the period from August 4, 1996 to the Closing Date.
(k) The Agent and the Lenders shall have received the agreements,
instruments and other documents set forth or referred to on EXHIBIT B, and such
agreements, instruments and documents shall be in form and substance
satisfactory to the Agent and the Lenders.
(l) The Agent and the Lenders shall have received evidence in form
and substance satisfactory to them that all Existing Bank Debt shall have been
repaid in full, and all agreements relating to such Existing Debt and security
interests and Liens relating to such Existing Bank Debt shall have been
terminated.
The acceptance by any Borrower of any Loans made on the Closing Date shall
be deemed to be a representation and warranty made by the Loan Parties to the
effect that all of the conditions precedent to the making of such Loans have
been satisfied, with the same effect as delivery to the Agent and the Lenders of
a certificate signed by a Responsible Officer of the Parent or the Borrowers,
dated the Closing Date, to such effect.
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Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this SECTION 10.1 have been fulfilled to the satisfaction of such
Lender and (ii) the decision of such Lender to execute and deliver to the Agent
an executed counterpart of this Agreement was made by such Lender independently
and without reliance on the Agent or any other Lender as to the satisfaction of
any condition precedent set forth in this SECTION 10.1.
10.2 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the Lenders to
make each Loan, including the initial Revolving Loans on the Closing Date, and
the obligation of the Agent to take reasonable steps to cause to be issued or to
provide Credit Support for any Letter of Credit and the obligation of the
Lenders to participate in Letters of Credit or Credit Support for Letters of
Credit, shall be subject to the further conditions precedent that on and as of
the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance by
any Borrower of any extension of credit shall be deemed to be a statement to the
effect set forth in clauses (i) and (ii), with the same effect as the delivery
to the Agent and the Lenders of a certificate signed by a Responsible Officer of
the applicable Borrower, dated the date of such extension of credit, stating
that:
(i) The representations and warranties contained in ARTICLES 6
and 8 of this Agreement are correct in all material respects on and as of the
date of such exten sion of credit as though made on and as of such date, other
than any such representation or warranty which relates to a specified prior date
and except to the extent the Agent and the Lenders have been notified by the
Borrowers that any representation or warranty is not correct and the Majority
Lenders have explicitly waived in writing compliance with such representation or
warranty; and
(ii) No event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an Event of
Default; and
(b) without limiting SECTION 10.1(b), the amount of the Combined
Availability shall be sufficient to make such Revolving Loan or cause the
issuance or provision of such Letter of Credit or Credit Support without
exceeding the Combined Availability, PROVIDED, HOWEVER, that the foregoing
conditions precedent are not conditions to each Lender participating in or
reimbursing BABC or the Agent for such Lenders' Pro Rata Share of any BABC Loan
or Agent Advance as provided in SECTIONS 2.2(h), (i) and (j).
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ARTICLE 11
DEFAULT; REMEDIES
-----------------
11.1 EVENTS OF DEFAULT. It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) any failure to pay the principal of or interest or premium on
any of the Obligations when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by any Loan
Party in ARTICLE 6 (other than in SECTION 6.4 to the extent same relates solely
to Collateral other than Inventory or proceeds of Inventory), 8 or 10 of this
Agreement or by any Loan Party in any of the other Loan Documents, any Financial
Statement, or any certificate furnished by any Loan Party at any time to the
Agent or any Lender shall prove to be untrue in any material respect as of the
date on which made, deemed made, or furnished;
(c) any default shall occur in the observance or performance of any
of the covenants and agreements contained in SECTION 6.3, 6.7 or 6.9 or in
ARTICLE 7 or in ARTICLE 9 (other than SECTIONS 9.1, 9.3, 9.4, 9.6, 9.7 and 9.8);
(d) (i) any default shall occur in the observance or performance of
any of the covenants, representations, warranties and agreements contained in
this Agreement, any other Loan Documents, or any other agreement entered into at
any time to which any Loan Party and the Agent or any Lender are party (other
than as specified in clauses (a), (b) and (c) above) and such default shall
continue unremedied for a period of 30 days after the earlier to occur of (x)
notice thereof from the Agent or any Lender to the Parent or any Borrower and
(y) the Parent's or any Borrower's receipt of actual knowledge thereof, or (ii)
if any such agreement or document shall terminate (other than in accordance with
its terms or the terms hereof or with the written consent of the Agent and the
Majority Lenders) or become void or unenforceable, without the written consent
of the Agent and the Majority Lenders;
(e) any default shall occur with respect to any Debt For Borrowed
Money (including Debt under the Senior Note Documents, but excluding the
Obligations) in an outstanding principal amount which exceeds $2,500,000, or
under any agreement or instru ment under or pursuant to which any such Debt For
Borrowed Money may have been issued, created, assumed, or guaranteed by any Loan
Party, and such default shall continue for more than the period of grace, if
any, therein specified, if the effect thereof (with or without the giving of
notice or further lapse of time or both) is to accelerate, or to permit the
holders of any such Debt For Borrowed Money to accelerate, the maturity of any
such Debt For Borrowed Money; or any such Debt For Borrowed Money shall be
declared due and payable or be required to be prepaid (other than by a regularly
scheduled required prepayment) prior to the stated maturity thereof;
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(f) any Loan Party shall (i) file a voluntary petition in bankruptcy
or file a voluntary petition or an answer or otherwise commence any action or
proceeding seeking reorganization, arrangement or readjustment of its debts or
for any other relief under the federal Bankruptcy Code, as amended, or under any
other bankruptcy or insolvency act or law, state or federal, now or hereafter
existing, or consent to, approve of, or acquiesce in, any such petition, action
or proceeding; (ii) apply for or acquiesce in the appointment of a receiver,
assignee, liquidator, sequestrator, custodian, monitor, trustee or similar
officer for it or for all or any part of its property; (iii) make an assignment
for the benefit of creditors; or (iv) be unable generally to pay its debts as
they become due;
(g) an involuntary petition or proposal shall be filed or an action
or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any Loan Party or for any other
relief under the federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter existing
and either (i) such petition, proposal, action or proceeding shall not have been
dismissed within a period of sixty (60) days after its commencement or (ii) an
order for relief against any Loan Party shall have been entered in such
proceeding;
(h) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for any Loan Party or for all or any part of
