Exhibit 10.1
CREDIT AGREEMENT
dated as of
October 11, 2005
among
GAMESTOP CORP.,
as Lead Borrower for:
GAMESTOP CORP.
GAMESTOP HOLDINGS CORP.
GAMESTOP, INC.
XXXXXXXX.XXX, INC.
SUNRISE PUBLICATIONS, INC.
MARKETING CONTROL SERVICES, INC.
GAMESTOP BRANDS, INC.
GAMESTOP OF TEXAS (GP), LLC
GAMESTOP (LP), LLC
GAMESTOP TEXAS LP
ELECTRONICS BOUTIQUE HOLDINGS CORP.
EB INVESTMENT CORP.
EB CATALOG COMPANY, INC.
EB GAMES CUSTOMER SERVICE, INC.
ELBO INC.
EB FINANCE INC.
EB SPECIALTY SERVICES, INC.
ELECTRONICS BOUTIQUE OF AMERICA INC.
EB SADSBURY SECOND, LLC
EB SADSBURY GENERAL PARTNER, LP
EB SADSBURY PROPERTY HOLDING, LP
EB INTERNATIONAL HOLDINGS, INC.
The LENDERS Party Hereto,
BANK OF AMERICA, N.A. and CITICORP NORTH AMERICA, INC.
as Issuing Banks,
BANK OF AMERICA, N.A.
as Administrative Agent and Collateral Agent,
CITICORP NORTH AMERICA, INC.,
as Syndication Agent
XXXXXXX XXXXX CAPITAL A DIVISION OF XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC.,
as Documentation Agent,
and
BANK OF AMERICA SECURITIES LLC
CITIGROUP GLOBAL MARKETS INC.
and
XXXXXXX XXXXX CAPITAL A DIVISION OF XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC.,
as Joint Lead Arrangers and Joint Lead Bookrunners
___________________________
TABLE OF CONTENTS
1. DEFINITIONS................................................................4
1.1 Defined Terms.....................................................4
1.2 Terms Generally..................................................32
1.3 Accounting Terms.................................................33
2. AMOUNT AND TERMS OF CREDIT................................................33
2.1 Commitment of the Lenders.......................................33
2.2 Reserves; Changes to Reserves...................................34
2.3 Making of Loans.................................................35
2.4 Overadvances....................................................37
2.5 Swingline Loans.................................................37
2.6 Letters of Credit...............................................38
2.7 Settlements Amongst Lenders.....................................42
2.8 Notes; Repayment of Loans.......................................43
2.9 Interest on Loans...............................................44
2.10 Default Interest................................................44
2.11 Certain Fees....................................................44
2.12 Unused Commitment Fee...........................................44
2.13 Letter of Credit Fees...........................................45
2.14 Nature of Fees..................................................46
2.15 Termination or Reduction of Commitments.........................46
2.16 Alternate Rate of Interest......................................47
2.17 Conversion and Continuation of Loans............................47
2.18 Mandatory Prepayment; Cash Collateral; Commitment Termination...48
2.19 Optional Prepayment of Loans; Reimbursement of Lenders..........49
2.20 Maintenance of Loan Account; Statements of Account..............51
2.21 Cash Receipts...................................................52
2.22 Application of Payments.........................................54
2.23 Increased Costs.................................................55
2.24 Change in Legality..............................................56
2.25 Payments; Sharing of Setoff.....................................56
2.26 Taxes...........................................................58
2.27 Security Interests in Collateral................................60
2.28 Mitigation Obligations; Replacement of Lenders..................60
3. REPRESENTATIONS AND WARRANTIES ........................................61
3.1 Organization; Powers............................................61
3.2 Authorization; Enforceability...................................61
3.3 Governmental Approvals; No Conflicts............................61
3.4 Financial Condition.............................................62
3.5 Properties......................................................62
3.6 Litigation and Environmental Matters............................62
3.7 Compliance with Laws and Agreements.............................63
(iii)
3.8 Investment and Holding Company Status...........................63
3.9 Taxes...........................................................63
3.10 ERISA...........................................................63
3.11 Interdependence of Borrower Affiliated Group....................64
3.12 Disclosure......................................................64
3.13 Subsidiaries....................................................65
3.14 Insurance.......................................................65
3.15 Labor Matters...................................................65
3.16 Certain Transactions............................................65
3.17 Restrictions on the Borrower Affiliated Group...................66
3.18 Security Documents..............................................66
3.19 Federal Reserve Regulations.....................................66
3.20 Solvency........................................................66
3.21 Franchises, Patents, Copyrights, Etc............................66
3.22 Closing Date Acquisition Documents..............................67
4. CONDITIONS...............................................................67
4.1 Closing Date....................................................67
4.2 Conditions Precedent to Each Loan and Each Letter of Credit.....71
5. AFFIRMATIVE COVENANTS....................................................72
5.1 Financial Statements and Other Information......................72
5.2 Notices of Material Events......................................74
5.3 Information Regarding Collateral................................75
5.4 Existence; Conduct of Business..................................76
5.5 Payment of Obligations..........................................76
5.6 Maintenance of Properties.......................................76
5.7 Insurance.......................................................76
5.8 Casualty and Condemnation.......................................78
5.9 Books and Records; Inspection and Audit Rights..................78
5.10 Fiscal Year.....................................................79
5.11 Physical Inventories............................................79
5.12 Compliance with Laws............................................80
5.13 Use of Proceeds and Letters of Credit...........................80
5.14 Additional Subsidiaries.........................................80
5.15 Further Assurances..............................................80
5.16 Coatesville, Pennsylvania Property..............................81
6. NEGATIVE COVENANTS.......................................................81
6.1 Indebtedness and Other Obligations..............................81
6.2 Liens...........................................................83
6.3 Fundamental Changes.............................................84
6.4 Investments, Loans, Advances, Guarantees and Acquisitions.......85
6.5 Asset Sales.....................................................85
6.6 Restrictive Agreements..........................................87
(iv)
6.7 Restricted Payments; Certain Payments of Indebtedness...........87
6.8 Transactions with Affiliates....................................88
6.9 Additional Subsidiaries.........................................88
6.10 Amendment of Material Documents.................................88
6.11 Fixed Charge Coverage Ratio.....................................88
6.12 Environmental Laws..............................................89
6.13 Fiscal Year.....................................................89
6.14 Certain Borrower Subsidiaries...................................89
7. EVENTS OF DEFAULT........................................................89
7.1 Events of Default...............................................89
7.2 When Continuing.................................................93
7.3 Remedies on Default.............................................93
7.4 Application of Proceeds.........................................93
8. THE AGENTS...............................................................93
8.1 Administration by Administrative Agent..........................93
8.2 The Collateral Agent............................................93
8.3 Sharing of Excess Payments......................................94
8.4 Agreement of Required Lenders...................................94
8.5 Liability of Agents.............................................95
8.6 Notice of Default...............................................96
8.7 Lenders' Credit Decisions.......................................96
8.8 Reimbursement and Indemnification...............................97
8.9 Rights of Agents................................................97
8.10 Notice of Transfer..............................................97
8.11 Successor Agent.................................................97
8.12 Reports and Financial Statements................................98
8.13 Delinquent Lender...............................................98
8.14 Syndication Agent and Documentation Agent.......................99
9. MISCELLANEOUS............................................................99
9.1 Notices.........................................................99
9.2 Waivers; Amendments............................................100
9.3 Expenses; Indemnity; Damage Waiver.............................102
9.4 Designation of Lead Borrower as Borrowers' Agent...............103
9.5 Successors and Assigns.........................................105
9.6 Survival.......................................................107
9.7 Counterparts; Integration; Effectiveness.......................107
9.8 Severability...................................................108
9.9 Right of Setoff................................................108
9.10 Governing Law; Jurisdiction; Consent to Service of Process.....108
9.11 WAIVER OF JURY TRIAL...........................................109
9.12 Headings.......................................................109
9.13 Interest Rate Limitation.......................................109
9.14 Additional Waivers.............................................109
(v)
9.15 Patriot Act....................................................111
9.16 Confidentiality................................................111
(vi)
EXHIBITS
A Assignment and Acceptance
B-1 Revolving Note
B-2 Swingline Note
C Opinion of Counsel to Borrowers
D Borrowing Base Certificate
E Compliance Certificate
(vii)
SCHEDULES
1.1 Lenders and Commitments
2.6(j) Existing Letters of Credit
2.21(b) Credit Card Arrangements
3.5(b)(i) Title to Properties; Real Estate Owned
3.5(b)(ii) Leased Properties
3.6 Disclosed Matters
3.10 ERISA Plans
3.13 Subsidiaries
3.14 Insurance
3.16 Borrower Affiliated Group Transactions
3.21 Intellectual Property
5.1(h) Financial Reporting Requirements
6.1 Indebtedness
6.2 Liens
6.4 Investments
(viii)
CREDIT AGREEMENT dated as of October 11, 2005 (this "Agreement") among
GAMESTOP CORP., a corporation organized under the laws of the State of
Delaware having a place of business at 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxx
00000, as Lead Borrower for the Borrowers, being
said GAMESTOP CORP.,
GAMESTOP HOLDINGS CORP., a corporation organized under the laws of the
State of Delaware having a place of business at 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxx,
Xxxxx 00000,
GAMESTOP, INC., a corporation organized under the laws of the State of
Minnesota having a place of business at 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxx
00000,
XXXXXXXX.XXX, INC., a corporation organized under the laws of the State of
Delaware having a place of business at 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxx
00000,
SUNRISE PUBLICATIONS, INC., a corporation organized under the laws of the
State of Minnesota having a place of business at 000 Xxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxx 00000,
MARKETING CONTROL SERVICES, INC., a corporation organized under the laws of
the Commonwealth of Virginia having a place of business at 000 Xxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxx 00000,
GAMESTOP BRANDS, INC., a corporation organized under the laws of the State
of Delaware having a place of business at 000 0xx Xxxxxx X., 0xx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000,
GAMESTOP OF TEXAS (GP), LLC, a limited liability company organized under
the laws of the State of Delaware having a place of business at 000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxx, Xxxxx 00000,
GAMESTOP (LP), LLC, a limited liability company organized under the laws of
the State of Delaware having a place of business at 000 0xx Xxxxxx X., 0xx
Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
GAMESTOP TEXAS LP, a limited partnership organized under the laws of the
State of Texas having a place of business at 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxx,
Xxxxx 00000,
ELECTRONICS BOUTIQUE HOLDINGS CORP., a corporation organized under the laws
of the State of Delaware having a place of business at 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000,
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EB INVESTMENT CORP., a corporation organized under the laws of the State of
Delaware having a place of business at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxxxxxxxxxx 00000,
EB CATALOG COMPANY, INC., a corporation organized under the laws of the
State of Nevada having a place of business at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000,
EB GAMES CUSTOMER SERVICE, INC., a corporation organized under the laws of
the State of Ohio having a place of business at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000,
ELBO INC., a corporation organized under the laws of the State of Delaware
having a place of business at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxxxxxxxxxx 00000,
EB FINANCE INC., a corporation organized under the laws of the State of
Delaware having a place of business at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxxxxxxxxxx 00000,
EB SPECIALTY SERVICES, INC., a corporation organized under the laws of the
State of Delaware having a place of business at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000,
ELECTRONICS BOUTIQUE OF AMERICA INC., a corporation organized under the
laws of the Commonwealth of Pennsylvania having a place of business at 000 Xxxxx
Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000,
EB SADSBURY SECOND, LLC, a limited liability company organized under the
laws of the State of Delaware having a place of business at 000 Xxxxx Xxxxxxx
Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000,
EB SADSBURY GENERAL PARTNER, LP, a limited partnership organized under the
laws of the State of Delaware having a place of business at 000 Xxxxx Xxxxxxx
Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000,
EB SADSBURY PROPERTY HOLDING, LP, a limited partnership organized under the
laws of the State of Delaware having a place of business at 000 Xxxxx Xxxxxxx
Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000,
EB INTERNATIONAL HOLDINGS, INC., a corporation organized under the laws of
the State of Delaware having a place of business at 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000,
the LENDERS party hereto; and
2
BANK OF AMERICA, N.A., a national banking association having a place of
business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and CITICORP NORTH
AMERICA, INC., a Delaware corporation having a place of business at 000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, as Issuing Banks; and
BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent for the
Secured Parties, a national banking association, having a place of business at
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; and
CITICORP NORTH AMERICA, INC., a Delaware corporation having a place of
business at 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, as
Syndication Agent; and
XXXXXXX XXXXX CAPITAL A DIVISION OF XXXXXXX XXXXX BUSINESS FINANCIAL
SERVICES INC., having a place of business at 000 X. XxXxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, as Documentation Agent,
in consideration of the mutual covenants herein contained and benefits to
be derived herefrom.
W I T N E S S E T H:
WHEREAS, the Lead Borrower, GameStop Holdings Corp., GameStop Inc., and
Electronics Boutique Holdings Corp., among others, have entered into that
certain Agreement and Plan of Merger dated as of April 17, 2005 (as amended and
in effect, the "Merger Agreement"); and
WHEREAS, immediately prior to or concurrently with the effectiveness of
this Agreement, the consummation of the Mergers and the other transactions
contemplated in the Merger Agreement have taken place; and
WHEREAS, pursuant to the consummation of the Mergers, the Lead Borrower is
the direct or indirect owner of all of the outstanding stock or other equity
interests in each of the other Borrowers; and
WHEREAS, the Borrowers have requested that the Lenders make available to
the Borrowers a revolving credit facility (including a letter of credit
sub-facility) in a maximum amount not to exceed $400,000,000, the proceeds of
which, in each case, shall be used by Borrowers for purposes permitted under,
and otherwise in accordance with and subject to the terms of, this Agreement;
and
WHEREAS, the Lenders are willing to make the revolving facility available
to the Borrowers, upon the terms and subject to the conditions set forth herein.
3
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Lenders, the Administrative Agent,
the Collateral Agent, the Syndication Agent, the Documentation Agent and the
Borrowers hereby agree as follows::
1. DEFINITIONS.1.1 Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ACH" shall mean automated clearing house transfers.
"Accounts" shall mean "accounts" as defined in the UCC, and also all
accounts, accounts receivable, and rights to payment (whether or not earned by
performance) for: (i) property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of; (ii) services rendered or to be rendered;
(iii) a policy of insurance issued or to be issued; (iv) a secondary obligation
incurred or to be incurred; or (v) arising out of the use of a credit or charge
card or information contained on or used with that card.
"Adjusted LIBO Rate" means, with respect to any LIBO Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period divided
by (b) a percentage equal to 100% minus the Statutory Reserve Rate.
"Administrative Agent" means Bank of America, in its capacity as
administrative agent for the Secured Parties hereunder.
"Affiliate" means, with respect to a specified Person, (i) any director or
officer of that Person, (ii) any other Person Controlling, Controlled by or
under direct or indirect common Control with that Person (and if that Person is
an individual, any member of the immediate family (including parents, siblings,
spouse, children, stepchildren, nephews, nieces and grandchildren) of such
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is Controlled by any
such member or trust), (iii) any other Person directly or indirectly holding 10%
or more of any class of the capital stock or other equity interests (including
options, warrants, convertible securities and similar rights) of that Person,
(iv) any other Person 10% or more of any class of whose capital stock or other
equity interests (including options, warrants, convertible securities and
similar rights) is held directly or indirectly by that Person, and (v) any other
Person that possesses, directly or indirectly, power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise) of that
Person.
"Agents" shall mean collectively, the Administrative Agent and the
Collateral Agent.
4
"Agreement" means this Credit Agreement, as modified, amended, supplemented
or restated, and in effect from time to time.
"Applicable Law" means as to any Person: (i) all statutes, rules,
regulations, orders, or other requirements having the force of law and (ii) all
court orders and injunctions, and/or similar rulings, in each instance ((i) and
(ii)) of or by any Governmental Authority, or court, or tribunal which are
applicable to such Person, or any property of such Person.
"Applicable Margin" means initially, the rates for Prime Rate Loans and
LIBO Loans set forth in Level II, below:
------------- ----------------------- --------------------- ---------------
Level Consolidated Leverage Prime Rate Loans LIBO Loans
Ratio
------------- ----------------------- --------------------- ---------------
------------- ----------------------- --------------------- ---------------
I Consolidated Leverage 0.25% 1.75%
Ratio equal to or
greater than 3.50 to
1.00
------------- ----------------------- --------------------- ---------------
------------- ----------------------- --------------------- ---------------
II Consolidated Leverage 0% 1.50%
Ratio equal to or
greater than 1.00 to
1.00 and less than
3.50 to 1.00
------------- ----------------------- --------------------- ---------------
------------- ----------------------- --------------------- ---------------
III Consolidated Leverage 0% 1.25%
Ratio less than 1.00
to 1.00
------------- ----------------------- --------------------- ---------------
The Applicable Margin shall be adjusted quarterly commencing with the
fiscal quarter ending January 28, 2006, based on the financial statements and
compliance certificate required to be delivered pursuant to Sections 5.1(b) and
5.1(c) below. Any interest rate change shall be effective two (2) Business Days
after the date of the Administrative Agent's receipt of the financial statements
and compliance certificate required to be delivered pursuant to Sections 5.1(b)
and 5.1(c) below. Upon the occurrence of an Event of Default, at the option of
the Administrative Agent or at the direction of the Required Lenders, interest
shall be determined in the manner set forth in Section 2.10.
"Appraisal Percentage" shall mean 90%.
5
"Appraised Value" means the net appraised liquidation value of the
Borrowers' Inventory as set forth in the Borrowers' inventory stock ledger
(expressed as a percentage of the Cost of such Inventory) as determined from
time to time by the Administrative Agent with the assistance of an independent
appraiser satisfactory to the Administrative Agent.
"Arrangers" means, collectively, Banc of America Securities LLC, Citigroup
Global Markets Inc., and Xxxxxxx Xxxxx Capital a division of Xxxxxxx Xxxxx
Business Financial Services Inc.
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.5), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Availability Reserves" means such reserves as the Administrative Agent
from time to time determines in the Administrative Agent's Permitted Discretion
(after consultation with the Lead Borrower (whose consent to any Availability
Reserve shall not be required)) as being appropriate to reflect the impediments
to the Agents' ability to realize upon the Collateral. Without limiting the
generality of the foregoing, Availability Reserves may include (but are not
limited to) reserves based on (i) rent; (ii) Customer Credit Liabilities; (iii)
customs, duties, and other costs to release Inventory which is being imported
into the United States; (iv) outstanding taxes and other governmental charges,
including, ad valorem, real estate, personal property, and other taxes which
might have priority over the interests of the Collateral Agent in the
Collateral; and (v) salaries, wages and benefits due to employees of any
Borrower which might have priority over the interests of the Collateral Agent in
the Collateral. Availability Reserves shall be established and calculated in a
manner and methodology consistent with the Administrative Agent's practices as
of the Closing Date with other similarly situated borrowers.
"Bank of America" shall mean Bank of America, N.A., a national banking
association.
"Bank of America Concentration Account" has the meaning provided therefor
in Section 2.21(d).
"Blocked Account Agreements" shall mean agency agreements with the banks
maintaining a checking or other demand deposit account of any Borrower into
which the proceeds of any other DDA are regularly swept on a daily basis, which
agreements shall be in form and substance reasonably satisfactory to the
Administrative Agent.
"Blocked Account Banks" shall mean the banks with whom the Borrowers have
entered into Blocked Account Agreements.
"Blocked Accounts" shall mean each deposit account of the Borrowers which
is the subject of a Blocked Account Agreement.
6
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrowers" means, individually and collectively, GameStop Corp., GameStop
Holdings Corp., GameStop, Inc., XxxxXxxx.xxx, Inc., Sunrise Publications, Inc.,
Marketing Control Services, Inc., GameStop Brands, Inc., GameStop of Texas (GP),
LLC, GameStop (LP), LLC, GameStop Texas LP, Electronics Boutique Holdings Corp.,
EB Investment Corp., EB Catalog Company, Inc., EB Games Customer Service, Inc.,
ELBO Inc., EB Finance Inc., Electronics Boutique Specialty Services, Inc.,
Electronics Boutique of America Inc., EB Sadsbury Second, LLC, EB Sadsbury
General Partner, LP, EB Sadsbury Property Holding, LP, EB International
Holdings, Inc., and any other Person who becomes a Borrower hereunder.
"Borrower Affiliated Group" shall mean, collectively, (i) the Borrowers and
(ii) each of the Subsidiaries of the Borrowers in existence from time to time.
"Borrowing" shall mean the incurrence of Loans of a single Type, on a
single date and having, in the case of LIBO Loans, a single Interest Period, or
(b) a Swingline Loan.
"Borrowing Base" means, at any time of calculation, an amount equal to:
(a) the lesser of (i) (A) the Appraisal Percentage multiplied by (B)(1) the
Appraised Value of Eligible Inventory, minus (2) Inventory Reserves, or (ii) (A)
the Inventory Advance Rate multiplied by (B)(1) the Cost of Eligible Inventory,
minus (2) Inventory Reserves; plus
(b) eighty-five (85%) percent multiplied by the then Eligible Credit Card
Receivables; minus
(b) the then amount of all Availability Reserves.
"Borrowing Base Certificate" has the meaning assigned to such term in
Section 5.1(e).
"Borrowing Request" means a request by the Lead Borrower on behalf of the
Borrowers for a Borrowing in accordance with Section 2.3.
"Breakage Costs" shall have the meaning set forth in Section 2.19(b).
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to remain closed, provided that, when used in
connection with a LIBO Loan, the term "Business Day" shall also exclude any day
on which banks are not open for dealings in dollar deposits in the London
interbank market.
"Capital Expenditures" of any Person means, for any period, to the extent
capitalized in accordance with GAAP, any expenditure for fixed assets (both
tangible and intangible),
7
including assets being constructed (whether or not completed), leasehold
improvements, capital leases under GAAP, installment purchases of machinery and
equipment, acquisitions of real estate and other similar expenditures including
(i) in the case of a purchase, the entire purchase price, whether or not paid
during the fiscal period in question, (ii) in the case of any Capitalized Lease
Obligation, the capitalized amount thereof (determined in accordance with GAAP)
and (iii) without duplication, expenditures in or from any
construction-in-progress account of any member of the Borrower Affiliated Group,
provided, however, that expenditures for a Permitted Acquisition shall not
constitute Capital Expenditures.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Cash Collateral Account" shall mean an interest-bearing account
established by the Borrowers with the Collateral Agent at Bank of America under
the sole and exclusive dominion and control of the Collateral Agent designated
as the "GameStop Corp. Cash Collateral Account".
