LOAN AND SECURITY AGREEMENT
Dated as of October 31, 0000
Xxxxxxx
XXXXXXXXXXX BUSINESS CREDIT, INC.
as the Lender
and
THE COSMETIC CENTER, INC.
as the Borrower
TABLE OF CONTENTS
SECTION PAGE
1. DEFINITIONS....................................................... 1
Accounts ...................................................... 1
Account Debtor.................................................... 1
Adjusted Tangible Assets.......................................... 1
Adjusted Tangible Net Worth....................................... 1
Affiliate ...................................................... 1
Anniversary Date.................................................. 2
Applicable Margin................................................. 2
Assigned Contracts................................................ 2
Availability...................................................... 2
Bank ...................................................... 2
Borrowing ...................................................... 2
Borrowing Base.................................................... 3
Business Day...................................................... 3
Capital Adequacy Regulation....................................... 3
Capital Expenditures.............................................. 3
Capital Lease..................................................... 3
Closing Date...................................................... 3
Code ...................................................... 3
Collateral ...................................................... 3
Contaminant ...................................................... 3
Conversion/Continuation Date...................................... 3
Debt ...................................................... 4
Distribution...................................................... 4
DOL ...................................................... 4
Eligible Inventory................................................ 4
Environmental Compliance Reserve.................................. 5
Environmental Laws................................................ 5
Environmental Lien................................................ 5
ERISA ...................................................... 5
ERISA Affiliate................................................... 5
ERISA Event ...................................................... 5
Event ...................................................... 6
Event of Default.................................................. 6
Existing Debt..................................................... 6
Facility Fee...................................................... 6
Financial Statements.............................................. 6
Fiscal Year ...................................................... 6
Funding Date...................................................... 6
GAAP ...................................................... 6
i
TABLE OF CONTENTS
(cont'd)
SECTION PAGE
Guaranty ...................................................... 6
Intercompany Accounts............................................. 7
Interest Period................................................... 7
Inventory ...................................................... 7
IRS ...................................................... 8
Latest Projections................................................ 8
Letter of Credit.................................................. 8
Letter of Credit Fee.............................................. 8
LIBOR Interest Payment Date....................................... 8
LIBOR Interest Rate Determination Date............................ 8
LIBOR Rate ...................................................... 8
Eurodollar Reserve Percentage......................... 8
LIBOR .......................................... 8
LIBOR Rate Loan................................................... 9
LIBOR Revolving Loan.............................................. 9
Lien ...................................................... 9
Loan and Loans.................................................... 9
Loan Documents.................................................... 9
Multiemployer Plan................................................ 9
Notice of Borrowing............................................... 9
Notice of Conversion/Continuation................................. 9
Obligations ...................................................... 9
Other Taxes ...................................................... 10
Outstanding Credit................................................ 10
Participating Lender.............................................. 10
Payment Account................................................... 10
PBGC ...................................................... 10
Pending Loans..................................................... 10
Pension Plan...................................................... 10
Permitted Liens................................................... 11
Person ...................................................... 11
Plan ...................................................... 12
Premises ...................................................... 12
Prior Lender...................................................... 12
Proceeds ...................................................... 12
Property ...................................................... 12
Proprietary Rights................................................ 12
Public Authority.................................................. 12
Receivables ...................................................... 12
ii
TABLE OF CONTENTS
(cont'd)
SECTION PAGE
Reference Rate.................................................... 13
Reference Rate Loans.............................................. 13
Reference Rate Revolving Loans.................................... 13
Release ...................................................... 13
Rental Reserve.................................................... 13
Rental ...................................................... 13
Reportable Event.................................................. 13
Requirement of Law................................................ 13
Restricted Investment............................................. 14
Reversions ...................................................... 14
Revolving Loans................................................... 14
Security Interest................................................. 14
Solvent ...................................................... 14
Stated Termination Date........................................... 14
Subsidiary ...................................................... 15
Taxes ...................................................... 15
Total Facility.................................................... 15
Trademark Security Agreements..................................... 15
UCC ...................................................... 15
Unused Line Fee................................................... 15
Xxxxxxxxx Family.................................................. 15
Accounting Terms.................................................. 15
Other Terms ...................................................... 15
2. LOANS AND LETTERS OF CREDIT....................................... 16
2.1 Total Facility........................................ 16
2.2 Revolving Loans....................................... 16
2.3 Letters of Credit..................................... 17
Other Conditions...................................... 17
Issuance of Letters of Credit......................... 18
Payments Pursuant to Letters of Credit................ 18
Compensation for Letters of Credit.................... 19
Indemnification; Exoneration; Power of Attorney....... 19
Supporting Letter of Credit; Cash Collateral.......... 21
3. INTEREST AND OTHER CHARGES........................................ 21
3.1 Interest.............................................. 21
Unused Line Fee....................................... 22
3.2 Conversion and Continuation Elections................. 22
iii
TABLE OF CONTENTS
(cont'd)
SECTION PAGE
3.3 Maximum Interest Rate................................. 23
3.4 Facility Fee.......................................... 24
3.5 [Intentionally Left Blank]............................ 24
3.6. [Intentionally Left Blank]............................ 24
3.7 Letter of Credit Fee.................................. 24
4. PAYMENTS AND PREPAYMENTS.......................................... 24
4.1 Revolving Loans....................................... 24
4.2 [Intentionally Left Blank]............................ 24
4.3 [Intentionally Left Blank]............................ 24
4.4 [Intentionally Left Blank]............................ 24
4.5 Place and Form of Payments; Extension of Time......... 24
4.6 Application and Reversal of Payments.................. 25
4.7 INDEMNITY FOR RETURNED PAYMENTS....................... 25
5. LENDER'S BOOKS AND RECORDS; MONTHLY STATEMENTS.................... 25
6. TAXES, YIELD PROTECTION AND ILLEGALITY............................ 26
6.1 Taxes................................................. 26
6.2 Illegality............................................ 26
6.3 Increased Costs and Reduction of Return............... 27
6.4 Funding Losses........................................ 27
6.5 Inability to Determine Rates.......................... 28
6.6 Survival.............................................. 28
7. COLLATERAL........................................................ 28
7.1 Grant of Security Interest............................ 28
7.2 Perfection and Protection of Security Interest........ 29
7.3 Location of Collateral................................ 30
7.4 Title to, Liens on, and Sale and Use of Collateral.... 30
7.5 Appraisals............................................ 31
7.6 Access and Examination................................ 31
7.7 Insurance............................................. 31
7.8 Collateral Reporting.................................. 32
7.9 [Intentionally Left Blank]............................ 32
7.10 Collection of Accounts; Payments...................... 32
7.11 Inventory............................................. 33
7.12 [Intentionally Left Blank]............................ 34
7.13 Assigned Contracts.................................... 34
iv
TABLE OF CONTENTS
(cont'd)
SECTION PAGE
7.14 Documents, Instruments, and Chattel Paper............. 35
7.15 Right to Cure......................................... 35
7.16 Power of Attorney..................................... 35
7.17 Lender's Rights, Duties, and Liabilities.............. 36
8. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES................. 36
8.1 Books and Records..................................... 36
8.2 Financial Information................................. 36
8.3 Notices to Lender..................................... 38
9. GENERAL WARRANTIES AND REPRESENTATIONS............................ 40
9.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan
Documents............................................. 40
9.2 Validity and Priority of Security Interest............ 40
9.3 Organization and Qualification........................ 40
9.4 Corporate Name; Prior Transactions.................... 41
9.5 Subsidiaries and Affiliates........................... 41
9.6 Financial Statements and Projections.................. 41
9.7 Capitalization........................................ 41
9.8 Solvency.............................................. 41
9.9 Debt.................................................. 42
9.10 Distributions......................................... 42
9.11 Title to Property..................................... 42
9.12 Adequate Assets....................................... 42
9.13 Real Property; Leases................................. 42
9.14 Proprietary Rights.................................... 42
9.15 Trade Names and Terms of Sale......................... 42
9.16 Litigation............................................ 43
9.17 Restrictive Agreements................................ 43
9.18 Labor Disputes........................................ 43
9.19 Environmental Laws.................................... 43
9.20 No Violation of Law................................... 44
9.21 No Default............................................ 45
9.22 ERISA Compliance...................................... 45
9.23 Taxes................................................. 46
9.24 Use of Proceeds....................................... 46
9.25 Private Offerings..................................... 46
9.26 Broker's Fees......................................... 46
9.27 No Material Adverse Change............................ 46
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TABLE OF CONTENTS
(cont'd)
SECTION PAGE
9.28 Disclosure............................................ 46
10. AFFIRMATIVE AND NEGATIVE COVENANTS.................... 46
10.1 Taxes and Other Obligations........................... 46
10.2 Corporate Existence and Good Standing................. 47
10.3 Compliance with Law and Agreements.................... 47
10.4 Maintenance of Property and Insurance................. 47
10.5 Environmental Laws.................................... 47
10.6 ERISA................................................. 48
10.7 Mergers, Consolidations, Acquisitions, or Sales....... 48
10.8 Distributions; Capital Changes........................ 48
10.9 Transactions Affecting Collateral or Obligations...... 48
10.10 Guaranties............................................ 48
10.11 Debt.................................................. 49
10.12 Prepayment............................................ 49
10.13 Transactions with Affiliates.......................... 49
10.14 [Intentionally Left Blank]............................ 49
10.15 Business Conducted.................................... 49
10.16 Liens................................................. 49
10.17 Sale and Leaseback Transactions....................... 49
10.18 New Subsidiaries...................................... 50
10.19 Restricted Investments................................ 50
10.20 [Intentionally Left Blank]............................ 50
10.21 [Intentionally Left Blank............................. 50
10.22 [Intentionally Left Blank] ........................... 50
10.23 [Intentionally Left Blank]............................ 50
10.24 [Intentionally Left Blank]............................ 50
10.25 [Intentionally Left Blank]............................ 50
10.26 [Intentionally Left Blank]............................ 50
10.27 Adjusted Tangible Net Worth........................... 50
10.28 [Intentionally Left Blank]............................ 51
10.29 Purchase of Inventory by Subsidiaries................. 51
10.30 Further Assurances.................................... 51
11. CLOSING; CONDITIONS TO CLOSING........................ 51
11.1 Conditions Precedent to Making of Loans on the
Closing Date................................... 51
Representations and Warranties; Covenants............. 51
Delivery of Document.................................. 52
[Intentionally Left Blank]............................ 52
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TABLE OF CONTENTS
(cont'd)
SECTION PAGE
[Intentionally Left Blank]............................ 52
Termination of Liens.................................. 52
[Intentionally Left Blank]............................ 52
Environmental Compliance.............................. 52
Payment of Fees and Expenses.......................... 52
Required Approvals.................................... 52
No Material Adverse Change............................ 52
Adjusted Tangible Net Worth........................... 52
Financial Performance................................. 53
Proceedings .......................................... 53
Excess Availability................................... 53
Release From Prior Lender............................. 53
11.2 Conditions Precedent to Each Loan..................... 53
12. DEFAULT; REMEDIES..................................... 53
12.1 Events of Default..................................... 53
13. REMEDIES.............................................. 56
14. TERM AND TERMINATION.................................. 57
15. MISCELLANEOUS......................................... 58
15.1 Cumulative Remedies; No Prior Recourse to Collateral.. 58
15.2 No Implied Waivers.................................... 58
15.3 Severability.......................................... 58
15.4 Governing Law......................................... 58
15.5 Consent to Jurisdiction and Venue; Service of Process. 58
15.6 Waiver of Jury Trial.................................. 58
15.7 [Intentionally Left Blank]............................ 59
15.8 Survival of Representations and Warranties............ 59
15.9 Other Security and Guaranties......................... 59
15.10 Fees and Expenses..................................... 59
15.11 Notices............................................... 60
15.12 Indemnification....................................... 61
15.13 Waiver of Notices..................................... 62
15.14 Binding Effect; Assignment............................ 62
15.15 Modification.......................................... 62
15.16 Counterparts.......................................... 62
15.17 Captions.............................................. 62
vii
TABLE OF CONTENTS
(cont'd)
SECTION PAGE
15.18 Right of Set-Off...................................... 63
15.19 Participating Lender's Security Interests............. 63
viii
LOAN AND SECURITY AGREEMENT, dated as of October 31, 1996, by
and between BANKAMERICA BUSINESS CREDIT, INC., with offices at 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx (the "Lender"), and THE COSMETIC CENTER, INC. (the
"Borrower" or "CCI"), with offices at 0000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx.
W I T N E S S E T H
WHEREAS, the Borrower has requested the Lender to make
available to the Borrower a revolving line of credit for loans and letters of
credit in an amount not to exceed $25,000,000, which extensions of credit the
Borrower will use to refinance certain debt outstanding under the Borrower's
existing credit facility and for the working capital needs and general business
purposes of the Borrower and the Guarantors (as hereinafter defined);
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 Borrower and the Lender hereby
agree as follows:
1. DEFINITIONS. As used herein:
"Accounts" means all of the Borrower's now owned or hereafter
acquired or arising accounts, and any other rights to payment for the sale or
lease of goods or rendition of services, whether or not they have been earned by
performance.
"Account Debtor" means each Person obligated in any way on or
in connection with an Account.
"Adjusted Tangible Assets" means all of CCI's assets on a
consolidated basis except: (a) deferred assets, other than prepaid insurance and
prepaid taxes; (b) patents, copyrights, trademarks, trade names, franchises,
goodwill, and other similar intangibles; (c) Restricted Investments; (d)
unamortized debt discount and expense; (e) assets constituting Intercompany
Accounts; and (f) fixed assets to the extent of any write-up in the book value
thereof resulting from a revaluation effective after the Closing Date.
"Adjusted Tangible Net Worth" means, at any date: (a) the book
value (after deducting related depreciation, obsolescence, amortization,
valuation, and other proper reserves as determined in accordance with GAAP) at
which the Adjusted Tangible Assets would be shown on a consolidated balance
sheet of CCI at such date prepared in accordance with GAAP less (b) the amount
at which CCI's consolidated liabilities would be shown on such balance sheet,
including as liabilities all reserves for contingencies and other potential
liabilities which would be shown on such balance sheet or disclosed in the notes
thereto.
"Affiliate" means, with respect to the Borrower or any
Guarantor: (a) a Person which, directly or indirectly, controls, is controlled
by, or is under common control with, the Borrower or a Guarantor; (b) a Person
which beneficially owns or holds, directly or indirectly,
ten percent or more of any class of voting stock of the Borrower or a Guarantor;
or (c) a Person in which five percent of any class of the voting stock is
beneficially owned or held, directly or indirectly, by the Borrower or a
Guarantor. The term control (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of the Person in
question.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means (i) with respect to Reference Rate
Loans and all other obligations (other than LIBOR Rate Loans), one half of one
percentage point (0.50%) and (ii) with respect to LIBOR Rate Loans, two
percentage points (2.00%).
"Assigned Contracts" means, collectively, all of the rights
and remedies under, and all moneys and claims for money due or to become due to
the Borrower or any Guarantor under, any material contracts and any and all
amendments, supplements, extensions, and renewals thereof, including, without
limitation, all rights and claims of the Borrower or the relevant Guarantor now
or hereafter existing: (a) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with the foregoing
agreements; (b) for any damages arising out of or for breach or default under or
in connection with the foregoing agreements; (c) to all other amounts from time
to time paid or payable under or in connection with the foregoing agreements; or
(d) to exercise or enforce any and all covenants, remedies, powers and
privileges thereunder.
"Availability" means, at any time:
(a) the lesser of (i) $25,000,000 or (ii) the
Borrowing Base at such time; minus
(b) the sum of (i) the Outstanding Credit at such
time, (ii) reserves, if any, for accrued interest on the Obligations of the
Borrower, (iii) the Environmental Compliance Reserve, if any (iv) the Rental
Reserve, if any, established by the Lender pursuant to Section 7.2 and (v) all
other reserves which the Lender deems necessary in the exercise of its
reasonable credit judgment to maintain with respect to the Borrower's account,
including, without limitation, reserves for Inventory shrinkage, gift
certificates, manufacturers coupons, or any amounts which the Lender may be
obligated to pay in the future for the account of the Borrower or any Guarantor.
"Bank" means Bank of America National Trust and Savings
Association in San Francisco, California.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans made on the same day by the Lender to the Borrower.
2
"Borrowing Base" means 50% of the value, at the lower of
moving average weighted cost or market, of all Eligible Inventory plus, without
duplication, 50% of the undrawn face amount of Letters of Credit issued or
caused to be issued by the Lender for the account of the Borrower for the
purchase of goods which will become Eligible Inventory.
"Business Day" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in New York, New York or San Francisco,
California, 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 Public 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 payments due (whether or not
paid) in respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those arising in connection with the direct
or indirect acquisition of such assets by way of increased product or service
charges or offset items or in connection with Capital Leases.
"Capital Lease" means any lease of Property by the Borrower or
any Guarantor that, in accordance with GAAP, should be reflected as a liability
on the balance sheet of the Borrower or such Guarantor.
"Closing Date" means the date of this Agreement, being the
date first above written.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning given to such term in Section
7.1.
"Contaminant" means any waste, 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 other substance or material, the handling, release, or possession
of which is regulated to protect health, safety, or environment, or any
constituent of any such substance or waste.
"Conversion/Continuation Date" has the meaning given to such
term in Section 3.2(b).
3
"Debt" means all liabilities, obligations and indebtedness of
the Borrower or any Guarantor to any Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, and including, without limitation, (a) the liabilities and
obligations of the Borrower or such Guarantor to trade creditors; (b) all
Obligations; (c) all obligations and liabilities of any Person secured by any
Lien on the Property of the Borrower or a Guarantor, even though the Borrower or
such Guarantor shall not have assumed or become liable for the payment thereof;
provided, however, that all such obligations and liabilities which are limited
in recourse to such Property shall be included in Debt only to the extent of the
book value of such Property as would be shown on a balance sheet of the Borrower
or such Guarantor prepared in accordance with GAAP; (d) all obligations or
liabilities created or arising under any Capital Lease or conditional sale or
other title retention agreement with respect to Property used or acquired by the
Borrower or such Guarantor, even if the rights and remedies of the lessor,
seller or lender thereunder are limited to repossession of such Property;
provided, however, that all such obligations and liabilities which are limited
in recourse to such Property shall be included in Debt only to the extent of the
book value of such Property as would be shown on a balance sheet of the Borrower
or such Guarantor prepared in accordance with GAAP; (e) all accrued pension fund
and other employee benefit plan obligations and liabilities; (f) all obligations
and liabilities under Guaranties; and (g) deferred taxes.