its property shall be appointed or a warrant of attachment, execution or similar
process shall be issued against any part of the property of any Loan Party;
(i) except as permitted under clause (vi) of SECTION 9.9, any Loan
Party shall file a certificate of dissolution under applicable state law or
shall be liquidated, dissolved or wound-up or shall commence or have commenced
against it any action or proceeding for dissolution, winding-up or liquidation,
or shall take any corporate action in furtherance thereof;
(j) all or any material part of the property of any Loan Party shall
be nationalized, expropriated or condemned, seized or otherwise appropriated, or
custody or control of such property or of any Loan Party shall be assumed by any
Governmental Authority or any court of competent jurisdiction at the instance of
any Governmental Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;
(k) any guaranty of the Obligations shall be terminated, revoked or
declared void or invalid;
(l) one or more judgments or orders for the payment of money
aggregating in excess of $2,500,000 over the aggregate insurance coverage (other
than self insurance) therefor, shall be rendered against any Loan Party and
either (i) enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of
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a pending appeal or otherwise, shall not be in effect (or if any such stay shall
at any time be in effect, such stay shall thereafter at any time not be in
effect);
(m) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Loan Party occurs which (i) could reasonably
be expected to have a Material Adverse Effect or (ii) is material in amount and
is not adequately covered by insurance;
(n) there occurs a Material Adverse Effect;
(o) there is filed against any Loan Party any civil or criminal
action, suit or proceeding under any federal or state racketeering statute
(including, without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (1) is not dismissed
within one hundred twenty (120) days, and (2) could result in the confiscation
or forfeiture of any material portion of the Collateral;
(p) for any reason other than the failure of the Agent to take any
action available to it to maintain perfection of the Agent's Liens, pursuant to
the Loan Documents, any Loan Document ceases to be in full force and effect or
any Lien with respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and prior to all other
Liens (other than Permitted Liens) or is terminated, revoked or declared void;
(q) an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to
result in liability of any Loan Party under Title IV of ERISA to the Pension
Plan, Multi-employer Plan or the PBGC in an aggregate amount in excess of
$1,000,000; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $1,000,000; or (iii) any Loan Party or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multi-employer Plan in an
aggregate amount in excess of $1,000,000; or
(r) there occurs a Change of Control; or
(s) the Senior Debt Obligations (as defined in SECTION 8.29) shall
cease to constitute, or shall be asserted by the Parent or any other Loan Party
not to constitute, Senior Debt (as defined in the Senior Indenture) under the
subordination provisions of the Senior Indenture or the subordinated guarantees
issued pursuant to the Senior Note Documents or any such subordination
provisions shall be invalidated or otherwise cease to be a legal, valid and
binding obligation of the parties thereto, enforceable in accordance with their
terms.
11.2 REMEDIES. (a) If a Default or an Event of Default exists, the Agent
may, in its discretion, and shall, at the direction of the Majority Lenders, do
one or more of the following at any time or times and in any order, without
notice to or demand on any Loan Party: (i) reduce the Maximum Revolver Amount,
or the advance rates against Eligible Inventory and/or goods
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covered by documentary Letters of Credit used in computing the Combined
Availability or reduce one or more of the other elements used in computing the
Combined Availability; (ii) restrict the amount of or refuse to make Revolving
Loans; and (iii) restrict or refuse to arrange for or provide Letters of Credit
or Credit Support. If an Event of Default exists, the Agent shall, at the
direction of the Majority Lenders, do one or more of the following, in addition
to the actions described in the preceding sentence, at any time or times and in
any order, without notice to or demand on any Loan Party: (a) terminate the
Commitments and this Agreement; (b) declare any or all Obligations to be
immediately due and payable; PROVIDED, HOWEVER, that upon the occurrence of any
Event of Default described in SECTION 11.1(f), 11.1(g), 11.1(h), or 11.1(i), the
Commitments shall automatically and immediately expire and all Obligations shall
automatically become imme diately due and payable without notice or demand of
any kind; and (c) pursue its other rights and remedies under the Loan Documents
and applicable law.
(b) If an Event of Default exists: (i) the Agent shall have for the
benefit of the Agent and the Lenders, in addition to all other rights of the
Agent and the Lenders, the rights and remedies of a secured party under the UCC;
(ii) the Agent may, at any time, take possession of the Collateral and keep it
on any Loan Party's premises, at no cost to the Agent or any Lender, or remove
any part of it to such other place or places as the Agent may desire, or the
Loan Parties shall, upon the Agent's demand, at the Loan Parties' cost, assemble
the Collateral and make it available to the Agent at a place reasonably
convenient to the Agent; and (iii) the Agent may sell and deliver any Collateral
at public or private sales, for cash, upon credit or otherwise, at such prices
and upon such terms as the Agent deems advisable, in its sole discretion, and
may, if the Agent deems it reasonable, postpone or adjourn any sale of the
Collateral by an announcement at the time and place of sale or of such postponed
or adjourned sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following manner, each Loan Party agrees
that any notice by the Agent of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the UCC or otherwise,
shall constitute reasonable notice to the Loan Parties if such notice is mailed
by registered or certified mail, return receipt requested, postage prepaid, or
is delivered personally against receipt, at least five (5) Business Days prior
to such action to the applicable Loan Party's address specified in or pursuant
to SECTION 16.8. If any Collateral is sold on terms other than payment in full
at the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to any Loan Party. In the
event the Agent seeks to take possession of all or any portion of the Collateral
by judicial process, each Loan Party irrevocably waives: (a) the posting of any
bond, surety or security with respect thereto which might otherwise be required;
(b) any demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (c) any requirement that the Agent retain possession
and not dispose of any Collateral until after trial or final judgment. Each Loan
Party agrees that the Agent has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. The Agent is
hereby granted a license or other right to use, without charge, each Loan
Party's labels, patents, copyrights, name, trade secrets, trade names,
trademarks, and advertising matter, or any similar property, in completing
production of, advertising or selling any Collateral, and each Loan Party's
rights under all licenses and all franchise agreements shall inure to the
Agent's benefit for such purpose.