"Cash Dominion Event" means either (i) the occurrence and continuance of
any Event of Default, or (ii) the failure of the Borrowers to maintain Uncapped
Availability in an amount equal to not less than fifteen (15%) percent of the
then Borrowing Base for five (5) consecutive Business Days. For purposes of this
Agreement, the occurrence of a Cash Dominion Event shall be deemed continuing at
the Administrative Agent's option (i) so long as such Event of Default has not
been waived, and/or (ii) if the Cash Dominion Event arises as a result of the
Borrowers' failure to achieve Uncapped Availability as required hereunder, until
Uncapped Availability is equal to or greater than fifteen (15%) percent of the
then Borrowing Base for fifteen (15) consecutive Business Days, in which case a
Cash Dominion Event shall no longer be deemed to be continuing for purposes of
this Agreement. Notwithstanding the foregoing, in the event that there are no
Obligations outstanding, a Cash Dominion Event shall not be deemed to have
occurred and be continuing for purposes of this Agreement and the other Loan
Documents.
"Cash Receipts" has the meaning provided therefor in Section 2.21(d).
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq.
"Change in Control" means, at any time, (a) occupation of a majority of the
seats (other than vacant seats) on the board of directors of the Lead Borrower
by Persons who were neither (i) nominated by the board of directors of the Lead
Borrower nor (ii) appointed by directors so nominated; or (b) any person (within
the meaning of the Securities and Exchange Act of 1934, as
8
amended), is or becomes the beneficial owner (within the meaning of Rule 13d-3
and 13d-5 of the Securities and Exchange Act of 1934, as amended) directly or
indirectly of fifty percent (50%) or more of the total voting power of the
Voting Stock of the Lead Borrower on a fully diluted basis, whether as a result
of the issuance of securities of the Lead Borrower, any merger, consolidation,
sale, or distribution, or otherwise, or (c) except as otherwise permitted
pursuant to this Agreement, the failure of the Lead Borrower to own, directly or
indirectly, 100% (or such other percentage as may be owned directly or
indirectly but in no event less than that percentage so owned as of the date of
acquisition or creation thereof) of the capital stock or ownership interest, as
applicable, of all members of the Borrower Affiliated Group.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement (or, in the case of any Person which becomes a Lender
or Participant thereafter, the date on which such Person becomes a Lender or
Participant), (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement (or, in the case of any Person which becomes a Lender or
Participant thereafter, the date on which such Person becomes a Lender or
Participant) or (c) compliance by any Lender or the Issuing Banks (or, for
purposes of Section 2.23, by any lending office of such Lender or by such
Lender's or any Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement (or, in
the case of any Person which becomes a Lender or Participant thereafter, the
date on which such Person becomes a Lender or Participant).
"Charges" has the meaning provided therefor in Section 9.13.
"Citibank" means Citicorp North America, Inc., a Delaware corporation.
"Closing Date" means the date on which the conditions specified in Section
4.1 are satisfied (or waived by the Agents).
"Closing Date Acquisition Documents" means collectively, the Merger
Agreement and all other agreements, documents, certificates and instruments
executed and/or delivered in connection therewith.
"Coatesville Property" means the Real Estate located at 200 Xxxxxxx Xxxxxx
Drive, Bellaire Business Park, Coatesville, Pennsylvania 19382-5521.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended from time to time.
"Collateral" means any and all "Collateral" as defined in any applicable
Security Document.
"Collateral Agent" means Bank of America, in its capacity as collateral
agent under the Security Documents.
9
"Commercial Letter of Credit" means any Letter of Credit issued for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by a Borrower in the ordinary
course of business of such Borrower.
"Commitment" shall mean, with respect to each Lender, the commitment of
such Lender hereunder in the amount set forth opposite its name on Schedule 1.1
hereto or as may subsequently be set forth in the Register from time to time, as
the same may be reduced from time to time pursuant to Section 2.15 hereof.
"Commitment Fee" has the meaning provided therefor in Section 2.12.
"Commitment Percentage" shall mean, with respect to each Lender, that
percentage of the Commitments of all Lenders hereunder in the amount set forth
opposite its name on Schedule 1.1 hereto or as may subsequently be set forth in
the Register from time to time, as the same may be reduced from time to time
pursuant to Section 2.15 hereof.
"Consolidated" means, when used to modify a financial term, test,
statement, or report of a Person, refers to the application or preparation of
such term, test, statement or report (as applicable) based upon the
consolidation, in accordance with GAAP, of the financial condition or operating
results of such Person and its Subsidiaries.
"Consolidated EBITDA" of any Person means, for any twelve month period, the
result for such period of (i) Consolidated Net Income, plus (ii) depreciation,
amortization and all other non-cash charges that were deducted in the
calculation of Consolidated Net Income for such period plus (iii) provisions for
income taxes that were deducted in the calculation of Consolidated Net Income
for such period, plus (iv) Consolidated Interest Expense, plus (v) extraordinary
non-cash losses to the extent such losses have not been and will not become cash
losses in a later fiscal period. Each calculation of Consolidated EBITDA under
this Agreement shall be made for the twelve month period ending on the date of
such calculation.
"Consolidated EBITDAR" of any Person means, for any period, an amount equal
to Consolidated EBITDA for such period, plus Consolidated Rent Expense for such
period.
"Consolidated Interest Expense" means, for any period for any Person, total
interest and all amortization of debt discount and expense (including that
attributable to Capital Lease Obligations in accordance with GAAP) of such
Person on a Consolidated basis with respect to all outstanding Indebtedness of
such Person, including, without limitation, all commitment fees, fees and
charges owed with respect to letters of credit, balance deficiency fees and
similar expenses, and bankers' acceptance financing and net costs under Hedging
Agreements, but excluding any non-cash or deferred interest financing costs.
10
"Consolidated Leverage Ratio" shall mean, as of the last day of any fiscal
month, for the twelve-month period then ended, the ratio of (i) Total
Indebtedness outstanding on such date, to (ii) Consolidated EBITDA for such
period.
"Consolidated Net Income" means, for any period with respect to any Person,
the net income (or loss) of such Person on a Consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP, provided
that there shall be excluded (i) the income (or loss) of any Person in which any
other Person (other than the Lead Borrower or any of its Domestic Subsidiaries)
has a joint interest, except to the extent of the amount of dividends or other
distributions actually paid to the Lead Borrower or any of its Domestic
Subsidiaries by such Person during such period, and (ii) the income (or loss) of
any Person accrued prior to the date it becomes a Subsidiary of the Lead
Borrower or any of its Domestic Subsidiaries or is merged into or consolidated
with the Lead Borrower or any of its Domestic Subsidiaries or that Person's
assets are acquired by the Lead Borrower or any of its Domestic Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person, the difference
between its Consolidated total assets and its Consolidated total liabilities,
all as determined in accordance with GAAP.
"Consolidated Rent Expense" of any Person means, for any period, the
aggregate rental expenses of such Person on a Consolidated basis for such period
(including percentage rent) under any operating lease classified as such under
GAAP but not including any amount included in the definition of "Consolidated
Interest Expense."
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.
"Cost" means the cost value of Inventory as reported on the Borrowers'
inventory stock ledger using the average cost method of accounting based on
practices which are in effect on the date of this Agreement. "Cost" does not
include inventory capitalization costs or other non-purchase price charges
(other than in-bound freight) used in the Borrowers' calculation of cost of
goods sold.
"Credit Card Notifications" has the meaning provided therefor in Section
2.21(a).
"Credit Extensions" as of any day, shall be equal to the sum of (a) the
principal balance of all Loans then outstanding, and (b) the then amount of the
Letter of Credit Outstandings.
"Customer Credit Liabilities" means, at any time, the aggregate face value
at such time of (a) outstanding gift certificates and gift cards of the
Borrowers entitling the holder thereof to use
11
all or a portion of the certificate to pay all or a portion of the purchase
price for any Inventory, including, without limitation, "GameStop Loyalty Cards"
or other discount cards, and (b) outstanding merchandise credits and customer
deposits of the Borrowers.
"DDA" means any checking or other demand deposit account maintained by any
Borrower.
"DDA List" has the meaning provided therefor in Section 2.21(a).
"DDA Notification" has the meaning provided therefor in Section 2.21(a).
"Default" means any event or condition that constitutes an Event of Default
or that upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
"Delinquent Lender" has the meaning given that term in Section 8.13.
"Delinquent Lender's Future Commitment" has the meaning given that term in
Section 8.13.
"Dollars" or "$" refers to lawful money of the United States of America.
"Domestic Subsidiary" means any Subsidiary of any Borrower organized under
the laws of any jurisdiction of the United States of America.
"EB Borrower Group" means, individually and collectively, Electronics
Boutique Holdings Corp., EB Investment Corp., EB Catalog Company, Inc., EB Games
Customer Service, Inc., ELBO Inc., EB Finance Inc., Electronics Boutique
Specialty Services, Inc., Electronics Boutique of America Inc., EB Sadsbury
Second, LLC, EB Sadsbury General Partner, LP, EB Sadsbury Property Holding, LP,
and EB International Holdings, Inc.
"Eligible Credit Card Receivables" means Accounts due to a Borrower on a
non-recourse basis from Visa, MasterCard, American Express Company, Discover,
and other major credit card processors, in each case acceptable to the
Administrative Agent in its reasonable discretion, as arise in the ordinary
course of business, which have been earned by performance and are deemed by the
Administrative Agent in its reasonable discretion to be eligible for inclusion
in the calculation of the Borrowing Base. Without limiting the foregoing, unless
the Administrative Agent otherwise agrees, none of the following shall be deemed
to be Eligible Credit Card Receivables:
(a) Accounts that have been outstanding for more than five (5) Business
Days from the date of sale;
12
(b) Accounts with respect to which a Borrower does not have good and valid
title, free and clear of any Lien (other than Liens granted to the Collateral
Agent for its own benefit and the ratable benefit of the other Secured Parties);
(c) Accounts that are not subject to a first priority security interest in
favor of the Collateral Agent for its own benefit and the ratable benefit of the
other Secured Parties (it being the intent that chargebacks in the ordinary
course by the credit card processors shall not be deemed violative of this
clause);
(d) Accounts which are disputed, are with recourse, or with respect to
which a claim, counterclaim, offset or chargeback has been asserted (to the
extent of such claim, counterclaim, offset or chargeback);
(e) Accounts which are acquired in a Permitted Acquisition unless and until
the Administrative Agent has completed a commercial finance examination of such
Accounts, establishes an advance rate and reserves (if applicable) therefor, and
otherwise agrees that such Accounts shall be deemed Eligible Credit Card
Receivables; or
(f) Accounts which the Administrative Agent determines in its Permitted
Discretion to be uncertain of collection.
"Eligible In-Transit Inventory" shall mean, as of the date of determination
thereof, without duplication of other Eligible Inventory, Inventory (a) which
has been shipped from a foreign location for receipt by a Borrower within sixty
(60) days of the date of determination, but which has not yet delivered to such
Borrower, (b) for which payment has been made by a Borrower and title has passed
to such Borrower, (c) for which the document of title reflects a Borrower as
consignee (along with delivery to such Borrower of the documents of title with
respect thereto), (d) as to which the Collateral Agent has control over the
documents of title which evidence ownership of the subject Inventory (such as,
if requested by the Collateral Agent, by the delivery of a customs broker agency
agreement, reasonably satisfactory to the Collateral Agent), and (e) which
otherwise would constitute Eligible Inventory.
"Eligible Inventory" shall mean, as of the date of determination thereof,
(a) Eligible In-Transit Inventory, (b) Eligible L/C Inventory, and (c) items of
Inventory of the Borrowers that are finished goods, merchantable and readily
saleable to the public in the ordinary course deemed by the Administrative Agent
in its reasonable discretion to be eligible for inclusion in the calculation of
the Borrowing Base. Without limiting the foregoing, unless otherwise approved in
writing by the Administrative Agent, none of the following shall be deemed to be
Eligible Inventory:
(a) Inventory that is not owned solely by a Borrower, or is leased or on
consignment, or such Borrower does not have good and valid title thereto;
13
(b) Inventory (including any portion thereof in transit from vendors, other
than Eligible In-Transit Inventory and Eligible L/C Inventory) that is not
located at a warehouse facility or store that is owned or leased by Borrower;
(c) Inventory that represents (i) goods damaged, defective or otherwise
unmerchantable, or (ii) goods returned to the vendor;
(d) Inventory that is not located in the United States of America
(excluding territories and possessions thereof) other than Eligible In-Transit
Inventory and Eligible L/C Inventory;
(e) Inventory that is not subject to a perfected first-priority security
interest in favor of the Collateral Agent for the benefit of the Secured
Parties;
(f) Inventory which consists of samples, labels, bags, packaging, and other
similar non-merchandise categories;
(g) Inventory as to which insurance in compliance with the provisions of
Section 5.7 hereof is not in effect;
(h) Inventory which has been sold but not yet delivered; or
(i) Inventory which is acquired in a Permitted Acquisition or which is
owned by a Subsidiary created after the Closing Date (except to the extent that
such Inventory has been acquired by such Subsidiary from another Borrower and
otherwise constitutes Eligible Inventory) unless and until the Collateral Agent
has completed an appraisal of such Inventory, establishes an Inventory Advance
Rate and Inventory Reserves (if applicable) therefor.
"Eligible L/C Inventory" shall mean, as of the date of determination
thereof, without duplication of other Eligible Inventory, Inventory (a) not yet
delivered to the Borrowers, (b) the purchase of which is supported by a
Commercial Letter of Credit having an expiry within sixty (60) days of such date
of determination, (c) which has been consigned to a Borrower as consignee (along
with delivery to a Borrower of the documents of title with respect thereto), (d)
as to which the Collateral Agent has control over the documents of title which
evidence ownership of the subject Inventory (such as, if requested by the
Collateral Agent, by the delivery of a customs broker agency agreement,
reasonably satisfactory to the Collateral Agent), and (e) which otherwise would
constitute Eligible Inventory.
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources, or
handling, treatment, storage, disposal, Release or threatened Release of any
Hazardous Material.
14
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties or
indemnities), of any Person directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with any Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by a Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by a Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by a
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by a Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from a Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Event of Default" has the meaning assigned to such term in Section 7.1. An
"Event of Default" shall be deemed to have occurred and to be continuing unless
and until that Event of Default has been duly waived by the Administrative Agent
in writing or cured to the reasonable satisfaction of the Administrative Agent.
"Excess Availability" means, as of any date of determination, the excess,
if any, of (a) the lesser of (i) the Total Commitments and (ii) the Borrowing
Base, over (b) the outstanding Credit Extensions.
15
"Excluded Taxes" means, with respect to the Agents, any Lender, the Issuing
Banks or any other recipient of any payment to be made by or on account of any
obligation of the Borrowers hereunder, (a) income or franchise taxes imposed on
(or measured by) its gross or net income by the United States of America, or by
the jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which any Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by a Borrower under Section
2.26(b)), any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.24, except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrowers with respect to such withholding tax pursuant to Section 2.24.
"Existing Credit Agreements" shall mean (i) that certain Amended and
Restated Credit Agreement dated as of June 21, 2004 by and among certain members
of the GameStop Borrower Group, the lenders party thereto, and Fleet Retail
Group, Inc., as Administrative Agent and Collateral Agent for the lenders, and
(ii) that certain Loan and Security Agreement, dated as of March 16, 1998 (as
the same has been amended from time to time) by and among certain members of the
EB Borrower Group, the lenders party thereto and Fleet Retail Group, Inc.
"Existing Hedging Agreement" means each of the Hedging Agreements listed on
Schedule 6.1 hereto.
"Existing Letters of Credit" means each of the letters of credit listed on
Schedule 2.6(j) hereto.
"Facility Guaranty" means the Guaranty executed by the Facility Guarantors
in favor of the Agents, the Issuing Banks and the Lenders.
"Facility Guarantors" means the Borrowers and each direct or indirect
Domestic Subsidiary of the Borrowers.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
16
"Fee Letter" means the letter entitled "Fee Letter" by, among others,
GameStop Corp. and the Administrative Agent dated as of April 17, 2005, which
Fee Letter has been joined into by the Borrowers pursuant that certain Joinder
to Fee Letter dated as of even date hereof, as such letter may from time to time
be amended.
"Financial Officer" means, with respect to any Borrower, the chief
financial officer, controller, assistant controller, treasurer, or assistant
treasurer of such Borrower.
"Fixed Charge Coverage Ratio" means, as of the last day of any month, for
the twelve-month period then ended, the ratio of (a) an amount equal to
Consolidated EBITDAR less Capital Expenditures for such period, to (b) the sum
of Consolidated Interest Expense plus Consolidated Rent Expense for such period.
Consolidated EBITDAR, Capital Expenditures and Consolidated Rent Expense shall
be calculated without regard to (i) those items attributable to any Person prior
to the date it becomes a Domestic Subsidiary of the Lead Borrower or any of its
other Domestic Subsidiaries or is merged into or consolidated with the Lead
Borrower or any of its Domestic Subsidiaries or that Person's assets are
acquired by the Lead Borrower or any of its Domestic Subsidiaries and (ii) any
Subsidiaries other than Domestic Subsidiaries Controlled by the Borrowers.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or the
District of Columbia.
"Foreign Subsidiary" means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America or any State thereof
or the District of Columbia.
"Fronting Fee" has the meaning provided therefor in Section 2.13(d).
"GAAP" means accounting principles which are (a) consistent with those
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that accounting period
in respect of which reference to GAAP is being made, and (b) consistently
applied with past financial statements of the Borrower Affiliated Group adopting
the same principles.
"GameStop Borrower Group" means, individually and collectively, GameStop
Corp., GameStop Holdings Corp., GameStop, Inc., XxxxXxxx.xxx, Inc., Sunrise
Publications, Inc., Marketing Control Services, Inc., GameStop Brands, Inc.,
GameStop of Texas (GP), LLC, GameStop (LP), LLC and GameStop Texas LP.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising
17
executive, legislative, judicial, taxing, regulatory or administrative
powers or functions of or pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the primary purpose of assuring the
owner of such Indebtedness or other obligation of the payment thereof, (c) to
maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation, provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes,
mold and other fungi, bacteria, and all other substances or wastes of any nature
regulated pursuant to any Environmental Law, including any material listed as a
hazardous substance under Section 101(14) of CERCLA.
"Hedging Agreement" means any interest rate protection agreement, interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement, foreign currency exchange agreement, commodity price protection
agreement, or other interest or currency exchange rate or commodity price
hedging arrangement designed to hedge against fluctuations in interest rates or
foreign exchange rates. Without limiting the foregoing, the Borrowers, the
Administrative Agent and the Lenders agree that the Existing Hedging Agreements
shall be deemed Hedging Agreements hereunder as if provided by the Arrangers or
any of their respective Affiliates.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money (including any obligations which
are without recourse to the credit of such Person), (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid
under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (e) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
18
been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g)
all Capital Lease Obligations of such Person, (h) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty, (i) all obligations, contingent or otherwise, of such
Person in respect of bankers' acceptances, (j) to the extent not otherwise
included, all net obligations of such Person under Hedging Agreements, and (k)
the principal and interest portions of all rental obligations of such Person
under any Synthetic Lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an operating
lease in accordance with GAAP. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning provided therefor in Section 9.3(b).
"Intellectual Property Security Agreement" shall mean the Patent and
Trademark Security Agreement dated as of the date hereof and executed and
delivered by the Borrowers to the Collateral Agent for the ratable benefit of
the Secured Parties.
"Interest Payment Date" means (a) with respect to any Prime Rate Loan
(including a Swingline Loan), the first day of each calendar quarter, and (b)
with respect to any LIBO Loan, on the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part, and, in addition, if such LIBO
Loan has an Interest Period of greater than 90 days, on the last day of the
third month of such Interest Period.
"Interest Period" means, with respect to any LIBO Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Lead Borrower may elect by notice to the Administrative Agent
in accordance with the provisions of this Agreement, provided that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, and (b) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month during which such Interest Period ends) shall end on the last
Business Day of the calendar month of such Interest Period, (c) any Interest
Period which would otherwise end after the Termination Date shall end on the
Termination Date, and (d) notwithstanding the provisions of clause (c), no
Interest Period shall have a duration of less than one month, and if any
Interest Period applicable to a LIBO Borrowing would be for a shorter period,
such Interest Period shall not be available hereunder. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter
19
shall be the effective date of the most recent conversion or continuation of
such Borrowing.
"Inventory" has the meaning assigned to such term in the Security
Agreement.
"Inventory Advance Rate" means, initially, with respect to Eligible
Inventory owned by the GameStop Borrower Group, 71%, and with respect to
Eligible Inventory owned by the EB Borrower Group, 70%.
"Inventory Reserves" means such reserves as may be established from time to
time by the Administrative Agent in the Administrative Agent's Permitted
Discretion (after consultation with the Lead Borrower (whose consent to any
Inventory Reserve shall not be required)) with respect to the determination of
the saleability, at retail, of the Eligible Inventory or which reflect such
other factors as affect the appraised value of the Eligible Inventory. Without
limiting the generality of the foregoing, Inventory Reserves may include (but
are not limited to) reserves based on (i) obsolescence; (ii) seasonality; (iii)
Shrink; (iv) imbalance; (v) change in Inventory character; (vi) change in
Inventory composition; (vii) change in Inventory mix; (viii) markdowns (both
permanent and point of sale); and (ix) retail markons and markups inconsistent
with prior period practice and performance; industry standards; current business
plans; or advertising calendar and planned advertising events. Inventory
Reserves shall be established and calculated in a manner and methodology
consistent with the Administrative Agent's practices as of the Closing Date with
other similarly situated borrowers.
"Investment" has the meaning provided therefore in Section 6.4.
"Issuing Bank or Issuing Banks" means Bank of America and/or Citibank, in
their capacity as the issuers of Letters of Credit hereunder, and any successor
to Bank of America and/or Citibank in such capacity. Each Issuing Bank may, in
its discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of such Issuing Bank, in which case the term "Issuing Banks" shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.
"L/C Disbursement" means a payment made by an Issuing Bank pursuant to a
Letter of Credit.
"Lead Borrower" means GameStop Corp.
"Lenders" shall mean the Persons identified on Schedule 1.1 and each
assignee that becomes a party to this Agreement as set forth in Section 9.5(b).
"Letter of Credit" shall mean a letter of credit that is (i) issued
pursuant to this Agreement for the account of any Borrower or any Facility
Guarantor, (ii) a Standby Letter of Credit or Commercial Letter of Credit, (iii)
issued in connection with the purchase of Inventory by any Borrower or any
Facility Guarantor or for any other purpose that is reasonably acceptable to the
20
Administrative Agent, and (iv) in form and substance reasonably satisfactory to
the applicable Issuing Bank.