"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 of such corporation, other than distributions in capital stock
of the same class; or (b) the redemption or other acquisition of any capital
stock of such corporation.
"DOL" means the United States Department of Labor or any
successor department or agency.
"Eligible Inventory" means Inventory of the Borrower and each
Guarantor, valued at the lower of moving average weighted cost basis or market,
that constitutes first quality finished goods and that: (a) is owned by the
Borrower or any Guarantor and with respect to which the Borrower or such
Guarantor has good and marketable title; (b) is not, in the Lender's reasonable
opinion, slow moving, excess, obsolete or unmerchantable; (c) is located at
Premises owned or leased by the Borrower or such Guarantor or on Premises
otherwise reasonably acceptable to the Lender; (d) is subject to the Lender's
first priority perfected security interest other than Permitted Liens described
in clauses (c), (d) and (l) of the definition of Permitted Liens; (e) is not
work-in-process, spare parts, packaging and shipping materials, supplies,
billand-hold Inventory, defective Inventory, or Inventory delivered to the
Borrower or such Guarantor on consignment; and (f) the Lender, in the exercise
of its reasonable discretion, deems eligible as the basis for Revolving Loans
based on such collateral and credit criteria as the Lender may from time to time
establish after the Closing Date and of which Lender has given the Borrower at
least three Business Days' notice. There shall in any event be excluded from
Eligible Inventory (i) any goods returned by customers of the Borrower or the
relevant Guarantor that are determined by the Borrower or the Lender to be
unsalable in the ordinary
4
course of business or held for return to vendors, (ii) any goods that are
intended to be given to customers without charge and (iii) goods in transit to
the Borrower or the relevant Guarantor from a third party. If any Inventory at
any time ceases to be Eligible Inventory, such Inventory shall promptly be
excluded from the calculation of Eligible Inventory.
"Environmental Compliance Reserve" means all reserves which
the Lender from time to time establishes after the Closing Date (and of which
the Lender has given the Borrower at least three Business Days' notice) for
amounts that are reasonably required to be expended in order for the operations
and Property of the Borrower or any Guarantor to comply with Environmental Laws
or in order to correct any violation (disclosed to or discovered by the Lender
after the Closing Date) of Environmental Laws by the Borrower or a Guarantor or
the Borrower's or a Guarantor's operations or Property.
"Environmental Laws" means all federal, state and local laws,
rules, regulations, ordinances, programs, permits, guidance, orders and consent
decrees relating to health, safety, hazardous substances, and environmental
matters applicable to the business and facilities of the Borrower or the
relevant Guarantor (whether or not owned by it). Such laws and regulations
include but are not limited to the Resource Conservation and Recovery Act, 42
U.S.C. ss. 6901 et seq., as amended; the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended; the
Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., as amended; the Clean
Water Act, 33 U.S.C. ss. 466 et seq., as amended; the Clean Air Act, 42 U.S.C.
ss. 7401 et seq., as amended; state and federal lien and environmental cleanup
programs; and U.S. Department of Transportation environmental regulations.
"Environmental Lien" means a Lien in favor of any Public
Authority for (a) any liability under any Environmental Laws, or (b) damages
arising from, or costs incurred by such Public Authority in response to, a
Release or threatened Release of a Contaminant into the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with CCI within the meaning of Section 414(b)
or Section 414(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, with respect to the Borrower or any
Guarantor, any ERISA Affiliate or any Pension Plan, the occurrence of any of the
following: (a) a Reportable Event; (b) a withdrawal by a substantial employer
(as defined in Section 4001 (a)(2) of ERISA) subject to Section 4063 of ERISA;
(c) a cessation of operations which is treated as a withdrawal under Section
4062(e) of ERISA; (d) a complete or partial withdrawal by the Borrower or a
Guarantor or any ERISA Affiliate under Section 4203 or Section 4205 of ERISA
from a Multiemployer Plan; (e) a notification that a Multiemployer Plan is in
reorganization under
5
Section 4242 of ERISA; (f) the filing of a notice of intent to terminate a
Pension Plan under 4041 of ERISA; (g) the treatment of an amendment of a Pension
Plan as a termination under 4041 of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA; (i) the commencement of
proceedings by the PBGC to terminate a Pension Plan under 4042 of ERISA; (j) an
event or condition which could reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, a Pension Plan; or (k) the imposition of any liability
under Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA.
"Event" means any event or condition which, with notice, the
passage of time, the happening of any other condition or event, or any
combination thereof, would constitute an Event of Default.
"Event of Default" has the meaning specified in Section 12.1.
"Existing Debt" means all Debt owing under or in connection
with the loan provided under the Revolving Loan Promissory Note, dated as of
March 29, 1996, between CCI and the Prior Lender.
"Facility Fee" has the meaning specified in Section 3.4.
"Financial Statements" means, according to the context in
which it is used, the financial statements attached hereto as Exhibit X-x, or
any financial statements required to be given to the Lender pursuant to Section
8.2(a), Section 8.2(b), and Section 8.2(c), or any combination thereof.
"Fiscal Year" means the Borrower's fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrower will end on
September 26, 1997.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means at any particular time generally accepted
accounting principles as in effect at such time.
"Guarantor" means any of Xxxxx Xxx Cosmetics, Inc., Xxxxx Xxxx
Cosmetics, Inc., Xxxx Xxxxxxx Cosmetics, Inc., Xxxxxxxx Xxxxxx, Inc., Xxxxxx
Distribution, Inc., or M. Xxxxxx Cosmetic Company, Inc.
"Guarantor Collateral" means the Collateral described in the
Security Agreements.
"Guaranty" by any Person means 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 obligation of any other Person (the
6
"guaranteed obligations"), or to 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.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to the Borrower or any Guarantor from, which are
due from the Borrower or any Guarantor to, or which otherwise arise from any
transaction by the Borrower or any Guarantor with, any Affiliate.
"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 a Reference Rate Loan is converted into a LIBOR Rate Loan or a
LIBOR Rate Loan is continued as such a LIBOR Rate Loan, and ending on the date
one, two, three or six months thereafter as selected by the Borrower in its
Notice of Borrowing or Notice of Conversion/Continuation; provided, however,
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;
(iii) there shall be no more than five different
Interest Periods in effect at any one time; and
(iv) no Interest Period shall extend beyond the
Stated Termination Date or any renewal term.
"Inventory" means all of the now owned and hereafter acquired
inventory, goods and merchandise of the Borrower and each Guarantor, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work-in-process, finished goods, returned goods, and
materials and supplies of any kind, nature or description which are or might be
used or consumed in the business of the Borrower or the relevant Guarantor or
used
7
in connection with the manufacture, packing, shipping, advertising, selling or
finishing of such goods and such merchandise and all documents of title or other
documents representing them.
"IRS" means the Internal Revenue Service or any successor
agency.
"Latest Projections" means: (a) on the Closing Date and
thereafter until the Lender receives new projections pursuant to Section 8.2(f),
the projections of the Borrower's monthly financial condition, results of
operations, and cash flow for the three-year period ending September 30, 1999 on
a consolidated basis, attached hereto as Exhibit B-3; and (b) thereafter, the
projections most recently received by the Lender pursuant to Section 8.2(f);
"Letter of Credit" has the meaning specified in Section 2.3.
"Letter of Credit Fee" has the meaning specified in Section
3.7.
"LIBOR Interest Payment Date" means, with respect to a LIBOR
Rate Loan, the last day of each Interest Period applicable to such Loan, but no
less frequently than monthly.
"LIBOR Interest Rate Determination Date" means each date of
calculating the LIBOR Rate for purposes of determining the interest rate with
respect to an Interest Period. The LIBOR Interest Rate Determination Date for
any LIBOR Rate Loan shall be the second Business Day prior to the first day of
the related Interest Period for such LIBOR Rate 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 1/100th of 1.0%) determined as follows:
LIBOR
LIBOR Rate = ------------------------------------
1.00 - Eurodollar Reserve Percentage
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
1.0%) in effect on such day (applicable to the Lender) under
regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement
(including, without limitation, 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 1/16 of 1%) notified to the Lender
by the Bank as the rate of interest at which United States
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 the Bank's
8
applicable lending office to major banks in the London
interbank market at their request at approximately 11:00 a.m.
(London time) two Business Days prior to the commencement of
such Interest Period.
"LIBOR Rate Loan" means a Loan during any period in which it
bears interest based on the LIBOR Rate.
"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.
"Loan and Loans" means all loans and advances provided for in
Section 2. The terms Loans and Revolving Loans are used herein interchangeably.
"Loan Documents" means this Agreement, the Payment Guaranty,
the Security Agreements, the Trademark Security Agreements, and all other
agreements, instruments, and documents heretofore, now or hereafter evidencing,
securing, guaranteeing or otherwise relating to the Obligations, the Collateral,
the Guarantor Collateral, the Security Interest, or any other aspect of the
transactions contemplated by this Agreement.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which CCI or any ERISA Affiliate makes, is
making, made, or was at any time during the current year or the immediately
preceding six years obligated to make contributions.
"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 Debt owing by the Borrower to
the Lender, whether or not arising under this Agreement, 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 Lender in the Borrower's debts owing to others), absolute or contingent, due
or to become due, primary or secondary, as
9
principal or guarantor, and including, without limitation, all interest,
charges, expenses, fees, attorneys' fees, filing fees and other sums chargeable
to the Borrower hereunder, under another Loan Document, or under any other
agreement or instrument with the Lender. "Obligations" includes, without
limitation, all debts, liabilities, and obligations now or hereafter owing from
the Borrower to the Lender under or in connection with the Letters of Credit.
"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, excluding, in the case of the Lender, such taxes (including, without
limitation, income taxes or franchise taxes) as are imposed on or measured by
the Lender's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which the Lender is organized or maintains a lending
office.
"Outstanding Credit" means, at any time, the sum of (a) the
aggregate outstanding principal amount of the Loans at such time made to the
Borrower plus (b) the aggregate undrawn amount of all outstanding Letters of
Credit at such time issued for the account of the Borrower plus (c) the
aggregate amount of all unpaid reimbursement obligations of the Borrower in
respect of Letters of Credit issued for the account of the Borrower.
"Participating Lender" means any Person who shall have been
granted the right by the Lender to participate in the Loans and who shall have
entered into a participation agreement in form and substance satisfactory to the
Lender.
"Payment Account" means each bank account established pursuant
to Section 7.10, to which the funds of the Borrower and the Guarantors
(including, without limitation, Proceeds of Accounts, other Collateral and
Guarantor Collateral) are deposited or credited, subject to a written agreement
between the Borrower, the Lender and the bank at which such account is
maintained, on terms acceptable to the Lender.
"Payment Guaranty" means the Continuing Guaranty, dated as of
the date hereof, executed and delivered by each Guarantor to the Lender to
guarantee the obligations of the Borrower hereunder.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to the functions thereof.
"Pending Loans" means, at any time, the aggregate principal
amount of all Loans requested in any Notice(s) of Borrowing received by the
Lender 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 CCI or an ERISA Affiliate
sponsors or maintains or to which it makes, is making, or is obligated to make
contributions or, in the case of a
10
Multiemployer Plan, has made contributions at any time during the current year
or the immediately preceding six plan years.
"Permitted Liens" means: (a) Liens for taxes not yet
delinquent or Liens for taxes in an amount not to exceed $100,000 being
contested in good faith by appropriate means or proceedings diligently pursued,
provided that a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor on the applicable Financial
Statements and that a stay of enforcement of any such Lien is in effect; (b)
Liens in favor of the Lender; (c) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, employees
or suppliers, incurred in the ordinary course of business of CCI or any of its
Subsidiaries and not in connection with the borrowing of money, for sums not yet
delinquent or which are being contested in good faith and by proper means or
proceedings diligently pursued, provided that a reserve or other appropriate
provision, if any, required by GAAP shall have been made therefor on the
applicable Financial Statements and a stay of enforcement of any such Lien is in
effect; (d) Liens in connection with worker's compensation or other unemployment
insurance incurred in the ordinary course of the business of the Borrower or any
Guarantor; (e) Liens created by deposits of cash to secure performance of bids,
tenders, leases (to the extent permitted under this Agreement), or trade
contracts, incurred in the ordinary course of business of the Borrower or any
Guarantor and not in connection with the borrowing of money; (f) Liens arising
by reason of cash deposit for surety or appeal bonds in the ordinary course of
business of the Borrower or any Guarantor; (g) Liens of or resulting from any
judgment or award, the time for the appeal or petition for rehearing of which
has not yet expired, or in respect of which the Borrower or any Guarantor is in
good faith prosecuting an appeal or proceeding for a review, and in respect of
which no execution may be had or a stay of execution pending such appeal or
proceeding for review has been secured; (h) Liens with respect to the real
estate which are exceptions to the commitments for title insurance issued in
connection with any mortgages, as accepted by the Lender; (i) with respect to
any Premises: easements, rights of way, zoning and similar covenants and
restrictions and similar encumbrances which customarily exist on properties of
corporations engaged in similar activities and similarly situated and which in
any event do not materially interfere with or impair the use or operation of the
Collateral by the Borrower or any Guarantor or the value of the Lender's
Security Interest therein, or materially interfere with the ordinary conduct of
the business of the Borrower or any Guarantor; (j) purchase money security
interests (other than in Inventory) and liens of lessors under Capital Leases to
the extent that the acquisition or lease of the underlying asset is not
prohibited under this Agreement, the security interest or lien only encumbers
the asset purchased or leased, and so long as the security interest or lien only
secures the purchase price of the asset; (k) existing Liens set forth on
Schedule 10.16; (l) Liens which landlords of Premises may be entitled to assert
against Inventory pursuant to statutory or common law; and (m) Liens on the
Borrower's or any Guarantor's assets (other than Inventory) that do not in the
aggregate exceed $10,000.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, limited
liability company, association, corporation, Public Authority, or other entity.
11
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower or any Guarantor or any ERISA Affiliate
sponsors or maintains or to which the Borrower or any Guarantor or any ERISA
Affiliate makes, is making, or is obligated to make contributions and includes
any Pension Plan.
"Premises" means the land identified by addresses on Schedule
9.13 together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way appertaining
thereto, and which constitutes all of the real property in which the Borrower or
any Guarantor has any interests on the Closing Date.
"Prior Lender" means NationsBank, N.A.
"Proceeds" means all products and proceeds of any Collateral,
and all proceeds of such products and proceeds, including, without limitation,
all cash and credit balances, all payments under any indemnity, warranty, or
guaranty payable with respect to any Collateral, all awards for taking by
eminent domain, all proceeds of fire or other insurance, and all money and other
Property obtained as a result of any claims against third parties or any legal
action or proceeding with respect to Collateral.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Proprietary Rights" means all of the Borrower's and the
Guarantors' now owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject matter
of copyrights, trademarks, trade names, trade styles, patent and trademark
applications and licenses and rights thereunder, including, without limitation,
those patents, trademarks and copyrights set forth on Schedule 9.14, 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; inventions, trade secrets, formulae, processes, compounds, drawings,
designs, blueprints, surveys, reports, manuals, and operating standards;
goodwill; customer and other lists in whatever form maintained; and trade secret
rights, copyright rights, rights in works of authorship, and contract rights
relating to computer software programs, in whatever form created or maintained.
"Public Authority" means the government of any country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or any department, agency, public corporation or other
instrumentality of any of the foregoing.
"Receivables" means all of the Borrower's now owned and
hereafter arising or acquired: Accounts (whether or not earned by performance),
including, without limitation, Accounts owed to the Borrower by any of its
Subsidiaries or Affiliates, together with all interest, late charges, penalties,
collection fees, and other sums which shall be due and payable in connection
with any Account; proceeds of any letters of credit naming the Borrower as
12
beneficiary; contract rights, chattel paper, instruments, documents, general
intangibles (including, without limitation, choses in action, causes of action,
tax refunds, tax refund claims, and Reversions and other amounts payable to the
Borrower from or with respect to any Plan) and all forms of obligations owing to
the Borrower (including, without limitation, in respect of loans, advances, and
extensions of credit by the Borrower to its Subsidiaries and Affiliates);
guarantees and other security for any of the foregoing; goods represented by or
the sale, lease or delivery of which gave rise to any of the foregoing;
merchandise returned to or repossessed by the Borrower and rights of stoppage in
transit, replevin, and reclamation; and other rights or remedies of an unpaid
vendor, lienor, or secured party.
"Reference Rate" means the rate of interest publicly announced
from time to time by the Bank as its reference rate. It is a rate set by the
Bank based upon various factors including the Bank's costs and desired return,
general economic conditions, and other factors, and is used as a reference point
for pricing some loans. However, the Bank may price loans at, above, or below
such announced rate. Any changes in the Reference Rate shall take effect on the
day specified in the public announcement of such change.
"Reference Rate Loans" means the Reference Rate Revolving
Loans.
"Reference Rate Revolving Loans" means a Revolving Loan during
any period in which it bears interest based on the Reference Rate.
"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, without limitation, the movement of
Contaminants through or in the air, soil, surface water, groundwater or real
estate or other property.
"Rental Reserve", with respect to any lease of real estate by
the Borrower or any Guarantor, shall mean, as of any date, an amount equal to
the next three months of Rental that would be payable by the Borrower or such
Guarantor under such lease.
"Rental" means all payments due from the lessee or sublessee
under a lease, including, without limitation, basic rent, percentage rent,
prepaid taxes, utility and maintenance costs, and insurance premiums.
"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 any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or of a Public
Authority.
13
"Restricted Investment" means any acquisition of Property by
the Borrower or any of its Subsidiaries in exchange for cash or other Property,
whether in the form of an acquisition of stock, debt security, or other
indebtedness or obligation, or the purchase or acquisition of any other
Property, or a loan, advance, capital contribution, or subscription, except
acquisitions of the following: (a) fixed assets to be used in the business of
the Borrower or any Guarantor, so long as the acquisition costs thereof
constitute Capital Expenditures permitted hereunder; (b) current assets arising
from the sale or lease of goods or rendition of services in the ordinary course
of business of the Borrower or any Guarantor; (c) 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 one
year from the date of acquisition thereof; (d) certificates of deposit maturing
within one year 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
$100,000,000; (e) commercial paper given the highest rating by a national credit
rating agency and maturing not more than 270 days from the date of creation
thereof; (f) interest rate cap agreements; (g) interest rate swap agreements
entered into on a basis consistent with past practices and having, in the
aggregate, a settlement risk not in excess of $100,000; (h) that certain
Certificate of Deposit of NationsBank, N.A. in the face amount of $5,000; and
(i) transfers of Inventory or other property between CCI and the Guarantors
consistent with past practices.