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The proceeds of sale shall be applied first to all expenses of sale, including
attorneys' fees, and then to the Obligations in whatever order the Agent elects.
The Agent will return any excess to the applicable Loan Party and the Loan
Parties shall remain liable for any deficiency.
(c) If an Event of Default occurs, each Loan Party hereby waives all
rights to notice and hearing prior to the exercise by the Agent of the Agent's
rights to repossess the Collateral without judicial process or to replevy,
attach or levy upon the Collateral without notice or hearing.
ARTICLE 12
TERM AND TERMINATION
--------------------
12.1 TERM AND TERMINATION. The term of this Agreement shall end on the
Stated Termination Date. The Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence of an Event of
Default. Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including, without limitation, all unpaid
principal, accrued interest and any early termination or prepayment fees or
penalties) shall become immediately due and payable and the Borrowers shall
immediately arrange for the cancellation of Letters of Credit then outstanding.
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in cash, the Loan Parties shall remain
bound by the terms of this Agreement and shall not be relieved of any of their
respective Obligations hereunder, and the Agent and the Lenders shall retain all
their rights and remedies hereunder (including, without limitation, the Agent's
Liens in and all rights and remedies with respect to all then existing and
after-arising Collateral).
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
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13.1 NO WAIVERS; CUMULATIVE REMEDIES. No failure by the Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any present or
future supplement thereto, or in any other agreement between or among any Loan
Party and the Agent and/or any Lender, or delay by the Agent or any Lender in
exercising the same, will not operate as a waiver thereof. No waiver by the
Agent or any Lender will be effective unless it is in writing, and then only to
the extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Loan Parties of any provision of
this Agreement. The Agent's and each Lender's rights under this Agreement will
be cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have.
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13.2 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Loan Parties therefrom, shall be effective unless the same
shall be in writing and signed by the Majority Lenders (or by the Agent at the
written request of the Majority Lenders) and the Loan Parties party thereto and
then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; PROVIDED, HOWEVER, that no such
waiver, amendment, or consent shall, unless in writing and signed by all the
Lenders and the Loan Parties and acknowledged by the Agent, do any of the
following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or any of
them to take any action hereunder;
(e) increase any of the percentages set forth in the definition of
Combined Availability;
(f) amend this Section or any provision of this Agreement providing
for consent or other action by all Lenders;
(g) release Collateral other than as permitted by SECTION 14.12 or
release any Loan Party of its guaranty obligations under ARTICLE 15;
(h) change the definition of "Majority Lenders";
and, PROVIDED FURTHER, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
13.3 ASSIGNMENTS; PARTICIPATIONS. (a) Any Lender may, with the written
consent of the Agent (which consent shall not be unreasonably withheld), assign
and delegate to one or more assignees (provided that no written consent of the
Agent shall be required in connection with any assignment and delegation by a
Lender to an Affiliate of such Lender) (each an "Assignee") all, or any ratable
part of all, of the Loans, the Commitments and the other rights and obligations
of such Lender hereunder, in a minimum amount of $15,000,000 or if less the
entire amount of such Lender's Commitment (provided, that, unless an assignor
Lender has assigned and delegated all
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its Loans and Commitment, no such assignment and/or delegation shall be
permitted unless, after giving effect to such assignment and/or delegation, such
assignor Lender retains a Commitment in a minimum amount of $15,000,000);
PROVIDED, HOWEVER, that the Loan Parties and the Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Loan Parties and the Agent by such Lender
and the Assignee; (ii) such Lender and its Assignee shall have delivered to the
Loan Parties and the Agent an Assignment and Acceptance in the form of EXHIBIT E
("Assignment and Acceptance") and (iii) the assignor Lender or Assignee has paid
to the Agent a processing fee in the amount of $3,000. The Agent agrees that if,
as a result of any assignments or delegations of its Commitment, the aggregate
of the Commitments of the Agent, in its capacity as a Lender, and its Affiliates
shall fall below $50,000,000, the Agent shall, upon the written request of the
Borrowers (but only if there exists no Default or Event of Default at the time
of such request), resign as Agent in accordance with the provisions set forth in
SECTION 14.9.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto; (2) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Loan Parties or the performance or observance by the
Loan Parties of any of their respective obligations under this Agreement or any
other Loan Document furnished pursuant hereto; (3) such Assignee confirms that
it has received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (4) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this
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Agreement; (5) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (6) such Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's or assigning Lender's making
its processing fee payment under the Assignment and Acceptance, this Agreement
shall be deemed to be amended to the extent, but only to the extent, necessary
to reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Lender PRO TANTO.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of the Loan Parties (a
"PARTICIPANT") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Loan Parties and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, and all amounts payable by any Loan Party hereunder shall be
determined as if such Lender had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender 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.