"Letter of Credit Fees" shall mean the fees payable in respect of Letters
of Credit pursuant to Section 2.13.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (a)
with respect to Letters of Credit outstanding at such time, the aggregate
maximum amount that then is or at any time thereafter may become available for
drawing or payment thereunder plus (b) all amounts theretofore drawn or paid
under Letters of Credit for which the applicable Issuing Bank has not then been
reimbursed.
"LIBO Borrowing" shall mean a Borrowing comprised of LIBO Loans.
"LIBO Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Adjusted LIBO Rate in accordance with the provisions of Section
2.3.
"LIBO Rate" means, with respect to any LIBO Borrowing for any Interest
Period, a rate per annum as determined on the basis of the offered rates for
deposits in Dollars, for a period of time comparable to such Interest Period
which appears on the Telerate page 3750 as of 11:00 a.m. (London time) on the
day that is two Business Days preceding the first day of such Interest Period;
provided, however, if the rate described above does not appear on the Telerate
System on any applicable interest determination date, LIBOR shall be the rate
(rounded upwards, if necessary, to the nearest one hundred thousandth of a
percentage point) determined on the basis of the offered rates for deposits in
Dollars for a period of time comparable to such Interest Period which are
offered to the Administrative Agent by four major banks in the London interbank
market at approximately 11:00 a.m. (London time), on the day that is two
Business Days preceding the first day of such Interest Period as selected by the
Administrative Agent. The principal London office of each of the four major
London banks will be requested to provide a quotation of its Dollar deposit
offered rate to the Administrative Agent. If at least two such quotations are
provided, the rate for that date will be the arithmetic mean of the quotations.
If fewer than two quotations are provided as requested, the rate for that date
will be determined on the basis of the rates quoted for loans in Dollars to
leading European banks for a period of time comparable to such Interest Period
offered by major banks in New York, New York at approximately 11:00 a.m. (New
York time), on the day that is two Business Days preceding the first day of such
Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
21
"Loan Account" has the meaning assigned to such term in Section 2.20(a).
"Loan Documents" means this Agreement, the Notes, the Letters of Credit,
the Fee Letter, all Borrowing Base Certificates, the Blocked Account Agreements,
the DDA Notifications, the Credit Card Notifications, the Security Documents,
the Facility Guaranty, and any other instrument or agreement now or hereafter
executed and delivered in connection herewith or therewith, including (i) any
transaction arising out of any cash management, depository, or letter of credit
provided by the Administrative Agent, the Collateral Agent or any of their
respective Affiliates, and (ii) at the Borrowers' option, any investment,
Hedging Agreement, equipment leasing or other banking or financial services
provided by the Administrative Agent, the Collateral Agent, the Arrangers or any
of their respective Affiliates, each as amended and in effect from time to time.
"Loans" shall mean all loans (including, without limitation, Revolving
Loans and Swingline Loans) at any time made to the Borrowers or for account of
the Borrowers pursuant to this Agreement.
"Margin Stock" has the meaning assigned to such term in Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, assets, condition, financial or otherwise, of
the Borrower Affiliated Group, taken as a whole, (b) the ability of the Borrower
Affiliated Group, taken as a whole, to perform any material obligation or to pay
any Obligations under this Agreement or any of the other Loan Documents, or (c)
the validity or enforceability of this Agreement or any of the other Loan
Documents or any of the material rights or remedies of the Administrative Agent,
the Collateral Agent or the Lenders hereunder or thereunder.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of the Borrowers in an aggregate principal
amount exceeding $20,000,000. In all events, the Senior Notes shall be deemed
Material Indebtedness.
"Material Foreign Subsidiary" means each Foreign Subsidiary which is a
direct Subsidiary of a Borrower which, as of the last day of any fiscal quarter,
satisfied any one or more of the following tests:
(a) such Foreign Subsidiary's total tangible assets (after intercompany
eliminations), as determined in accordance with GAAP, exceeds 10% of
consolidated total tangible assets of the Borrower Affiliated Group); or
(b) such Foreign Subsidiary's Consolidated Net Income for the previous
twelve months ending as of the last day of such fiscal quarter exceeds 10% of
the Consolidated Net Income for the previous twelve months ending as of the last
day of such fiscal quarter of the Borrower Affiliated Group; or
22
(c) such Foreign Subsidiary's Consolidated Net Worth exceeds 10% of the
Consolidated Net Worth of the Borrower Affiliated Group.
"Maturity Date" means October 11, 2010.
"Maximum Rate" has the meaning provided therefor in Section 9.13.
"Mergers" has the meaning provided therefore in the Merger Agreement.
"Merger Agreement" has the meaning set forth in the recitals hereto.
"Minority Lenders" has the meaning provided therefor in Section 9.2(c).
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgages" means the Mortgages, Security Agreements and Assignments and
Deeds of Trust between the Borrower owning the Real Estate encumbered thereby
and the Collateral Agent for its own benefit and the ratable benefit of the
other Secured Parties.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Noncompliance Notice" has the meaning provided therefor in Section 2.5(b).
"Notes" shall mean (i) the promissory notes of the Borrowers substantially
in the form of Exhibit B-1, each payable to the order of a Lender, evidencing
the Revolving Loans, and (ii) the promissory note of the Borrowers substantially
in the form of Exhibit B-2, payable to the Swingline Lender, evidencing the
Swingline Loans.
"Obligations" means (a) the due and punctual payment by the Borrowers of
(i) the principal of, and interest (including all interest that accrues after
the commencement of any case or proceeding by or against any Borrower under any
federal or state bankruptcy, insolvency, receivership or similar law, whether or
not allowed in such case or proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrowers under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise, of the Borrowers to the Secured Parties
under this Agreement and the other Loan Documents, (b) the due and punctual
payment and performance of all covenants, agreements, obligations and
liabilities of the Borrowers under or pursuant to this Agreement and the other
Loan Documents, and (c) the payment and performance under any transaction with
any of the Arrangers or any of their respective Affiliates, which arises out of
(i) any cash management, depository or letter of credit,
23
or (ii), at the Borrowers' option, any investment, Hedging Agreement or other
banking or financial services provided by any such Person.
"Other Taxes" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Overadvance" means, at any time of calculation, a circumstance in which
the Credit Extensions exceed the lesser of (a) the Total Commitments or (b) the
Borrowing Base.
"Participant" has the meaning provided therefore in Section 9.5(e).
"Payment Conditions" means, at the time of determination, that (a) no
Default or Event of Default then exists or would arise as a result of the making
such payment, (b) the Borrowers have maintained Uncapped Availability equal to
or greater than twenty-five (25%) percent of the then Borrowing Base for each
day of the thirty (30) days prior to making such payment, (c) after giving
effect to such payment, Uncapped Availability will be equal to or greater than
twenty-five (25%) percent of the then Borrowing Base, and (d) Administrative
Agent has determined that Uncapped Availability, as projected on a pro-forma
basis for each day of the ninety (90) days following such payment, will be equal
to or greater than twenty-five (25%) percent of the then Borrowing Base.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of Annex 1 to the
Security Agreement or any other form approved by the Collateral Agent.
"Permitted Acquisition" means an Investment in, a purchase of the capital
stock in, or the acquisition of all or a substantial portion of the assets or
properties of, any Person, the entering into any exchange of securities with any
Person, or the entering into any transaction, merger or consolidation of any
Person, or any acquisition of any retail store locations of any Person (each of
the foregoing an "Acquisition") in each case which satisfies each of the
following conditions:
(i) The Acquisition is of a business permitted to be conducted by the
Borrowers pursuant to Section 6.3(b) hereof; and
(ii) Prior to and after giving effect to the Acquisition, no Default or
Event of Default will exist or will arise therefrom; and
(iii) The Person making the Acquisition must be a Borrower or a Subsidiary
which will become a Borrower or Facility Guarantor in accordance with
Section 5.14 hereof and the Borrowers (including such Person) shall
take such steps as are
24
necessary to grant to the Collateral Agent, for the benefit of the
Secured Parties, a legal, valid and enforceable first priority
security interest (except as provided in Section 6.2 hereof) in all of
the assets and capital stock acquired in connection with such
acquisition;
(iv) If a Borrower shall merge with such other Person, such Borrower shall
be the surviving party of such merger; and
(v) Each of the Payment Conditions shall have been satisfied.
"Permitted Discretion" means the Administrative Agent's good faith credit
judgment based upon any factor or circumstance which it reasonably believes in
good faith: (i) will or could reasonably be expected to adversely affect the
value of the Collateral, the enforceability or priority of the Collateral
Agent's Liens thereon in favor of the Secured Parties or the amount which the
Collateral Agent and the Secured Parties would likely receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of such Collateral; (ii) suggests that any collateral report or financial
information delivered to the Administrative Agent by or on behalf of the
Borrower Affiliated Group is incomplete, inaccurate or misleading in any
material respect; (iii) could reasonably be expected to materially increase the
likelihood of a bankruptcy, reorganization or other insolvency proceeding
involving any member of the Borrower Affiliated Group; or (iv) creates or
reasonably could be expected to create a Default or Event of Default. In
exercising such judgment, the Administrative Agent may consider such factors or
circumstances already included in or tested by the definition of Eligible
in-Transit Inventory, Eligible Inventory, or Eligible L/C Inventory, as well as
any of the following: (A) the financial and business climate and prospects of
any member of the Borrower Affiliated Group's industry and general macroeconomic
conditions; (B) changes in demand for and pricing of Inventory; (C) changes in
any concentration of risk with respect to Inventory; (D) any other factors or
circumstances that will or could reasonably be expected to have a Material
Adverse Effect; (E) audits of books and records by third parties, history of
chargebacks or other credit adjustments; and (F) any other factors that change
or could reasonably be expected to change the credit risk of lending to the
Borrowers on the security of the Inventory. Notwithstanding the foregoing, it
shall not be within Permitted Discretion for the Administrative Agent to
establish Reserves which are duplicative of each other whether or not such
reserves fall under more than one reserve category.
"Permitted Encumbrances" means:
(i) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.5;
(ii) carriers', warehousemen's, mechanics', materialmen's, repairmen's and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 60 days or are being
contested in compliance with Section 5.5;
25
(iii) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance, old-age pension
and other social security laws or regulations;
(iv) deposits to secure the performance of bids, trade contracts, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature, in each case in the ordinary course of business;
(v) judgment liens in respect of judgments that do not constitute an Event
of Default under Section 7.1(m);
(vi) easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business
that do not secure any monetary obligations and do not materially detract from
the value of the affected property or materially interfere with the ordinary
conduct of business of the Borrowers or any other member of the Borrower
Affiliated Group;
(vii) Possessory liens in favor of brokers and dealers arising in
connection with the acquisition or disposition of Investments owned as of the
date hereof and Permitted Investments, provided that such liens (a) attach only
to such Investments and (b) secure only obligations incurred in the ordinary
course and arising in connection with the acquisition or disposition of such
Investments and not any obligation in connection with margin financing (viii)
Liens in favor of a financial institution encumbering deposits (including the
right of setoff) held by such financial institution in the ordinary course of
its business and which are within the general parameters customary in the
banking industry; and
(ix) Landlords' and lessors' liens in respect of rent that is not overdue
by more than thirty (30) days or which is being contested in compliance with
Section 5.5;
provided that, except as provided in any one or more of clauses (i) through
(vi) above, the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means each of the following:
(i) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;
(ii) Investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, a credit rating
of at least A-1 or P-1 from S&P or from Moody's;
26
(iii) Investments in certificates of deposit, banker's acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and demand deposit and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State thereof
that has a combined capital and surplus and undivided profits of not less than
$100,000,000;
(iv) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (i) above (without regard to the
limitation on maturity contained in such clause) and entered into with a
financial institution satisfying the criteria described in clause (iii) above or
with any primary dealer and having a market value at the time that such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation of such counterparty entity with whom such repurchase agreement has
been entered into;
(v) money market mutual funds, 90% of the investments of which are in cash
or investments contemplated by clauses (i) through (iv) of this definition; and
(vi) Investments by the Lead Borrower consistent with the Lead Borrower's
current investment policy, which Investments are approved by the Administrative
Agent from time to time;
provided that, notwithstanding the foregoing, after the occurrence and
during the continuance of a Cash Dominion Event, (i) no such new Investments
shall be permitted by a Borrower unless either (A) no Loans are then
outstanding, or (B) the Investment is a temporary Investment pending expiration
of an Interest Period for a LIBO Loan, the proceeds of which Investment will be
applied to the Obligations after the expiration of such Interest Period, and
(ii) all such Investments are pledged by the applicable Borrower to the
Administrative Agent as additional collateral for the Obligations pursuant to
such agreements as may be reasonably required by the Administrative Agent.
"Permitted Overadvance" means an Overadvance determined by the
Administrative Agent, in its reasonable discretion, (a) which is made to
maintain, protect or preserve the Collateral and/or the Lenders' rights under
the Loan Documents, or (b) which is otherwise in the Lenders' interests;
provided that Permitted Overadvances shall not (i) exceed ten percent of the
then Borrowing Base in the aggregate outstanding at any time or (ii) remain
outstanding for more than thirty consecutive Business Days, unless in case of
clause (ii) the Required Lenders otherwise agree; and provided further that the
foregoing shall not (1) modify or abrogate any of the provisions of Section
2.6(f) regarding the Lenders' obligations with respect to L/C Disbursements, or
(2) result in any claim or liability against the Administrative Agent
(regardless of the amount of any Overadvance) for "inadvertent Overadvances"
(i.e. where an Overadvance results from changed circumstances beyond the control
of the Administrative Agent (such as a reduction in the collateral value)), and
further provided that in no event shall the Administrative Agent make an
Overadvance, if after giving effect thereto, the principal amount of the Credit
27
Extensions (including any Overadvance or proposed Overadvance) would exceed the
Total Commitments.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which a Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreements" means the Securities Collateral Pledge Agreements dated
as of the date hereof and executed and delivered by one or more of the Borrowers
to the Collateral Agent, for the benefit of the Secured Parties, as the same may
be amended and in effect from time to time, pursuant to which, without
limitation, (i) all of the issued and outstanding capital stock of all Domestic
Subsidiaries owned by a Borrower and (ii) sixty-five percent (or such lesser
amount owned by such Borrower) of all of the issued and outstanding capital
stock of all Foreign Subsidiaries is pledged to the Collateral Agent (in each
case, other than Subsidiaries that are not directly or indirectly wholly owned
by such Borrower).
"Prime Rate" shall mean, for any day, the higher of (a) the annual rate of
interest then most recently announced by Bank of America at its head office in
Charlotte, North Carolina as its "Prime Rate" and (b) the Federal Funds
Effective Rate in effect on such day plus 1/4 of 1% (0.50%) per annum. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer. If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations thereof in accordance with the terms hereof, the Prime
Rate shall be determined without regard to clause (b) of the first sentence of
this definition, until the circumstances giving rise to such inability no longer
exist. Any change in the Prime Rate due to a change in Bank of America's Prime
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in Bank of America's Prime Rate or the Federal Funds
Effective Rate, respectively.
"Prime Rate Loan" shall mean any Loan bearing interest at a rate determined
by reference to the Prime Rate in accordance with the provisions of Section 2.3.
"Real Estate" means all land, together with the buildings, structures,
parking areas, and other improvements thereon, now or hereafter owned or leased
by any Borrower, including all easements, rights-of-way, and similar rights
relating thereto and all leases, tenancies, and occupancies thereof.
28
"Register" has the meaning set forth in Section 9.5(c).
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" has the meaning set forth in Section 101(22) of CERCLA.
"Required Lenders" shall mean, at any time, Lenders having Commitments
greater than 50% of the Total Commitments, or if the Commitments have been
terminated, Lenders whose percentage of the outstanding Loans and Letters of
Credit aggregate greater than 50% of all such Loans and Letters of Credit
Outstanding.
"Reserves" means the Inventory Reserves and Availability Reserves.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of Borrower, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such shares of capital stock of any Borrower or any option, warrant or other
right to acquire any such shares of capital stock of any Borrower.
"Revolving Loans" means all Loans at any time made by a Lender pursuant to
Section 2.
"S&P" means Standard & Poor's Rating Services, a division of the
XxXxxx-Xxxx Companies, Inc.
"Secured Parties" has the meaning assigned to such term in the Security
Agreement.
"Security Agreement" means the Security Agreement dated as of the date
hereof and executed and delivered by the Borrowers to the Collateral Agent for
the benefit of the Secured Parties, as amended and in effect from time to time.
"Security Documents" means the Security Agreement, the Intellectual
Property Security Agreement, the Pledge Agreements, the Facility Guaranty, the
Mortgages and each other security agreement, guaranty or other instrument or
document executed and delivered pursuant to Section 5.15 or any other provision
hereof or any other Loan Document, to secure any of the Obligations.
29
"Senior Notes" means the Senior Floating Rate Notes Due 2011 and 8% senior
Notes Due 2012 issued by GSC Holdings Corp. and GameStop, Inc. under an
Indenture dated as of September 28, 2005 with Citibank, N.A., as Trustee and any
securities issued in lieu or in replacement thereof.
"Senior Note Documents" means the documents, instruments and other
agreements now or hereafter executed and delivered in connection with the Senior
Notes.
"Settlement Date" has the meaning provided in Section 2.7(b) .
"Shrink" means Inventory which has been lost, misplaced, stolen, or is
otherwise unaccounted for.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in a business or a transaction, and is not about to engage in a business or
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged.
"Standby Letter of Credit" means any Letter of Credit other than a
Commercial Letter of Credit.
"Statutory Reserve Rate" means, for any Interest Period, the rate
(expressed as a decimal) applicable to the Administrative Agent during such
Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum reserve
requirement (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board to which the
Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. LIBO Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
30
"Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent and/or one or more subsidiaries of the parent.
"Subsidiary Borrowers" means, individually and collectively, GameStop
Holdings Corp., GameStop, Inc., XxxxXxxx.xxx, Inc., Sunrise Publications, Inc.,
Marketing Control Services, Inc., GameStop Brands, Inc., GameStop of Texas (GP),
LLC, GameStop (LP), LLC, GameStop Texas LP, Electronics Boutique Holdings Corp.,
EB Investment Corp., EB Catalog Company, Inc., EB Games Customer Service, Inc.,
ELBO Inc., EB Finance Inc., Electronics Boutique Specialty Services, Inc.,
Electronics Boutique of America Inc., EB Sadsbury Second, LLC, EB Sadsbury
General Partner, LP, EB Sadsbury Property Holding, LP, EB International
Holdings, Inc., and any other Subsidiary which becomes a Borrower.
"Swingline Lender" means Bank of America, in its capacity as lender of
Swingline Loans hereunder.
"Swingline Loan" shall mean a Loan made by the Swingline Lender to the
Borrowers pursuant to Section 2.5 hereof.
"Synthetic Lease" means any lease or other agreement for the use or
possession of property creating obligations which does not appear as
Indebtedness on the balance sheet of the lessee thereunder but which, upon the
insolvency or bankruptcy of such Person, would be characterized as Indebtedness
of such lessee without regard to the accounting treatment.
"Taxes" means any and all current or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Termination Date" shall mean the earliest to occur of (i) the Maturity
Date, (ii) the date on which the maturity of the Loans are accelerated and the
Commitments are terminated in accordance with Section 7.1, or (iii) the date of
the occurrence of any Event of Default pursuant to Section 7.1(j) or 7.1(k).
"Total Commitments" shall mean, at any time, the sum of the Commitments at
such time.
"Total Indebtedness" shall mean at any date of determination, the total
Indebtedness of the Borrowers on a Consolidated basis determined in accordance
with GAAP, including, without
31
limitation, all Indebtedness under the Loan Documents, the Senior Notes, and all
Capital Lease Obligations.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Prime Rate.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York.
"Uncapped Availability" means, as of any date of determination, the excess,
if any, of (a) the Borrowing Base, over (b) the outstanding Credit Extensions.
"Unused Commitment" shall mean, on any day, (a) the then Total Commitments
minus (b) the sum of (i) the principal amount of Loans then outstanding
(including the principal amount of Swingline Loans then outstanding), and (ii)
the then Letter of Credit Outstandings.
"Voting Stock" means, with respect to any corporation, the outstanding
stock of all classes (or equivalent interests) which ordinarily, in the absence
of contingencies, entitles holders thereof to vote for the election of directors
(or Persons performing similar functions) of such corporation, even though the
right so to vote has been suspended by the happening of such contingency.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
1.2 Terms Generally. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns or, for natural persons, such Person's successors, heirs, executors,
administrators and other legal representatives, (c) the words "herein", "hereof"
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Sections, Exhibits and Schedules shall be construed to
refer to Sections of, and Exhibits and Schedules to, this Agreement, (e) the
words "asset" and "property" shall be construed to have the same meaning and
effect and to refer
32
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights, (f) all financial statements and other
financial information provided by the Borrowers and each other member of the
Borrower Affiliated Group to the Administrative Agent or any Lender shall be
provided with reference to Dollars, and (g) this Agreement and the other Loan
Documents are the result of negotiation among, and have been reviewed by counsel
to, among others, the Borrower Affiliated Group and the Administrative Agent and
are the product of discussions and negotiations among all parties. Accordingly,
this Agreement and the other Loan Documents are not intended to be construed
against the Administrative Agent or any of the Lenders merely on account of the
Administrative Agent's or any Lender's involvement in the preparation of such
documents.
1.3 Accounting Terms. Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect on the Closing Date, on a basis consistent with the financial
statements referred to in Section 4.1(g) of this Agreement, provided that, if
the Borrowers request an amendment to any provision hereof to reflect the effect
of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrowers that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
provision shall have been amended in accordance herewith.
2. AMOUNT AND TERMS OF CREDIT
2.1 Commitment of the Lenders.
(a) Each Lender severally and not jointly with any other Lender, agrees,
upon the terms and subject to the conditions herein set forth, to extend credit
to the Borrowers on a revolving basis, in the form of Revolving Loans and
Letters of Credit and in an amount not to exceed the lesser of such Lender's
Commitment or such Lender's Commitment Percentage of the lesser of (x) the
Borrowing Base or (y) the Total Commitments, subject to the following
limitations:
(i) The aggregate outstanding amount of the Credit Extensions shall
not at any time exceed the lower of (i) (x) the Total Commitments, or (y)
such lesser amount to which the Total Commitments have then been decreased
by the Borrowers pursuant to Section 2.15 hereof, or (ii) the then amount
of the Borrowing Base.