"Reversions" means any funds which may become due to the
Borrower or any Guarantor in connection with the termination of any Plan or
other employee benefit plan.
"Revolving Loans" has the meaning specified in Section 2.2.
"Security Agreements" means the Security Agreements, each
dated as of the date hereof, executed and delivered by each Guarantor to the
Lender to evidence and perfect the Lender's security interest in the Guarantor
Collateral described therein.
"Security Interest" means collectively the Liens granted to
the Lender in the Collateral pursuant to this Agreement, the other Loan
Documents, or any other agreement or instrument.
"Solvent" shall mean when used with respect to any Person
that: (a) the fair value of all its Property is in excess of the total amount of
its debts (including, without limitation, contingent liabilities); (b) it is
able to pay its debts as they mature; (c) it does not have unreasonably small
capital for the business in which it is engaged or for any business or
transaction in which it is about to engage; and (d) it is not "insolvent" as
such term is defined in Section 101(32) of the Bankruptcy Code.
"Stated Termination Date" means October 31, 1999.
14
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 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 Borrower.
"Taxes" means any and all present or future taxes,
assessments, levies, imposts, impositions, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of the Lender,
such taxes (including, without limitation, income taxes or franchise taxes) as
are imposed on or measured by the Lender's net income by the jurisdiction (or
any political subdivision thereof) under the laws of which the Lender is
organized or maintains a lending office.
"Total Facility" has the meaning specified in Section 2.1.
"Trademark Security Agreements" means the Trademark Security
Agreements, each dated as of the date hereof, executed and delivered by the
Borrower and Xxxxxxxx Xxxxxx, Inc. to the Lender.
"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 Line Fee" has the meaning specified in Section 3.1(c).
"Xxxxxxxxx Family" means Xxxxx X. Xxxxxxxxx; Xxxx X. Xxxxxxxxx
and each member of his immediate family; Xxxxx X. Xxxxxxxxx and each member of
her immediate family; and trusts the primary beneficiaries of which are one or
more of the foregoing individuals.
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 is used in the preparation of the Financial Statements.
Other Terms. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
Wherever appropriate in the context, terms used herein in the singular also
include the plural, and vice versa, and each masculine, feminine, or neuter
pronoun shall also include the other genders. Unless the context indicates
otherwise, all section and schedule references herein are to Sections hereof and
Schedules hereto, respectively.
15
2. LOANS AND LETTERS OF CREDIT.
2.1 Total Facility. Subject to all of the terms and conditions
of this Agreement, the Lender shall make available a total credit facility in
the aggregate amount of $25,000,000 (the "Total Facility") for the Borrower's
use from time to time during the term of this Agreement. The Total Facility
shall be comprised of: a revolving line of credit up to the limits of the
Availability, consisting of revolving loans and letters of credit as described
in Sections 2.2 and 2.3.
2.2 Revolving Loans.
(a) The Lender shall, upon the Borrower's request
from time to time, make revolving loans (the "Revolving Loans") to the Borrower
(subject to the Total Facility) up to the limits of the Availability. The
Lender, in its discretion, may elect to make Revolving Loans or cause the
issuance of Letters of Credit (as provided for in Section 2.3) in excess of the
limits of the Availability on one or more occasions, but, if it does so, the
Lender shall not be deemed thereby to have changed the limits of the
Availability for the Borrower or to be obligated to exceed the limits of the
Availability on any other occasion. If the sum of the outstanding Revolving
Loans, the undrawn amount of outstanding Letters of Credit and any unpaid
reimbursement obligations in respect of Letters of Credit exceeds the
Availability (determined for this purpose as if the amount of the Revolving
Loans were zero), then the Lender may refuse to make or otherwise restrict
Revolving Loans on such terms as the Lender determines until such excess has
been eliminated. The Borrower may request Revolving Loans either telephonically
or in writing. Each oral request for a Revolving Loan shall be conclusively
presumed to be made by a person authorized by the Borrower to do so, and the
crediting of a Revolving Loan to the Borrower's deposit account, or transmittal
to such Person as the Borrower shall direct, shall conclusively establish the
obligation of the Borrower to repay such Revolving Loan as provided herein. The
Lender will charge all Revolving Loans to and other Obligations of the Borrower
to a loan account of the Borrower maintained with the Lender. All fees,
commissions, costs, expenses, and other charges under or pursuant to the Loan
Documents, and all payments made and out-of-pocket expenses incurred by the
Lender pursuant to the Loan Documents, will be charged as Revolving Loans to the
Borrower's loan account as of the date due from the Borrower or the date paid or
incurred by the Lender, as the case may be.
(b) Procedure for Borrowing.
(i) Each Borrowing shall be made upon the
Borrower's irrevocable written notice delivered to the Lender in the form of a
Notice of Borrowing (which notice must be received by the Lender prior to 11:00
a.m. (New York City time)) (1) three Business Days prior to the requested
Funding Date, in the case of LIBOR Rate Loans, and (2) on the requested Funding
Date, in the case of Reference Rate Loans, specifying:
(A) the amount of the Borrowing;
16
(B) the requested Funding Date, which shall
be a Business Day;
(C) whether the Revolving Loans requested
are to be Reference 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
consisting of LIBOR Rate Loans, such Interest Period shall be one month;
provided, however, that, with respect to the Borrowings to be made on the
Closing Date, such Borrowings will consist of Reference Rate Revolving Loans
only.
(ii) After giving effect to any Borrowing,
there may not be more than five different Interest Periods in effect.
(iii) With respect to any request for
Reference Rate Revolving Loans, in lieu of delivering the above-described Notice
of Borrowing the Borrower may give the Lender 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 Lender shall be entitled
to rely on the telephonic notice in making such Revolving Loans.
2.3 Letters of Credit. (a) Subject to the terms and conditions
of this Agreement, the Lender shall, upon the Borrower's request from time to
time, cause merchandise or standby letters of credit to be issued for the
Borrower's account by the Lender or another issuer reasonably acceptable to the
Borrower and the Lender (the "Letters of Credit"). The Lender will not cause to
be issued any Letter of Credit if: (i) the maximum face amount of the requested
Letter of Credit, plus the aggregate undrawn face amount of all outstanding
Letters of Credit, would exceed $1,000,000; (ii) the maximum face amount of the
requested Letter of Credit, and all commissions, fees, and charges due from the
Borrower to the Lender in connection with the opening thereof, would cause the
Availability to be exceeded at such time; or (iii) the expiration date of the
Letter of Credit would exceed the Stated Termination Date or any renewal term or
be greater than (A) 12 months from the date of issuance if such Letter of Credit
is a standby Letter of Credit or (B) 180 days from the date of issuance if such
Letter of Credit is a merchandise Letter of Credit. All payments made and
expenses incurred by the Lender pursuant to or in connection with the Letters of
Credit will be charged to the Borrower's loan account as Reference Rate Loans.
(b) Other Conditions. In addition to being
subject to the satisfaction of the applicable conditions precedent contained in
Section 11, the obligation of the Lender to cause to be issued any Letter of
Credit is subject to the following conditions precedent having been satisfied in
a manner satisfactory to the Lender:
(1) The 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
17
prescribe, an application in form and substance satisfactory to such proposed
issuer and the Lender 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 Lender and
such proposed issuer; and
(2) As of the date of issuance, no order of
any court, arbitrator or Public 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 Public 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.
(c) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrower
shall give the Lender two Business Days' prior written notice of the 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 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 Borrower shall attach to such notice the proposed form of the Letter
of Credit that the Lender is requested to cause to be issued.
(2) No Extensions or Amendment. The Lender
shall not be obligated to cause any Letter of Credit to be extended or amended
unless the requirements of this Section 2.3 are met as though a new Letter of
Credit were being requested and issued.
(d) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations.
The Borrower agrees to reimburse the issuer for any draw under any Letter of
Credit 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 immediately when due, irrespective of
any claim, setoff, defense or other right which the Borrower may have at any
time against such issuer or any other Person.
(2) Reference Rate Loans to Satisfy
Reimbursement Obligations. In the event that the issuer of any Letter of Credit
honors a draw under such Letter of Credit and the Borrower shall not have repaid
such amount to the issuer of such Letter of Credit pursuant to Section
2.3(d)(1), the Lender shall pay the issuer and such amount when paid shall
constitute a Reference Rate Loan which shall be deemed to have been requested by
the Borrower.
18
(e) Compensation for Letters of Credit.
(1) Letter of Credit Fee. The Borrower
agrees to pay to the Lender, with respect to each Letter of Credit, the Letter
of Credit Fee specified in, and in accordance with the terms of, Section 3.7.
(2) Issuer Fees and Charges. The Borrower
shall pay to the issuer of any Letter of Credit, or to the Lender 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 such issuer, 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.
(f) Indemnification; Exoneration; Power of
Attorney.
(1) Indemnification. In addition to amounts
payable as elsewhere provided in this Section 2.3, the Borrower hereby agrees to
protect, indemnify, pay and save the Lender harmless from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including, without limitation, reasonable attorneys' fees) which the Lender may
incur or be subject to as a consequence, direct or indirect, of the issuance of
any Letter of Credit or the provision of any credit support or enhancement in
connection therewith except to the extent arising from the willful misconduct or
gross negligence of the Lender. The agreement in this Section 2.3(f)(1) shall
survive payments of all Obligations.
(2) Assumption of Risk by the Borrower. As
between the Borrower and the Lender, the 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 other than risks arising from the gross
negligence or willful misconduct of the Lender. In furtherance and not in
limitation of the foregoing and to the extent not arising from the willful
misconduct or gross negligence of the Lender, the Lender 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 to 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 of any drawing under such Letter of Credit; or (H) any consequences
arising from causes beyond the control of the
19
Lender, including, without limitation, any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Public Authority. None of
the foregoing shall affect, impair or prevent the vesting of any rights or
powers of the Lender under this Section 2.3.
(3) Exoneration. In furtherance and
extension, and not in limitation, of the specific provisions set forth above, no
action taken or omitted by the 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 put the Lender under
any resulting liability to the Borrower or relieve the Borrower of any of its
obligations hereunder.
(4) Power of Attorney. In connection with
all Inventory financed by Letters of Credit, the Borrower hereby appoints the
Lender, or the Lender's designee, as the Borrower's attorney, with full power
and authority: (a) to sign and/or endorse the Borrower's name upon any warehouse
or other receipts; (b) to sign the Borrower's name on bills of lading and other
negotiable and non-negotiable documents; (c) to clear Inventory through customs
in the Lender's or the Borrower's name, and to sign and deliver to customs
officials powers of attorney in the Borrower's name for such purpose; (d) to
complete in the Borrower's or the Lender'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 Lender to obtain possession of the Inventory and to
obtain payment of the Obligations. Neither the Lender nor its designee, as the
Borrower's attorney, shall be liable for any acts or omissions, nor for any
error of judgment or mistakes of fact or law, except for willful misconduct or
gross negligence. This power, being coupled with an interest, is irrevocable
until all Obligations have been paid and satisfied.
(5) Account Party. The Borrower hereby
authorizes and directs any issuer of a Letter of Credit to name the Borrower as
the "account party" therein, to deliver to the Lender 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 Lender'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, the Borrower shall, at the
Lender's request, instruct all suppliers, carriers, forwarders, warehouses or
others receiving or holding cash, checks, Inventory, documents or instruments in
which the Lender holds a security interest to deliver them to the Lender and/or
subject to the Lender's order and, if they shall come into the Borrower's
possession, the Borrower shall deliver them, upon request, to the Lender in
their original form. The Borrower shall also, at the Lender's request, designate
the Lender as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
(g) Supporting Letter of Credit; Cash Collateral.
If, notwithstanding the provisions of this Section 2.3 and Section 14, any
Letter of Credit is outstanding upon the termination of this Agreement, then
upon such termination the Borrower shall deposit with the Lender, at its
discretion, with respect to each Letter of Credit then outstanding, either (A) a
20
standby letter of credit (a "Supporting Letter of Credit") in form and substance
satisfactory to the Lender, issued by an issuer satisfactory to the Lender in an
amount equal to the greatest amount for which such Letter of Credit may be
drawn, under which Supporting Letter of Credit the Lender is entitled to draw
amounts necessary to reimburse the Lender for payments made by the Lender under
such Letter of Credit or under any credit support or enhancement provided
through the Lender with respect thereto, or (B) cash in amounts necessary to
reimburse the Lender for payments made by the Lender under such Letter of Credit
or under any credit support or enhancement provided through the Lender. Such
Supporting Letter of Credit or deposit of cash shall be held by the Lender as
security for, and to provide for the payment of, the aggregate undrawn amount of
such Letters of Credit remaining outstanding.
3. INTEREST AND OTHER CHARGES.
3.1 Interest.
(a) 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 Reference
Rate or the LIBOR Rate and Section 3.1 (a)(i) or Section 3.1(a)(ii), as
applicable, but not to exceed the Maximum Rate referred to in Section 3.3.
Subject to the provisions of Section 3.2, any of the Loans may be converted
into, or continued as, Reference Rate Loans or LIBOR Rate Loans in the manner
provided in Section 3.2. If at any time Loans are outstanding with respect to
which notice has not been delivered to the Lender in accordance with the terms
of this Agreement specifying the basis for determining the interest rate
applicable thereto, then those Loans shall be Reference Rate Loans and shall
bear interest at a rate determined by reference to the Reference Rate until
notice to the contrary has been given to the Lender and such notice has become
effective. Except as otherwise provided herein, the Obligations shall bear
interest as follows:
(i) For all Reference Rate Loans and other
Obligations (other than LIBOR Rate Loans), at a fluctuating per annum rate equal
to the Reference Rate plus the Applicable Margin; and
(ii) For all LIBOR Rate Loans, at a per
annum rate for each Interest Period therefor equal to the LIBOR Rate for such
Interest Period plus the Applicable Margin.
Each change in the Reference 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. All interest shall be payable to the Lender on the first day of each
month hereafter.
(b) If any Event of Default occurs, then, from the
date such Event of Default occurs until it is cured, or, if not cured, until all
Obligations are paid and performed in
21
full, the Borrower shall pay interest on the unpaid principal balances of the
Revolving Loans at a per annum rate 2% greater than the rate of interest
otherwise specified herein, and the Letter of Credit Fee shall be increased to
three and one-half percent (3.50%) per annum.
(c) Unused Line Fee. For every month during the
term of this Agreement, the Borrower agrees to pay the Lender a fee (the "Unused
Line Fee") in an amount equal to one-quarter of one percent (.25%) per annum
(i.e., 1/12 of .25% per month), multiplied by the average daily amount by which
the Total Facility exceeds the sum of (i) the average daily outstanding amount
of Revolving Loans and (ii) the undrawn face amount of all outstanding Letters
of Credit during such month, with the unpaid balance calculated for this purpose
by applying payments immediately upon receipt. Such a fee, if any, shall be
financed by the Lender as a Revolving Loan to the Borrower, shall be calculated
on the basis of a year of 360 days and actual days elapsed and shall be payable
to the Lender on the first day of each month with respect to the prior month.
3.2 Conversion and Continuation Elections.
(a) The Borrower may, upon irrevocable written
notice to the Lender in accordance with Section 3.2(b):
(i) elect, as of any Business Day, in the
case of Reference Rate Loans to convert any such Loans (or any part
thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of any
Interest Period applicable thereto, to continue to maintain as LIBOR Rate
Loans any LIBOR Rate Loans to the Borrower having Interest Periods
expiring on such day;
provided that the Borrower may not make such election if any LIBOR Rate Loans
resulting from such election would be in an amount less than $4,000,000 or an
integral multiple of $1,000,000 in excess thereof; provided further 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
$4,000,000, such LIBOR Rate Loans shall automatically convert into Reference
Rate Loans, and on and after such date the right of the Borrower to continue
such Loans as, and convert such Loans into, LIBOR Rate Loans, as the case may
be, shall terminate.
(b) The Borrower shall deliver a notice ("Notice
of Conversion/Continuation") to be received by the Lender not later than 11:00
a.m. (New York City time) at least three Business Days in advance of the date of
conversion or continuation (the "Conversion/Continuation Date") if the Loans are
to be converted into or continued as LIBOR Rate Loans, and specifying:
(A) the proposed Conversion/Continuation
Date;
(B) the aggregate amount of Loans to be
converted or continued;
22
(C) the type of Loans resulting from the
proposed conversion or continuation; and
(D) the duration of the requested Interest
Period.
(c) If, upon the expiration of any Interest Period
applicable to LIBOR Rate Loans, the Borrower has failed to select timely a new
Interest Period to be applicable to such LIBOR Rate Loans or, if any Event or
Event of Default then exists and the Lender shall have given notice that no
Libor Rate Loans will be made available, the Borrower shall be deemed to have
elected to convert such LIBOR Rate Loans into Reference Rate Loans effective as
of the expiration date of such Interest Period.
(d) During the existence of an Event or Event of
Default, the Lender may give the Borrower notice that no LIBOR Rate Loans will
be made available to the Borrower and the Borrower may not elect to have a Loan
converted into or continued as a LIBOR Rate Loan.
(e) After giving effect to any conversion or
continuation of Loans, there may not be more than five different Interest
Periods in effect.
3.3 Maximum Interest Rate. In no event shall any interest rate
provided for hereunder exceed the maximum rate permissible for corporate
borrowers 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 that would have been paid if the same had not been
limited by the Maximum Rate. In the event that, upon payment in full of the
Obligations under this Agreement, the total amount of interest paid or accrued
by the Borrower 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 Borrower shall, to the extent permitted by applicable law,
pay the Lender an amount equal to the excess of (a) the lesser of (i) the amount
of interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the
interest rates otherwise set forth in this Agreement, at all times, been in
effect over (b) the amount of interest actually paid or accrued under this
Agreement. In the event that a court determines that the Lender has received
from the Borrower 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 of the Borrower other than
interest, in the inverse order of maturity, and, if there are no Obligations
outstanding, the Lender shall refund to the Borrower such excess.