(g) In the event that a Lender shall assign and/or delegate to an
Assignee all or a portion of the Loans and/or Commitment of such Lender and the
Assignee shall thereafter demand payment from a Borrower under SECTION 5.3, such
Borrower shall not be liable to make any payments to such Assignee under SECTION
5.3 as a result of circumstances existing with respect to such Assignee on the
date of such assignment and/or delegation if and to the extent such Borrower
would not be required to make any such payment to the assigning Lender under
such section had such assignment and/or delegation not been made, unless (i)
prior to such Assignee's demand for payment therefor, such Borrower shall have
consented in writing to such assignment
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and/or delegation (which consent is not required under the terms of
this Agreement to effectuate any assignment, delegation, participation or other
transfer of any interest in any Loans, Commitment or rights or obligations in
any Loan Document) or (ii) a Default or Event of Default shall exist at the time
of such Assignee's demand for payment therefor.
ARTICLE 14
THE AGENT
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14.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby designates and
appoints BankAmerica Business Credit, Inc. as its Agent under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes the Agent
to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. The
Agent agrees to act as such on the express conditions contained in this ARTICLE
14. The provisions of this ARTICLE 14 are solely for the benefit of the Agent
and the Lenders and the Loan Parties shall have no rights as a third party
beneficiary of any of the provisions contained herein. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. Except as expressly
otherwise provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the other
Loan Documents, including, without limitation, (a) the determination of the
applicability of ineligibility criteria with respect to the calculation of the
Combined Availability, (b) the making of Agent Advances pursuant to SECTION
2.2(i), and (c) the exercise of remedies pursuant to SECTION 11.2, and any
action so taken or not taken shall be deemed consented to by the Lenders.
14.2 DELEGATION OF DUTIES. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
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14.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Loan Party or any Subsidiary
or Affiliate of any Loan Party, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Loan Party or
any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party or
any Loan Party's Subsidiaries or Affiliates.
14.4 RELIANCE BY AGENT. (a) The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the Loan
Parties), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Lenders or all Lenders, as applicable, as
it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Majority Lenders or all Lenders, as applicable, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in SECTION 10.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender.
14.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except with respect
to defaults in the payment of principal, interest and fees required to be paid
to the Agent for the account of the Lenders, unless the Agent shall have
received written notice from a Lender or the Borrowers referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." The Agent will promptly notify the Lenders of
its receipt of any such notice.
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The Agent shall take such action with respect to such Default or Event of
Default as may be requested by the Majority Lenders in accordance with SECTION
11; PROVIDED, HOWEVER, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable.
14.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Parent and its Subsidiaries, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Parent and its Subsidiaries, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Borrowers. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrowers and other Loan
Parties. Except for notices, reports and other documents expressly herein
required to be furnished to the Lenders by the Agent, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any Loan Party which may come into
the possession of any of the Agent-Related Persons.
14.7 INDEMNIFICATION. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Loan Parties and
without limiting the obligation of the Loan Parties to do so), pro rata, from
and against any and all Indemnified Liabilities as such term is defined in
SECTION 16.11; PROVIDED, HOWEVER, that no Lender shall be liable for the payment
to the Agent-Related Persons of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse the Agent upon
demand for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Loan Parties. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
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14.8 AGENT IN INDIVIDUAL CAPACITY. BABC and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Loan Parties and
their Subsidiaries and Affiliates as though BABC were not the Agent hereunder
and without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BABC or its Affiliates may receive information
regarding the Loan Parties or their Affiliates (including information that may
be subject to confidentiality obligations in favor of the Loan Parties or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BABC shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Agent, and the terms "Lender" and "Lenders"
include BABC in its individual capacity.
14.9 SUCCESSOR AGENT. The Agent may resign as Agent upon 30 days' notice to
the Lenders and the Borrowers. If the Agent resigns under this Agreement, the
Majority Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrowers, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall upon such acceptance be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this SECTION 14 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a commercial
bank organized under the laws of the United States or of any State thereof and
having a combined capital and surplus of at least $500,000,000, without the
consent of the Majority Lenders, and the retiring Agent's resignation shall
nevertheless thereupon become effective.
14.10 WITHHOLDING TAX. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver
to the Agent:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS Forms
1001 and W-8 before the payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Lender and in each
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succeeding taxable year of such Lender during which interest may be paid under
this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations owing to such Lender, such Lender agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations owing to such Lender. To the extent of such
percentage amount, the Agent will treat such Lender's IRS Form 1001 as no longer
valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations owing to
such Lender, such Lender agrees to undertake sole responsibility for complying
with the withholding tax requirements imposed by Sections 1441 and 1442 of the
Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.
14.11 CO-AGENTS. None of the Lenders, if any, identified on the facing page
or signature pages of this Agreement as a "co-agent" shall have any right,
power, obligation, liability, responsibility or duty under this Agreement other
than those applicable to all Lenders as such.
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Without limiting the foregoing, none of the Lenders so identified as a "co-
agent" shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.