(ii) No Lender shall be obligated to issue any Letter of Credit, and
Letters of Credit shall be available from the Issuing Banks, subject to the
ratable
33
participation of all Lenders, as set forth in Section 2.6. The aggregate
Letter of Credit Outstandings shall not at any time exceed $50,000,000.
(iii) Subject to all of the other provisions of this Agreement,
Revolving Loans that are repaid may be reborrowed prior to the Termination
Date. No new Credit Extension, however, shall be made to the Borrowers
after the Termination Date.
(b) Each Borrowing of Revolving Loans (other than Swingline Loans)
shall be made by the Lenders pro rata in accordance with their respective
Commitments. The failure of any Lender to make any Loan shall neither
relieve any other Lender of its obligation to fund its Loan in accordance
with the provisions of this Agreement nor increase the obligation of any
such other Lender.
2.2 Reserves; Changes to Reserves.
(a) The initial Inventory Reserves and Availability Reserves as of the date
of this Agreement are the following:
(i) Return to Vendor (an Inventory Reserve): An amount equal to the
Cost of Inventory for which vendors are to furnish credit to the Borrower
Affiliated Group as reflected in the Borrower Affiliated Group's books and
records from time to time.
(ii) Shrink (an Inventory Reserve): An amount equal to the one month
accrual for Shrink reflected in the Borrower Affiliated Group's books and
records from time to time.
(iii) Defective and Refurbishment Parts (an Inventory Reserve): An
amount equal to the amount of defective goods and goods at the
refurbishment center for repair reflected in the Borrower Affiliated
Group's books and records from time to time.
(iv) Internal Warranties (an Inventory Reserve): An amount equal to
the amount of internal warranties reflected in the cost of the Borrower
Affiliated Group's Inventory from time to time.
(v) Customer Credit Liabilities (an Availability Reserve): An amount
equal to 30% of the amount of gift certificates and merchandise credits
reflected in the Borrower Affiliated Group's books and records from time to
time.
(vi) Rent (an Availability Reserve): An amount equal to one month's
rent for each location in the States of Pennsylvania, Virginia, Washington
and any other state which provides a lien for landlords which may have
priority over the
34
Collateral Agent's Lien (except for those locations for which the Agents
have received a landlord's waiver satisfactory in form to the Agents).
(b) The Administrative Agent may hereafter, on five (5) Business Days
written notice to the Lead Borrower, establish additional Reserves or change any
of the foregoing Reserves, in the exercise of the Permitted Discretion of the
Administrative Agent; provided, however, that as long as no Event of Default is
then exists and is continuing, in no event shall the Administrative Agent
establish new Reserves in any thirty day period in an aggregate amount in excess
of ten percent (10%) of the Borrowing Base (as set forth in the most recent
Borrowing Base Certificate delivered to the Administrative Agent under Section
5.1(e) of this Agreement); and provided further that the Administrative Agent
shall not modify the methodology in which Reserves described in Section 2.2(a)
hereof are determined from time to time.
2.3 Making of Loans.
(a) Except as set forth in Sections 2.16 and 2.24, Loans (other than
Swingline Loans) by the Lenders shall be either Prime Rate Loans or LIBO Loans
as the Lead Borrower on behalf of the Borrowers may request subject to and in
accordance with this Section 2.3, provided that all Swingline Loans shall be
only Prime Rate Loans. All Loans made pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, be Loans of the same Type. Each
Lender may fulfill its Commitment with respect to any Loan by causing any
lending office of such Lender to make such Loan; but any such use of a lending
office shall not affect the obligation of the Borrowers to repay such Loan in
accordance with the terms of the applicable Note. Each Lender shall, subject to
its overall policy considerations, use reasonable efforts (but shall not be
obligated) to select a lending office which will not result in the payment of
increased costs by the Borrowers pursuant to Section 2.23. Subject to the other
provisions of this Section 2.3 and the provisions of Section 2.24, Borrowings of
Loans of more than one Type may be incurred at the same time, but no more than
twenty (20) Borrowings of LIBO Loans may be outstanding at any time.
(b) The Lead Borrower shall give the Administrative Agent three (3)
Business Days' prior telephonic notice (thereafter confirmed in writing) of each
LIBO Borrowing and one (1) Business Day's prior notice of each Borrowing of
Prime Rate Loans. Any such notice, to be effective, must be received by the
Administrative Agent not later than 11:00 a.m., New York time, on the third
Business Day in the case of LIBO Loans prior to, and on the first Business Day
in the case of Prime Rate Loans prior to, the date on which such Borrowing is to
be made. Such notice shall be irrevocable and shall specify the amount of the
proposed Borrowing (which shall be in an integral multiple of $100,000, but not
less than $1,000,000 in the case of LIBO Loans) and the date thereof (which
shall be a Business Day) and shall contain disbursement instructions. Such
notice shall specify whether the Borrowing then being requested is to be a
Borrowing of Prime
35
Rate Loans or LIBO Loans and, if LIBO Loans, the Interest Period with respect
thereto. If no election of Interest Period is specified in any such notice for a
Borrowing of LIBO Loans, such notice shall be deemed a request for an Interest
Period of one month. If no election is made as to the Type of Loan, such notice
shall be deemed a request for a Borrowing of Prime Rate Loans. The
Administrative Agent shall promptly notify each Lender of its proportionate
share of such Borrowing, the date of such Borrowing, the Type of Borrowing being
requested and the Interest Period or Interest Periods applicable thereto, as
appropriate. On the borrowing date specified in such notice, each Lender shall
make its share of the Borrowing available at the office of the Administrative
Agent at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, no later than 12:00 noon,
New York time, in immediately available funds. Unless the Administrative Agent
shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with this
Section and may, in reliance upon such assumption, make available to the
Borrowers a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrowers severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrowers to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the Federal Funds
Effective Rate or (ii) in the case of the Borrowers, the interest rate
applicable to Prime Rate Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing. Upon receipt of the funds made available by the
Lenders to fund any Borrowing hereunder, the Administrative Agent shall disburse
such funds in the manner specified in the notice of borrowing delivered by the
Lead Borrower and shall use reasonable efforts to make the funds so received
from the Lenders available to the Borrowers no later than 3:00 p.m., New York
time.
(c) The Administrative Agent, without the request of the Lead Borrower, may
advance any interest, fee, service charge, or other payment to which any Agent
or their Affiliates or any Lender is entitled from any Borrower pursuant hereto
or any other Loan Document and may charge the same to the Loan Account
notwithstanding that an Overadvance may result thereby. The Administrative Agent
shall notify the Lead Borrower of any such advance or charge no later than one
Business Day prior to the making thereof. Such action on the part of the
Administrative Agent shall not constitute a waiver of the Administrative Agent's
rights and each Borrower's obligations under Section 2.3(a). Any amount which is
added to the principal balance of the Loan Account as provided in this Section
2.3(c) shall bear interest at the interest rate then and thereafter applicable
to Prime Rate Loans.
36
2.4 Overadvances. The Agents and the Lenders have no obligation to make any
Loan or to provide any Letter of Credit if an Overadvance would result. The
Administrative Agent may, in its discretion, make Permitted Overadvances without
the consent of the Lenders and each Lender shall be bound thereby. Any Permitted
Overadvances may constitute Swingline Loans. The making of any Permitted
Overadvance is for the benefit of the Borrowers; such Permitted Overadvances
constitute Revolving Loans and Obligations. The making of any such Permitted
Overadvances on any one occasion shall not obligate the Administrative Agent or
any Lender to make or permit any Permitted Overadvances on any other occasion or
to permit such Permitted Overadvances to remain outstanding.
2.5 Swingline Loans.
(a) The Swingline Lender is authorized by the Lenders and shall, subject to
the provisions of this Section, make Swingline Loans up to $15,000,000 in the
aggregate outstanding at any time consisting only of Prime Rate Loans, upon a
notice of Borrowing received by the Administrative Agent and the Swingline
Lender (which notice, at the Swingline Lender's discretion, may be submitted
prior to 1:00 p.m., New York time, on the Business Day on which such Swingline
Loan is requested). Swingline Loans shall be subject to periodic settlement with
the Lenders under Section 2.7 below.
(b) Swingline Loans may be made only in the following circumstances: (A)
for administrative convenience, the Swingline Lender shall, at the Lead
Borrower's request, make Swingline Loans in reliance upon the Borrowers' actual
or deemed representations under Section 4.2, that the applicable conditions for
borrowing are satisfied or (B) for Permitted Overadvances. If the conditions for
borrowing under Section 4.2 cannot be fulfilled, the Lead Borrower shall give
immediate notice thereof to the Administrative Agent and the Swingline Lender (a
"Noncompliance Notice"), and the Administrative Agent shall promptly provide
each Lender with a copy of the Noncompliance Notice. If the conditions for
borrowing under Section 4.2 cannot be fulfilled, the Required Lenders may direct
the Swingline Lender to, and the Swingline Lender thereupon shall, cease making
Swingline Loans (other than Permitted Overadvances) until such conditions can be
satisfied or are waived in accordance with Section 9.2. Unless the Required
Lenders so direct the Swingline Lender, the Swingline Lender may, but is not
obligated to, continue to make Swingline Loans beginning one Business Day after
the Non-Compliance Notice is furnished to the Lenders. Notwithstanding the
foregoing, no Swingline Loans shall be made pursuant to this subsection (b)
(other than Permitted Overadvances) if the aggregate outstanding amount of the
Credit Extensions would exceed the lower of (i)(x) $400,000,000, or (y) such
lesser amount to which the Total Commitments have then been decreased by the
Borrowers pursuant to Section 2.15 hereof, or (ii) the then amount of the
Borrowing Base.
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2.6 Letters of Credit.
(a) Upon the terms and subject to the conditions herein set forth, the Lead
Borrower on behalf of the Borrowers, may request an Issuing Bank, at any time
and from time to time after the date hereof and prior to the Termination Date,
to issue, and subject to the terms and conditions contained herein, such Issuing
Bank shall issue, for the account of the relevant Borrower, one or more Letters
of Credit; provided that no Letter of Credit shall be issued if after giving
effect to such issuance (i) the aggregate Letter of Credit Outstandings shall
exceed $50,000,000, or (ii) the aggregate Credit Extensions would exceed the
limitation set forth in Section 2.1(a)(i); and provided, further, that no Letter
of Credit shall be issued if such Issuing Bank shall have received notice from
the Administrative Agent or the Required Lenders that the conditions to such
issuance have not been met.
(b) Each Letter of Credit shall expire at or prior to the close of business
on the earlier of (i) the date one year after the date of the issuance of such
Letter of Credit (or, in the case of any renewal or extension thereof, one year
after such renewal or extension) and (ii) the date that is five (5) Business
Days prior to the Maturity Date, provided that each Letter of Credit may, upon
the request of the Lead Borrower, include a provision whereby such Letter of
Credit shall be renewed automatically for additional consecutive periods of
twelve (12) months or less (but not beyond the date that is five (5) Business
Days prior to the Maturity Date) unless the Issuing Bank which issued such
Letter of Credit notifies the beneficiary thereof at least thirty (30) days
prior to the then-applicable expiration date that such Letter of Credit will not
be renewed.
(c) Drafts drawn under any Letter of Credit shall be reimbursed by the
Borrowers in dollars on the same Business Day of any such payment thereof by the
applicable Issuing Bank by paying to the Administrative Agent an amount equal to
such drawing (together with interest as provided in Section 2.6(e)) not later
than 12:00 noon, New York time, on (i) the date that the Lead Borrower shall
have received notice of such drawing, if such notice is received prior to 10:00
a.m., New York time, on such date, or (ii) the Business Day immediately
following the day that the Lead Borrower receives such notice, if such notice is
received after 10:00 a.m., New York time on the day of drawing, provided that
the Lead Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.3 that such payment be financed with a
Revolving Loan consisting of a Prime Rate Loan, or a Swingline Loan in an
equivalent amount and, to the extent so financed, the Borrowers' obligation to
make such payment shall be discharged and replaced by the resulting Prime Rate
Loan or Swingline Loan. Each Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment
under a Letter of Credit issued by such Issuing Bank. Such Issuing Bank shall
promptly notify the Administrative Agent and the Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether such Issuing Bank
has made or will make payment thereunder (which payment shall not
38
be made until two (2) Business Days after such notice from such Issuing Bank to
the Borrower), provided that any failure to give or delay in giving such notice
shall not relieve the Borrowers of their obligation to reimburse such Issuing
Bank and the Lenders with respect to any such payment.
(d) If an Issuing Bank shall make any L/C Disbursement, then, unless the
Borrowers shall reimburse such Issuing Bank in full on the date such payment is
made, the unpaid amount thereof shall bear interest, for each day from and
including the date such payment is made to but excluding the date that the
Borrowers reimburse such Issuing Bank therefor, at the rate per annum then
applicable to Prime Rate Loans, provided that if the Borrowers fail to reimburse
such Issuing Bank when due pursuant to paragraph (c) of this Section, then
Section 2.10 shall apply. Interest accrued pursuant to this paragraph shall be
for the account of such Issuing Bank, except that interest accrued on and after
the date of payment by any Lender pursuant to paragraph (f) of this Section to
reimburse such Issuing Bank shall be for the account of such Lender to the
extent of such payment.
(e) Immediately upon the issuance of any Letter of Credit by an Issuing
Bank (or the amendment of a Letter of Credit increasing the amount thereof), and
without any further action on the part of such Issuing Bank, such Issuing Bank
shall be deemed to have sold to each Lender, and each such Lender shall be
deemed unconditionally and irrevocably to have purchased from such Issuing Bank,
without recourse or warranty, an undivided interest and participation, to the
extent of such Lender's Commitment Percentage, in such Letter of Credit, each
drawing thereunder and the obligations of the Borrowers under this Agreement and
the other Loan Documents with respect thereto. Upon any change in the
Commitments pursuant to Section 2.15, and/or 9.5, it is hereby agreed that with
respect to all Letter of Credit Outstandings, there shall be an automatic
adjustment to the participations hereby created to reflect the new Commitment
Percentages of the assigning and assignee Lenders. Any action taken or omitted
by an Issuing Bank under or in connection with a Letter of Credit issued by such
Issuing Bank, if taken or omitted in the absence of gross negligence, bad faith
or willful misconduct, shall not create for such Issuing Bank any resulting
liability to any Lender.
(f) In the event that an Issuing Bank makes any L/C Disbursement and the
Borrowers shall not have reimbursed such amount in full to such Issuing Bank
pursuant to Section 2.6(c), such Issuing Bank shall promptly notify the
Administrative Agent, which shall promptly notify each Lender of such failure,
and each Lender shall promptly and unconditionally pay to the Administrative
Agent for the account of such Issuing Bank the amount of such Lender's
Commitment Percentage of such unreimbursed payment in dollars and in same day
funds. If an Issuing Bank so notifies the Administrative Agent, and the
Administrative Agent so notifies the Lenders prior to 11:00 a.m., New York time,
on any Business Day, each such Lender shall make available to such Issuing Bank
such Lender's Commitment Percentage of the amount of such
39
payment on such Business Day in same day funds (or if such notice is received by
the Lenders after 11:00 a.m., New York time on the day of receipt, payment shall
be made on the immediately following Business Day). If and to the extent such
Lender shall not have so made its Commitment Percentage of the amount of such
payment available to such Issuing Bank, such Lender agrees to pay to such
Issuing Bank, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the
Administrative Agent for the account of such Issuing Bank at the Federal Funds
Effective Rate. Each Lender agrees to fund its Commitment Percentage of such
unreimbursed payment notwithstanding a failure to satisfy any applicable lending
conditions or the provisions of Sections 2 or 2.6, or the occurrence of the
Termination Date. The failure of any Lender to make available to an Issuing Bank
its Commitment Percentage of any payment under any Letter of Credit shall
neither relieve any Lender of its obligation hereunder to make available to such
Issuing Bank its Commitment Percentage of any payment under any Letter of Credit
on the date required, as specified above, nor increase the obligation of such
other Lender. Whenever any Lender has made payments to an Issuing Bank in
respect of any reimbursement obligation for any Letter of Credit, such Lender
shall be entitled to share ratably, based on its Commitment Percentage, in all
payments and collections thereafter received on account of such reimbursement
obligation.
(g) Whenever any Borrower desires that an Issuing Bank issue a Letter of
Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit), the Lead Borrower shall give to such Issuing Bank and the
Administrative Agent at least two (2) Business Days' prior written (including
telegraphic, telex, facsimile or cable communication) notice (or such shorter
period as may be agreed upon in writing by such Issuing Bank and Borrower)
specifying the date on which the proposed Letter of Credit is to be issued,
amended, renewed or extended (which shall be a Business Day), the stated amount
of the Letter of Credit so requested, the expiration date of such Letter of
Credit, the name and address of the beneficiary thereof, and the provisions
thereof. If requested by an Issuing Bank, the applicable Borrower shall also
submit a letter of credit application on such Issuing Bank's standard form in
connection with any request for the issuance, amendment, renewal or extension of
a Letter of Credit.
(h) The obligations of the Borrowers to reimburse an Issuing Bank for any L/C
Disbursement shall be unconditional and irrevocable and shall be paid strictly
in accordance with the terms of this Agreement under all circumstances,
including, without limitation: (i) any lack of validity or enforceability of any
Letter of Credit; (ii) the existence of any claim, setoff, defense or other
right which the Borrowers may have at any time against a beneficiary of any
Letter of Credit or against any Issuing Bank or any of the Lenders, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction; (iii) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any
40
respect; (iv) payment by any Issuing Bank of any Letter of Credit issued by such
Issuing Bank against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit; (v) any
other circumstance or happening whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrowers' obligations hereunder; or (vi) the fact that any Event of Default
shall have occurred and be continuing. None of the Administrative Agent, the
Lenders, the Issuing Banks or any of their Affiliates shall have any liability
or responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of any Issuing Bank, provided that the foregoing shall
not be construed to excuse an Issuing Bank from liability to the Borrowers to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrowers to the extent permitted by
Applicable Law) suffered by the Borrowers that are caused by such Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence, bad faith or
willful misconduct on the part of an Issuing Bank (as finally determined by a
court of competent jurisdiction), such Issuing Bank shall be deemed to have
exercised care in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented that appear on their face to be in compliance with the terms
of a Letter of Credit, an Issuing Bank may, in its sole discretion, either
accept and make payment upon such documents without responsibility for further
investigation, or refuse to accept and make payment upon such documents if such
documents are not in strict compliance with the terms of such Letter of Credit.
(i) If any Event of Default shall occur and be continuing, on the Business
Day that the Lead Borrower receives notice from the Administrative Agent or the
Required Lenders demanding the deposit of cash collateral pursuant to this
paragraph, the Borrowers shall deposit in the Cash Collateral Account an amount
in cash equal to 105% of the Letter of Credit Outstandings as of such date plus
any accrued and unpaid interest thereon. Each such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the
Obligations of the Borrowers under this Agreement. The Collateral Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such Cash Collateral Account. Other than any interest earned on
the investment of such deposits, which investments shall be made at the option
and sole discretion of the Collateral Agent at the request of the Lead Borrower
and at the Borrowers' risk and expense, such deposits shall not bear interest.
Interest or profits, if
41
any, on such investments shall accumulate in such account. Moneys in such Cash
Collateral Account shall be applied by the Collateral Agent to reimburse an
Issuing Bank for payments on account of drawings under Letters of Credit for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrowers for
the Letter of Credit Outstandings at such time or, if the Loans have matured or
the maturity of the Loans has been accelerated, be applied to satisfy other
Obligations of the Borrowers under this Agreement.
(j) The Borrowers, the Administrative Agent and the Lenders agree that the
Existing Letters of Credit shall be deemed Letters of Credit hereunder as if
issued by an Issuing Bank.
2.7 Settlements Amongst Lenders.
(a) The Swingline Lender may (but shall not be obligated to), at any time,
on behalf of the Borrowers (which hereby authorize the Swingline Lender to act
in their behalf in that regard) request the Administrative Agent to cause the
Lenders to make a Revolving Loan (which shall be a Prime Rate Loan) in an amount
equal to such Lender's Commitment Percentage of the outstanding amount of
Swingline Loans made in accordance with Section 2.5, which request may be made
regardless of whether the conditions set forth in Section 4 have been satisfied.
Upon such request, each Lender shall make available to the Administrative Agent
the proceeds of such Revolving Loan for the account of the Swingline Lender. If
the Swingline Lender requires a Revolving Loan to be made by the Lenders and the
request therefor is received prior to 12:00 Noon, New York time, on a Business
Day, such transfers shall be made in immediately available funds no later than
3:00 p.m., New York time, that day; and, if the request therefor is received
after 12:00 Noon, New York time, then no later than 3:00 p.m., New York time, on
the next Business Day. The obligation of each Lender to transfer such funds is
irrevocable, unconditional and without recourse to or warranty by the
Administrative Agent or the Swingline Lender. If and to the extent any Lender
shall not have so made its transfer to the Administrative Agent, such Lender
agrees to pay to the Administrative Agent, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Administrative Agent at the Federal Funds Effective Rate.
(b) The amount of each Lender's Commitment Percentage of outstanding
Revolving Loans shall be computed weekly (or more frequently in the
Administrative Agent's discretion) and shall be adjusted upward or downward
based on all Revolving Loans and repayments of Revolving Loans received by the
Administrative Agent as of 3:00 p.m., New York time, on the first Business Day
following the end of the period specified by the Administrative Agent (such
date, the "Settlement Date").
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(c) The Administrative Agent shall deliver to each of the Lenders promptly
after the Settlement Date a summary statement of the amount of outstanding
Revolving Loans for the period and the amount of repayments received for the
period. As reflected on the summary statement: each Lender shall transfer to the
Administrative Agent (as provided below), or the Administrative Agent shall
transfer to each Lender, such amounts as are necessary to insure that, after
giving effect to all such transfers, the amount of Revolving Loans made by each
Lender shall be equal to such Lender's applicable Commitment Percentage of
Revolving Loans outstanding as of such Settlement Date. If the summary statement
requires transfers to be made to the Administrative Agent by the Lenders and is
received prior to 12:00 Noon, New York time, on a Business Day, such transfers
shall be made in immediately available funds no later than 3:00 p.m., New York
time, that day; and, if received after 12:00 Noon, New York time, then no later
than 3:00 p.m., New York time, on the next Business Day. The obligation of each
Lender to transfer such funds is irrevocable, unconditional and without recourse
to or warranty by the Administrative Agent. If and to the extent any Lender
shall not have so made its transfer to the Administrative Agent, such Lender
agrees to pay to the Administrative Agent, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Administrative Agent at the Federal Funds Effective Rate.