3.4 Facility Fee. The Borrower agrees to pay the
Lender on the Closing Date a facility fee in the aggregate amount of $93,750
(the "Facility Fee"). The Lender
23
acknowledges that it received $75,000 of the Facility Fee prior to the Closing
Date. The Lender and the Borrower agree that as of the Closing Date the Facility
Fee shall be financed by the Lender as a Revolving Loan to the Borrower.
3.5 [Intentionally Left Blank].
3.6. [Intentionally Left Blank].
3.7 Letter of Credit Fee. The Borrower agrees to pay
to the Lender a fee (the "Letter of Credit Fee") equal to one and one-half
percent (1.50%) per annum of the undrawn face amount of each Letter of Credit
issued for the Borrower's account at the Borrower's request, plus all
out-of-pocket costs, fees and expenses incurred by the Lender 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 Lender 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 monthly in arrears on the first day of each month following any
month in which a Letter of Credit was issued and/or in which a Letter of Credit
remains outstanding. The Letter of Credit Fee shall be financed by the Lender as
a Revolving Loan to the Borrower and shall be computed on the basis of a 360-day
year for the actual number of days elapsed.
4. PAYMENTS AND PREPAYMENTS.
4.1 Revolving Loans. The Borrower shall repay the
outstanding principal balance of the Revolving Loans, plus all accrued but
unpaid interest thereon, upon the termination of this Agreement for any reason.
In addition, and without limiting the generality of the foregoing, the Borrower
shall pay to the Lender, on demand, the amount by which the unpaid principal
balance of the Revolving Loans at any time exceeds the Availability at such time
(determined for this purpose as if the amount of the Revolving Loans were zero).
4.2 [Intentionally Left Blank].
4.3 [Intentionally Left Blank].
4.4 [Intentionally Left Blank].
4.5 Place and Form of Payments; Extension of Time. All
payments by the Borrower of principal, interest, premium, and other sums due to
the Lender shall be made at the Lender's address set forth in Section 15.11.
Except for Proceeds received directly by the Lender, all such payments shall be
made in immediately available funds. Subject to the provisions set forth in the
definition of "Interest Period", if any payment by the Borrower of principal,
interest, premium, or other sum to be made hereunder becomes due and payable on
a day other than a Business Day, the due date of such payment shall be extended
to the next succeeding Business Day and interest thereon shall be payable at the
applicable interest rate during such extension.
24
4.6 Application and Reversal of Payments. During the
continuation of an Event of Default, the Lender may determine in its sole
discretion the order and manner in which Proceeds of Collateral and other
payments that the Lender receives are applied to the Revolving Loans, interest
thereon, and the other Obligations, and the Borrower hereby irrevocably waives
the right to direct the application of any payment or Proceeds. During the
continuation of an Event of Default, the Lender shall have the continuing and
exclusive right to apply and reverse and reapply any and all such Proceeds and
payments to any portion of the Obligations.
4.7 INDEMNITY FOR RETURNED PAYMENTS. IF, AFTER RECEIPT
OF ANY PAYMENT WHICH IS APPLIED TO THE PAYMENT OF ALL OR ANY PART OF THE
OBLIGATIONS, THE LENDER IS FOR ANY REASON COMPELLED TO SURRENDER SUCH PAYMENT TO
ANY PERSON BECAUSE SUCH PAYMENT IS INVALIDATED, DECLARED FRAUDULENT, SET ASIDE,
DETERMINED TO BE VOID OR VOIDABLE AS A PREFERENCE, AN 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, THIS AGREEMENT
SHALL CONTINUE IN FULL FORCE AS IF SUCH PAYMENT HAD NOT BEEN RECEIVED BY THE
LENDER, AND THE BORROWER SHALL BE LIABLE TO PAY TO THE LENDER AND HEREBY DOES
INDEMNIFY THE LENDER AND HOLD THE LENDER HARMLESS FOR THE AMOUNT OF SUCH PAYMENT
SURRENDERED. The provisions of this Section 4.7 shall be and remain effective
notwithstanding any contrary action which may have been taken by the Lender in
reliance upon such payment, and any such contrary action so taken shall be
without prejudice to the Lender's rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable. The provisions of this Section 4.7 shall survive the termination of
this Agreement.
5. LENDER'S BOOKS AND RECORDS; MONTHLY STATEMENTS. Within 20 days
after the end of each calendar month, the Lender shall provide to the Borrower a
monthly statement of Loans, payments, and other transactions of the Borrower
pursuant to this Agreement. Such statement shall be deemed correct, accurate,
and binding on the Borrower and as an account stated (except for reversals and
reapplications of payments made as provided in Section 4.6 and corrections of
errors discovered by the Lender), unless the Borrower notifies the Lender in
writing to the contrary within 45 days after such statement is given or deemed
given as provided in Section 15.11. In the event a timely written notice of
objections is given by Borrower, only the items to which exception is expressly
made will be considered to be disputed.
6. TAXES, YIELD PROTECTION AND ILLEGALITY
6.1 Taxes.
(a) Any and all payments by the Borrower to the
Lender 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
Borrower shall pay all Other Taxes.
25
(b) The Borrower agrees to indemnify and hold
harmless the Lender for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by the Lender and any liability
(including, without limitation, 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 45 days after the date the Lender makes
written demand therefor.
(c) If the 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 Lender, then:
(i) the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including, without limitation, deductions and withholdings applicable to
additional sums payable under this Section) the Lender receives an amount equal
to the sum it would have received had no such deductions or withholdings been
made;
(ii) the Borrower shall make such deductions
and withholdings;
(iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to the
Lender, at the time interest is paid, all additional amounts which the Lender
specifies as being necessary to preserve the after-tax yield the Lender would
have received if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment
by the Borrower of Taxes or Other Taxes, the Borrower shall furnish the Lender
the original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to the Lender.
6.2 Illegality. (a) If the 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 Public Authority has asserted
that it is unlawful, for the Lender or its applicable lending office to make
LIBOR Rate Loans, then, on notice thereof by the Lender to the Borrower, any
obligation of the Lender to make LIBOR Rate Loans shall be suspended until the
Lender notifies the Borrower that the circumstances giving rise to such
determination no longer exists.
(b) If the Lender determines that it is unlawful
to maintain any LIBOR Rate Loan, the Borrower shall, upon its receipt of notice
of such fact and demand from the Lender, prepay in full such LIBOR Rate Loans
then outstanding, together with interest accrued thereon and amounts required
under Section 6.4, 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,
26
or immediately, if the Lender may not lawfully continue to maintain such LIBOR
Rate Loan. If the Borrower is required so to prepay any LIBOR Rate Loan, then,
concurrently with such prepayment, the Borrower shall borrow from the Lender, in
the amount of such repayment, a Reference Rate Loan.
6.3 Increased Costs and Reduction of Return. (a) If
the 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 the
Lender with any guideline or request from any central bank or other Public
Authority (whether or not having the force of law), there shall be any increase
in the cost to the Lender of agreeing to make or making, funding or maintaining
any LIBOR Rate Loans, then the Borrower shall be liable for, and shall from time
to time, upon demand, pay to the Lender, such additional amounts as are
sufficient to compensate the Lender for such increased costs.
(b) If the 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
Public Authority charged with the interpretation or administration thereof, or
(iv) compliance by the Lender or any corporation controlling the Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital,
reserves, or special deposits required or expected to be maintained by the
Lender or any corporation controlling the Lender and (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy
and such Lender's desired return on capital) determines that the amount of such
capital, reserves, or special deposits is increased as a consequence of its
loans, credits or obligations under this Agreement, then, upon demand of the
Lender to the Borrower, the Borrower shall pay to the Lender, from time to time
as specified by the Lender, additional amounts sufficient to compensate the
Lender for such increase. Notwithstanding the foregoing, all such amounts shall
be subject to the provisions of Section 3.3.
6.4 Funding Losses. The Borrower shall reimburse the
Lender and hold the Lender harmless from any loss or expense which the Lender
may sustain or incur as a consequence of:
(a) the failure of the Borrower to make on a
timely basis any payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow,
continue or convert a Loan after the 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,
without limitation, after acceleration thereof) by the Borrower of any LIBOR
Rate Loan on a day that is not the last day of the relevant Interest Period;
27
including, without limitation, 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.
6.5 Inability to Determine Rates. If the Lender
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 Lender of funding such Loan, the Lender will promptly so
notify the Borrower. Thereafter, the obligation of the Lender to make or
maintain LIBOR Rate Loans hereunder shall be suspended until the Lender revokes
such notice in writing. Upon receipt of such notice, the Borrower may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by the
Borrower. If the Borrower does not revoke such Notice, the Lender shall make,
convert or continue the Loans, as proposed by the Borrower, in the amount
specified in the applicable notice submitted by the Borrower, but such Loans
shall be made, converted or continued as Reference Rate Loans instead of LIBOR
Rate Loans.
6.6 Survival. The agreements and obligations of the
Borrower in this Section 6 shall survive the payment of all other Obligations.
7. COLLATERAL.
7.1 Grant of Security Interest.
(a) As security for the Obligations, the Borrower
hereby grants to the Lender a continuing security interest in, lien on,
assignment of and right of set-off against, all of the following property of the
Borrower, whether now owned or existing or hereafter acquired or arising,
regardless of where located: (i) all Receivables, Inventory, Assigned Contracts,
Proprietary Rights, and Proceeds, wherever located and whether now existing or
hereafter arising or acquired; (ii) all moneys, securities and the Proceeds
thereof, now or hereafter held or received by, or in transit to, the Lender from
or for the Borrower, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, including, without limitation, all of the Borrower's
deposit accounts, credits, and balances with the Lender and all claims of the
Borrower against the Lender at any time existing; (iii) all of the Borrower's
deposit accounts with any financial institutions with which the Borrower
maintains deposits; and (iv) all books, records and other Property relating to
or referring to any of the foregoing, including, without limitation, all books,
records, ledger cards, data processing records, computer software and other
property and general intangibles at any time evidencing or relating to the
Receivables, Inventory, Assigned Contracts, Proprietary Rights, Proceeds, and
other property referred to above (all of the foregoing, together with all other
property in which the Lender may at any time be granted a Lien, being herein
collectively referred to as the "Collateral"). The Lender shall have all of the
rights of a secured party with respect to the Collateral under the UCC and other
applicable laws.
28
(b) [Intentionally Left Blank].
(c) All Obligations shall be secured by all of the
Collateral. The Lender may, in its sole discretion, (i) exchange, waive, or
release any of the Collateral, (ii) apply Collateral and direct the order or
manner of sale thereof as the Lender may determine, and (iii) settle,
compromise, collect, or otherwise liquidate any Collateral in any manner, all
without affecting the Obligations or the Lender's right to take any other action
with respect to any other Collateral.
7.2 Perfection and Protection of Security Interest.
The Borrower shall, at its expense, perform all steps requested in good faith by
the Lender at any time to perfect, maintain, protect, and enforce the Security
Interest, including, without limitation: (a) executing and recording of the
Trademark Security Agreements and executing and filing financing or continuation
statements, and amendments thereof, in form and substance satisfactory to the
Lender; (b) delivering to the Lender the originals of all instruments,
documents, and chattel paper, and all other Collateral of which the Lender
determines it should have physical possession in order to perfect and protect
the Security Interest therein, duly endorsed or assigned to the Lender without
restriction; (c) delivering to the Lender upon request warehouse receipts
covering any portion of the Collateral located in warehouses and for which
negotiable warehouse receipts are issued; (d) executing and delivering to the
Lender upon request a security agreement relating to the Reversions in form and
substance satisfactory to the Lender; (e) delivering to the Lender upon request
all letters of credit on which the Borrower or a Guarantor is named beneficiary;
and (f) taking such other steps as are deemed necessary by the Lender to
maintain the Security Interest. To the extent permitted by applicable law, the
Lender may file, without the Borrower's signature, one or more financing
statements disclosing the Security Interest. The Borrower agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. If any Collateral or
Guarantor Collateral is at any time in the possession or control of any
warehouseman, any bailee or any agent of the Borrower or any Guarantor or
processors, then the Borrower shall notify (or cause the relevant Guarantor to
notify) the Lender thereof and shall notify such Person of the Lender's security
interest in such Collateral and Guarantor Collateral, as the case may be, and,
upon the Lender's request, instruct such Person to hold all such Collateral and
Guarantor Collateral, as the case may be, for the Lender's account subject to
the Lender's instructions. If at any time any Collateral or Guarantor Collateral
is located on any Premises that are not owned by the Borrower or any Guarantor,
then the Borrower shall request (or cause the relevant Guarantor to request)
written waivers, in form and substance satisfactory to the Lender, of all
present and future Liens to which the owner or lessor or any mortgagee of such
Premises may be entitled to assert against the Collateral and Guarantor
Collateral, as the case may be; provided, however, if such waivers are not
obtained by the 90th day after the Closing Date, the Lender, in its discretion,
may, thereafter, establish a Rental Reserve with respect to such Premises. The
Lender shall give the Borrower three Business Days' notice of the establishment
of any Rental Reserve, by location. From time to time, the Borrower shall, upon
the Lender's request, execute and deliver confirmatory written instruments
pledging to the Lender the Collateral, but the Borrower's failure to do so shall
not affect or limit the Security Interest or the Lender's
29
other rights in and to the Collateral. So long as this Agreement is in effect
and until all Obligations have been fully satisfied, the Security Interest shall
continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Availability or as the basis for any
advance, loan, extension of credit, or other financial accommodation).
7.3 Location of Collateral. The Borrower represents
and warrants to the Lender that: (a) Schedule 7.3 hereto is a correct and
complete list of the Borrower's and each Guarantor's chief executive office, the
location of the books and records of the Borrower and each Guarantor, the
locations of the Collateral of the Borrower and Guarantor Collateral of each
Guarantor, and the locations of all of its and each Guarantor's other places of
business and (b) Schedule 7.3 correctly identifies any of such facilities and
locations that are not owned by the Borrower or any Guarantor and sets forth the
names of the owners and lessors or sub-lessors of such facilities and locations.
The Borrower covenants and agrees that it will not (and each Guarantor will not)
maintain any Collateral or Guarantor Collateral, as the case may be, at any
location other than (a) those listed on Schedule 7.3 and (b) those with respect
to which the Borrower has given notice to the Lender, has executed (or has
caused the relevant Guarantor to execute) any and all financing statements and
other documents that the Lender has required in connection therewith, and has
filed same in the appropriate places and within the time periods indicated by
the Lender. The Borrower shall give the Lender written notice 10 days prior to
the opening or closing of any store by the Borrower or any Guarantor.
7.4 Title to, Liens on, and Sale and Use of
Collateral. The Borrower represents and warrants to the Lender with respect to
Collateral owned by the Borrower that: (a) except for sales or transfers of
Inventory in the ordinary course of business, all Collateral is and will
continue to be owned by the Borrower free and clear of all Liens whatsoever,
except for the Security Interest and other Permitted Liens; (b) the Security
Interest will not be subject to any prior Lien except for the Liens described in
(b), (c), (d), (e), (f), (h), (i), (j), (k) and (l) of the definition of
Permitted Liens; (c) the Borrower will use, store, and maintain such Collateral
with all reasonable care and will use such Collateral for lawful purposes only;
and (d) the Borrower will not, without the Lender's prior written approval,
sell, lease, or dispose of or permit the sale or disposition of such Collateral
or any portion thereof, except for sales or transfers of Inventory in the
ordinary course of business. The inclusion of Proceeds in the Collateral shall
not be deemed the Lender's consent to any sale or other disposition of the
Collateral except as expressly permitted herein.
7.5 Appraisals. Whenever an Event of Default exists,
the Borrower shall, at its expense and upon the Lender's request, provide the
Lender with appraisals or updates thereof of any or all of the Collateral and
Guarantor Collateral from an appraiser reasonably acceptable to Lender.
Notwithstanding the foregoing, the Lender may obtain once during each calendar
year, at Lender's expense, appraisals or updates thereof of any or all of the
Collateral owned by the Borrower.
7.6 Access and Examination. The Lender may at all
reasonable times have access to, examine, audit, make extracts from and inspect
the Borrower's or any Guarantor's
30
records, files, and books of account and the Collateral and Guarantor Collateral
and may discuss the Borrower's affairs with the Borrower's officers and
management. The Borrower shall deliver to the Lender any instrument necessary
for the Lender to obtain records from any service bureau maintaining records for
the Borrower. The Lender may, at any time during the continuation of an Event of
Default, at Borrower's expense, make copies of all of the Borrower's books and
records, or require the Borrower to deliver the copies to the Lender. The Lender
may, without expense to the Lender, use such of the Borrower's personnel,
supplies, and Premises as may be reasonably necessary for maintaining or
enforcing the Security Interest. During the continuation of an Event of Default,
the Lender shall have the right, at any time, in the Lender's name or in the
name of a nominee of the Lender, to verify the validity, amount or any other
matter relating to the Accounts, by mail, telephone, or otherwise.
7.7 Insurance. The Borrower shall insure the
Collateral and Guarantor Collateral against loss or damage by fire with extended
coverage, theft, burglary, pilferage, loss in transit, and such other hazards as
the Lender shall specify, in amounts, under policies and by insurers acceptable
to the Lender. The Borrower shall also maintain flood insurance for Inventory
located on real estate, in the event of a designation of the area in which real
estate is located as a "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 Lender, and shall comply with SFHA requirements of
the National Flood Insurance Program as set forth therein. Upon the Lender's
request, the Borrower shall also maintain flood insurance for such Inventory as
is located at any time in an SFHA. The Borrower shall cause the Lender to be
named in each such policy as a secured party or mortgagee and loss payee or
additional insured, in a manner acceptable to the Lender. Each policy of
insurance shall contain a clause or endorsement requiring the insurer to give
not less than 30 days' prior written notice to the Lender in the event of
cancellation of the policy for any reason whatsoever and a clause or endorsement
stating that the interest of the Lender shall not be impaired or invalidated by
any act or neglect of the Borrower or the owner of any premises where Collateral
or Guarantor Collateral is located nor by the occupation of such premises for
purposes more hazardous than are permitted by such policy. The Borrower shall
pay, upon the Lender's request, all fees incurred by the Lender to determine
whether any of the real estate and other Collateral or Guarantor Collateral is
located in an SFHA. The Borrower shall also pay all premiums for such insurance
when due and shall deliver to the Lender certificates of insurance and, if
requested, photocopies of the policies. If the Borrower fails to pay such fees
or to procure such insurance or the premiums therefor when due, the Lender may
(but shall not be required to) do so and charge the costs thereof to Borrower's
loan account as a Reference Rate Loan. The Borrower shall promptly notify the
Lender of any loss, damage, or destruction to the Collateral or Guarantor
Collateral or arising from its use, whether or not covered by insurance. The
Lender is hereby authorized to collect all insurance proceeds directly. After
deducting from such proceeds the expenses, if any, incurred by the Lender in the
collection or handling thereof, the Lender may apply such proceeds to the
reduction of the Obligations in such order as the Lender determines or at the
Lender's option may permit or require the Borrower to use such money, or any
part thereof, to replace, repair, restore or rebuild the Collateral or Guarantor
Collateral
31
in a diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss, damage or
destruction.