14.12 COLLATERAL MATTERS. (a) The Lenders hereby irrevocably authorize the
Agent, at its option and in its sole discretion, to release any Agent's Lien
upon any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by the Borrowers of all Loans and reimbursement obligations
in respect of Letters of Credit and Credit Support, and the termination of all
outstanding Letters of Credit (whether or not any of such obligations are due)
and all other Obligations; (ii) constituting property (other than Inventory)
being sold or disposed of or used as collateral in connection with a borrowing
if a Borrower certifies to the Agent that the sale, disposition or borrowing is
made in compliance with SECTION 9.9, 9.13 or 9.20, as appropriate (and the Agent
may rely conclusively on any such certificate, without further inquiry); (iii)
constituting property in which a Loan Party owned no interest at the time the
Lien was granted or at any time thereafter; or (iv) constituting property leased
to a Loan Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement. Except as provided above, the Agent
will not release any of the Agent's Liens without the prior written
authorization of the Lenders; PROVIDED that the Agent may, in its discretion,
release the Agent's Liens on Collateral valued in the aggregate not in excess of
$10,000,000 without the prior written authorization of the Lenders. Upon request
by the Agent or the Borrowers at any time, the Lenders will confirm in writing
the Agent's authority to release any Agent's Liens upon particular types or
items of Collateral pursuant to this SECTION 14.12.
(b) Upon receipt by the Agent of any authorization required pursuant
to SECTION 14.12(a) from the Lenders of the Agent's authority to release any
Agent's Liens upon particular types or items of Collateral, and upon at least
five (5) Business Days' prior written request by the Borrowers, the Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Agent's Liens upon such
Collateral; PROVIDED, HOWEVER, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
the Loan Parties in respect of) all interests retained by any Loan Party,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by any Loan Party or is
cared for, protected or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the
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Collateral, or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion given the Agent's own
interest in the Collateral in its capacity as one of the Lenders and that the
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing.
14.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS. (a) Each of
the Lenders agrees that it shall not, without the express consent of all
Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of all Lenders, set off against the Obligations, any amounts owing
by such Lender to any Loan Party or any accounts of any Loan Party now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by the Agent, take or cause
to be taken any action to enforce its rights under this Agreement or against any
Loan Party, including, without limitation, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations owing to such Lender arising under, or relating
to, this Agreement or the other Loan Documents, except for any such proceeds or
payments received by such Lender from the Agent pursuant to the terms of this
Agreement, or (ii) payments from the Agent in excess of such Lender's ratable
portion of all such distributions by the Agent, such Lender shall promptly (1)
turn the same over to the Agent, in kind, and with such endorsements as may be
required to negotiate the same to the Agent, or in same day funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; PROVIDED, HOWEVER, that if all or part of such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.
14.14 AGENCY FOR PERFECTION. Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.15 PAYMENTS BY AGENT TO LENDERS. All payments to be made by the Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to such transfer
instructions for such Lender set forth on SCHEDULE A (or, with respect to a
Lender which was an Assignee, on the applicable Assignment and Acceptance
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pursuant to which such Assignee became a Lender) or pursuant to such other wire
transfer instructions as each party may designate for itself by written notice
to the Agent. Concurrently with each such payment, the Agent shall identify
whether such payment (or any portion thereof) represents principal, premium or
interest on the Revolving Loans or otherwise.
14.16 CONCERNING THE COLLATERAL AND THE RELATED LOAN DOCUMENTS. Each Lender
authorizes and directs the Agent to enter into this Agreement and the other Loan
Docu ments relating to the Collateral, for the ratable benefit of the Agent and
the Lenders. Each Lender agrees that any action taken by the Agent, Majority
Lenders or all Lenders, as applicable, in accordance with the terms of this
Agreement or the other Loan Documents relating to the Collateral, and the
exercise by the Agent, the Majority Lenders, or all Lenders, as applicable, of
their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
14.17 FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by the Agent;
(b) expressly agrees and acknowledges that neither BABC nor the
Agent (i) makes any representation or warranty as to the accuracy of any Report,
or (ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or examination will inspect only specific information regarding the
Borrowers and other Loan Parties and will rely significantly upon each Loan
Party's books and records, as well as on representations of each Loan Party's
personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of the Borrowers; and (ii) to pay and protect, and indemnify, defend and
hold the Agent and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses and other
amounts (including, without limitation reasonable attorney costs) incurred by
the Agent and any such other Lender preparing a Report
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as the direct or indirect result of any third parties who might obtain all or
part of any Report through the indemnifying Lender.
14.18 RELATION AMONG LENDERS. The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Agent) authorized to act for, any
other Lender.
ARTICLE 15
GUARANTEES
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Each Guarantor unconditionally guarantees, as a primary obligor and
not merely as a surety, jointly and severally with each other Guarantor, the due
and punctual payment of the principal of and interest on the Revolving Loans and
of all other Obligations, when and as due, whether at maturity, by acceleration,
by notice or prepayment or otherwise. Each Guarantor further agrees that the
Obligations may be extended and renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligations.
To the fullest extent permitted by law, each Guarantor waives
presentment to, demand of payment from and protest to the Borrowers or any other
Person of any of the Obligations, and also waives notice of acceptance of its
guarantee and notice of protest for nonpayment. To the fullest extent permitted
by law, the obligations of a Guarantor hereunder shall not be affected by (a)
the failure of the Agent or any Lender to assert any claim or demand or to
enforce any right or remedy against any Borrower or any other Guarantor under
the provisions of this Agreement or any of the other Loan Documents or
otherwise; (b) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement, any of the other Loan Documents, any
guarantee or any other agreement; (c) the release of any security held by the
Agent or any Lender for the Obligations or any of them; or (d) the failure of
the Agent or any Lender to exercise any right or remedy against any other
Guarantor of the Obligations.
Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Agent or any Lender to any security (if
any) held for payment of the Obligations or to any balance of any deposit
account or credit on the books of the Agent or any Lender in favor of any
Borrower or any other Person.