2.8 Notes; Repayment of Loans.
(a) The Loans made by each Lender (and to the Swingline Lender, with
respect to Swingline Loans) shall be evidenced by a Note duly executed on behalf
of the Borrowers, dated the Closing Date, in substantially the form attached
hereto as Exhibit B-1 or Exhibit B-2, as applicable, payable to the order of
each such Lender (or the Swingline Lender, as applicable) in an aggregate
principal amount equal to such Lender's Commitment (or, in the case of the Note
evidencing the Swingline Loans, $15,000,000).
(b) Each Lender is hereby authorized by the Borrower to endorse on a
schedule attached to each Note delivered to such Lender (or on a continuation of
such schedule attached to such Note and made a part thereof), or otherwise to
record in such Lender's internal records, an appropriate notation evidencing the
date and amount of each Loan from such Lender, each payment and prepayment of
principal of any such Loan, each payment of interest on any such Loan and the
other information provided for on such schedule; provided, however, that the
failure of any Lender to make such a notation or any error therein shall not
affect the obligation of the Borrowers to repay the Loans made by such Lender in
accordance with the terms of this Agreement and the applicable Notes.
(c) Upon receipt of an affidavit of a Lender as to the loss, theft,
destruction or mutilation of such Lender's Note and an indemnity in form and
substance reasonably satisfactory to the Lead Borrower, and upon cancellation of
such Note, the Borrowers
43
will issue, in lieu thereof, a replacement Note in favor of such Lender, in the
same principal amount thereof and otherwise of like tenor.
2.9 Interest on Loans.
(a) Subject to Section 2.10, each Prime Rate Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as applicable) at a rate per annum that shall be equal to the then
Prime Rate, plus the Applicable Margin for Prime Rate Loans.
(b) Subject to Section 2.10, each LIBO Loan shall bear interest (computed
on the basis of the actual number of days elapsed over a year of 360 days) at a
rate per annum equal, during each Interest Period applicable thereto, to the
Adjusted LIBO Rate for such Interest Period, plus the Applicable Margin for LIBO
Loans.
(c) Accrued interest on all Loans shall be payable in arrears on each
Interest Payment Date applicable thereto, on the Termination Date, after the
Termination Date on demand and (with respect to LIBO Loans) upon any repayment
or prepayment thereof (on the amount prepaid).
2.10 Default Interest. Effective upon the occurrence of any Event of
Default and at all times thereafter while such Event of Default is continuing,
at the option of the Administrative Agent or upon the direction of the Required
Lenders, interest shall accrue on all outstanding Loans (including Swingline
Loans) (after as well as before judgment, as and to the extent permitted by
law), and all fees payable under Sections 2.12 and 2.13 shall accrue, at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the rate (including the Applicable Margin) in effect
from time to time plus 2.00% per annum, and such interest shall be payable on
demand.
2.11 Certain Fees. The Borrowers shall pay to the Administrative Agent, for
the account of the Administrative Agent, the fees set forth in the Fee Letter as
and when payment of such fees is due as therein set forth.
2.12 Unused Commitment Fee. The Borrowers shall pay to the Administrative
Agent for the account of the Lenders, a commitment fee (the "Commitment Fee")
computed at a rate per annum, in accordance with the table set forth below (on
the basis of actual days elapsed in a year of 360 days), of the average daily
balance of the Unused Commitment for each day commencing on and including the
Closing Date and ending on but excluding the Termination Date. The Commitment
Fee shall initially be that rate set forth in Level II, subject to adjustment as
provided below:
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------------- ----------------------- ---------------------
Level Consolidated Leverage Commitment Fee
Ratio
------------- ----------------------- ---------------------
I Consolidated Leverage 0.50%
Ratio equal to or
greater than 3.50 to
1.00
------------- ----------------------- ---------------------
II Consolidated Leverage 0.375%
Ratio equal to or
greater than 1.00 to
1.00 and less than
3.50 to 1.00
------------- ----------------------- ---------------------
III Consolidated Leverage 0.375%
Ratio less than 1.00
to 1.00
------------- ----------------------- ---------------------
The Commitment Fee shall be adjusted quarterly commencing with the fiscal
quarter ending January 28, 2006, based on the financial statements and
compliance certificate required to be delivered pursuant to Sections 5.1(b) and
5.1(c) below. Any change in the Commitment Fee shall be effective two (2)
Business Days after the date of the Administrative Agent's receipt of the
financial statements and compliance certificate required to be delivered
pursuant to Sections 5.1(b) and 5.1(c) below. Upon the occurrence of an Event of
Default, at the option of the Administrative Agent or at the direction of the
Required Lenders, the Commitment Fee shall be determined in the manner set forth
in Section 2.10. The Commitment Fee so accrued in any calendar quarter shall be
payable on the last day of each calendar quarter, in arrears, commencing
December 31, 2005, except that all Commitment Fees so accrued as of the
Termination Date shall be payable on the Termination Date. The Administrative
Agent shall pay the Commitment Fee to the Lenders based upon their Commitment
Percentage.
2.13 Letter of Credit Fees. The Borrowers shall pay the Administrative
Agent, for the account of the Lenders, on the last day of each calendar quarter,
in arrears, a fee (each, a "Letter of Credit Fee") equal to the following per
annum percentages of the face amount of the following categories of Letters of
Credit outstanding during the subject quarter:
(a) Each Standby Letter of Credit: At the then Applicable Margin per annum
for LIBO Loans.
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(b) Each Commercial Letter of Credit: Fifty percent (50%) of the Applicable
Margin per annum for LIBO Loans.
(c) After the occurrence and during the continuance of an Event of Default,
at the option of the Administrative Agent or upon the direction of the Required
Lenders, the Letter of Credit Fee set forth in clauses (a) and (b) above, shall
be increased by an amount equal to two percent (2%) per annum.
(d) The Borrowers shall pay to the applicable Issuing Bank, in addition to
all Letter of Credit Fees otherwise provided for hereunder, a fronting fee (each
a "Fronting Fee") in an amount equal to 0.125% of the face amount of each Letter
of Credit payable on the issuance of such Letter of Credit.
(e) The Borrowers shall pay to the applicable Issuing Bank, in addition to
the Letter of Credit Fees and Fronting Fees otherwise provided for hereunder,
fees and charges in connection with the issuance, negotiation, settlement,
amendment and processing of each Letter of Credit issued by such Issuing Bank as
are customarily imposed by such Issuing Bank from time to time in connection
with letter of credit transactions.
(f) All Letter of Credit Fees shall be calculated on the basis of a 360-day
year and actual days elapsed.
2.14 Nature of Fees. All fees shall be paid on the dates due, in
immediately available funds, to the Administrative Agent, for the respective
accounts of the Administrative Agent, the Issuing Banks, and the Lenders, as
provided herein. All fees shall be fully earned on the date when due and shall
not be refundable under any circumstances.
2.15 Termination or Reduction of Commitments.
(a) Upon at least three (3) Business Days' prior written notice to the
Administrative Agent, the Lead Borrower may at any time or from time to time in
part permanently reduce the Commitments. Each such reduction shall be in the
principal amount of $2,500,000 or any integral multiple of $1,000,000 in excess
thereof. Each such reduction shall (i) be applied ratably to the Commitments of
each Lender and (ii) be irrevocable when given. At the effective time of each
such reduction, the Borrowers shall pay to the Administrative Agent for
application as provided herein (i) all Commitment Fees accrued on the amount of
the Commitments so reduced through the date thereof, (ii) any amount by which
the Credit Extensions outstanding on such date exceed the amount to which the
Commitments are to be reduced effective on such date, in each case pro rata
based on the amount prepaid, and (iii) any Breakage Costs, if applicable.
46
(b) Upon at least three (3) Business Days' prior written notice to the
Administrative Agent, the Lead Borrower may at any time terminate the
Commitments. At the effective time of each such termination specified in such
notice, the Borrowers shall repay to the Administrative Agent for application as
provided herein all Obligations.
2.16 Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a LIBO Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Lead
Borrower and the Lenders by telephone or telecopy as promptly as practicable
thereafter (but in any event, within two (2) Business Days) and, until the
Administrative Agent notifies the Lead Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Borrowing
Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a LIBO Borrowing shall be ineffective and (ii) if any Borrowing
Request requests a LIBO Borrowing, such Borrowing shall be made as a Borrowing
of Prime Rate Loans.
2.17 Conversion and Continuation of Loans. The Lead Borrower on behalf of
the Borrowers shall have the right at any time,
(a) on three (3) Business Days' prior irrevocable notice to the
Administrative Agent (which notice, to be effective, must be received by the
Administrative Agent not later than 11:00 a.m., New York time, on the third
Business Day preceding the date of any conversion), (x) to convert any
outstanding Borrowings of Prime Rate Loans (but in no event Swingline Loans) to
Borrowings of LIBO Loans, or (y) to continue an outstanding Borrowing of LIBO
Loans for an additional Interest Period,
(b) on one Business Day's irrevocable notice to the Administrative Agent
(which notice, to be effective, must be received by the Administrative Agent not
later than 11:00 a.m., New York time, on the date of any conversion), to convert
any outstanding Borrowings of LIBO Loans to a Borrowing of Prime Rate Loans,
subject to the following:
(i) no Borrowing of Loans may be converted into, or continued as, LIBO
Loans at any time when an Event of Default has occurred and is continuing;
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(ii) if less than a full Borrowing of Loans is converted, such
conversion shall be made pro rata among the Lenders, as applicable, in
accordance with the respective principal amounts of the Loans comprising
such Borrowing held by such Lenders immediately prior to such conversion;
(iii) the aggregate principal amount of Loans being converted into or
continued as LIBO Loans shall be in an integral of $100,000 and at least
$1,000,000;
(iv) each Lender shall effect each conversion by applying the proceeds
of its new LIBO Loan or Prime Rate Loan, as the case may be, to its Loan
being so converted;
(v) the Interest Period with respect to a Borrowing of LIBO Loans
effected by a conversion or in respect to the Borrowing of LIBO Loans being
continued as LIBO Loans shall commence on the date of conversion or the
expiration of the current Interest Period applicable to such continued
Borrowing, as the case may be;
(vi) a Borrowing of LIBO Loans may be converted only on the last day
of an Interest Period applicable thereto;
(vii) each request for a conversion or continuation of a Borrowing of
LIBO Loans which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one month; and
(viii) no more than twenty (20) Borrowings of LIBO Loans may be
outstanding at any time.
If the Lead Borrower does not give notice to convert any Borrowing of Prime
Rate Loans, or does not give notice to continue, or does not have the right to
continue, any Borrowing as LIBO Loans, in each case as provided above, such
Borrowing shall automatically be converted to, or continued as, as applicable, a
Borrowing of Prime Rate Loans at the expiration of the then current Interest
Period. The Administrative Agent shall, after it receives notice from the
Borrower, promptly give each Lender notice of any conversion, in whole or part,
of any Loan made by such Lender.
2.18 Mandatory Prepayment; Cash Collateral; Commitment Termination. The
outstanding Obligations shall be subject to mandatory prepayment as follows:
(a) If at any time the amount of the Credit Extensions exceeds the lower of
(i) the then amount of the Total Commitments, and (ii) the then amount of the
Borrowing Base, the Borrowers will immediately upon notice from the
Administrative Agent (A) prepay the Loans in an amount necessary to eliminate
such excess, and (B) if, after giving
48
effect to the prepayment in full of all outstanding Loans such excess has not
been eliminated, deposit cash into the Cash Collateral Account in an amount
equal to 105% of the Letters of Credit Outstanding.
(b) To the extent required pursuant to Section 2.21, the Revolving Loans
shall be repaid daily in accordance with the provisions of said Section 2.21.
(c) Subject to the foregoing, outstanding Prime Rate Loans shall be prepaid
before outstanding LIBO Loans are prepaid. Each partial prepayment of LIBO Loans
shall be in an integral multiple of $1,000,000. No prepayment of LIBO Loans
shall be permitted pursuant to this Section 2.18 other than on the last day of
an Interest Period applicable thereto, unless the Borrowers simultaneously
reimburse the Lenders for all "Breakage Costs" (as defined below) associated
therewith. In order to avoid such Breakage Costs, as long as no Event of Default
has occurred and is continuing, at the request of the Lead Borrower, the
Administrative Agent shall hold all amounts required to be applied to LIBO Loans
in the Cash Collateral Account and will apply such funds to the applicable LIBO
Loans at the end of the then pending Interest Period therefor and such LIBO
Loans shall continue to bear interest at the rate set forth in Section 2.9 until
the amounts in the Cash Collateral Account have been so applied (provided that
the foregoing shall in no way limit or restrict the Agents' rights upon the
subsequent occurrence of an Event of Default). No partial prepayment of a
Borrowing of LIBO Loans shall result in the aggregate principal amount of the
LIBO Loans remaining outstanding pursuant to such Borrowing being less than
$1,000,000 (unless all such outstanding LIBO Loans are being prepaid in full).
Any prepayment of the Revolving Loans shall not permanently reduce the
Commitments.
(d) All amounts required to be applied to all Loans hereunder (other than
Swingline Loans) shall be applied ratably in accordance with each Lender's
Commitment Percentage.
(e) Upon the Termination Date, the Commitments and the credit facility
provided hereunder shall be terminated in full and the Borrowers shall pay, in
full and in cash, all outstanding Loans and all other outstanding Obligations.
2.19 Optional Prepayment of Loans; Reimbursement of Lenders.
(a) The Borrowers shall have the right at any time and from time to time to
prepay outstanding Loans in whole or in part, (x) with respect to LIBO Loans,
upon at least two Business Days' prior written, telex or facsimile notice to the
Administrative Agent prior to 11:00 a.m., New York time, and (y) with respect to
Prime Rate Loans, upon at least one Business Day prior written, telex or
facsimile notice to the Administrative Agent prior to 11:00 p.m., New York time,
subject to the following limitations:
49
(i) All prepayments under this Section 2.19 shall be paid to the
Administrative Agent for application, first, to the prepayment of outstanding
Swingline Loans, second, to the prepayment of other outstanding Loans ratably in
accordance with each Lender's Commitment Percentage, and third, to the funding
of a cash collateral deposit in the Cash Collateral Account in an amount equal
to 105% of all Letter of Credit Outstandings.
(ii) Subject to the foregoing, outstanding Prime Rate Loans shall be
prepaid before outstanding LIBO Loans are prepaid. Each partial prepayment of
LIBO Loans shall be in an integral multiple of $1,000,000. No prepayment of LIBO
Loans shall be permitted pursuant to this Section 2.19 other than on the last
day of an Interest Period applicable thereto, unless the Borrowers
simultaneously reimburse the Lenders for all "Breakage Costs" (as defined below)
associated therewith. No partial prepayment of a Borrowing of LIBO Loans shall
result in the aggregate principal amount of the LIBO Loans remaining outstanding
pursuant to such Borrowing being less than $1,000,000 (unless all such
outstanding LIBO Loans are being prepaid in full).
(iii) Each notice of prepayment shall specify the prepayment date, the
principal amount and Type of the Loans to be prepaid and, in the case of LIBO
Loans, the Borrowing or Borrowings pursuant to which such Loans were made. Each
notice of prepayment shall be irrevocable and shall commit the Borrowers to
prepay such Loan by the amount and on the date stated therein. The
Administrative Agent shall, promptly after receiving notice from the Lead
Borrower hereunder, notify each Lender of the principal amount and Type of the
Loans held by such Lender which are to be prepaid, the prepayment date and the
manner of application of the prepayment.
(b) The Borrowers shall reimburse each Lender on demand for any loss
incurred or to be incurred by it in the reemployment of the funds released (i)
resulting from any prepayment (for any reason whatsoever, including, without
limitation, conversion to Prime Rate Loans or acceleration by virtue of, and
after, the occurrence of an Event of Default) of any LIBO Loan required or
permitted under this Agreement, if such Loan is prepaid other than on the last
day of the Interest Period for such Loan or (ii) in the event that after the
Lead Borrower delivers a notice of borrowing under Section 2.3 in respect of
LIBO Loans, such Loans are not borrowed on the first day of the Interest Period
specified in such notice of borrowing for any reason. Such loss shall be the
amount as reasonably determined by such Lender as the excess, if any, of (A) the
amount of interest which would have accrued to such Lender on the amount so paid
or not borrowed at a rate of interest equal to the Adjusted LIBO Rate for such
Loan, for the period from the date of such payment or failure to borrow to the
last day (x) in the case of a payment or refinancing of a LIBO Loan other than
on the last day of the Interest Period for such Loan, of the then current
Interest Period for such Loan or (y) in the case of such failure to borrow, of
the Interest Period for such LIBO Loan which would have commenced on the date of
such
50
failure to borrow, over (B) the amount of interest which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the London interbank market (collectively,
"Breakage Costs"). Any Lender demanding reimbursement for such loss shall
deliver to the Lead Borrower from time to time one or more certificates setting
forth the amount of such loss as determined by such Lender and setting forth in
reasonable detail the manner in which such amount was determined.
(c) In the event the Borrowers fail to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.19(a), the
Borrowers on demand by any Lender shall pay to the Administrative Agent for the
account of such Lender any amounts required to compensate such Lender for any
actual loss incurred by such Lender as a result of such failure to prepay,
including, without limitation, any loss, cost or expenses incurred by reason of
the acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Any Lender demanding
such payment shall deliver to the Lead Borrower from time to time one or more
certificates setting forth the amount of such loss as determined by such Lender
and setting forth in reasonable detail the manner in which such amount was
determined.
(d) Whenever any partial prepayment of Loans are to be applied to LIBO
Loans, such LIBO Loans shall be prepaid in the chronological order of their
Interest Payment Dates.
2.20 Maintenance of Loan Account; Statements of Account.
(a) The Administrative Agent shall maintain an account on its books in the
name of the Borrowers (the "Loan Account") which will reflect (i) all Loans and
other advances made by the Lenders to the Borrowers or for the Borrowers'
account, (ii) all L/C Disbursements, fees and interest that have become payable
as herein set forth, and (iii) any and all other monetary Obligations that have
become payable.
(b) The Loan Account will be credited with all amounts received by the
Administrative Agent from the Borrowers or otherwise for the Borrowers' account,
including all amounts received in the Bank of America Concentration Account from
the Blocked Account Banks, and the amounts so credited shall be applied as set
forth in Sections 2.22(a) and (b) After the end of each month, the
Administrative Agent shall send to the Lead Borrower a statement accounting for
the charges, loans, advances and other transactions occurring among and between
the Administrative Agent, the Lenders and the Borrowers during that month. The
monthly statements shall, absent manifest error, be an account stated, which is
final, conclusive and binding on the Borrowers.
51
2.21 Cash Receipts.
(a) At the request of Administrative Agent, at any time after Excess
Availability falls below fifteen percent (15%) of the then Borrowing Base, or
upon the occurrence and continuance of an Event of Default, the Borrowers shall
deliver to the Administrative Agent (i) a list of all present DDAs maintained by
the Borrowers, which list includes, with respect to each depository (A) the name
and address of that depository; (B) the account number(s) maintained with such
depository; and (C) to the extent known, a contact person at such depository
(the "DDA List"), (ii) notifications executed on behalf of the Borrowers to each
depository institution identified on the DDA List in form and substance
reasonably satisfactory to the Administrative Agent, of the Administrative
Agent's interest in such DDA (each, a "DDA Notification"), and (iii)
notifications (the "Credit Card Notifications") executed on behalf of the
Borrowers with each of the Borrowers' major credit card processors in form and
substance reasonably satisfactory to the Administrative Agent.
(b) Annexed hereto as Schedule 2.21(b) is a list describing all
arrangements to which any Borrower is a party with respect to the payment to any
Borrower of the proceeds of all credit card charges for sales by such Borrower.
(c) On or prior to the Closing Date the Borrowers shall have entered into a
Blocked Account Agreement with the Blocked Account Banks in form and substance
reasonably satisfactory to the Administrative Agent.
(d) The DDA Notifications and Credit Card Notifications shall require,
after the occurrence and during the continuance of a Cash Dominion Event, the
sweep on each Business Day of all available cash receipts and other proceeds
from the sale or disposition of any Collateral, including, without limitation,
the proceeds of all credit card charges (all such cash receipts and proceeds,
"Cash Receipts"), to (x) a concentration account maintained by the Collateral
Agent at Bank of America (the "Bank of America Concentration Account"), or (z) a
Blocked Account, as the Administrative Agent may direct.
(e) The Blocked Account Agreements shall require, after the occurrence and
during the continuance of a Cash Dominion Event, the sweep on each Business Day
of all Cash Receipts to the Bank of America Concentration Account or to such
other account as the Administrative Agent may direct.
(f) If at any time after the occurrence and during the continuance of a
Cash Dominion Event, any cash or cash equivalents owned by the Borrowers are
deposited to any account (other than a DDA for which a DDA Notification has been
delivered), or held or invested in any manner, otherwise than in a Blocked
Account that is subject to a Blocked Account Agreement as required herein, the
Administrative Agent shall require
52
the Borrowers to have all funds held in such account transferred to the Bank of
America Concentration Account or such other Blocked Account as the
Administrative Agent may direct.
(g) The Borrowers may close DDAs or Blocked Accounts and/or open new DDAs
or Blocked Accounts, subject to the execution and delivery to the Administrative
Agent of appropriate DDA Notifications or Blocked Account Agreements consistent
with the provisions of this Section 2.21. Unless consented to in writing by the
Administrative Agent, the Borrowers may not enter into any agreements with
additional credit card processors unless contemporaneously therewith, a Credit
Card Notification is executed and delivered to the Administrative Agent.
(h) The Bank of America Concentration Account is and shall remain, under
the sole dominion and control of the Collateral Agent. Each Borrower
acknowledges and agrees that, subject to the provisions of subparagraph (i)
below, (i) such Borrower has no right of withdrawal from the Bank of America
Concentration Account, (ii) the funds on deposit in the Bank of America
Concentration Account shall continue to be collateral security for all of the
Obligations and (iii) the funds on deposit in the Bank of America Concentration
Account shall be applied as provided in Section 2.22(a).
(i) So long as no Cash Dominion Event has occurred and is continuing, the
Borrowers may direct, and shall have sole control over, the manner of
disposition of its funds in the DDA Accounts and the Blocked Accounts.