7.8 Collateral Reporting. The Borrower shall provide
the Lender with the following documents (which shall include the Borrower and
each Guarantor) at the following times in form satisfactory to the Lender: (a)
on a weekly basis as of the end of the Borrower's fiscal week, a report of the
inventory balance (by location) based on the perpetual inventory reports no
later than four Business Days following the end of such fiscal week; (b) monthly
agings of accounts receivable no later than the 10th day of the following month;
(c) monthly departmental inventory reports, no later than the 10th day of the
following month; (d) monthly agings of accounts payable, no later than the 10th
day of the following month; (e) a monthly Sales to Gross Margin analysis report
by location (including, without limitation, summary information regarding the
results of cycle counts of Inventory), prepared in a manner consistent with the
Borrower's past practices, no later than the 30th day of the following month;
(f) upon reasonable request, additional cycle count information (including,
without limitation, work papers and other back-up information), copies of
purchase orders, invoices, and delivery documents for Inventory acquired by the
Borrower or any Guarantor; (g) on or before the fourth Business Day of each
week, a Borrowing Base Certificate in the form of Exhibit C, as of the last
Business Day of the prior week; (h) such other reports as to the Collateral as
the Lender shall reasonably request from time to time; and (i) certificates of
an officer of the Borrower or the relevant Guarantor certifying as to the
foregoing. If any of the Borrower's records or reports of the Collateral are
prepared by an accounting service or other agent, the Borrower hereby authorizes
such service or agent to deliver such records, reports, and related documents to
the Lender.
7.9 [Intentionally Left Blank].
7.10 Collection of Accounts; Payments.
(a) The Borrower shall, at its own cost and
expense, cause all Proceeds received by the Borrower or any Guarantor on account
of Accounts, Inventory and other Collateral or Guarantor Collateral, whether in
the form of cash, checks, notes, drafts, bills of exchange, money orders or
otherwise (referred to herein as "Payments"), to be deposited not less often
than once each Business Day in a Payment Account (either directly or following
deposit thereof in a deposit account maintained or established by the Borrower
at a bank acceptable to the Lender). The bank at which a Payment Account is
maintained shall execute and deliver to the Lender such agreements, in form and
substance mutually satisfactory to the Lender and the Borrower, as the Lender
shall request with respect to such accounts, including, without limitation, with
respect to prohibitions on the Borrower, upon notice from the Lender to the
bank, withdrawing funds from such accounts or otherwise directing or modifying
actions with respect to such accounts, and, providing that, upon notice from the
Lender to such bank, all funds deposited into such account shall be transferred
directly to the Lender on a daily basis; provided, however, the Lender may give
such notice or notices only if an Event of Default is continuing or if
Availability (without giving effect to any Rental Reserve) is less than
32
$3,000,000. The Lender or the Lender's designee may, at any time during the
continuance of an Event of Default, notify Account Debtors that the Accounts
have been assigned to the Lender and of the Lender's security interest therein
and may collect them directly and charge the collection costs and expenses to
the Borrower's loan account as a Revolving Loan. Upon the written request of the
Lender, the Borrower agrees to provide to the Lender a complete and accurate
list of all bank accounts maintained by Borrower and any Guarantor with any bank
or other financial institution.
(b) [Intentionally Left Blank].
(c) All payments received by the Lender on account
of Accounts or as proceeds of other Collateral, or Guarantor Collateral, shall
be credited to the Borrower's loan account with the Lender, shall be the
Lender's sole property and, if received in the Lender's account by 2:00 p.m.
(New York City time) on any day, shall be credited to the Borrower's loan
account (conditional upon final collection) on such day. Notwithstanding the
foregoing, all payments shall be deemed to be credited to the Borrower's loan
account immediately upon receipt for purposes of determining (i) Availability
and (ii) the Unused Line Fee whether or not received before or after 2:00 p.m.
(New York City time).
(d) In the event that the Borrower repays all of
the Obligations upon the termination of this Agreement, other than through the
Lender's receipt of payments on account of Accounts or Proceeds of other
Collateral or Guarantor Collateral under the Security Agreements, such payment
will be credited (conditional upon final collection) to the Borrower's loan
account immediately upon receipt if received in the Lender's account by 2:00
p.m. (New York City time)
7.11 Inventory. The Borrower represents and warrants to
the Lender that all of the Inventory is and will be held for sale or lease, or
is to be furnished in connection with the rendition of services in the ordinary
course of the Borrower's business, and is and will be fit for such purposes. The
Borrower shall keep the Inventory in good and marketable condition, at the
Borrower's own expense. The Borrower shall not, without prior written notice to
the Lender, acquire or accept any Inventory on consignment or approval. The
Borrower agrees that all Inventory that the Borrower may produce will be
produced in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations, and orders thereunder. The Borrower shall
maintain, and shall cause each Guarantor to maintain, a perpetual inventory
reporting system at all times. The Borrower shall conduct a physical count of
the Inventory at least once per Fiscal Year and, if an Event of Default is
continuing, at such other times as the Lender requests and shall promptly supply
the Lender with a copy of such count accompanied by a report of the value of
such Inventory (valued at the lower of cost, on a weighted average cost basis,
or market value). The Borrower shall not, without the Lender's prior written
consent, sell any Inventory on a xxxx-and-hold, guaranteed sale, sale on
approval, consignment, or other such repurchase or return basis. Notwithstanding
the foregoing, the Borrower may sell on a sale and return basis to retail
customers.
7.12 [Intentionally Left Blank].
33
7.13 Assigned Contracts. Borrower shall fully perform
all of its obligations under each of the Assigned Contracts and shall enforce
all of its rights and remedies thereunder as it deems appropriate in its
business judgment, provided, however, that the Borrower shall not take any
action or fail to take any action with respect to the Assigned Contracts that
would result in a waiver or other loss of any material right or remedy of the
Borrower thereunder. Without limiting the generality of the foregoing, the
Borrower shall take all action necessary or appropriate to permit, and shall not
take any action which would have any adverse effect upon, the full enforcement
of all indemnification rights under the Assigned Contracts. Except in the
ordinary course of business, the Borrower shall not, without the Lender's prior
written consent, modify, amend, supplement, compromise, satisfy, release, or
discharge any of the Assigned Contracts, any collateral securing the same, any
Person liable directly or indirectly with respect thereto, or any agreement
relating to any of the Assigned Contracts or the collateral therefor. The
Borrower shall notify the Lender in writing, promptly after the Borrower becomes
aware thereof, of any event or fact which could give rise to a claim by the
Borrower for indemnification under any of the Assigned Contracts and shall
diligently pursue such right and report to the Lender on all further
developments with respect thereto. The Borrower shall remit directly to the
Lender during the continuation of an Event of Default for application to the
Obligations, in such order as the Lender determines, all amounts received by the
Borrower as indemnification or otherwise pursuant to the Assigned Contracts. If
the Borrower shall fail after the Lender's demand to pursue diligently any right
under the Assigned Contracts, or if an Event of Default exists, then the Lender,
subject to the terms and conditions of the Assigned Contracts, may directly
enforce such right in its own or the Borrower's name and may enter into such
settlements or other agreements with respect thereto as the Lender determines.
All amounts thereby recovered by the Lender, after deducting the Lender's costs
and expenses in connection therewith, shall be applied to the Obligations in
such order as the Lender determines. In any suit, proceeding or action brought
by the Lender under any Assigned Contract for any sum owing thereunder or to
enforce any provision thereof, the Borrower shall indemnify and hold the Lender
harmless from and against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment, or reduction of liability whatsoever
of the obligor thereunder arising out of a breach by the Borrower of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing from the Borrower to or in favor of such obligor or
its successors. All such obligations of the Borrower shall be and remain
enforceable only against the Borrower and shall not be enforceable against the
Lender. Notwithstanding any provision hereof to the contrary, the Borrower shall
at all times remain obligated to observe and perform all of its respective
duties and obligations under the Assigned Contracts and the Lender's exercise of
any of its rights with respect to the Collateral shall not release the Borrower
from any of such duties and obligations. The Lender shall not be obligated to
perform or fulfill any of the Borrower's duties or obligations under the
Assigned Contracts or to make any payment thereunder or to make any inquiry as
to the nature or sufficiency of any payment or Property received by the Lender
thereunder or the sufficiency of performance by any party thereunder, or to
present or file any claim, or to take any action to collect or enforce any
performance or payment of any amounts due.
34
7.14 Documents, Instruments, and Chattel Paper. The
Borrower represents and warrants to the Lender that: (a) all documents,
instruments, and chattel paper describing, evidencing, or constituting
Collateral, and all signatures and endorsements thereon, 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 the Borrower free and
clear of all Liens other than Permitted Liens.
7.15 Right to Cure. The Lender may, in its sole
discretion and at any time, pay any amount or do any act required of the
Borrower hereunder or any Guarantor under the Security Agreements to preserve,
protect, maintain or enforce the Obligations, the Collateral, the Guarantor
Collateral or the Security Interest, and which the Borrower or Guarantor fails
to pay or do, including, without limitation, payment of any judgment against the
Borrower or Guarantor (unless such judgment is being contested by the Borrower
or Guarantor and no execution may be had or execution on such judgment has been
stayed), 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 or Guarantor Collateral. All payments that the Lender makes
under this Section 7.15 and all out-of-pocket costs and expenses that the Lender
pays or incurs in connection with any action taken by it hereunder shall be
charged to the Borrower's loan account as a Reference Rate Loan. Any payment
made or other action taken by the Lender under this Section 7.15 shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed thereafter as herein provided.
7.16 Power of Attorney. The Borrower hereby appoints
the Lender and the Lender's designees as the Borrower's attorney, with power:
(a) during the continuation of an Event of Default or if the notice described in
Section 7.10(a) has been given, to endorse the Borrower's name on any checks,
notes, acceptances, money orders, or other forms of payment or security that
come into the Lender's possession; (b) during the continuation of an Event of
Default, to sign the Borrower's name on any invoice, xxxx of lading, 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, on verifications of Accounts and on notices to Account
Debtors; (c) during the continuation of an Event of Default, to send requests
for verification of Accounts to Account Debtors; and (d) during the continuation
of an Event of Default, to do all things necessary to carry out this Agreement.
The Borrower ratifies and approves all acts of such attorney in accordance with
the foregoing provisions. Neither the Lender nor the attorney shall be liable
for any acts or omissions or for any error of judgment or mistake of fact or
law, except for willful misconduct or gross negligence. This power, being
coupled with an interest, is irrevocable until this Agreement has been
terminated and the Obligations have been fully satisfied.
7.17 Lender's Rights, Duties, and Liabilities. While in
possession or control of any Collateral, the Borrower assumes all responsibility
and liability arising from or relating to the use, sale, or other disposition of
the Collateral. Neither the Lender nor any of its officers, directors,
employees, and agents shall be liable or responsible in any way for the
safekeeping of any of the Collateral, for any act or failure to act with respect
to the Collateral,
35
for any loss or damage thereto, for any diminution in the value thereof, or for
any act of default of any warehouseman, carrier, forwarding agency or other
person whomsoever, all of which shall be at the Borrower's sole risk. In any
event, the Obligations shall not be affected by any failure of the Lender to
take any steps to perfect the Security Interest or to collect or realize upon
the Collateral, nor shall loss of or damage to the Collateral release the
Borrower from any of the Obligations. During the continuation of an Event of
Default, the Lender may (but shall not be required to), without notice to or
consent from the Borrower, 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, 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 the Borrower for the Obligations or under
this Agreement or any other agreement now or hereafter existing between the
Lender and the Borrower.
8. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.
8.1 Books and Records. The Borrower shall maintain, at
all times, correct and complete books, records and accounts in which complete,
correct and timely entries are made of its transactions in accordance with GAAP
consistent with those applied in the preparation of the Financial Statements.
The Borrower shall, by means of appropriate entries, reflect in such accounts
and in all Financial Statements proper liabilities and reserves for all taxes
and proper provision for depreciation and amortization of Property and bad
debts, all in accordance with GAAP. The Borrower shall maintain at all times
books and records pertaining to the Collateral in such detail, form, and scope
as the Lender shall reasonably require, including, without limitation, records
of: (a) all payments received and all credits and extensions granted with
respect to the Accounts; (b) the return, rejection, repossession, stoppage in
transit, loss, damage, or destruction of any Inventory; and (c) all other
dealings affecting the Collateral. The Lender acknowledges that as of the
Closing Date the Lender does not require any change in the detail, scope or form
of the Borrower's books and records pertaining to the Collateral except as
otherwise set forth in this Agreement.
8.2 Financial Information. The Borrower shall promptly
furnish to the Lender or its agents all such financial information as the Lender
shall reasonably request. Without limiting the foregoing, CCI and its
Subsidiaries shall furnish to the Lender, in such detail as the Lender shall
request, the following:
(a) As soon as available, but in any event not
later than 90 days after the close of each Fiscal Year, consolidated audited
balance sheets, and statements of income and expense, retained earnings, and
cash flow and stockholders equity for CCI and its consolidated Subsidiaries for
such Fiscal Year, and the accompanying notes thereto, setting forth in each case
in comparative form figures for the previous Fiscal Year, all in reasonable
detail, fairly presenting the financial position and the results of operations
of CCI and its consolidated
36
Subsidiaries as at the date thereof and for the Fiscal Year then ended, and
prepared in accordance with GAAP. Such statements shall be examined in
accordance with generally accepted auditing standards by and accompanied by a
report thereon unqualified as to scope by independent certified public
accountants selected by CCI and reasonably satisfactory to the Lender.
(b) As soon as available, but in any event not
later than 45 days after the close of each fiscal quarter other than the fourth
quarter of a Fiscal Year, consolidated unaudited balance sheets of CCI and its
consolidated Subsidiaries as at the end of such quarter, and consolidated
unaudited statements of income and expenses and cash flow for CCI and its
consolidated Subsidiaries for such quarter and for the period from the beginning
of the Fiscal Year to the end of such quarter, together with the accompanying
notes thereto, all in reasonable detail, fairly presenting the financial
position and results of operation of CCI and its consolidated Subsidiaries as at
the date thereof and for such periods, prepared in accordance with GAAP
consistent with the audited Financial Statements required pursuant to Section
8.2(a). Such statements shall be certified to be correct in all material
respects by the chief financial or accounting officer of CCI subject to normal
year-end adjustments.
(c) As soon as available, but in any event not
later than 30 days after the end of the first and second month of each fiscal
quarter and 45 days after the end of the third month of each fiscal quarter,
consolidated unaudited balance sheets of CCI and its consolidated Subsidiaries
as at the end of such month, and consolidated unaudited statements of income and
expenses and cash flow for CCI and its consolidated Subsidiaries for such month
and for the period from the beginning of the Fiscal Year to the end of such
month, all in reasonable detail, fairly presenting the financial position and
results of operation of CCI and its consolidated Subsidiaries as at the date
thereof and for such periods, and prepared in accordance with GAAP consistent
with the audited Financial Statements required pursuant to Section 8.2(a). Such
statements shall be certified to be correct in all material respects by the
chief financial or accounting officer of CCI subject to normal year-end
adjustments.
(d) Promptly after filing, copies of all federal,
state and local tax returns for the Borrower and each Subsidiary.
(e) With each of the annual audited and quarterly
unaudited Financial Statements delivered pursuant to Sections 8.2(a) and 8.2(b),
a certificate of the chief executive or chief financial officer of CCI (i)
setting forth in reasonable detail the calculations required to establish that
CCI was in compliance with its covenant set forth in Section 10.27 during the
period covered in such Financial Statements, and (ii) stating that, except as
explained in reasonable detail in such certificate, (A) all of the
representations and warranties of the Borrower and each Guarantor contained in
this Agreement and the other Loan Documents applicable to them are correct and
complete as at the date of such certificate as if made at such time and (B) no
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, that a covenant has not been complied with,
or that an Event of Default existed or
37
exists, such certificate shall set forth what action the Borrower or the
relevant Guarantor has taken or proposes to take with respect thereto.
(f) No sooner than 90 days and no later than 30
days prior to the beginning of each Fiscal Year, consolidated projected balance
sheets, statements of income and expense, and statements of cash flow for CCI
and its Subsidiaries as at the end of and for each month of such Fiscal Year.
(g) [Intentionally Left Blank]
(h) Promptly after their preparation, copies of
any and all proxy statements, financial statements, and reports which CCI makes
available to its stockholders or the Securities and Exchange Commission.
(i) Promptly after filing with the PBGC, DOL, or
IRS, a copy of each annual report or other filing or notice filed with respect
to each Plan of CCI or any ERISA Affiliate.
(j) Such additional information as the Lender may
from time to time reasonably request regarding the financial and business
affairs of CCI or any Subsidiary, including, without limitation, projections of
future operations on a consolidated basis.
8.3 Notices to Lender. The Borrower shall notify the
Lender in writing of the following matters at the following times:
(a) Immediately after becoming aware of the
existence of any Event or Event of Default.
(b) Immediately after becoming aware that the
holder of any Debt has given notice or taken any action with respect to a
claimed default or that the Xxxxxxxxx Family or their Affiliates has given
notice or taken any action with respect to a default concerning capital stock
held by the Xxxxxxxxx Family or their Affiliates.
(c) Immediately after becoming aware of any
material adverse change in the Property, business, operations, or condition
(financial or otherwise) of the Borrower or any Guarantor.