To the fullest extent permitted by law, the obligations of each
Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or
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otherwise. Without limiting the generality of the foregoing, to the fullest
extent permitted by law, the obligations of each Guarantor hereunder shall not
be discharged or impaired or otherwise affected by the failure of the Agent or
any Lender to assert any claim or demand or to enforce any remedy under this
Agreement or under any other Loan Document, any guarantee or any other
agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or omission which may or might in any manner or
to any extent vary the risk of such Guarantor or otherwise operate as a
discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal or of interest on any Obligation is rescinded or
must otherwise be returned by the Agent or any Lender upon the bankruptcy or
reorganization of any Borrower or otherwise.
Each Guarantor hereby waives and releases all rights of subrogation
against each Loan Party and its property and all rights of indemnification,
contribution and reimbursement from each Loan Party and its property, in each
case in connection with this guarantee and any payments made hereunder, and
regardless of whether such rights arise by operation of law, pursuant to
contract or otherwise.
ARTICLE 16
MISCELLANEOUS
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16.1 CUMULATIVE REMEDIES; NO PRIOR RECOURSE TO COLLATERAL. The enumeration
herein of the Agent's and each Lender's rights and remedies is not intended to
be exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Agent and the Lenders may
have under the UCC or other applicable law. The Agent and the Lenders shall have
the right, in their sole discretion, to determine which rights and remedies are
to be exercised and in which order. The exercise of one right or remedy shall
not preclude the exercise of any others, all of which shall be cumulative. The
Agent and the Lenders may, without limitation, proceed directly against any or
all of the Loan Parties to collect the Obligations without any prior recourse to
the Collateral. No failure to exercise and no delay in exercising, on the part
of the Agent or any Lender, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
16.2 SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
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16.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO
ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW
RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK; PROVIDED THAT
THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY, THE AGENT AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH LOAN PARTY, THE AGENT AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING:
(1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY LOAN PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF
THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
(c) EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH LOAN PARTY AT ITS
ADDRESS SET FORTH IN SECTION 16.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS
TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
16.4 WAIVER OF JURY TRIAL. EACH LOAN PARTY, LENDER AND THE AGENT WAIVES ITS
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE
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BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED
PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. EACH LOAN PARTY, LENDER AND THE AGENT AGREES THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
16.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of each Loan Party's
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
16.6 OTHER SECURITY AND GUARANTIES. The Agent, may, without notice or
demand and without affecting the Loan Parties' obligations hereunder, from time
to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
16.7 FEES AND EXPENSES. Each Borrower agrees, jointly and severally, to pay
to the Agent, for its benefit, on demand, all costs and expenses that the Agent
pays or incurs in connection with the negotiation, preparation, consummation,
administration, enforcement, and termination of this Agreement, including,
without limitation: (a) Attorney Costs; (b) costs and expenses (including
reasonable and documented (to the satisfaction of the Agent) attorneys' and
paralegals' fees and disbursements which shall include the reasonable and
documented (to the satisfaction of the Agent) allocated costs of Agent's
in-house counsel fees and disbursements) for any amendment, supplement, waiver,
consent, or subse quent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges for recording
any real estate mortgage or deed of trust, filing financing statements and
continuations, and other actions to perfect, protect, and continue the Agent's
Liens (including costs and expenses paid or incurred by the Agent in connection
with the consummation of Agreement); (e) sums paid or incurred to pay any amount
or take any action required of any Loan Party under the Loan Documents that such
Loan Party fails to pay or take; (f) costs of appraisals, inspections, and
verifications of the Collateral, including, without limitation, travel, lodging,
and meals for inspections of the
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Collateral and any Loan Party's operations by the Agent plus the Agent's then
customary charge for field examinations and audits and the preparation of
reports thereof (such charge is currently $750 per day (or portion thereof) for
each agent or employee of the Agent with respect to each field examination or
audit); PROVIDED, HOWEVER, that so long as no Default or Event of Default shall
be in existence, the Borrowers shall not be required to pay more than $40,000 in
any calendar year with respect to any costs and fees in connection with such
field examinations and audits; (g) costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining payment accounts and lock boxes; (h) costs and expenses of
preserving and protecting the Collateral; and (i) costs and expenses (including
reasonable and documented (to the satisfaction of the Agent) attor neys' and
paralegals' fees and disbursements which shall include the reasonable and
documented (to the satisfaction of the Agent) allocated cost of Agent's in-house
counsel fees and disbursements) paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Agent or any Lender arising out
of the transactions contemplated hereby (including without limitation,
preparations for and consultations concerning any such matters). Each Borrower
further agrees, jointly and severally, to pay to each Lender on demand all costs
and expenses that such Lender pays or incurs in connection with the enforcement
or protection of such Lender's rights under this Agreement or the other Loan
Documents. The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid by any Borrower or
other Loan Party. All of the foregoing costs and expenses shall be charged to
the Borrowers' Loan Account as Revolving Loans as described in SECTION 4.4.
16.8 NOTICES. Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing, or by a telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal delivery thereof,
including, but not limited to, delivery by overnight mail and courier service,
(b) four (4) days after it shall have been mailed by United States mail, first
class, certified or registered, with postage prepaid, or (c) in the case of
notice by such a telecommunications device, when properly transmitted (and
additionally with respect to notices by the Agent or any of the Lenders to a
Loan Party of a Default or Event of Default, when such notice is mailed by the
Agent or such Lender, as appropriate, to such Loan Party by overnight mail or
courier service), in each case addressed to the party to be notified as follows:
If to the Agent or to BABC:
BankAmerica Business Credit, Inc.