(j) After the occurrence and during the continuation of a Cash Dominion
Event, the Borrowers shall cause the ACH or wire transfer to, upon the
Administrative Agent's instruction, any Blocked Account, no less frequently than
daily (unless the Commitments have been terminated hereunder and the Obligations
have been paid in full) of the then contents of each DDA, each such transfer to
be net of any minimum balance, not to exceed $10,000, as may be required to be
maintained in the subject DDA by the bank at which such DDA is maintained, and,
in connection with each such transfer, the Borrowers shall also provide the
Administrative Agent with an accounting of the contents of each DDA.
(k) After the occurrence and during the continuation of a Cash Dominion
Event, whether or not any Obligations are then outstanding, the Borrowers shall
cause the ACH or wire transfer, upon the Administrative Agent's instruction, to
the Bank of America Concentration Account of the then entire ledger balance of
each Blocked Account, net of such minimum balance, not to exceed $10,000, as may
be required to be maintained in the subject Blocked Account by the bank at which
such Blocked Account is maintained.
53
(l) In the event that, notwithstanding the provisions of this Section 2.21,
after the occurrence of a Cash Dominion Event, the Borrowers receive or
otherwise have dominion and control of any such proceeds or collections, such
proceeds and collections shall be held in trust by the Borrowers for the
Administrative Agent and shall not be commingled with any of the Borrowers'
other funds or deposited in any account of Borrower other than as instructed by
the Administrative Agent.
2.22 Application of Payments.
(a) As long as the time for payment of the Obligations has not been
accelerated, all amounts received in the Bank of America Concentration Account
from any source, including the Blocked Account Banks, and other amounts received
by the Administrative Agent, shall be applied, on the day of receipt, in the
following order: first, to pay any fees and expense reimbursements and
indemnification then due and payable to the Administrative Agent, the Issuing
Banks, and the Collateral Agent; second, to pay interest then due and payable on
Credit Extensions; third, to repay any outstanding Swingline Loans; fourth, to
repay any outstanding Revolving Loans that are Prime Rate Loans and any
outstanding reimbursement obligations under Letters of Credit; fifth, to repay
any outstanding Revolving Loans that are LIBO Loans and all Breakage Costs due
in respect of such repayment pursuant to Section 2.19(b) or, at the Lead
Borrower's option, to fund a cash collateral deposit to the Cash Collateral
Account sufficient to pay, and with direction to pay, all such outstanding LIBO
Loans on the last day of the then-pending Interest Period therefor from such
Cash Collateral Account; sixth, if an Event of Default exists, to fund a cash
collateral deposit in the Cash Collateral Account in an amount equal to 105% of
all Letter of Credit Outstandings; seventh, to pay all other Obligations that
are then outstanding and then due and payable. If all amounts set forth in
clauses first through and including seventh above are paid, any excess amounts
shall be deposited in a separate cash collateral account, and shall be released
to the Lead Borrower on the day of receipt. So long as no Event of Default has
occurred and is continuing, the Administrative Agent shall release the funds
held in the Cash Collateral Account pursuant to clause fifth above to the
Borrowers upon the Lead Borrower's request.
(b) All credits against the Obligations shall be effective on the day of
receipt thereof, and shall be conditioned upon final payment to the
Administrative Agent of the items giving rise to such credits. If any item
deposited to the Bank of America Concentration Account and credited to the Loan
Account is dishonored or returned unpaid for any reason, whether or not such
return is rightful or timely, the Administrative Agent shall have the right to
reverse such credit and charge the amount of such item to the Loan Account and
the Borrowers shall indemnify the Administrative Agent, the Collateral Agent,
the Issuing Banks and the Lenders against all claims and losses resulting from
such dishonor or return.
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2.23 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender or any holding company of any Lender
(except any such reserve requirement reflected in the Adjusted LIBO Rate)
or any Issuing Bank; or
(ii) impose on any Lender or any Issuing Bank or the London interbank
market any other condition affecting this Agreement or LIBO Loans made by
such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any LIBO Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or such
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise) other than
Taxes, which shall be governed by Section 2.26 hereof , then the Borrowers will
pay to such Lender or such Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or such Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or any Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or such Issuing Bank's capital or on the capital of
such Lender's or such Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender or such Issuing Bank or such Lender's or such
Issuing Bank's holding company could have achieved but for such Change in Law
(taking into consideration such Lender's or such Issuing Bank's policies and the
policies of such Lender's or such Issuing Bank's holding company with respect to
capital adequacy), then from time to time the Borrowers will pay to such Lender
or such Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or such Issuing Bank or such Lender's or such
Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or such Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section and setting forth in reasonable detail the manner in which such
amount or amounts were determined shall be delivered to the Lead Borrower and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender
or such Issuing Bank, as the case
55
may be, the amount shown as due on any such certificate within ten (10) Business
Days after receipt thereof.
(d) Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section within ninety (90) days of the effective
date of the relevant Change in Law shall constitute a waiver of such Lender's or
such Issuing Bank's right to demand such compensation.
2.24 Change in Legality.
(a) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if (x) any Change in Law shall make it unlawful for a Lender to make
or maintain a LIBO Loan or to give effect to its obligations as contemplated
hereby with respect to a LIBO Loan or (y) at any time any Lender determines that
the making or continuance of any of its LIBO Loans has become impracticable as a
result of a contingency occurring after the date hereof which adversely affects
the London interbank market or the position of such Lender in the London
interbank market, then, by written notice to the Lead Borrower, such Lender may
(i) declare that LIBO Loans will not thereafter be made by such Lender
hereunder, whereupon any request by the Borrowers for a LIBO Borrowing shall, as
to such Lender only, be deemed a request for a Prime Rate Loan unless such
declaration shall be subsequently withdrawn; and (ii) require that all
outstanding LIBO Loans made by it be converted to Prime Rate Loans, in which
event all such LIBO Loans shall be automatically converted to Prime Rate Loans
as of the effective date of such notice as provided in paragraph (b) below. In
the event any Lender shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to repay the LIBO Loans that would have been made by such
Lender or the converted LIBO Loans of such Lender shall instead be applied to
repay the Prime Rate Loans made by such Lender in lieu of, or resulting from the
conversion of, such LIBO Loans.
(b) For purposes of this Section 2.24, a notice to the Lead Borrower by any
Lender pursuant to paragraph (a) above shall be effective, and if any LIBO Loans
shall then be outstanding, on the last day of the then-current Interest Period;
and otherwise such notice shall be effective on the date of receipt by the Lead
Borrower.
2.25 Payments; Sharing of Setoff.
(a) The Borrowers shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of drawings under Letters of Credit, or of amounts payable
under Sections 2.19(b), 2.23 or 2.26, or otherwise) prior to 2:00 p.m., New York
time, on the date when due, in immediately available funds, without setoff or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent,
56
be deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx,
except payments to be made directly to an Issuing Bank or Swingline Lender as
expressly provided herein and except that payments pursuant to Sections 2.19(b),
2.23, 2.26 or 9.3 shall be made directly to the Persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the Persons specified
therein. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document (other than
payments with respect to LIBO Borrowings) shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, if any payment due with respect to LIBO Borrowings shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, unless that succeeding Business Day is in
the next calendar month, in which event, the date of such payment shall be on
the last Business Day of subject calendar month, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension. All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed
drawings under Letters of Credit, interest and fees then due hereunder, such
funds shall be applied ratably among the parties entitled thereto in accordance
with the provisions of Section 2.22(a) hereof or Section 6.2 of the Security
Agreement, as applicable.
(c) If any Lender shall, by exercising any right of setoff or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans or participations in drawings under Letters of Credit or Swingline
Loans resulting in such Lender's receiving payment of a greater proportion of
the aggregate amount of its Loans and participations in drawings under Letters
of Credit and Swingline Loans and accrued interest thereon than the proportion
received by any other Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value) participations in the Loans and
participations in drawings under Letters of Credit and Swingline Loans of other
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Loans and participations
in drawings under Letters of Credit and Swingline Loans, provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrowers pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in
57
drawings under Letters of Credit to any assignee or participant, other than to
the Borrowers or any Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrowers consent to the foregoing and agree, to the
extent they may effectively do so under Applicable Law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrowers rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrowers
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Lead Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or an Issuing Bank hereunder
that the Borrowers will not make such payment, the Administrative Agent may
assume that the Borrowers have made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
such Issuing Bank, as the case may be, the amount due. In such event, if the
Borrowers have not in fact made such payment, then each of the Lenders or such
Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the Federal Funds Effective Rate.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to this Agreement, then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender's obligations under this Agreement until all such unsatisfied
obligations are fully paid.
2.26 Taxes.
(a) Any and all payments by or on account of any obligation of the
Borrowers hereunder or under any other Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes,
provided that if the Borrowers shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Agents, any Lender
or any Issuing Bank (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrowers shall
make such deductions, and (iii) the Borrowers shall pay the full amount deducted
to the relevant Governmental Authority in accordance with Applicable Law.
(b) In addition, the Borrowers shall pay any Other Taxes to the relevant
Governmental Authority in accordance with Applicable Law.
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(c) The Borrowers shall indemnify the Agents, each Lender and each Issuing
Bank, within ten (10) Business Days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by such Agent, such Lender
or such Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrowers hereunder or under any other
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Borrowers by a Lender
or an Issuing Bank, or by any Agent on its own behalf or on behalf of a Lender
or an Issuing Bank setting forth in reasonable detail the manner in which such
amount was determined, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrowers to a Governmental Authority, the Borrowers shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or reduction
in withholding tax shall deliver to the Lead Borrower and the Administrative
Agent two copies of either United States Internal Revenue Service Form W-8BEN or
Form W-8ECI, or any subsequent versions thereof or successors thereto, or, in
the case of a Foreign Lender's claiming exemption from or reduction in U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a Form W-8BEN, or any subsequent versions
thereof or successors thereto (and, if such Foreign Lender delivers a Form
W-8BEN, a certificate representing that such Foreign Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrowers and is not a
controlled foreign corporation related to the Borrowers (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Foreign Lender claiming complete exemption from or reduced rate of, United
States federal withholding tax on payments by the Borrowers under this Agreement
and the other Loan Documents, or in the case of a Foreign Lender claiming
exemption for "portfolio interest" certifying that it is not a foreign
corporation, partnership, estate or trust. Such forms shall be delivered by each
Foreign Lender on or before the date it becomes a party to this Agreement (or,
in the case of a transferee that is a participation holder, on or before the
date such participation holder becomes a transferee hereunder) and on or before
the date, if any, such Foreign Lender changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
each Foreign Lender shall deliver such forms promptly upon the obsolescence or
59
invalidity of any form previously delivered by such Foreign Lender.
Notwithstanding any other provision of this Section 2.26(e), a Foreign Lender
shall not be required to deliver any form pursuant to this 2.26(e) that such
Foreign Lender is not legally able to deliver.
(f) The Borrowers shall not be required to indemnify any Foreign Lender or
to pay any additional amounts to any Foreign Lender in respect of United States
federal withholding tax pursuant to paragraph (a) or (c) above to the extent
that the obligation to pay such additional amounts would not have arisen but for
a failure by such Foreign Lender to comply with the provisions of paragraph (e)
above. Should a Lender become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrowers shall, at such Lender's expense, take
such steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
2.27 Security Interests in Collateral. To secure their Obligations under
this Agreement and the other Loan Documents, the Borrowers shall grant, and
shall cause each Facility Guarantor to grant to the Collateral Agent, for its
benefit and the ratable benefit of the other Secured Parties, a first-priority
security interest in all of the Collateral pursuant hereto and to the Security
Documents.
2.28 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.23, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.26,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Sections 2.23 or 2.26, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment;
provided, however, that the Borrowers shall not be liable for such costs and
expenses of a Lender requesting compensation if (i) such Lender becomes a party
to this Agreement on a date after the Closing Date and (ii) the relevant Change
in Law occurs on a date prior to the date such Lender becomes a party hereto.
(b) If any Lender requests compensation under Section 2.23, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.26,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrowers may, at their sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to
60
the restrictions contained in Section 9.5), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that (i) except in the case of an assignment to another
Lender, the Borrowers shall have received the prior written consent of the
Administrative Agent, the Issuing Banks and the Swingline Lender, which consent
shall not unreasonably be withheld, (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and participations
in unreimbursed drawings under Letters of Credit and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrowers (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.23 or payments required to be made pursuant to Section 2.26, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrowers to require such assignment and delegation cease to
apply.
3. REPRESENTATIONS AND WARRANTIES Each Borrower, for itself and on behalf
of each other member of the Borrower Affiliated Group, represents and warrants
to the Agents and the Lenders that, after giving effect to the Mergers:
3.1 Organization; Powers. Each member of the Borrower Affiliated Group is,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and each such Person has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
3.2 Authorization; Enforceability. The transactions contemplated hereby and
by the other Loan Documents to be entered into by each Borrower are within such
Borrower's corporate powers and have been duly authorized by all necessary
corporate, and, if required, stockholder action. This Agreement has been duly
executed and delivered by each Borrower and constitutes, and each other Loan
Document to which any Borrower is a party, when executed and delivered by such
Borrower will constitute, a legal, valid and binding obligation of such Borrower
(as the case may be), enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
3.3 Governmental Approvals; No Conflicts. The transactions to be entered
into contemplated by the Loan Documents (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except (i) for such as have been obtained or made and
are in full force and effect, (ii) for those which could not be
61
reasonably be expected to have a Material Adverse Effect, and (iii) for filings
and recordings necessary to perfect Liens created under the Loan Documents, (b)
will not violate any Applicable Law or regulation or the charter, by-laws or
other organizational documents of any Borrower or any other member of the
Borrower Affiliated Group or any order of any Governmental Authority, except for
such violation which could not reasonably be expected to have a Material Adverse
Effect, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon any Borrower or any other member of
the Borrower Affiliated Group or their respective assets, except for such
violation or default which could not reasonably be expected to have a Material
Adverse Effect, or give rise to a right thereunder to require any material
payment to be made by any Borrower or any other member of the Borrower
Affiliated Group, and (d) will not result in the creation or imposition of any
Lien on any material asset of any Borrower or any other member of the Borrower
Affiliated Group, except Liens created under the Loan Documents or otherwise
permitted hereby or thereby.
3.4 Financial Condition. The Lead Borrower has heretofore furnished to the
Lenders the consolidated balance sheet, and statements of income, stockholders'
equity, and cash flows for each of (i) the GameStop Borrower Group and its
Subsidiaries and (ii) the EB Borrower Group and its Subsidiaries as of and for
the three fiscal years ending on or about January 31, 2003, January 31, 2004 and
January 31, 2005. Such financial statements present fairly, in all material
respects, the financial position, results of operations and cash flows of the
Borrower Affiliated Group, in each case, as of such dates and for such periods
in accordance with GAAP.
3.5 Properties.
(a) Each member of the Borrower Affiliated Group has good title to, or
valid leasehold interests in, all of such Person's real and personal property
material to its business, except for defects which could not reasonably be
expected to have a Material Adverse Effect.
(b) Schedule 3.5(b)(i) sets forth the address (including county) of all
Real Estate that is owned by each member of the Borrower Affiliated Group as of
the Closing Date, after giving effect to the Mergers, together with a list of
the holders of any mortgage or other Lien thereon. Schedule 3.5(b)(ii) sets
forth the address of all Real Estate that is leased by each member of the
Borrower Affiliated Group as of the Closing Date, after giving effect to the
Mergers. Each of such leases is in full force and effect and no Borrower is in
default of the terms thereof, except for such defaults which would not
reasonably be expected to have a Material Adverse Effect.
3.6 Litigation and Environmental Matters.
(a) There are no actions, suits, investigations, or proceedings by or
before any arbitrator or Governmental Authority pending against or, to the
knowledge of any member of the Borrower Affiliated Group, threatened against or
affecting any such
62
Person (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than those set forth on Schedule 3.6) or (ii) that involve any of the Loan
Documents.
(b) Except for the matters set forth on Schedule 3.6, and except as could
not reasonably be expected to have a Material Adverse Effect, no member of the
Borrower Affiliated Group (i) has failed to comply with any Environmental Law or
to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with respect to
any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the matters set forth on Schedule 3.6 that, individually or in the
aggregate, has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.
3.7 Compliance with Laws and Agreements. Each member of the Borrower
Affiliated Group is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to such Person or its property and all
indentures, material agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. No
Default has occurred and is continuing.
3.8 Investment and Holding Company Status. No member of the Borrower
Affiliated Group is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
3.9 Taxes. Each member of the Borrower Affiliated Group has timely filed or
caused to be filed all tax returns and reports required to have been filed and
has paid or caused to be paid all taxes required to have been paid by it, except
(a) taxes that are being contested in good faith by appropriate proceedings, for
which such Person has set aside on its books adequate reserves, and as to which
no Lien has arisen, or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
3.10 ERISA. Except as set forth in Schedule 3.10, no member of the Borrower
Affiliated Group is party to a Plan. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed the fair
63
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans.
3.11 Interdependence of Borrower Affiliated Group.(a) The business of each
member of the Borrower Affiliated Group shall benefit from the successful
performance of the business of each other member of the Borrower Affiliated
Group, and the Borrower Affiliated Group as a whole.
(b) Each member of the Borrower Affiliated Group has cooperated to the
extent necessary and shall continue to cooperate with each other member of the
Borrower Affiliated Group to the extent necessary in the development and conduct
of each other member of the Borrower Affiliated Group's business, and shall to
the extent necessary share and participate in the formulation of methods of
operation, distribution, leasing, inventory control, and other similar business
matters essential to each member of the Borrower Affiliated Group's business.
(c) The failure of any member of the Borrower Affiliated Group to cooperate
with all other members of the Borrower Affiliated Group in the conduct of their
respective businesses shall have an adverse impact on the business of each other
member of the Borrower Affiliated Group, and the failure of any member of the
Borrower Affiliated Group to associate or cooperate with all other members of
the Borrower Affiliated Group is reasonably likely to impair the goodwill of
such other members of Borrower Affiliated Group and the Borrower Affiliated
Group as a whole.
(d) Each member of the Borrower Affiliated Group is accepting joint and
several liability for the Obligations on the terms and conditions set forth in
the Facility Guaranty and represents and warrants that the financial
accommodations being provided hereby are for the mutual benefit, directly and
indirectly, of each member of the Borrower Affiliated Group.
3.12 Disclosure. The Borrowers have disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which any member
of the Borrower Affiliated Group is subject, and all other matters known to any
such Person, that, individually or in the aggregate, in each case, could
reasonably be expected to result in a Material Adverse Effect. None of the
reports, financial statements, certificates or other information furnished by or
on behalf of any member of the Borrower Affiliated Group to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact
64
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
3.13 Subsidiaries. On and as of the Closing Date, and after giving effect
to the Mergers, the authorized capital stock or other equity, and the number of
issued and outstanding shares of capital stock or other equity, of the Borrowers
and each other member of the Borrower Affiliated Group is as described in
Schedule 3.13. All such outstanding shares of capital stock or other equity of
the Borrowers and each other member of the Borrower Affiliated Group have been
duly and validly issued, in compliance with all legal requirements relating to
the authorization and issuance of shares of capital stock or other equity, and
are fully paid and non-assessable. There is no other capital stock or ownership
interest of any class outstanding. Except as set forth on Schedule 3.13, no
member of the Borrower Affiliated Group is party to any joint venture, general
or limited partnership, or limited liability company, agreements or any other
business ventures or entities.
3.14 Insurance. Schedule 3.14 sets forth a description of all insurance
maintained by or on behalf of the Borrower Affiliated Group as of the Closing
Date, after giving effect to the Mergers. Each of such policies is in full force
and effect. As of the Closing Date, after giving effect to the Mergers, all
premiums in respect of such insurance that are due and payable have been paid.
3.15 Labor Matters. There are no strikes, lockouts or slowdowns against any
member of the Borrower Affiliated Group pending or, to the knowledge of the
Borrowers, threatened. The hours worked by and payments made to employees of the
members of the Borrower Affiliated Group have not been in violation of the Fair
Labor Standards Act or any other applicable federal, state, local or foreign law
dealing with such matters to the extent that any such violation could reasonably
be expected to have a Material Adverse Effect. All payments due from any member
of the Borrower Affiliated Group, or for which any claim may be made against any
such Person, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of such
member. The consummation of the transactions contemplated by the Loan Documents
will not give rise to any right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to which any member
of the Borrower Affiliated Group is bound.
3.16 Certain Transactions. Except as set forth on Schedule 3.16, none of
the officers, partners, or directors of any member of the Borrower Affiliated
Group is presently a party to any transaction, and, to the knowledge of the
executive officers of the Borrowers, none of the employees of any member of the
Borrower Affiliated Group is presently a party to any material transaction, with
any other member of the Borrower Affiliated Group or any Affiliate (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, partner, director or such employee
or, to the knowledge of the executive officers of the Borrowers, any
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corporation, partnership, trust or other entity in which any officer, partner,
director, or any such employee or natural person related to such officer,
partner, director or employee or other Person in which such officer, partner,
director or employee has a direct or indirect beneficial interest, has a
substantial direct or indirect beneficial interest or is an officer, director,
trustee or partner.
3.17 Restrictions on the Borrower Affiliated Group. No member of the
Borrower Affiliated Group is a party to or bound by any contract, agreement or
instrument, or subject to any charter or other corporate restriction, that has
or could reasonably be expected to have a Material Adverse Effect.
3.18 Security Documents. The Security Documents create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral, and the Security Documents
constitute, or will upon the filing of financing statements and the obtaining of
"control", in each case with respect to the relevant Collateral as required
under the applicable Uniform Commercial Code, the creation of a fully perfected
first priority Lien on, and security interest in, all right, title and interest
of the Borrowers and each Facility Guarantor thereunder in such Collateral, in
each case prior and superior in right to any other Person (other than Permitted
Encumbrances having priority under Applicable Law), except as permitted
hereunder or under any other Loan Document.
3.19 Federal Reserve Regulations.
(a) No member of the Borrower Affiliated Group is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to buy or carry Margin Stock or to extend credit to others for
the purpose of buying or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose or (ii) for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations of
the Board, including Regulation U or X.
3.20 Solvency. The Borrower Affiliated Group, taken as a whole, is Solvent.
No transfer of property is being made by any Borrower and no obligation is being
incurred by any Borrower in connection with the transactions contemplated by
this Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of any Borrower.
3.21 Franchises, Patents, Copyrights, Etc. Except as otherwise set forth on
Schedule 3.21 hereto, each member of the Borrower Affiliated Group owns, or is
licensed to use, all franchises, patents, copyrights, trademarks, tradenames,
service marks, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of its business as substantially now
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conducted without known conflict with any rights of any other Person and, in
each case, free of any Lien that is not a Permitted Encumbrance.