(d) Immediately after becoming aware of any
pending or threatened action, suit, proceeding, or counterclaim by any Person,
or any pending or threatened investigation by a Public Authority, which may
materially and adversely affect the Collateral, the Guarantor Collateral, the
repayment of the Obligations, the Lender's rights under the Loan Documents or
the Property, business, operations or condition (financial or otherwise) of the
Borrower or any Guarantor.
38
(e) Immediately after becoming aware of any
pending or threatened strike, work stoppage, unfair labor practice claim, or
other labor dispute affecting the Borrower or any of its Subsidiaries.
(f) Immediately after becoming aware of any
violation of any law, statute, regulation, or ordinance of a Public Authority
applicable to the Borrower, any Subsidiary, or their respective Properties which
may materially and adversely affect the Collateral, the Guarantor Collateral,
the repayment of the Obligations, the Lender's rights under the Loan Documents,
or the Property, business, operations, or condition (financial or otherwise) of
the Borrower or any Guarantor.
(g) Immediately after becoming aware of any
violation by the Borrower or any Guarantor of Environmental Laws or immediately
upon receipt of any notice that a Public Authority has asserted that the
Borrower or any Guarantor is not in compliance with Environmental Laws or that
its compliance is being investigated.
(h) Thirty days prior to the Borrower or any
Guarantor changing its name.
(i) Immediately after becoming aware of any ERISA
Event, accompanied by any materials required to be filed with the PBGC with
respect thereto; immediately after the receipt by the Borrower or any Guarantor
of any notice concerning the imposition of any withdrawal liability under
Section 4042 of ERISA with respect to withdrawal from a Multiemployer Plan;
immediately upon the establishment of any Pension Plan not existing at the
Closing Date or the commencement of contributions by the Borrower or any
Guarantor to any Pension Plan to which the Borrower or the Guarantor was not
contributing at the Closing Date; and immediately upon becoming aware of any
other event or condition regarding a Plan or the Borrower's any Guarantor's or
an ERISA Affiliate's compliance with ERISA, which may materially and adversely
affect the Property, business, operations, or condition (financial or otherwise)
of the Borrower or any Guarantor.
Each notice given under this Section 8.3 shall describe the subject matter
thereof in reasonable detail and shall set forth the action that the Borrower or
the relevant Guarantor has taken or proposes to take with respect thereto.
9. GENERAL WARRANTIES AND REPRESENTATIONS.
The Borrower continuously warrants and represents to the
Lender, at all times during the term of this Agreement and until all Obligations
have been satisfied, that, except as hereafter disclosed to and accepted by the
Lender in writing:
9.1 Authorization, Validity, and Enforceability of
this Agreement and the Loan Documents. The Borrower and each Guarantor has the
corporate power and authority to execute, deliver and perform this Agreement and
the other Loan Documents applicable to it, to
39
incur the Obligations, and to grant the Security Interest. The Borrower and each
Guarantor has taken all necessary corporate action to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents
applicable to it. No consent, approval, or authorization of, or declaration or
filing with, any Public Authority, and no consent of any other Person, is
required in connection with Borrower's and each Guarantor's execution, delivery,
and performance of this Agreement and the other Loan Documents applicable to it,
except for those already duly obtained. This Agreement and the other Loan
Documents have been duly executed and delivered by the Borrower and each
Guarantor party thereto and each constitutes the legal, valid and binding
obligation of the Borrower and each Guarantor, enforceable against it in
accordance with its terms without defense, setoff, or counterclaim. The
Borrower's and each Guarantor's execution, delivery, and performance of this
Agreement and such other Loan Documents applicable to it do not and will not
conflict with, or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien upon the Property of
Borrower or any of its Subsidiaries (except as contemplated by this Agreement
and the other Loan Documents) by reason of the terms of (a) any mortgage, lease,
agreement, or instrument to which the Borrower or any of its Subsidiaries is a
party or which is binding upon it, (b) any judgment, law, statute, rule or
governmental regulation applicable to the Borrower or any of its Subsidiaries,
or (c) the corporate charter or By-Laws of the Borrower or any of its
Subsidiaries.
9.2 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 and the Guarantor Collateral in the Lender's favor,
and such Liens will constitute perfected and continuing Liens on all the
Collateral and the Guarantor Collateral, having priority over all other Liens on
the Collateral and the Guarantor Collateral except for the Permitted Liens
identified in Section 7.4, securing the Obligations, and enforceable against the
Borrower, each Guarantor and all third parties.
9.3 Organization and Qualification. The Borrower and
each Guarantor: (a) is duly incorporated and organized and validly existing in
good standing under the laws of its state of incorporation set forth on Schedule
9.5; (b) is qualified to do business as a foreign corporation and is in good
standing in each State in which qualification is necessary in order for it to
own or lease its Property and conduct its business; and (c) has all requisite
power and authority to conduct its business and to own its Property.
9.4 Corporate Name; Prior Transactions. Neither the
Borrower nor any of the Guarantors has during the five years ending on the
Closing Date been known by or used any other corporate or fictitious name, or
been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its Property out of the
ordinary course of business, except as set forth on Schedule 9.4.
9.5 Subsidiaries and Affiliates. Schedule 9.5, as the
same may be amended by written notice from the Borrower to the Lender from time
to time, is a correct and complete list of the name and relationship to CCI of
each and all of CCI's Subsidiaries and other
40
Affiliates. Each Subsidiary is (a) duly incorporated and organized and validly
existing in good standing under the laws of its state of incorporation set forth
on Schedule 9.5, as so amended, and (b) qualified to do business as a foreign
corporation and in good standing in the states set forth opposite its name on
Schedule 9.5, as so amended, which are the only states in which such
qualification is necessary in order for it to own or lease its Property and
conduct its business. Xxxxxx Distribution, Inc. is an inactive corporation,
having no material assets, liabilities or business operations. Xxxxxxxx Xxxxxx,
Inc. has no material assets (other than trade names), liabilities or business
operations.
9.6 Financial Statements and Projections.
(a) CCI has delivered to the Lender the audited
balance sheet and related statements of income, retained earnings, cash flow,
and changes in stockholders equity for CCI as of September 25, 1995 and for the
Fiscal Year then ended, accompanied by the report thereon of CCI's independent
certified public accountants, Xxxxxx Xxxxxxxx LLP. CCI has also delivered to the
Lender the unaudited balance sheet and related statements of income and cash
flow for CCI as at June 28, 1996 and for the nine months then ended. Such
financial statements are attached hereto as Exhibit B-1. All such financial
statements have been prepared in accordance with GAAP and present accurately and
fairly CCI's financial position as at the dates thereof and its results of
operations for the periods then ended.
(b) The Latest Projections represent CCI's best
estimate of CCI's future financial performance for the periods set forth
therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which CCI believes are fair and reasonable in
light of current and reasonably foreseeable business conditions.
9.7 Capitalization. As of the Closing Date, the only
Persons who own beneficially (as such term is used under the securities laws of
the United States) 10% or more of any class of stock or the voting power of CCI
are the Xxxxxxxxx Family and, according to a filing with the Securities and
Exchange Commission, Xxxxx Capital Management, Inc. CCI owns beneficially and of
record 100% of all classes of stock of each Subsidiary listed on Schedule 9.5.
9.8 Solvency. The Borrower and its Subsidiaries are,
on a consolidated basis, Solvent prior to and after giving effect to the making
of each Revolving Loan and the issuance of Letters of Credit.
9.9 Debt. Neither the Borrower nor any Guarantor has
any Debt, except (a) the Obligations applicable to it, (b) Debt set forth in the
most recent Financial Statements delivered to the Lender, or the notes thereto,
(c) trade payables and other contractual obligations arising in the ordinary
course of business since the date of such Financial Statements, (d) Debt
incurred since the date of such Financial Statements to finance Capital
Expenditures permitted hereby, (e) Debt set forth on Schedule 9.9, and (f) other
Debt not to exceed at any time outstanding $500,000.
41
9.10 Distributions. Since September 29, 1995 through
the Closing Date, no Distribution has been declared, paid, or made upon or in
respect of any capital stock or other securities of CCI.
9.11 Title to Property. Except for Property which the
Borrower or any Guarantor leases, the Borrower and each Guarantor has good and
marketable title in fee simple (subject to Permitted Liens) to the Premises
indicated on Schedule 9.13 belonging to it and good, indefeasible, and
merchantable title to all of its other Property material to the business and
operations of the Borrower and such Guarantor, including, without limitation,
the assets reflected on the most recent Financial Statements delivered to the
Lender, except as disposed of since the date thereof in the ordinary course of
business. As of the Closing Date, neither the Borrower nor any Guarantor owns
any Premises consisting of real property (excluding fixtures and improvements).
9.12 Adequate Assets. The Borrower and each Guarantor
possesses adequate assets for the conduct of its business.
9.13 Real Property; Leases. Schedule 9.13, as the same
may be amended by written notice from the Borrower to the Lender from time to
time, is a correct and complete list of all real property, owned by the Borrower
or any Guarantor, all leases and subleases of real or personal property, having
a value in excess of $50,000 individually, by the Borrower or any Guarantor as
lessee or sublessee, and all leases and subleases of real or personal property
by the Borrower or any Guarantor as lessor or sublessor. Each of such leases and
subleases is valid and enforceable in accordance with its terms and is in full
force and effect, and no material default by any party to any such lease or
sublease exists.
9.14 Proprietary Rights. Schedule 9.14, as the same may
be amended by written notice from the Borrower to the Lender from time to time,
is a correct and complete list of the Proprietary Rights of the Borrower and the
Guarantors. None of the Proprietary Rights is subject to any licensing agreement
or similar arrangement except as set forth on Schedule 9.14. To the best of the
Borrower's knowledge, none of the Proprietary Rights in any material respect
infringes on or conflicts with any other Person's Property, and no other
Person's Property in any material respect infringes on or conflicts with the
Proprietary Rights. The Proprietary Rights described on Schedule 9.14 as
belonging to the Borrower or any Guarantor constitute all of the Property of
such type necessary to the current and anticipated future conduct of the
Borrower and each Guarantor's business.
9.15 Trade Names and Terms of Sale. All trade names or
styles under which the Borrower or any Guarantor will sell Inventory or create
Accounts, or to which instruments in payment of Accounts may be made payable,
are listed on Schedule 9.15, as the same may be amended by written notice from
the Borrower to the Lender from time to time.
9.16 Litigation. Except as set forth on Schedule 9.16,
as amended by written notice from the Borrower to the Lender from time to time,
there is no pending or, to the best
42
of the Borrower's knowledge, threatened action, suit, proceeding, or
counterclaim by any Person, or investigation by any Public Authority, or to the
best of the Borrower's knowledge, any basis for any of the foregoing, which may
materially and adversely affect the Collateral, the Guarantor Collateral, the
repayment of the Obligations, the Lender's rights under the Loan Documents, or
the Property, business, operations, or condition (financial or otherwise) of the
Borrower or any Guarantor.
9.17 Restrictive Agreements. Neither the Borrower nor
any Guarantor is a party to any contract or agreement, and none is subject to
any charter or other corporate restriction, which affects the ability of the
Borrower or any Guarantor to execute, deliver, and perform the Loan Documents
applicable to it and repay the Obligations or which materially and adversely
affects the Property, business, operations, or condition (financial or
otherwise) of the Borrower or any Guarantor.
9.18 Labor Disputes. Except as set forth on Schedule
9.18, as amended by written notice from the Borrower to the Lender from time to
time: (a) there is no collective bargaining agreement or other labor contract
covering employees of the Borrower 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) no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of
employees of the Borrower or any of its Subsidiaries or for any similar purpose;
and (d) there is no pending or, to the best of the Borrower's knowledge,
threatened strike, work stoppage, material unfair labor practice claim, or other
material labor dispute against or affecting the Borrower or any of its
Subsidiaries or their respective employees.
9.19 Environmental Laws.
(a) The Borrower and each Guarantor has to the
best of their knowledge complied in all material respects with all Environmental
Laws applicable to its respective Premises and business, and neither the
Borrower nor any Guarantor nor any of their respective present Premises or
operations, nor their respective past property or operations, is subject to any
enforcement order from or liability agreement with any Public 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 Borrower and each Guarantor have obtained
all permits necessary for its current operations under Environmental Laws, all
such permits are in good standing, and the Borrower and each Guarantor is in
compliance with all terms and conditions of such permits.
(c) To the best of the Borrower's knowledge,
neither the Borrower, any Guarantor, nor any of their respective predecessors in
interest has stored, treated or disposed
43
of any hazardous waste on any Premises, as defined pursuant to 40 CFR Part 261
or any equivalent Environmental Law.
(d) Neither the Borrower nor any Guarantor has
received any summons, complaint, order or similar written notice that it is not
currently in compliance with, or that any Public Authority is investigating its
compliance with, any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant.
(e) To the best of the Borrower's knowledge, none
of the present or past operations of the Borrower or any Guarantor is the
subject of any investigation by any Public Authority evaluating whether any
remedial action is needed to respond to a Release or threatened Release of a
Contaminant.
(f) Except as set forth in Schedule 9.19, to the
best of the Borrower's knowledge, there is not now, nor has there ever been, on
or in the Premises:
(i) any underground storage tanks or surface
impoundments,
(ii) any asbestos containing material, or
(iii) any polychlorinated biphenyls (PCB's)
used in hydraulic oils, electrical transformers or other equipment.
(g) Neither the Borrower nor any Guarantor has
filed any notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted Release or discharge of a Contaminant into the
environment.
(h) Neither the Borrower nor any Guarantor has
entered into any nego- tiations or settlement agreements with any Person
(including, without limitation, the prior owner of its property) imposing
material obligations or liabilities on the Borrower or any Guarantor with
respect to any remedial action in response to the Release of a Contaminant or
environmentally related claim.
(i) To the best of the Borrower's knowledge, none
of the products distributed or sold by the Borrower or any Guarantor contains
asbestos material.
(j) To the best of the Borrower's knowledge, no
Environmental Lien has attached to any Premises of the Borrower or any
Guarantor.
9.20 No Violation of Law. Neither the Borrower nor any
Guarantor is in violation of any law, statute, regulation, ordinance, judgment,
order, or decree applicable to it which violation would in any respect
materially and adversely affect the Collateral, the Guarantor Collateral, the
repayment of the Obligations, the Lender's rights under the Loan
44
Documents, or the Property, business, operations, or condition (financial or
otherwise) of the Borrower or any Guarantor.
9.21 No Default. Neither the Borrower or any Guarantor
is in default with respect to any note, indenture, loan agreement, mortgage,
lease, deed, or other agreement to which the Borrower or any Guarantor is a
party or bound, which default could reasonably be expected to materially and
adversely affect the Collateral, the Guarantor Collateral, the repayment of the
Obligations, the Lender's rights under the Loan Documents, or the Property,
business, operations, or condition (financial or otherwise) of the Borrower or
any Guarantor.
9.22 ERISA Compliance.
(a) Except as set forth on Schedule 9.22, as
amended by written notice from the Borrower to the Lender from time to time,
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 and, to the best knowledge of CCI, nothing has
occurred which would cause the loss of such qualification. The Borrower, each
Guarantor 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 the Borrower, threatened claims, actions or lawsuits, or actions by any
Public Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a material adverse effect on the business or
operations or the Borrower or any Guarantor. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
material adverse effect on the business or operations of the Borrower or any
Guarantor.
(c) (i) Except as set forth on Schedule 9.22, as
amended by written notice from the Borrower to the Lender from time to time, no
ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension
Plan has any unfunded pension liability; (iii) neither the Borrower nor any
Guarantor nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
the Borrower nor any Guarantor nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (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 Section 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Borrower nor any Guarantor nor any ERISA
Affiliate has engaged in a transaction that could subject any Person to Section
4069 or Section 4212(c) of ERISA.
45
9.23 Taxes. The Borrower and its Subsidiaries have
filed all tax returns and other reports required to be filed and have paid all
Taxes, assessments, fees and other governmental charges levied or imposed upon
them or their properties, income or assets that are otherwise due and payable.
9.24 Use of Proceeds. None of the transactions
contemplated in this Agreement (including, without limitation, the use of
proceeds from the Loans) will violate or result in the violation of Section 7 of
the Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including, without limitation, Regulations G,T,U and X of the
Board of Governors of the Federal Reserve System, 12 CFR, Chapter II. Neither
the Borrower nor any Guarantor owns or intends to carry or purchase any "margin
stock" within the meaning of said Regulation U or G and (b) none of the proceeds
of the loans will be used, directly or indirectly, to purchase or carry (or
refinance any borrowing, the proceeds of which were used to purchase or carry)
any "security" within the meaning of the Securities Exchange Act of 1934, as
amended.
9.25 Private Offerings. Neither the Borrower nor any
Guarantor has, directly or indirectly, offered the Loans for sale to, or
solicited offers to buy part thereof from, or otherwise approached or negotiated
with respect thereto with any prospective purchaser other than the Lender. The
Borrower hereby agrees that neither it nor anyone acting on its behalf has
offered or will offer the Loans or any part thereof for issue or sale to or
solicit any offer to acquire any of the same from anyone so as to bring the
issuance thereof within the provisions of Section 5 of the Securities Act of
1933, as amended.
9.26 Broker's Fees. No Person is entitled to any
brokerage or finder's fee with respect to the transactions described in this
Agreement.
9.27 No Material Adverse Change. No material adverse
change has occurred in the Property, business, operations, or conditions
(financial or otherwise) of the Borrower or any Guarantor since the date of the
Financial Statements delivered to the Lender.
9.28 Disclosure. Neither this Agreement nor any
document or statement furnished to the Lender by or on behalf of the Borrower or
any Guarantor hereunder contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
contained herein or therein not misleading.
10. AFFIRMATIVE AND NEGATIVE COVENANTS. The Borrower covenants
that, so long as any of the Obligations remains outstanding or this Agreement is
in effect:
10.1 Taxes and Other Obligations. CCI and each of its
Subsidiaries shall: (a) file when due all tax returns and other reports which it
is required to file, 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 for the payment of all such items, and
shall provide
46
to the Lender, upon request, satisfactory evidence of its timely compliance with
the foregoing; and (b) pay when due all Debt owed by it and perform and
discharge in a timely manner all other obligations undertaken by it; provided,
however, that CCI and its Subsidiaries need not pay any tax, fee, assessment,
governmental charge, or Debt, or perform or discharge any other obligation, that
it is contesting in good faith by appropriate means or proceedings diligently
pursued.