00 Xxxx 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxxxx
Telecopy No. (000) 000-0000
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with copies to:
Bank of America NT & SA
00000 Xxx Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Telecopy No. (000) 000-0000
If to any Lender (other than BABC): at such address for such Lender as set forth
on SCHEDULE A (or, with respect to a Lender which was an Assignee, on the
applicable Assignment and Acceptance pursuant to which such Assignee became a
Lender);
If to any Loan Party:
c/o Hills Stores Company
00 Xxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Vice President-Secretary
Telecopy No. (000) 000-0000
with copies to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopy No. (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
16.9 WAIVER OF NOTICES. Unless otherwise expressly provided herein, each
Loan Party waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, notice of intent to accelerate the Obligations and
notice of acceleration of the Obligations, as well as any and all other notices
to which it might otherwise be entitled. No notice to or demand on any Loan
Party which the Agent or any Lender may elect to give shall entitle any Loan
Party to any or further notice or demand in the same, similar or other
circumstances.
16.10 BINDING EFFECT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; PROVIDED, HOWEVER, that no interest herein may be
assigned by any Loan Party without prior
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written consent of the Agent and each Lender. The rights and benefits of the
Agent and the Lenders hereunder shall, if such Persons so agree, inure to any
party acquiring any interest in the Obligations or any part thereof.
16.11 INDEMNITY OF THE AGENT AND THE LENDERS BY THE LOAN PARTIES. Each Loan
Party agrees, jointly and severally, to defend, indemnify and hold the
Agent-Related Persons, and each Lender and each of its respective officers,
directors, employees, Affiliates, counsel, agents and attorneys-in-fact (each,
an "Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any insolvency proceeding or
appellate proceeding) related to or arising out of this Agreement, any other
Loan Document, or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); PROVIDED, that the Loan Parties shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities to the extent resulting from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
16.12 LIMITATION OF LIABILITY. No claim may be made by any Loan Party, any
Lender or other Person against the Agent, any Lender, or the affiliates,
directors, officers, officers, employees, or agents of any of them for any
special, indirect, consequential or punitive damages in respect of any claim for
breach of contract or any other theory of liability arising out of or related to
the transactions contemplated by this Agreement or any other Loan Document, or
any act, omission or event occurring in connection therewith, and each Loan
Party and each Lender hereby waive, release and agree not to xxx upon any claim
for such damages, whether or not accrued and whether or not know or suspected to
exist in its favor.
16.13 FINAL AGREEMENT. This Agreement and the other Loan Documents are
intended by each Loan Party, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement among them. This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof. No modification, rescission, waiver, release, or amendment of any
provision of this Agreement or any other Loan Document shall be made, except by
a written agreement signed by the Loan Parties and a duly authorized officer of
each of the Agent and the requisite Lenders.
16.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each Loan Party in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
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16.15 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
16.16 RIGHT OF SETOFF. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Loan Party, any such notice being waived by the Loan
Parties to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other indebtedness at any time owing by, such Lender to or for the
credit or the account of any Loan Party against any and all Obligations owing to
such Lender, now or hereafter existing, irrespective of whether or not the Agent
or such Lender shall have made demand under this Agreement or any Loan Document
and although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Borrowers and the Agent after any such set-off and
application made by such Lender; PROVIDED, HOWEVER, that the failure to give
such notice shall not affect the validity of such set-off and application.
NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF,
BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY LOAN
PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS
CONSENT OF THE LENDERS.
16.17 JOINT AND SEVERAL LIABILITY. The Borrowers shall be liable for all
amounts due to the Agent and/or any Lender under this Agreement, regardless of
which Borrower actually receives Loans or other extensions of credit hereunder
or the amount of such Loans received or the manner in which the Agent and/or
such Lender accounts for such Loans or other extensions of credit on its books
and records. Each Borrower's Obligations with respect to Loans made to it, and
each Borrower's Obligations arising as a result of the joint and several
liability of the Borrowers hereunder, with respect to Loans made to the other
Borrower hereunder, shall be separate and distinct obligations, but all such
Obligations shall be primary obligations of each Borrower.
The Borrower's Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Loans or other
extensions of credit made to the other Borrower hereunder shall, to the fullest
extent permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of the other
Borrower or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrower, (ii) the absence of any attempt to
collect the Obligations from the other Borrower, any other guarantor, or any
other security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance or granting of any indulgence
by the Agent and/or any Lender with respect to any provision of any instrument
evidencing the Obligations of the other Borrower, or any part thereof, or any
other agreement now or hereafter executed by the other Borrower and delivered to
the Agent and/or any Lender, (iv) the failure by the Agent and/or any Lender to
take any steps to perfect and maintain its security interest in, or to preserve
its rights to, any security or collateral for the Obligations of
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the other Borrower, (v) the Agent's and/or any Lender's election, in any
proceeding instituted under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by the other Borrower, as debtor-in-possession under Section 364 of the
Bankruptcy Code, (vii) the disallowance of all or any portion of the Agent's
and/or any Lender's claim(s) for the repayment of the Obligations of the other
Borrower under Section 502 of the Bankruptcy Code, or (viii) any other
circumstances which might constitute a legal or equitable discharge or defense
of a guarantor or of the other Borrower. With respect to the Borrower's
Obligations arising as a result of the joint and several liability of the
Borrowers hereunder with respect to Loans or other extensions of credit made to
the other Borrower hereunder, each Borrower waives, until the Obligations shall
have been paid in full and this Agreement shall have been terminated, any right
to enforce any right of subrogation or any remedy which the Agent and/or any
Lender now has or may hereafter have against any Borrower, any endorser or any
guarantor of all or any part of the Obligations, and any benefit of, and any
right to participate in, any security or collateral given to the Agent and/or
any Lender to secure payment of the Obligations or any other liability of any
Borrower to the Agent and/or any Lender.
Upon any Event of Default, the Agent may proceed directly and at
once, without notice, against any Borrower to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against the
other Borrower or any other Person, or against any security or collateral for
the Obligations. Each Borrower consents and agrees that the Agent shall be under
no obligation to marshal any assets in favor of any Borrower or against or in
payment of any or all of the Obligations.