3.22 Closing Date Acquisition Documents. The Borrowers have delivered to
the Agents a complete and correct copy of the Closing Date Acquisition
Documents. Each of the Closing Date Acquisition Documents to which each Borrower
is a party constitutes the legal, valid and binding obligation of such Borrower,
enforceable against such Borrower in accordance with its terms. No Borrower and,
to the Borrowers' knowledge, no other Person party thereto is in default in the
performance or compliance with any material provisions of the Closing Date
Acquisition Documents. The Closing Date Acquisition Documents comply with, and
the Mergers have been consummated in accordance with, all Applicable Laws in
effect as of the Closing Date.
4. CONDITIONS.
4.1 Closing Date. The obligation of the Lenders to make the initial Loans
and of the Issuing Banks to issue the initial Letters of Credit is subject to
the following conditions precedent:
(a) The Agents (or their counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement and all other Loan Documents
(including, without limitation, the Security Documents) signed on behalf of such
party or (ii) written evidence satisfactory to the Agents and the Arrangers
(which may include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement and all
other Loan Documents.
(b) The Agents shall have received a favorable written opinion (addressed
to each Agent and the Lenders on the Closing Date and dated the Closing Date) of
Xxxxx Xxxx LLP, counsel for the Borrowers, substantially in the form of Exhibit
C, covering such matters relating to the Borrowers, the Loan Documents or the
transactions contemplated thereby as the Required Lenders shall reasonably
request. The Borrowers hereby request such counsel to deliver such opinion.
(c) The Agents shall have received such documents and certificates as the
Agents or their counsel may reasonably request relating to the organization,
existence and good standing of each member of the Borrower Affiliated Group, the
authorization of the transactions contemplated by the Loan Documents and any
other legal matters relating to the Borrower Affiliated Group, the Loan
Documents or the transactions contemplated thereby, all in form and substance
reasonably satisfactory to the Agents and their counsel.
(d) The Agents shall have received a Borrowing Base Certificate dated the
Closing Date, relating to the month ended on September 30, 2005, and executed by
a Financial Officer of the Lead Borrower.
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(e) The Agents shall have received a certificate from the chief financial
officer of the Lead Borrower, together with such other evidence reasonably
requested by the Agents, in each case reasonably satisfactory in form and
substance to the Agents, (i) with respect to the solvency of the Borrower
Affiliated Group on a consolidated basis, as of the Closing Date after giving
effect to the Mergers, and (ii) certifying that, as of the Closing Date and
after giving effect to the Mergers, the representations and warranties made by
the Borrowers in the Loan Documents are true and complete in all material
respects and that no event has occurred (or failed to occur) which is or which,
solely with the giving of notice or passage of time(or both) would be a Default
or an Event of Default.
(f) All necessary consents and approvals to the transactions contemplated
hereby shall have been obtained and shall be reasonably satisfactory to the
Agents, including, without limitation, consents from all requisite material
Governmental Authorities and, except as would not reasonably be expected to have
or result in a Material Adverse Effect, all third parties shall have approved or
consented to the transactions contemplated hereby and by the Closing Date
Acquisition Documents, including, without limitation, the Mergers, to the extent
required, all applicable waiting periods shall have expired and there shall be
no material governmental or judicial action, actual or threatened, that could
reasonably be expected to materially restrain, prevent or impose burdensome
conditions on the Mergers.
(g) The absence of any change, effect, event, occurrence or state of facts
that is materially adverse to the business, financial condition, or results of
operations of Electronics Boutique Holdings Corp. and its Subsidiaries, other
than any changes, effects, events, occurrences or state of facts relating to (i)
the economy or financial markets in general, (ii) negotiation and entry into the
Merger Agreement, the announcement of the Merger Agreement or the undertaking
and performance or observance of the obligations contemplated by the Merger
Agreement or necessary to consummate the transactions contemplated hereby
(including adverse effects on results of operations attributable to the
uncertainties associated with the period between the date of the Merger
Agreement and the Closing Date), (iii) fluctuation in GameStop Corp.'s or
Electronics Boutique Holdings Corp.'s stock prices (iv) the effect of incurring
and paying Expenses (as defined in the Merger Agreement) in connection with
negotiating, entering into, performing and consummating the transactions
contemplated by the Merger Agreement, (v) changes in GAAP after the date of the
Merger Agreement, and (vi) product shortages and delays in product introductions
consistent with those that occurred in 2004; provided, that with respect to
clause (i) such changes, effects, events, occurrences or state of facts do not
disproportionately affect such Persons (as defined in the Merger Agreement)
relative to the other participants in the industries in which such Persons
operate; provided, further, that, for the avoidance of doubt, compliance with
(and the consequences thereof) the terms of the Merger Agreement (including
Section 6.5 thereof, except for Section
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6.5(a)(vi)) shall not be taken into account in determining whether a material
adverse effect shall have occurred or shall be expected to occur for any and all
purposes.
(h) The Administrative Agent shall have received and be satisfied with (a)
not later than thirty (30) days prior to the Closing Date, (x) audited
consolidated balance sheets and related statements of income, stockholders'
equity and cash flows of each of the GameStop Borrower Group and the EB Borrower
Group for the three fiscal years ended before the Closing Date and (y) unaudited
consolidated balance sheets and related statements of income, stockholders'
equity and cash flows of each of the GameStop Borrower Group and the EB Borrower
Group for the fiscal quarter ending July 31, 2005 (and, to the extent available,
for each completed month since the last such quarter) (which audited and
unaudited financial statements shall be prepared in accordance with, or
reconciled to, GAAP, except with respect to the unaudited financial statements,
for absence of footnotes and subject to year-end adjustments), and (b) such
other information (financial or otherwise) reasonably requested by the
Administrative Agent in form and substance reasonably satisfactory to the
Administrative Agent. The Agents shall be reasonably satisfied that any
financial statements delivered to them fairly present the business and financial
condition of the Borrower Affiliated Group.
(i) Except as set forth on Schedule 3.6, there shall not be pending any
litigation or other proceeding, the result of which could reasonably be expected
to have a Material Adverse Effect on the Borrower Affiliated Group, taken as a
whole.
(j) There shall not have occurred any default, nor shall any event exist
which is, or solely with the passage of time, the giving of notice or both,
would be a default under any Material Indebtedness of any member of the Borrower
Affiliated Group.
(k) The Collateral Agent shall have received results of searches from such
jurisdictions as may be reasonably required by the Collateral Agent or other
evidence reasonably satisfactory to the Collateral Agent (in each case dated as
of a date reasonably satisfactory to the Collateral Agent) indicating the
absence of Liens on the Collateral, including, without limitation, receivables
from credit card processors, except for Permitted Encumbrances and Liens for
which termination statements and releases reasonably satisfactory to the
Collateral Agent are being tendered concurrently with such extension of credit.
(l) The Collateral Agent shall have received all documents and instruments,
including Uniform Commercial Code financing statements, required by law or
reasonably requested by the Collateral Agent to be filed, registered or recorded
to create or perfect the first priority Liens intended to be created under the
Loan Documents and all such documents and instruments shall have been so filed,
registered or recorded to the satisfaction of the Collateral Agent.
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(m) The Collateral Agent shall have received the DDA Notifications, the
Blocked Account Agreements and the Credit Card Notifications required to be
delivered hereunder on or before the Closing Date.
(n) The Agents shall have received the results of a commercial financial
examination and inventory appraisal, which results shall be satisfactory to the
Agents in their Permitted Discretion.
(o) All fees due at or immediately after the Closing Date and all
reasonable costs and expenses incurred by the Agents in connection with the
establishment of the credit facility contemplated hereby (including the
reasonable fees and expenses of counsel to the Agents) shall have been paid in
full.
(p) The consummation of the transactions contemplated hereby shall not (a)
violate any Applicable Law, or (b) conflict with, or result in a default or
event of default under, any material agreement of Borrowers or any other member
of the Borrower Affiliated Group, taken as a whole (and the Agents and the
Lenders shall receive a satisfactory opinion of Borrowers' counsel to that
effect). No event shall exist which is, or solely with the passage of time, the
giving of notice or both, would be a default under any material agreement of any
member of the Borrower Affiliated Group.
(q) No material changes in governmental regulations or policies affecting
the Borrowers, the Agents, or any Lender involved in this transaction shall have
occurred prior to the Closing Date which could, individually or in the
aggregate, materially adversely effect the transaction contemplated by this
Agreement.
(r) There shall be no Default or Event of Default on the Closing Date.
(s) The Collateral Agent shall have received, and be satisfied with,
evidence of the Borrowers' insurance, together with such endorsements as are
required by the Loan Documents.
(t) The Agents shall have received evidence of repayment in full and
termination of all liabilities and obligations of the Borrowers under the
Existing Credit Agreements and all related documents, agreements and instruments
and of all Liens and Uniform Commercial Code financing statements relating
thereto, including, without limitation, any Liens and/or Uniform Commercial Code
financing statements covering or relating to any assets or properties of any
equity holders of any member of the Borrower Affiliated Group.
(u) There shall not have occurred any disruption or material adverse change
in the financial or capital markets in general that would, in the reasonable
opinion of the
70
Agents, have a material adverse effect on the market for loan syndications or
adversely affecting the syndication of the Loans.
(v) The Mergers shall have been or shall concurrently be consummated on the
terms set forth in the Merger Agreement, with such modifications as the parties
thereto may agree (other than amendments, modifications or waivers which are
materially adverse to the Lenders, which modifications, amendments or waivers
shall be reasonably acceptable to the Agents and the Arrangers).
(w) The Borrowers shall have received the proceeds from the Senior Notes
which Senior Notes shall be consistent with the terms previously disclosed to
the Agents, with such modifications as the agents under the Senior Notes and the
Borrowers may agree (other than modifications which are adverse to the Lenders,
which modifications shall be reasonably acceptable to the Agents and the
Arrangers).
(x) The Borrower shall have Excess Availability on the Closing Date, after
giving effect to Credit Extensions made on the Closing Date, of not less than
$150,000,000.
(y) There shall have been delivered to the Administrative Agent such
additional instruments and documents as the Agents or counsel to the Agents
reasonably may require or request.
The Administrative Agent shall notify the Lead Borrower and the Lenders of
the Closing Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Banks to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.2) at or prior to 5:00 p.m., New York time, on October 31,
2005 (provided that such date shall be automatically extended to December 31,
2005 to the extent the Outside Date (as defined in the Merger Agreement) is
extended to December 31, 2005 pursuant to Section 8.1(b)(i) of the Merger
Agreement (as in effect on the date of its execution)) (and, in the event such
conditions are not so satisfied or waived, this Agreement shall terminate at
such time).
4.2 Conditions Precedent to Each Loan and Each Letter of Credit. In
addition to those conditions described in Section 4.1, the obligation of the
Lenders to make each Loan and of the applicable Issuing Bank to issue each
Letter of Credit, is subject to the following conditions precedent:
(a) Notice. The Administrative Agent shall have received a notice with
respect to such Borrowing or issuance, as the case may be, as required by
Section 2.3.
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(b) Representations and Warranties. All representations and warranties
contained in this Agreement and the other Loan Documents or otherwise made in
writing in connection herewith or therewith shall be true and correct in all
material respects on and as of the date of each Borrowing or the issuance of
each Letter of Credit hereunder with the same effect as if made on and as of
such date, other than representations and warranties that relate solely to an
earlier date.
(c) No Default. On the date of each Borrowing hereunder and the issuance of
each Letter of Credit, the Borrowers shall be in compliance with all of the
terms and provisions set forth herein and in the other Loan Documents to be
observed or performed and no Default or Event of Default shall have occurred and
be continuing.
(d) Borrowing Base Certificate. The Administrative Agent shall have
received the most recently required Borrowing Base Certificate, with each such
Borrowing Base Certificate including schedules as required by the Administrative
Agent.
The request by the Borrowers for, and the acceptance by the Borrowers of,
each extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this Section 4.2 have
been satisfied at that time and that after giving effect to such extension of
credit the Borrowers shall continue to be in compliance with the Borrowing Base.
The conditions set forth in this Section 4.2 are for the sole benefit of the
Administrative Agent and each Lender and may be waived by the Administrative
Agent in whole or in part without prejudice to the Administrative Agent or any
Lender.
5. AFFIRMATIVE COVENANTS. Until the Commitments have expired or been
terminated and the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full and all Letters of Credit shall have
expired or terminated and all L/C Disbursements shall have been reimbursed, each
Borrower covenants and agrees with the Agents and the Lenders that:
5.1 Financial Statements and Other Information. The Borrowers will furnish
to the Agents:
(a) within ninety (90) days after the end of each fiscal year of the
Borrower Affiliated Group, a consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all audited and reported on by BDO Xxxxxxx or another
independent public accountant of recognized national standing (without a "going
concern" or like qualification or exception and without a qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Borrower Affiliated Group on a
consolidated basis in accordance with GAAP consistently applied;
72
(b) within forty-five (45) days after the end of each fiscal quarter of the
Borrower Affiliated Group, a consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows, as of the end of and for
such fiscal quarter and the elapsed portion of the fiscal year, with comparative
results to the same fiscal periods of the prior fiscal year, all certified by a
Financial Officer of the Lead Borrower as presenting in all material respects
the financial condition and results of operations of the Borrower Affiliated
Group on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year end audit adjustments and the absence of footnotes,
(c) concurrently with any delivery of financial statements under clause (a)
or (b) above, a certificate of a Financial Officer of the Lead Borrower in the
form of Exhibit E hereto (i) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations with respect to the Fixed Charge Coverage Ratio
and the Consolidated Leverage Ratio for such period, and (iii) stating whether
any change in GAAP or in the application thereof has occurred since the date of
the Borrowers' audited financial statements referred to in Section 3.4 and, if
any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(d) within thirty (30) days after the commencement of each fiscal year of
the Borrower Affiliated Group, a detailed consolidated budget by quarter for
such fiscal year (including a projected consolidated balance sheet and related
statements of projected operations and cash flow as of the end of and for such
fiscal year);
(e) within five (5) Business Days after the end of each month, a
certificate in the form of Exhibit D (a "Borrowing Base Certificate") showing
the Borrowing Base as of the close of business on the last day of the
immediately preceding month, each such Certificate to be certified as complete
and correct on behalf of the Borrower Affiliated Group by a Financial Officer of
the Lead Borrower, provided, however, if and so long as an Event of Default
exists or Uncapped Availability is less than twenty (20%) percent of the then
Borrowing Base, the Administrative Agent may require that Borrowers furnish such
Borrowing Base Certificate (showing the Borrowing Base as of the close of
business on the last day of the immediately preceding week) weekly on Wednesday
of each week;
(f) within thirty (30) days after the commencement of each fiscal year,
projected sales and inventory levels for the Borrowers' stores for each month of
the following fiscal year;
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Lead Borrower or any other member of the Borrower Affiliated Group with the
Securities and Exchange
73
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, as the
case may be;
(h) the financial and collateral reports described on Schedule 5.1(h)
hereto, at the times set forth in such Schedule;
(i) Fifteen (15) days' after the consummation of a Permitted Acquisition,
(A) copies of purchase and sale agreements or other acquisition documents to be
executed in connection with the Permitted Acquisition, and (B) with respect to
any Permitted Acquisition for aggregate consideration of equal to or greater
than $35,000,000, (i) copies of the most recent audited, and if later, unaudited
financial statements of the Person which is the subject of the Permitted
Acquisition, and (ii) an unaudited pro forma Consolidated balance sheet and
income statement of the Borrower Affiliated Group as of the end of the most
recently completed fiscal quarter but prepared as though the Permitted
Acquisition had occurred on such date and related pro forma calculations of
average Excess Availability for the subsequent four fiscal quarters period;
(j) notice of any (i) sale or other disposition of assets of any Borrower
permitted under Section 6.5(f) hereof promptly following the date of
consummation such sale or disposition or (ii) incurrence of any Indebtedness
permitted under Section 6.1(e) promptly following the incurrence of such
Indebtedness;
(k) promptly upon receipt thereof, copies of all reports submitted to the
Lead Borrower or any other member of the Borrower Affiliated Group by
independent certified public accountants in connection with each annual, interim
or special audit of the books of the Borrower Affiliated Group made by such
accountants, including any management letter commenting on the Borrowers'
internal controls submitted by such accountants to management in connection with
their annual audit; and
(l) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the Lead
Borrower or any other member of the Borrower Affiliated Group, or compliance
with the terms of any Loan Document, as the Agents or any Lender may reasonably
request.
5.2 Notices of Material Events. The Borrowers will, and will cause each
other member of the Borrower Affiliated Group to furnish to the Administrative
Agent, the Issuing Banks, and the Collateral Agent prompt written notice of the
following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting any member
of the
74
Borrower Affiliated Group that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect;
(d) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect;
(e) any change in any Borrower's chief executive officer or chief financial
officer;
(f) any collective bargaining agreement or other labor contract to which
any member of the Borrower Affiliated Group becomes a party, or the application
for the certification of a collective bargaining agent;
(g) the filing of any Lien for unpaid taxes in an aggregate amount in
excess of $2,500,000 against any member of the Borrower Affiliated Group;
(h) the discharge by any Borrower of its present independent accountants or
any withdrawal or resignation by such independent accountants; and
(i) any material adverse change in the business, operations, or financial
affairs of any member of the Borrower Affiliated Group taken as a whole.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Lead Borrower
setting forth the details of the event or development requiring such notice and,
if applicable, any action taken or proposed to be taken with respect thereto.
5.3 Information Regarding Collateral. The Lead Borrower will furnish to the
Agents thirty (30) days' prior written notice of any change (i) in any member of
the Borrower Affiliated Group's corporate or legal name or in any trade name
used to identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of any member of the Borrower Affiliated
Group's chief executive office, its principal place of business, any office in
which it maintains books or records relating to Collateral owned by it or any
office or facility at which Collateral owned by it is located (including the
establishment of any such new office or facility), (iii) in any member of the
Borrower Affiliated Group's organizational structure or (iv) in any member of
the Borrower Affiliated Group's jurisdiction of incorporation or formation,
Federal Taxpayer Identification Number or organizational identification number
assigned to it by its state of organization.
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5.4 Existence; Conduct of Business. Each Borrower will, and will cause each
other member of the Borrower Affiliated Group to, do or cause to be done all
things necessary to comply with its respective charter, certificate of
incorporation, articles of organization, and/or other organizational documents,
as applicable; and by-laws and/or other instruments which deal with corporate
governance, and to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business,
provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.3 or any sale, lease,
transfer or other disposition permitted by Section 6.5.
5.5 Payment of Obligations. Each Borrower will, and will cause each other
member of the Borrower Affiliated Group to, pay its Indebtedness and other
obligations, including tax liabilities, before the same shall become delinquent
or in default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) such Borrower or such
other member of the Borrower Affiliated Group has set aside on its books
adequate reserves with respect thereto in accordance with GAAP, (c) such contest
effectively suspends collection of the contested obligation, (d) no Lien secures
such obligation and (e) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect. Nothing
contained herein shall be deemed to limit the rights of the Administrative Agent
under Section 2.2(b).
5.6 Maintenance of Properties. Each Borrower will, and will cause each
other member of the Borrower Affiliated Group to, keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted and with the exception of asset dispositions
permitted hereunder.
5.7 Insurance.
(a) Each Borrower will, and will cause each other member of the Borrower
Affiliated Group to, (i) maintain insurance with financially sound and reputable
insurers reasonably acceptable to the Administrative Agent (or, to the extent
consistent with prudent business practice, a program of self-insurance
consistent with current practices) on such of its property and in at least such
amounts and against at least such risks as is customary with companies in the
same or similar businesses operating in the same or similar locations, including
public liability insurance against claims for personal injury or death occurring
upon, in or about or in connection with the use of any properties owned,
occupied or controlled by it (including the insurance required pursuant to the
Security Documents); (ii) maintain such other insurance as may be required by
law; and (iii) furnish to the Administrative Agent, upon written request, full
information as to the insurance carried. The Administrative Agent shall not, by
the fact of approving, disapproving, accepting, obtaining or failing to obtain
any such insurance, incur liability for the form or legal sufficiency of
insurance contracts, solvency of insurance companies or payment of lawsuits, and
each Borrower and each other member of the Borrower
76
Affiliated Group hereby expressly assumes full responsibility therefor and
liability, if any, thereunder. The Borrowers shall, and shall cause each other
member of the Borrower Affiliated Group to, furnish to the Administrative Agent
certificates or other evidence satisfactory to the Administrative Agent of
compliance with the foregoing insurance provisions.
(b) Fire and extended coverage policies maintained with respect to any
Collateral shall be endorsed or otherwise amended to include (i) a lenders' loss
payable clause, in form and substance reasonably satisfactory to the Collateral
Agent, which endorsements or amendments shall provide that the insurer shall pay
all proceeds otherwise payable to the Borrowers under the policies directly to
the Collateral Agent, (ii) a provision to the effect that none of the Borrowers,
the Administrative Agent, the Collateral Agent, or any other party shall be a
coinsurer and (iii) such other provisions as the Collateral Agent may reasonably
require from time to time to protect the interests of the Lenders. Commercial
general liability policies shall be endorsed to name the Collateral Agent as an
additional insured. Business interruption policies shall name the Collateral
Agent as a loss payee and shall be endorsed or amended to include (i) a
provision that, from and after the Closing Date, the insurer shall pay all
proceeds in excess of $5,000,000 otherwise payable to the Borrowers under the
policies directly to the Administrative Agent or the Collateral Agent, provided,
however, that the Agents hereby agree that prior to the occurrence of an Event
of Default or a Cash Dominion Event, the Agents shall remit all proceeds
received by Agents under the policies to Borrowers, provided further that after
the occurrence of an Event of Default or a Cash Dominion Event, the Agents shall
apply any proceeds received in accordance with Section 2.22 hereof or Section
6.2 of the Security Agreement, as applicable, (ii) a provision to the effect
that none of the Borrowers, the Administrative Agent, the Collateral Agent or
any other party shall be a co-insurer and (iii) such other provisions as the
Collateral Agent may reasonably require from time to time to protect the
interests of the Lenders. Each such policy referred to in this paragraph also
shall provide that it shall not be canceled, modified or not renewed except upon
not less than 30 days' prior written notice thereof by the insurer to the
Collateral Agent (giving the Collateral Agent the right to cure defaults in the
payment of premiums). The Borrowers shall deliver to the Collateral Agent, prior
to the cancellation, modification or nonrenewal of any such policy of insurance,
a copy of a renewal or replacement policy (or other evidence of renewal of a
policy previously delivered to the Collateral Agent) together with evidence
satisfactory to the Collateral Agent of payment of the premium therefor.