10.2 Corporate Existence and Good Standing. CCI and
each of its Subsidiaries shall maintain its corporate existence and its
qualification and good standing in all states necessary to conduct its business
and own its Property and shall obtain and maintain all licenses, permits,
franchises and governmental authorizations necessary to conduct its business and
own its Property.
10.3 Compliance with Law and Agreements. Except as
otherwise specifically provided in this Agreement, CCI and each of its
Subsidiaries shall comply in all material respects with the terms and provisions
of each judgment, law, statute, rule, and governmental regulation applicable to
it and each material contract, mortgage, lien, lease, indenture, order,
instrument, agreement, or document to which it is a party or by which it is
bound.
10.4 Maintenance of Property and Insurance. CCI and
each of its Subsidiaries shall: (a) maintain in all material respects all of its
Property necessary and useful in its business in good operating condition and
repair, ordinary wear and tear excepted; and (b) in addition to the insurance
required by Section 7.7, maintain with financially sound and reputable insurers
such other insurance with respect to its Property and business against
casualties and contingencies of such types (including, without limitation,
business interruption, environmental liability, public liability, product
liability, and larceny, embezzlement or other criminal misappropriation) and in
such amounts as is customary for Persons of established reputation engaged in
the same or a similar business and similarly situated, naming the Lender, at its
request, as additional insured under each such policy.
10.5 Environmental Laws. CCI and each of its
Subsidiaries shall in all material respects conduct its business in full
compliance with all Environmental Laws applicable to it, including, without
limitation, those relating to CCI's generation, handling, use, storage, and
disposal of hazardous and toxic wastes and substances. CCI shall take prompt and
appropriate action to respond to any non-compliance with Environmental Laws and
shall regularly report to the Lender on such response. Without limiting the
generality of the foregoing, whenever the Borrower gives notice to the Lender
pursuant to Section 8.3(g) and the Lender determines such alleged violations or
potential non-compliance is or could reasonably be expected to be material, CCI
shall, at the Lender's request and CCI's expense: (a) cause an independent
environmental engineer acceptable to the Lender to conduct such tests of the
site where CCI's noncompliance or alleged non-compliance with Environmental Laws
has occurred and prepare and deliver to the Lender a report setting forth the
results of such tests, a proposed plan for responding to any environmental
problems described therein, and an estimate of the costs thereof; and (b)
provide to the Lender a supplemental report of such engineer whenever
47
the scope of the environmental problems, or CCI's response thereto or the
estimated costs thereof, shall change.
10.6 ERISA. CCI and each of its Subsidiaries shall
cause each Plan, which has been designated to be so, to be qualified within the
meaning of Section 401(a) of the Code and to be administered in all material
respects in compliance with Section 401(a) of the Code. CCI and each of its
Subsidiaries shall cause each Plan to be administered in all material respects
in compliance with ERISA.
10.7 Mergers, Consolidations, Acquisitions, or Sales.
Neither CCI 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) the merger of a
Guarantor with and into the Borrower with the Borrower as the surviving entity;
and (ii) in the ordinary course of business, sales of Inventory, obsolete or
worn-out Equipment, or Equipment which is no longer necessary for the conduct of
its business; provided, however, CCI may execute and deliver a merger agreement
contemplated by that certain Letter of Intent dated October 1, 1996 between CCI,
certain members of the Xxxxxxxxx Family, Revlon Consumer Products Corporation
and Prestige Fragrance & Cosmetic, Inc. (pursuant to which CCI would be the
surviving entity) but shall not consummate the transactions contemplated by such
Letter of Intent and such merger agreement without the prior written consent of
the Lender.
10.8 Distributions; Capital Changes. Neither CCI nor
any of its Subsidiaries shall: (a) directly or indirectly declare or make, or
incur any liability to make, any Distribution, except Distributions to CCI by a
Subsidiary wholly-owned by CCI or (b) make any change in its capital structure
which could reasonably be expected to materially and adversely affect the
repayment of the Obligations; provided, however, CCI may execute and deliver a
merger agreement contemplated by that certain Letter of Intent dated October 1,
1996 between CCI, certain members of the Xxxxxxxxx Family, Revlon Consumer
Products Corporation and Prestige Fragrance & Cosmetic, Inc. (pursuant to which
CCI would be the surviving entity) but shall not consummate the transactions
contemplated by such Letter of Intent and such merger agreement without the
prior written consent of the Lender. Nothing contained in Section 10.7 or this
Section 10.8 shall constitute or be deemed to be a waiver of any other term,
covenant or provision of this Agreement in connection with CCI entering into
such merger agreement.
10.9 Transactions Affecting Collateral or Obligations.
Neither CCI nor any of its Subsidiaries shall enter into any transaction which
materially and adversely affects the Collateral, the Guarantor Collateral or the
Borrower's ability to repay the Obligations.
10.10 Guaranties. Neither CCI nor any of its
Subsidiaries shall make, issue, or become liable on any Guaranty, except (i) the
Payment Guaranty and other Guaranties in favor of the Lender and endorsements of
instruments for deposit, (ii) Guaranties by the Borrower or any Guarantor of the
obligations of the Borrower or any Guarantor in the ordinary course of
48
business, consistent with past practices or (iii) the guarantee of any Debt
permitted by Section 9.9.
10.11 Debt. Neither CCI nor any of its Subsidiaries
shall incur or maintain any Debt in excess of $500,000 in the aggregate at any
time outstanding, other than: (a) the Obligations; (b) trade payables and
contractual obligations to suppliers and customers, landlords and employees
incurred in the ordinary course of business; (c) other Debt existing on the
Closing Date and reflected in the Financial Statements attached as Exhibit X-x;
(d) Capital Expenditures; (e) Taxes; and (f) Debt set forth in Schedule 9.9.
10.12 Prepayment. Neither CCI nor any of its
Subsidiaries shall voluntarily prepay any Debt, except trade payables and
contractual obligations to suppliers or customers incurred in the ordinary
course of business and the Obligations in accordance with their terms.
10.13 Transactions with Affiliates. Except as set forth
below, neither CCI nor any of its Subsidiaries shall: sell, transfer,
distribute, or pay any money or Property to any Affiliate, or lend or advance
money or Property to any Affiliate, or invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness or any Property
of any Affiliate, or become liable on any Guaranty (other than the Payment
Guaranty) dividends, or other obligations of any Affiliate. Notwithstanding the
foregoing, the Borrower and each Guarantor may (i) continue to enter into
transactions with each other consistent with past practices as of the date of
this Agreement and (ii) if no Event of Default has occurred and is continuing
engage in transactions with Affiliates other than each other in the ordinary
course of business in amounts and upon terms fully disclosed to the Lender and
no less favorable to the Borrower or the relevant Guarantor, as the case may be,
than would obtain in a comparable arm's length transaction with a third party
that is not an Affiliate.
10.14 [Intentionally Left Blank].
10.15 Business Conducted. CCI and its Subsidiaries
shall not engage, directly or indirectly, in any line of business other than the
businesses in which the Borrower and its Subsidiaries are engaged on the Closing
Date.
10.16 Liens. Neither CCI 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.
10.17 Sale and Leaseback Transactions. Neither CCI nor
any of its Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for CCI or a Subsidiary to lease or rent
Property that CCI or a Subsidiary has or will sell or otherwise transfer to such
Person, except in the ordinary course of business and on terms fully disclosed
to the Lender, no Event of Default has occurred and is continuing, the sale
price and rental payments for such Property do not exceed the fair market value
thereof, and, in the case of any transaction with an Affiliate, the terms of
such arrangement are no less favorable to CCI
49
or such Subsidiary than would obtain in a comparable arm's length transaction
with a third party who is not an Affiliate.
10.18 New Subsidiaries. CCI shall not, directly or
indirectly, organize or acquire any Subsidiary other than those listed on
Schedule 10.18.
10.19 Restricted Investments. Neither CCI nor any of
its Subsidiaries shall make any Restricted Investment.
10.20 [Intentionally Left Blank].
10.21 [Intentionally Left Blank].
10.22 [Intentionally Left Blank] .
10.23 [Intentionally Left Blank].
10.24 [Intentionally Left Blank].
10.25 [Intentionally Left Blank].
10.26 [Intentionally Left Blank].
10.27 Adjusted Tangible Net Worth. CCI on a
consolidated basis shall maintain Adjusted Tangible Net Worth, determined as of
the last day of each fiscal month indicated below, of not less than the
following amounts:
Net Worth
1st Fiscal Month 1997 $35,500,000
2nd Fiscal Month 1997 35,500,000
3rd Fiscal Month 1997 35,500,000
4th Fiscal Month 1997 35,500,000
5th Fiscal Month 1997 35,500,000
6th Fiscal Month 1997 35,500,000
7th Fiscal Month 1997 35,500,000
8th Fiscal Month 1997 35,500,000
9th Fiscal Month 1997 35,500,000
10th Fiscal Month 1997 35,500,000
11th Fiscal Month 1997 35,500,000
12th Fiscal Month 1997 36,000,000
1st Fiscal Month 1998 36,000,000
2nd Fiscal Month 1998 36,000,000
3rd Fiscal Month 1998 36,000,000
50
4th Fiscal Month 1998 36,000,000
5th Fiscal Month 1998 36,000,000
6th Fiscal Month 1998 36,000,000
7th Fiscal Month 1998 36,000,000
8th Fiscal Month 1998 36,000,000
9th Fiscal Month 1998 36,000,000
10th Fiscal Month 1998 36,000,000
11th Fiscal Month 1998 36,000,000
12th Fiscal Month 1998 37,000,000
1st Fiscal Month 1999 37,000,000
2nd Fiscal Month 1999 37,000,000
3rd Fiscal Month 1999 37,000,000
4th Fiscal Month 1999 37,000,000
5th Fiscal Month 1999 37,000,000
6th Fiscal Month 1999 37,000,000
7th Fiscal Month 1999 37,000,000
8th Fiscal Month 1999 37,000,000
9th Fiscal Month 1999 37,000,000
10th Fiscal Month 1999 37,000,000
11th Fiscal Month 1999 37,000,000
12th Fiscal Month 1999 and each fiscal 38,500,000
month thereafter
10.28 [Intentionally Left Blank].
10.29 Purchase of Inventory by Subsidiaries. No
Subsidiary shall incur any obligations to trade suppliers.
10.30 Further Assurances. The Borrower shall execute and
deliver, or cause to be executed and delivered, to the Lender such documents and
agreements, and shall take or cause to be taken such actions, as the Lender may,
from time to time, reasonably request to carry out the terms and conditions of
this Agreement and the other Loan Documents.
11. CLOSING; CONDITIONS TO CLOSING. The Lender shall not be
obligated to make the initial Loans or to obtain any Letters of Credit on the
Closing Date, unless the following conditions precedent have been satisfied in a
manner satisfactory to the Lender:
11.1 Conditions Precedent to Making of Loans on the
Closing Date.
(a) Representations and Warranties; Covenants. The
Borrower's and Guarantors' representations and warranties contained in this
Agreement and the other Loan Documents applicable to it shall be correct and
complete in all material respects, and the Borrower and the Guarantors shall
have performed and complied with all covenants, agreements,
51
and conditions contained herein and in the other Loan Documents applicable to it
which are required to have been performed or complied with.
(b) Delivery of Documents. The Borrower shall have
delivered, or caused to be delivered, to the Lender the Payment Guaranty, the
Security Agreements, the Trademark Security Agreements and such documents,
instruments, agreements, financing statements, consents, evidence of corporate
authority, certificates, landlord and/or mortgagee waivers, insurance
certificates and loss payee endorsements, opinions of counsel and other writings
and covenants as the Lender shall request in connection herewith, duly executed
by all parties thereto other than the Lender, and in form and substance
satisfactory to the Lender and its counsel.
(c) [Intentionally Left Blank].
(d) [Intentionally Left Blank].
(e) Termination of Liens. The Lender shall have
received duly executed UCC-3 Termination Statements and other instruments, in
form and substance satisfactory to the Lender, as shall be necessary to
terminate and satisfy all Liens on the Property of the Borrower and its
Subsidiaries except Permitted Liens.
(f) [Intentionally Left Blank].
(g) Environmental Compliance. The Lender shall have
received copies of any environmental reports previously obtained or received by
the Borrower or any Guarantor relating to the Premises.
(h) Facility Fee. The Borrower shall have paid in
full the Facility Fee.
(i) Payment of Fees and Expenses. The Borrower shall
have paid all reasonable fees and expenses of the Lender's outside counsel,
Xxxxxxxx & Xxxxxx, and all other reasonable fees and expenses of the Lender
incurred in connection with any of the Loan Documents and the transactions
contemplated thereby.
(j) Required Approvals. The Lender shall have
received certified copies of all consents or approvals of any Public Authority
or other Person which the Lender determines is required in connection with the
transactions contemplated by this Agreement.
(k) No Material Adverse Change. There shall have
occurred no material adverse change in CCI's business, operations, profits,
prospects or financial condition or in the Collateral and Guarantor Collateral
since June 28, 1996 except as previously disclosed to the Lender in writing,
including the Exhibits hereto, and the Lender shall have received a certificate
of CCI's chief financial officer to such effect.
52
(l) Adjusted Tangible Net Worth. CCI's Adjusted
Tangible Net Worth on a consolidated basis as of September 27, 1996, shall have
been not less than $35,500,000.
(m) Financial Performance. CCI's financial
performance, as of the Closing Date, shall have been within 90% of the
projections delivered to the Lender by the Borrower on September 26, 1996.
(n) Proceedings. All proceedings to be taken in
connection with the transactions contemplated by this Agreement, and all
documents contemplated in connection herewith, shall be satisfactory in form and
substance to the Lender and its counsel.
(o) Excess Availability. After taking into account
the Revolving Loans and the Letters of Credit to be made or issued on the
Closing Date and after deducting the amount of the accounts payable of the
Borrower and the Guarantors more than 30 days past due, the aggregate remaining
Availability shall be at least $2,500,000.
(p) Release From Prior Lender. Lender shall have
received a Pay-off Letter relating to the financing arrangements between CCI and
the Prior Lender, satisfactory in form, scope and substance to the Lender, from
the Prior Lender with respect to the Existing Debt.
11.2 Conditions Precedent to Each Loan. The obligation
of the Lender to make each Loan or to provide for the issuance of any Letter of
Credit shall be subject to the conditions precedent that on the date of any such
extension of credit the following statements shall be true, and the acceptance
by the Borrower of any extension of credit shall be deemed to be a statement to
the effect set forth in clauses (a) and (b), with the same effect as the
delivery to the Lender of a certificate signed by the chief executive officer
and chief financial officer of CCI dated the date of such extension of credit,
stating that:
(a) The representations and warranties contained in
this Agreement and the other Loan Documents are correct in all material respects
on and as of the date of such extension of credit as though made on and as of
such date, except to the extent that the Lender has been notified by CCI that
any representation or warranty is not correct and the Lender has explicitly
waived in writing compliance with such representation or warranty; and
(b) No Event or Event of Default has occurred and is
continuing or would result from such extension of credit.
12. DEFAULT; REMEDIES.
12.1 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:
53
(a) failure to make payment of principal, interest,
fees or premium on any of the Obligations when due except that it shall not
constitute an Event of Default if payment is made within three (3) Business Days
of demand as to the amount by which the unpaid principal balance of the
Revolving Loans at any time exceeds the Availability at such time (determined
for this purpose as if the amount of the Revolving Loans were zero);
(b) any representation or warranty made or deemed
made by the Borrower or any Guarantor in this Agreement, any of the other Loan
Documents, any Financial Statement, or any certificate furnished by the Borrower
or any Guarantor at any time to the Lender shall prove to be untrue in any
material respect as of the date when made, deemed made, or furnished;
(c) the Borrower shall (i) fail to comply with any of
the covenants set forth in Article 10 (other than Sections 10.1, 10.2, 10.3,
10.4, 10.5, 10.6 or 10.16) or Article 8 or (ii) fail to comply with any of the
covenants set forth in Sections 10.1, 10.2, 10.3, 10.4, 10.5 or 10.6 if such
failure shall have existed for more than 30 days (or 10 Business Days for
Section 10.4 or Section 10.16) after the date that the Borrower discovers, or
reasonably should have discovered, such failure.
(d) except as provided in Section 12.1(c), default
shall occur in the observance or performance of any of the covenants and
agreements contained in this Agreement, the other Loan Documents, or any other
agreement entered into at any time to which (i) the Borrower or any Guarantor
and (ii) the Lender are party, or if any such agreement or document shall
terminate (other than in accordance with its terms or with the written consent
of the Lender) or become void or unenforceable without the written consent of
the Lender or any event of default as defined therein shall occur.
(e) default shall occur in the payment of any
principal or interest on any indebtedness for borrowed money (other than the
Obligations) or under the Payment Guaranty and any other material agreement,
beyond any period of grace provided with respect thereto;
(f) CCI or any Subsidiary shall: (i) file a
voluntary petition in bankruptcy or file a voluntary petition 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,
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 shall be filed or an
action or proceeding otherwise commenced seeking reorganization, arrangement or
readjustment of CCI's or any
54
Subsidiary's 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 and such petition, action or proceeding shall
not be dismissed within 60 days from such filing or commencement, provided that
the Lender shall have no obligation to make any Revolving Loans or obtain any
Letters of Credit during such 60-day grace period;
(h) a receiver, assignee, liquidator, sequestrator,
custodian, trustee or similar officer for CCI or any Subsidiary or for all or
any part of their Property shall be appointed involuntarily; or a warrant of
attachment, execution or similar process shall be issued against any material
part of the Property of CCI or any Subsidiary and such waiver, execution or
process shall not be released or fully bonded within 30 days of its issuance,
provided that the Lender shall have no obligation to make any Revolving Loans or
obtain any Letters of Credit during such 30-day grace period;
(i) CCI or any Subsidiary 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 the
Borrower or any Guarantor shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such Property or of
the Borrower or any Guarantor shall be assumed by any Public Authority or any
court of competent jurisdiction at the instance of any Public Authority, except
where contested in good faith by proper proceedings diligently pursued where a
stay of enforcement is in effect;
(k) the Payment Guaranty, the Security Agreements or
any other guaranty or security agreement relating to the Obligations shall be
terminated, revoked or declared void or invalid;
(l) one or more final judgments for the payment of
money aggregating in excess of $500,000 (whether or not covered by insurance)
shall be rendered against CCI or any Subsidiary and CCI or such Subsidiary shall
fail to discharge the same within 30 days from the date of notice of entry
thereof or to appeal therefrom;
(m) any loss, theft, damage or destruction of any
item or items of Collateral or Guarantor Collateral occurs which: (i) materially
and adversely affects the operation of the business of the Borrower or any
Guarantor or (ii) is material in amount and is not adequately covered by
insurance;
(n) CCI shall cease to own 100% of the voting stock
of its subsidiaries set forth in Schedule 9.5, any person other than the
Xxxxxxxxx Family and their Affiliates shall own more than 50% of the voting
stock of CCI or have the power to control (such term having the meaning given to
it in the definition of Affiliate herein) the Board of Directors of CCI, or
55
the Xxxxxxxxx Family and their Affiliates shall own less than 50% of such stock
or cease to have the power to control (as so defined) such Board of Directors.