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IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWERS"
HILLS DEPARTMENT STORE COMPANY
By /s/ C. Xxxxx Xxxxxx
-----------------------------------
Name: C. Xxxxx Xxxxxx
Title: EVP-CFO
C.R.H. INTERNATIONAL, INC.
By /s/ Xxxxxxx X. Friend
-----------------------------------
Name: Xxxxxxx X. Friend
Title: Vice President/Secretary
OTHER "LOAN PARTIES"
HILLS STORES COMPANY
By /s/ C. Xxxxx Xxxxxx
-----------------------------------
Name: C. Xxxxx Xxxxxx
Title: EVP-CFO
CANTON ADVERTISING, INC.
By /s/ Xxxxxxx X. Friend
-----------------------------------
Name: Xxxxxx X. Friend
Title: Vice President/Secretary
HDS TRANSPORT, INC.
By /s/ Xxxxxxx X. Friend
-----------------------------------
Name: Xxxxxxx X. Friend
Title: Vice President/Secretary
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120
CORPORATE VISION INC.
By /s/ Xxxxxxx X. Friend
-----------------------------------
Name: Xxxxxxx X. Friend
Title: Vice President-Secretary
HILLS DISTRIBUTING COMPANY
By /s/ Xxxxxx X. Friend
-----------------------------------
Name: Xxxxxxx X. Friend
Title: Vice President-Secretary
"AGENT"
BANKAMERICA BUSINESS CREDIT, INC., as
the Agent
By /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
"LENDERS"
Commitment: $75,000,000 BANKAMERICA BUSINESS CREDIT, INC., as
a Lender
By /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
Commitment: $25,000,000 THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By
-----------------------------------
Name:
Title:
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121
CORPORATE VISION INC.
By
-----------------------------------
Name:
Title:
HILLS DISTRIBUTING COMPANY
By
-----------------------------------
Name:
Title:
"AGENT"
BANKAMERICA BUSINESS CREDIT, INC., as
the Agent
By
-----------------------------------
Name:
Title:
"LENDERS"
Commitment: $75,000,000 BANKAMERICA BUSINESS CREDIT, INC., as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $25,000,000 THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
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122
Commitment: $25,000,000 THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By /s/ Xxxxx Xxxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice President
Commitment: $25,000,000 CONGRESS FINANCIAL CORPORATION, as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $30,000,000 XXXXXX FINANCIAL, INC., as a Lender
By
-----------------------------------
Name:
Title:
Commitment: $15,000,000 IBJ XXXXXXXX BANK & TRUST COMPANY, as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $25,000,000 LASALLE BUSINESS CREDIT, INC., as a
Lender
By
-----------------------------------
Name:
Title:
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123
Commitment: $25,000,000 THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By
-----------------------------------
Name:
Title:
Commitment: $25,000,000 CONGRESS FINANCIAL CORPORATION, as
a Lender
By /s/ Xxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
Commitment: $30,000,000 XXXXXX FINANCIAL, INC., as a Lender
By
-----------------------------------
Name:
Title:
Commitment: $15,000,000 IBJ XXXXXXXX BANK & TRUST COMPANY, as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $25,000,000 LASALLE BUSINESS CREDIT, INC., as a
Lender
By
-----------------------------------
Name:
Title:
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124
Commitment: $25,000,000 THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By
-----------------------------------
Name:
Title:
Commitment: $25,000,000 CONGRESS FINANCIAL CORPORATION, as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $30,000,000 XXXXXX FINANCIAL, INC., as a Lender
By /s/ Xxxx Xxxx
-----------------------------------
Name: Xxxx Xxxx
Title: VP
Commitment: $15,000,000 IBJ XXXXXXXX BANK & TRUST COMPANY, as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $25,000,000 LASALLE BUSINESS CREDIT, INC., as a
Lender
By
-----------------------------------
Name:
Title:
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125
Commitment: $25,000,000 THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By
-----------------------------------
Name:
Title:
Commitment: $25,000,000 CONGRESS FINANCIAL CORPORATION, as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $30,000,000 XXXXXX FINANCIAL, INC., as a Lender
By
-----------------------------------
Name:
Title:
Commitment: $15,000,000 IBJ XXXXXXXX BANK & TRUST COMPANY, as
a Lender
By /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
Commitment: $25,000,000 LASALLE BUSINESS CREDIT, INC., as a
Lender
By
-----------------------------------
Name:
Title:
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126
Commitment: $25,000,000 THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By
-----------------------------------
Name:
Title:
Commitment: $25,000,000 CONGRESS FINANCIAL CORPORATION, as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $30,000,000 XXXXXX FINANCIAL, INC., as a Lender
By
-----------------------------------
Name:
Title:
Commitment: $15,000,000 IBJ XXXXXXXX BANK & TRUST COMPANY, as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $25,000,000 LASALLE BUSINESS CREDIT, INC., as a
Lender
By /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Financial Vice President
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127
Commitment: $30,000,000 SANWA BUSINESS CREDIT CORPORATION, as
a Lender
By /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
Commitment: $50,000,000 TRANSAMERICA BUSINESS CREDIT CORPORATION,
as a Lender
By
-----------------------------------
Name:
Title:
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128
Commitment: $30,000,000 SANWA BUSINESS CREDIT CORPORATION, as
a Lender
By
-----------------------------------
Name:
Title:
Commitment: $50,000,000 TRANSAMERICA BUSINESS CREDIT CORPORATION,
as a Lender
By /s/ Xxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxx
Title: Sr. Vice Pres.
114