(o) any event or condition shall occur or exist with
respect to a Plan that could, in the Lender's reasonable judgment, subject CCI
or any Subsidiary to any tax, penalty or liability under ERISA, the Code or
otherwise which in the aggregate is material in relation to the business,
operations, Property or financial or other condition of the Borrower or any
Guarantor; or
(p) there occurs any material adverse change in the
Property, business, operations, or condition (financial or otherwise) of the
Borrower or the Guarantors taken as a whole.
13. REMEDIES.
(a) If an Event of Default exists, the Lender may, without
notice to or demand on the Borrower, do one or more of the following at any time
or times and in any order: (i) reduce the Availability or one or more of the
elements thereof; (ii) restrict the amount of or refuse to make Revolving Loans
and restrict or refuse to arrange for Letters of Credit; (iii) terminate this
Agreement; (iv) declare any or all Obligations to be immediately due and payable
(provided, however, that, upon the occurrence of any Event of Default described
in any of Sections 12.1(f), 12.1(g), 12.1(h)and 12.1(i), all Obligations shall
automatically become immediately due and payable); and (v) pursue its other
rights and remedies under the Loan Documents and applicable law.
(b) If an Event of Default exists: (i) the Lender shall have,
in addition to all other rights, the rights and remedies of a secured party
under the UCC; (ii) the Lender may, at any time, take possession of the
Collateral and keep it on the premises of the Borrower or any Guarantor, at no
cost to Lender, or remove any part of it to such other place or places as the
Lender may desire, or the Borrower shall, upon the Lender's demand, at the
Borrower's cost, assemble the Collateral and make it available to the Lender at
a place reasonably convenient to the Lender; and (iii) the Lender 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 Lender deems advisable, in
its sole discretion, and may, if the Lender 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, the
Borrower agrees that any notice by the Lender 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 Borrower if such notice
is mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least ten days prior to
such action to the Borrower's address specified in or pursuant to Section 15.11.
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 Lender receives
payment, and if the buyer defaults in payment, the Lender may resell the
Collateral
56
without further notice to the Borrower. In the event the Lender seeks to take
possession of all or any portion of the Collateral by judicial process, the
Borrower 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 Lender retain possession and not
dispose of any Collateral until after trial or final judgment. The Borrower
agrees that the Lender has no obligation to preserve rights to the Collateral or
marshal any Collateral for the benefit of any Person. The Lender is hereby
granted a license or other right to use, without charge, the Borrower'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 the Borrower's rights under all
licenses and all franchise agreements shall inure to the Lender's benefit. The
proceeds of sale shall be applied first to all expenses of sale, including,
without limitation, attorneys' fees and second, in whatever order the Lender
elects, to all Obligations. The Lender will return any excess to the Borrower or
such other Person as shall be legally entitled thereto and the Borrower shall
remain liable for any deficiency.
(c) If an Event of Default occurs, the Borrower hereby waives
(i) all rights to notice and hearing prior to the exercise by the Lender of the
Lender's rights to repossess the Collateral without judicial process or to
replevy, attach or levy upon the Collateral without notice or hearing, and (ii)
all rights of set-off and to assert a non-compulsory or permissive counterclaim
against Lender.
(d) If the Lender terminates this Agreement upon an Event of
Default, the Borrower shall pay the Lender, immediately upon termination, an
early termination penalty equal to the early termination fee that would have
been payable under Section 14 if this Agreement had been terminated on that date
pursuant to the Borrower's election.
14. TERM AND TERMINATION. This Agreement shall expire on the
Stated Termination Date unless terminated as provided in this Section. The
Borrower may terminate this Agreement at any time during its term if: (a) it
gives the Lender 15 days' prior written notice of termination by registered or
certified mail; (b) it pays and performs all Obligations on or prior to the
effective date of termination; and (c) it pays the Lender, on or prior to the
effective date of termination, and in addition to the fees required by Section
6.4, a fee (the "Termination Fee") equal to (i) three-quarters of one percent
(.75%) of the Total Facility if such termination is made on or prior to the
first Anniversary Date or (ii) one-quarter of one percent (.25%) of the Total
Facility if such termination is made after the first Anniversary Date; provided,
however, that no Termination Fee shall be due or payable in the event of a
refinancing of the Obligations with the Lender, or any Affiliate of the Lender,
as sole lender or agent for a syndicate of lenders. The Lender may also
terminate this Agreement without notice upon an Event of Default. Upon the
effective date of termination of this Agreement for any reason whatsoever, all
Obligations shall become immediately due and payable and the Borrower shall
immediately arrange for the cancellation of Letters of Credit then outstanding.
Notwithstanding the termination of this Agreement, until all Obligations are
paid and performed in full, the
57
Lender shall retain all its rights and remedies hereunder (including, without
limitation, Liens in and all rights and remedies with respect to all then
existing and after-arising Collateral).
15. MISCELLANEOUS.
15.1 Cumulative Remedies; No Prior Recourse to
Collateral. The enumeration herein of the 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 Lender may
have under the UCC or other applicable law. The Lender shall have the right, in
its 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 Lender may,
without limitation, proceed directly against the Borrower to collect the
Obligations without any prior recourse to the Collateral.
15.2 No Implied Waivers. No act, failure or delay by
the Lender shall constitute a waiver of any of its rights and remedies. No
single or partial waiver by the Lender of any provision of this Agreement or any
other Loan Document, or of breach or default hereunder or thereunder, or of any
right or remedy which the Lender may have, shall operate as a waiver of any
other provision, breach, default, right or remedy or of the same provision,
breach, default, right or remedy on a future occasion. No waiver by the Lender
shall affect its rights to require strict performance of this Agreement.
15.3 Severability. If any provision of this Agreement
shall be prohibited or invalid, under applicable law, it shall be ineffective
only to such extent, without invalidating the remainder of this Agreement.
15.4 Governing Law. This Agreement shall be deemed to
have been made in the State of New York and shall be governed by and interpreted
in accordance with the laws of such state, except that no doctrine of choice of
law shall be used to apply the laws of any other state or jurisdiction.
15.5 Consent to Jurisdiction and Venue; Service of
Process. The Borrower agrees that, in addition to any other courts that may have
jurisdiction under applicable laws, any action or proceeding to enforce or
arising out of this Agreement or any of the other Loan Documents may be
commenced in the Supreme Court of the State of New York for New York County, or
in the United States District Court for the Southern District of New York, and
the Borrower consents and submits in advance to such jurisdiction and agrees
that venue will be proper in such courts on any such matter. The Borrower hereby
waives personal service of process and agree that a summons and complaint
commencing an action or proceeding in any such court shall be properly served
and shall confer personal jurisdiction if served by registered or certified mail
to the Borrower. The choice of forum set forth in this section shall not be
deemed to preclude the enforcement of any judgment obtained in such forum, or
the taking of any action under this Agreement to enforce the same, in any
appropriate jurisdiction.
58
15.6 Waiver of Jury Trial. THE BORROWER HEREBY WAIVES
TRIAL BY JURY, RIGHTS OF SETOFF, AND THE RIGHT TO INTERPOSE NONCOMPULSORY OR
PERMISSIVE COUNTERCLAIMS IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL, OR ANY INSTRUMENT OR DOCUMENT DELIVERED
PURSUANT HERETO OR THERETO, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING,
BETWEEN THE BORROWER AND THE LENDER. THE BORROWER CONFIRMS THAT THE FOREGOING
WAIVERS ARE INFORMED AND FREELY MADE.
15.7 [Intentionally Left Blank].
15.8 Survival of Representations and Warranties. All of
the representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Lender or its agents.
15.9 Other Security and Guaranties. The Lender may,
without notice or demand and without affecting the Borrower's 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.
15.10 Fees and Expenses. The Borrower shall pay to the
Lender on demand all reasonable costs and expenses that the Lender pays or
incurs in connection with the negotiation, preparation, consummation,
administration, enforcement, and termination of this Agreement, the Payment
Guaranty and the other Loan Documents, including, without limitation: (a)
reasonable attorneys' and paralegal's fees and disbursements of counsel to the
Lender (including, without limitation, a reasonable estimate of the allocable
cost of in-house counsel and staff) ; (b) reasonable costs and expenses,
including, without limitation, attorneys' and paralegals' fees and disbursements
(including, without limitation, a reasonable estimate of the allocable cost of
in-house counsel and staff) for any amendment, supplement, waiver, consent, or
subsequent 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 the mortgages,
filing financing statements and continuations, and other actions to perfect,
protect, and continue the Security Interest; (e) sums paid or incurred to pay
any amount or take any action required of the Borrower or any Guarantor under
the Loan Documents that the Borrower or such Guarantor fails to pay or take; (f)
costs of appraisals, inspections, and verifications of the Collateral or
Guarantor Collateral, including, without limitation, travel, lodging, and meals
together with an allocated charge equal to its then customary per diem fee
(currently $750) per day for each auditor employed by the Lender for
59
inspections of the Collateral or Guarantor Collateral and the Borrower's
operations, provided that the Borrower shall not have to pay with respect to any
one audit after the Closing Date more than $10,000 or with respect to audits for
any single contract year more than $30,000 but provided, further, that, to the
extent that the Borrower pays less than $30,000 with respect to audits for any
single contract year, the amount by which $30,000 exceeds the amount actually
paid by the Borrower for such year shall be carried over to each successive
contract year and added to the $30,000 maximum for such year (for example, if,
with respect to any contract year the Borrower is only required to pay $20,000
for audits, the maximum annual amount that the Borrower will have to pay with
respect to audits for the next contract year would be $40,000); (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 or Guarantor
Collateral; and (i) costs and expenses, including, without limitation,
reasonable attorneys' and paralegals' fees and disbursements (including, without
limitation, a reasonable estimate of the allocable cost of in-house counsel and
staff) paid or incurred to obtain payment of the Obligations, enforce the
Security Interest, sell or otherwise realize upon the Collateral or Guarantor
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Lender arising out of the
transactions contemplated hereby (including, without limitation, preparations
for and consultations concerning any such matters). The foregoing shall not be
construed to limit any other provisions of the Loan Documents regarding costs
and expenses to be paid by the Borrower. All of the foregoing costs and expenses
shall be charged to the Borrower's loan account as Reference Rate Loans.
15.11 Notices. Except as otherwise provided herein, all
notices, demands, and requests that either party is required or elects to give
to the other shall be in writing, shall be delivered personally against receipt,
or sent by recognized overnight courier services, or mailed by registered or
certified mail, return receipt requested, postage prepaid, and shall be
addressed to the party to be notified as follows:
If to the Lender: BankAmerica Business Credit, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Division Manager
with a copy to: Bank of America NT&SA, Legal Department
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
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- and -
Xxxxxxxx & Xxxxxx
Xxx Xxxxxxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
If to CCI: The Cosmetic Center, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
with a copy to: Arent Fox Xxxxxxx Xxxxxxx & Xxxx
0000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Attention: Carter Strong
or to such other address as each party may designate for itself by like notice.
Any such notice, demand, or request shall be deemed given when received if
personally delivered or sent by overnight courier, or when deposited in the
United States mails, postage paid, if sent by registered or certified mail.
15.12 Indemnification. THE BORROWER HEREBY INDEMNIFIES,
DEFENDS AND HOLDS THE LENDER, AND ITS DIRECTORS, OFFICERS, AGENTS, EMPLOYEES AND
COUNSEL, HARMLESS FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES, DEFICIENCIES, JUDGMENTS, PENALTIES OR EXPENSES IMPOSED ON, INCURRED
BY OR ASSERTED AGAINST ANY OF THEM, WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL,
ARISING OUT OF OR BY REASON OF ANY LITIGATION, INVESTIGATIONS, CLAIMS, OR
PROCEEDINGS (WHETHER BASED ON ANY FEDERAL, STATE OR LOCAL LAWS OR OTHER STATUTES
OR REGULATIONS, INCLUDING, WITHOUT LIMITATION, SECURITIES, ENVIRONMENTAL, OR
COMMERCIAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITY, OR IN CONTRACT
OR OTHERWISE) COMMENCED OR THREATENED, WHICH ARISE OUT OF OR ARE IN ANY WAY
BASED UPON THE NEGOTIATION, PREPARATION, EXECUTION, DELIVERY, ENFORCEMENT,
PERFORMANCE OR ADMINISTRATION OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY
UNDERTAKING OR PROCEEDING RELATED TO ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR ANY ACT, OMISSION TO ACT, EVENT OR TRANSACTION RELATED OR ATTENDANT THERETO,
INCLUDING, WITHOUT LIMITATION, AMOUNTS PAID IN SETTLEMENT, COURT COSTS, AND THE
FEES AND EXPENSES OF COUNSEL REASONABLY INCURRED IN CONNECTION WITH ANY SUCH
LITIGATION, INVESTIGATION, CLAIM OR PROCEEDING AND FURTHER INCLUDING, WITHOUT
LIMITATION, ALL LOSSES, DAMAGES (INCLUDING, WITHOUT
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LIMITATION, CONSEQUENTIAL DAMAGES), EXPENSES OR LIABILITIES SUSTAINED BY THE
LENDER IN CONNECTION WITH ANY ENVIRONMENTAL INSPECTION, MONITORING, SAMPLING, OR
CLEANUP OF THE ENCUMBERED REAL ESTATE REQUIRED OR MANDATED BY ANY ENVIRONMENTAL
LAW; PROVIDED, HOWEVER, THAT THE BORROWER SHALL NOT INDEMNIFY THE LENDER OR ITS
DIRECTORS, OFFICERS, AGENTS, EMPLOYEES AND COUNSEL FROM ANY SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES, DEFICIENCIES, JUDGMENTS, PENALTIES, OR EXPENSES RESULTING
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THEM. Without limiting
the foregoing, if, by reason of any suit or proceeding of any kind, nature, or
description against the Borrower, or by the Borrower or any other party against
the Lender, which in the Lender's sole discretion makes it advisable for the
Lender to seek counsel for protection and preservation of its liens and security
assets, or to defend its own interest, such expenses and counsel fees shall be
allowed to the Lender. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in this Section 15.12 may be unenforceable because it is
violative of any law or public policy, the Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all indemnified matters incurred by the Lender. The
foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement. All of the foregoing costs and expenses shall be
part of the Obligations and secured by the Collateral and the Guarantor
Collateral.
15.13 Waiver of Notices. Unless otherwise expressly
provided herein, the Borrower waives presentment, protest and notice of demand
or dishonor and protest as to any instrument, as well as any and all other
notices to which the Borrower might otherwise be entitled. No notice to or
demand on the Borrower which the Lender may elect to give shall entitle the
Borrower to any or further notice or demand in the same, similar or other
circumstances.
15.14 Binding Effect; Assignment. 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 the Borrower without the
prior written consent of the Lender. The rights and benefits of the Lender
hereunder shall, if the Lender so agrees, inure to any party acquiring any
interest in the Obligations or any part thereof.
15.15 Modification. This Agreement is intended by the
Borrower and the Lender to be the final, complete, and exclusive expression of
the agreement between them. This Agreement supersedes any and all prior oral or
written agreements relating to the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no oral agreements between the parties. No
modification, rescission, waiver, release, or amendment of any provision of this
Agreement shall be made, except by a written agreement signed by the Borrower
and a duly authorized officer of the Lender.
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15.16 Counterparts. This Agreement may be executed in
any number of counterparts, and by the Lender and the Borrower in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
15.17 Captions. The captions contained in this Agreement
are for convenience only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
15.18 Right of Set-Off. Whenever an Event of Default
exists, the Lender is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Lender or any affiliate of the
Lender to or for the credit or the account of the Borrower against any and all
of the Obligations, whether or not then due and payable. The Lender agrees
promptly to notify the Borrower after any such set-off and application made by
the Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
15.19 Participating Lender's Security Interests. The
Lender may, without notice to or consent by the Borrower, grant one or more
participations in the Loans to Participating Lenders. If a Participating Lender
shall at any time with the Borrower's knowledge participate with the Lender in
the Loans, the Borrower hereby grants to such Participating Lender, and the
Lender and such Participating Lender shall have and are hereby given, a
continuing lien on and security interest in any money, securities and other
property of the Borrower in the custody or possession of the Participating
Lender, including, without limitation, the right of setoff, to the extent of the
Participating Lender's participation in the Obligations, and such Participating
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Lender shall be deemed to have the same right of setoff to the extent of such
Participating Lender's participation in the Obligations under this Agreement as
it would have if it were a direct lender.
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
THE COSMETIC CENTER, INC.
By:____________________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.
By:____________________________
Name:
Title:
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List of Exhibits/Schedules
Exhibit A Form of Borrowing Notice
Exhibit B Financial Statements and Projections
- Exhibit B-1 Financial Statements
- Exhibit B-2 [Intentionally Left Blank]
- Exhibit B-3 Projections
- Exhibit B-4 [Intentionally Left Blank]
Exhibit C Borrowing Base Certificate
Schedule 7.3 Locations of the Borrower and the Guarantors
Schedule 9.2 [Intentionally Left Blank]
Schedule 9.4 Corporate Names
Schedule 9.5 Subsidiaries and Affiliates and states of
incorporation and qualification
Schedule 9.9 Other Debt or Obligations
Schedule 9.13 Real Estate--Owned and Leased
Schedule 9.14 Proprietary Rights Collateral (patents, trademarks,
and copyrights)
Schedule 9.15 Trade Names
Schedule 9.16 Litigation
Schedule 9.18 Labor Disputes
Schedule 9.19 Environmental Laws
Schedule 9.22 ERISA Compliance
Schedule 10.16 Existing Liens
Schedule 10.18 New Subsidiaries
65