5.8 Casualty and Condemnation. Each Borrower will furnish to the Agents and
the Lenders prompt written notice of any casualty or other insured damage to any
material portion of the Collateral or the commencement of any action or
proceeding for the taking of any material portion of the Collateral or any part
thereof or interest therein under power of eminent domain or by condemnation or
similar proceeding. 5.9 Books and Records; Inspection and Audit Rights.
(a) Each Borrower will, and will cause each other member of the Borrower
Affiliated Group to, keep proper books of record and account in which full, true
and correct entries are made of all dealings and transactions in relation to its
business and activities. Each Borrower will permit any representatives
designated by any Agent on its own behalf or on behalf of any Arranger, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.
(b) Each Borrower will, and will cause each other member of the Borrower
Affiliated Group to, from time to time upon the reasonable request and
reasonable prior notice of the Collateral Agent or the Required Lenders through
the Administrative Agent, permit any Agent or professionals (including
consultants, accountants, lawyers and appraisers) retained by the Agents to
conduct appraisals, commercial finance examinations and other evaluations,
including, without limitation, of (i) the Borrowers' practices in the
computation of the Borrowing Base and (ii) the assets included in the Borrowing
Base and related financial information such as, but not limited to, sales, gross
margins, payables, accruals and reserves, and pay the reasonable fees and
expenses of the Agents or such professionals with respect to such evaluations
and appraisals, provided that so long as the Credit Extensions are less than
fifty (50%) of the lesser of the Total Commitments or the Borrowing Base, the
Borrowers shall be responsible only for the costs and expenses of one such
appraisal and one commercial finance examination in any twelve month period
following the Closing Date, and if the Credit Extensions are at any time equal
to or greater than fifty (50%) of the lesser of the Total Commitments or the
then Borrowing Base, the Borrowers shall be responsible only for the costs and
expenses of two such appraisals and two commercial finance examinations in any
twelve month period following the Closing Date, in each case unless an Event of
Default shall have occurred and be continuing (in which event the Administrative
Agent may undertake such additional appraisals and commercial finance
examinations as it deems appropriate). Notwithstanding the foregoing limitations
on the Borrowers' obligation to pay the expenses for appraisals and commercial
finance examinations prior to the occurrence of an Event of Default, the
Administrative Agent may undertake such additional appraisals and commercials
finance examinations prior to the occurrence of an Event of Default as it, in
its Permitted Discretion, deems necessary, at the expense of the Lenders.
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(c) The Borrowers shall, at all times, retain BDO Xxxxxxx, LLP or other
independent certified public accountants who are reasonably satisfactory to the
Administrative Agent and instruct such accountants to cooperate with, and be
available to, the Administrative Agent or its representatives to discuss the
Borrowers' financial performance, financial condition, operating results,
controls, and such other matters, within the scope of the retention of such
accountants, as may be raised by the Administrative Agent.
5.10 Fiscal Year. Each of the Borrowers and each other member of the
Borrower Affiliated Group shall have a fiscal year ending on the Saturday
closest to January 31 of each year and shall notify the Administrative Agent of
any change in such fiscal year.
5.11 Physical Inventories.
(a) The Collateral Agent, at the expense of the Borrowers, may participate
in and/or observe each physical count and/or inventory of so much of the
Collateral as consists of Inventory which is undertaken on behalf of the
Borrowers so long as such participation does not disrupt the normal inventory
schedule or process, provided that such participation shall be limited to once
in any twelve month period after the Closing Date (unless a Cash Dominion Event
shall have occurred and be continuing).
(b) The Borrowers, at their own expense, shall cause not less than one
physical inventory of the Borrowers' inventory to be undertaken in each twelve
(12) month period during which this Agreement is in effect, conducted by the
Borrowers and using practices consistent with practices in effect on the date
hereof.
(c) At the Administrative Agent's request, the Borrowers, within forty-five
(45) days following the completion of such inventory, shall provide the
Collateral Agent with a reconciliation of the results of each such inventory (as
well as of any other physical inventory undertaken by the Borrowers) and shall
post such results to the Borrowers' stock ledger and general ledger, as
applicable.
(d) If and so long as there are any Loans outstanding, the Collateral
Agent, in its discretion, if any Event of Default exists, may cause such
additional inventories to be taken as the Collateral Agent determines (each, at
the expense of the Borrowers). The Collateral Agent shall use its best efforts
to schedule any such inventories so as to not unreasonably disrupt the operation
of the Borrowers' business.
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5.12 Compliance with Laws. Each Borrower will, and will cause each other
member of the Borrower Affiliated Group to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
5.13 Use of Proceeds and Letters of Credit. The proceeds of Loans made
hereunder and Letters of Credit issued hereunder will be used only (a) for
Restricted Payments and Permitted Acquisitions, (b) to finance the acquisition
of working capital assets of the Borrowers, including the purchase of inventory
and equipment, in each case in the ordinary course of business, (c) to finance
Capital Expenditures of the Borrowers, (d) for refinancing of existing working
capital indebtedness of the Borrowers, (e) to pay transaction costs in
connection with the Mergers, and (f) for general corporate purposes, all to the
extent permitted herein. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations U and X or to make
payments of principal or fees on the Senior Notes.
5.14 Additional Subsidiaries(a) If any additional Domestic Subsidiary of
any Borrower is formed or acquired after the Closing Date, the Lead Borrower
will promptly notify the Agents and the Lenders thereof and (i) if a wholly
owned Domestic Subsidiary, the Borrowers will cause each such Domestic
Subsidiary, to become a Borrower or Facility Guarantor hereunder, as the
Administrative Agent or the Lead Borrower may request, and under each applicable
Security Document in the manner provided therein within thirty (30) days after
such Domestic Subsidiary is formed or acquired and promptly take such actions to
create and perfect Liens on such Domestic Subsidiary's assets to secure the
Obligations as any Agent shall reasonably request and (ii) any shares of capital
stock owned, and if any Indebtedness of such Domestic Subsidiary (whether or not
wholly owned) are owned, by or on behalf of any Borrower, the Borrowers will
cause such shares and promissory notes evidencing such Indebtedness to be
pledged within thirty (30) Days after such Domestic Subsidiary is formed or
acquired.
(b) If any additional Material Foreign Subsidiary of any Borrower is formed
or acquired after the Closing Date or if a Foreign Subsidiary becomes a Material
Foreign Subsidiary, the Lead Borrower will notify the Agents and the Lenders
thereof and the Borrowers shall cause 65% of the outstanding shares of Voting
Stock of such Material Foreign Subsidiary (or such lesser percentage as is owned
by any such Borrower) to be pledged within sixty (60) days after such Material
Foreign Subsidiary is formed or acquired or such Subsidiary becomes a Material
Foreign Subsidiary.
5.15 Further Assurances. Each member of the Borrower Affiliated Group will
execute any and all further documents, financing statements, agreements and
instruments, and take all such further actions (including the filing and
recording of financing statements and other documents), that may be required
under any Applicable Law, or which any Agent or the
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Required Lenders may reasonably request, to effectuate the transactions
contemplated by the Loan Documents or to grant, preserve, protect or perfect the
Liens created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the Borrowers. The
Borrowers also agree to provide to the Agents, from time to time upon request,
evidence reasonably satisfactory to the Agents as to the perfection and priority
of the Liens created or intended to be created by the Security Documents.
5.16 Coatesville, Pennsylvania Property. In the event that the Borrowers
have not sold, or caused to be sold, the Coatesville Property within two hundred
and seventy (270) days after the Closing Date, the Borrowers shall deliver a
Mortgage to the Collateral Agent granting a Lien on the Coatesville Property in
favor of the Collateral Agent, which Lien shall be second in priority only to
the mortgage granted by the owner of the Coatesville Property to Thrivent
Financial for Lutherans.
6. NEGATIVE COVENANTS. Until the Commitments have expired or terminated and
the principal of and interest on each Loan and all fees payable hereunder have
been paid in full and all Letters of Credit have expired or terminated and all
L/C Disbursements shall have been reimbursed, each Borrower covenants and agrees
with the Agents and the Lenders that:
6.1 Indebtedness and Other Obligations. The Borrowers will not, and will
not permit any other member of the Borrower Affiliated Group to, create, incur,
assume or permit to exist any Indebtedness, except:
(a) Indebtedness created under the Loan Documents;
(b) Indebtedness created under the Senior Note Documents; provided that the
principal of the Senior Notes shall not be repaid (other than from the proceeds
of a debt or equity issuance or from any rollover loans publicly issued or
privately placed notes, or exchange notes issued in exchange for the Senior
Notes);
(c) Indebtedness set forth in Schedule 6.1 and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof or result in an earlier maturity date or decreased
weighted average life thereof;
(d) Indebtedness of any Borrower or Subsidiary to any other Borrower or
Subsidiary, provided, however, that the aggregate amount of Indebtedness due to
any Borrower by Foreign Subsidiaries, when combined with the amount of
Investments in Foreign Subsidiaries set forth in Section 6.4(e), shall not at
any time exceed (i) $100,000,000 per annum or (ii) $500,000,000 in the aggregate
from and after the Closing Date, and further provided that (A) no Default or
Event of Default has occurred and is continuing or would result from the
incurrence of such Indebtedness, and (B) immediately after giving effect to the
incurrence of such Indebtedness and on a pro forma
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basis for a period of ninety (90) days thereafter, Excess Availability shall be
not less than $80,000,000;
(e) Indebtedness of the Borrower Affiliated Group to finance the
acquisition of any fixed or capital assets, including Capital Lease Obligations
and any Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition thereof,
and extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof or result in an earlier
maturity date or decreased weighted average life thereof, provided that the
aggregate principal amount of Indebtedness permitted by this clause (e) shall
not exceed $50,000,000 at any time outstanding;
(f) Indebtedness incurred to finance any Real Estate owned by any Borrower
or incurred in connection with any sale-leaseback transaction;
(g) Indebtedness under Hedging Agreements, other than for speculative
purposes, entered into in the ordinary course of business;
(h) Contingent liabilities under surety bonds or similar instruments
incurred in the ordinary course of business in connection with the construction
or improvement of stores;
(i) Indebtedness of any Domestic Subsidiary to any Borrower or to other
Domestic Subsidiaries of any Borrower or of any Foreign Subsidiary to any other
Foreign Subsidiary;
(j) Guarantees by any member of the Borrower Affiliated Group of
Indebtedness of any other member of the Borrower Affiliated Group, provided that
such Indebtedness is otherwise permitted by this Section 6.1;
(k) Indebtedness of any Person that becomes a Subsidiary after the Closing
Date, provided that (i) such Indebtedness exists at the time such Person becomes
a Subsidiary and is not created in contemplation of or in connection with such
Person becoming a Subsidiary and (ii) the aggregate outstanding principal amount
of Indebtedness permitted by this subsection (k) shall not, without duplication,
exceed $50,000,000 at any time; and
(l) other unsecured Indebtedness in an aggregate principal amount not
exceeding $75,000,000 at any time outstanding; provided that in the event that a
member of the Borrower Affiliated Group undertakes a Permitted Acquisition, the
total consideration paid or payable in connection therewith is greater than
$500,000,000, such Person may incur other unsecured Indebtedness in an aggregate
amount not exceeding $300,000,000 for the payment of the purchase price for all
such Permitted Acquisitions,
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provided further that no Default or Event of Default has occurred and is
continuing or would result from the incurrence of such Indebtedness.
6.2 Liens. The Borrowers will not, and will not permit any other member of
the Borrower Affiliated Group to, create, incur, assume or permit to exist any
Lien on any property or asset now owned or hereafter acquired by it, or assign
or sell any income or revenues (including accounts receivable) or rights in
respect of any thereof, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of any Borrower or other member of
the Borrower Affiliated Group set forth in Schedule 6.2, provided that (i) such
Lien shall not apply to any other property or asset of such Person and (ii) such
Lien shall secure only those obligations that it secures as of the Closing Date,
and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(d) Liens on fixed or capital assets acquired by any Borrower or other
member of the Borrower Affiliated Group, provided that (i) such Liens secure
Indebtedness permitted by Section 6.1(e), (ii) such Liens and the Indebtedness
secured thereby are incurred on or prior to or within 60 days after such
acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring such
fixed or capital assets (iv) such Liens shall not apply to any other property or
assets of the Borrowers or other member of the Borrower Affiliated Group, and
(v) at the Collateral Agent's option with respect to Liens which arise after the
Closing Date, the Collateral Agent shall have entered into an intercreditor
agreement with the holder of such Lien on terms reasonably satisfactory to the
Collateral Agent;
(e) Liens to secure Indebtedness permitted by Section 6.1(f) provided that
such Liens shall not apply to any property or assets of the Borrowers other than
the Real Estate so financed or which is the subject of a sale-leaseback
transaction; and
(f) Security interests existing on any property or assets (other than
Inventory, Accounts, and the Proceeds thereof) prior to the acquisition thereof
by any member of the Borrower Affiliated Group or existing on any property or
assets (other than Inventory, Accounts, and the Proceeds thereof)of any Person
that becomes a Subsidiary after the Closing Date prior to the time such Person
becomes a Subsidiary, provided that (i) such security interests secure
Indebtedness permitted by Section 6.1(k), (ii) such security interests are not
created in contemplation of or in connection with such acquisition or such
Person becoming a Subsidiary, as applicable, (iii) such security interests shall
not apply to any other property or assets of the Borrower or any Subsidiary and
(iv) such security interests shall secure only the Indebtedness that such
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security interests secure on the date of such acquisition or the date such
Person becomes a Subsidiary, as applicable, and any extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof.
6.3 Fundamental Changes. (a) The Borrowers shall not, and shall not permit
any other member of the Borrower Affiliated Group to, liquidate, merge or
consolidate into or with any other Person or enter into or undertake any plan or
agreement of liquidation, merger or consolidation with any other Person,
provided that (i) a Borrower may merge with another company in connection with a
Permitted Acquisition if such Borrower is the surviving company, (ii) any
wholly-owned Subsidiary of any Borrower may merge or consolidate into or with
such Borrower or any other wholly-owned Subsidiary of such Borrower if no
Default or Event of Default has occurred and is continuing or would result from
such merger and if such Borrower or such Subsidiary is the surviving company,
(iii) a Subsidiary of any Borrower may merge into another entity in connection
with a Permitted Acquisition if, upon consummation of such merger, the surviving
entity shall be a direct or indirect wholly-owned Subsidiary of such Borrower
and, if the surviving entity is a Domestic Subsidiary, a party to the Security
Documents, (iv) any Domestic Subsidiary may merge into any other Domestic
Subsidiary, (v) any Foreign Subsidiary may merge into any other Foreign
Subsidiary and (vi) any Subsidiary (other than a Borrower) may liquidate or
dissolve if the Lead Borrower determines in good faith that such liquidation is
in the best interests of the Borrowers and would not have a Material Adverse
Effect.
(b) The Borrowers shall not, and shall not permit any other member of the
Borrower Affiliated Group to, engage to any material extent in any business
other than businesses of the type conducted by the Borrower Affiliated Group on
the date of execution of this Agreement and businesses reasonably related or
complementary thereto, except that the Borrowers or any other member of the
Borrower Affiliated Group may withdraw from any business activity which such
Person's board of directors reasonably deems unprofitable or unsound, provided
that promptly after such withdrawal, the Lead Borrower shall provide the
Administrative Agent with written notice thereof.
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6.4 Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrowers shall not, and shall not permit any other member of the Borrower
Affiliated Group to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit (each of the
foregoing, an "Investment"), except for:
(a) Permitted Acquisitions;
(b) Permitted Investments;
(c) Investments existing on the Closing Date, and set forth on Schedule
6.4, to the extent such investments would not be permitted under any other
clause of this Section;
(d) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(e) Investments by a Borrower in such Borrower's Subsidiaries, provided,
however, that the aggregate amount of Investments in Foreign Subsidiaries, when
combined with the amount of Indebtedness due from Foreign Subsidiaries set forth
in Section 6.1(d), may not at any time exceed (i) $100,000,000 per annum or (ii)
$500,000,000 in the aggregate from and after the Closing Date, and further
provided that (A) no Default or Event of Default has occurred and is continuing
or would result from such Investment, and (B) immediately after giving effect to
such Investment and on a pro forma basis for a period of ninety (90) days
thereafter, Excess Availability shall be not less than $80,000,000, and further
provided that any Investment in Domestic Subsidiaries which are not wholly-owned
and which are not Borrowers or Facility Guarantors hereunder shall not exceed
$25,000,000 for any Subsidiary and $100,000,000 in the aggregate; and
(f) loans or advances to employees for the purpose of travel, entertainment
or relocation in the ordinary course of business and consistent with past
practices, not exceeding $1,000,000 in the aggregate at any time outstanding;
provided, that no such advances to any single employee shall exceed $250,000 in
the aggregate.
6.5 Asset Sales. The Borrowers will not, and will not permit any other
member of the Borrower Affiliated Group to, sell, transfer, lease or otherwise
dispose of any asset, including
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any capital stock, nor will any Borrower issue any additional shares of its
capital stock or other ownership interest in such Borrower, except:
(a) (i) sales of Inventory in the ordinary course of business, or (ii) used
or surplus equipment, or (iii) Permitted Investments, in each case in the
ordinary course of business;
(b) sales, transfers and dispositions among the Borrower Affiliated Group
(excluding, however, any sales, transfers and dispositions of Inventory or
proceeds thereof, from any Borrower or any Facility Guarantor except to Borrower
or another Facility Guarantor), provided that any such sales, transfers or
dispositions involving a Subsidiary that is not a Borrower or a Facility
Guarantor shall be made in compliance with Section 6.8;
(c) sales, transfers and dispositions by the Lead Borrower of the capital
stock of any member of the Borrower Affiliated Group that does not own Eligible
Inventory or the proceeds thereof.
(d) sales or other transfers of assets pursuant to store closures provided
that in any fiscal year, Borrowers shall not close more than ten percent (10%)
of Borrowers' stores open at the beginning of such fiscal year;
(e) sales, transfers or other dispositions of assets, which in the
reasonable determination of the Lead Borrower, are duplicative and unnecessary
as a result of the Mergers, provided that (x) such assets are no longer
necessary for the conduct of the Borrower's business and (y) the aggregate
amount of such sales, transfers or dispositions shall not exceed $75,000,000;
(f) other sales, transfers, or dispositions of assets not in the ordinary
course of business and not pursuant to store closures provided that (x) no
Default or Event of Default then exists or would arise therefrom and (y) the
aggregate amount of such sales, transfers or dispositions shall not exceed
$75,000,000;
(g) sales or issuances by the Lead Borrower of any of its capital stock
that does not result in a Change of Control; and
(h) sales or issuances of capital stock to any Borrower;
provided that all sales, transfers, leases and other dispositions of
Inventory and the proceeds thereof shall be made for cash consideration, and
further provided that that all sales, transfers, leases and other dispositions
permitted hereby (other than sales, transfers and other dispositions permitted
under clauses (a)(ii), (b) (subject to the proviso therein), (g) and (h)) shall
be made at arm's length and for fair value; and further provided that the
authority granted
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hereunder may be terminated in whole or in part by the Agents upon the
occurrence and during the continuance of any Event of Default.
6.6 Restrictive Agreements. The Borrowers will not, and will not permit any
other member of the Borrower Affiliated Group to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of any member
of the Borrower Affiliated Group to create, incur or permit to exist any Lien
upon any of its property or assets or (b) the ability of any member of the
Borrower Affiliated Group to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
Borrowers or any other member of the Borrower Affiliated Group or to guarantee
Indebtedness of the Borrowers or any other member of the Borrower Affiliated
Group, provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by any Loan Document, (ii) the foregoing
restrictions shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such sale, provided
that such restrictions and conditions apply only to the Subsidiary that is to be
sold and such sale is permitted hereunder, (iii) clause (a) of the foregoing
shall not apply to restrictions or conditions imposed by any agreement relating
to secured Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness and
(iv) clause (a) of the foregoing shall not apply to customary provisions in
leases restricting the assignment or subleasing thereof.
6.7 Restricted Payments; Certain Payments of Indebtedness.
(a) The Borrowers will not, and will not permit any other member of the
Borrower Affiliated Group to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, except as long as no Default or Event of
Default exists or would arise therefrom, and after giving effect thereto, the
Borrowers are Solvent (i) any Borrower may declare and pay dividends with
respect to its capital stock payable solely in additional shares of their common
stock, (ii) the Subsidiaries of the Lead Borrower may declare and pay cash
dividends with respect to their capital stock, and (iii) only if the Payment
Conditions are then satisfied, the Lead Borrower may repurchase its capital
stock and/or declare and pay cash dividends to its shareholders.
(b) The Borrowers will not at any time, and will not permit any other
member of the Borrower Affiliated Group to make or agree to pay or make,
directly or indirectly, any payment or other distribution (whether in cash
securities or other property) of or in respect of principal of or interest on
any Indebtedness, or any payment or other distribution (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Indebtedness, except:
(i) only if the Payment Conditions are then satisfied, prepayment of
(i) the Promissory Note dated October 1, 2004 by GameStop Corp. in favor of
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B&N GameStop Holding Corp., (ii) that certain mortgage dated May 25, 2005
by EB Sadsbury Property Holding L.P. in favor of Thrivent Financial for
Lutherans on the Coatesville Property and (iii) the Senior Notes.
(ii) payment of regularly scheduled interest and principal payments as
and when due in respect of any Indebtedness permitted under Section 6.1
(other than in connection with Indebtedness the principal of which is
prohibited from payment in accordance with Section 6.1(b)); and
(iii) refinancings of Indebtedness described in clause (ii), above, to
the extent permitted by Section 6.1, including without limitation, any
refinancing as a result of any rollover loans, publicly issued or privately
placed notes or exchange notes issued in exchange for such Indebtedness.
6.8 Transactions with Affiliates. The Borrowers will not at any time sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions in the
ordinary course of business that are at prices and on terms and conditions not
less favorable to the Borrowers than could be obtained on an arm's-length basis
from unrelated third parties, and (b) transactions between or among the
Borrowers not involving any other Affiliate, which would not otherwise violate
the provisions of the Loan Documents.
6.9 Additional Subsidiaries. The Borrowers will not, and will not permit
any other member of the Borrower Affiliated Group to, create any additional
Subsidiary unless no Default or Event of Default would arise therefrom and the
requirements of Section 5.14 are satisfied.
6.10 Amendment of Material Documents. The Borrowers will not, and will not
permit any other member of the Borrower Affiliate Group to, amend, modify or
waive any of its rights under (a) its certificate of incorporation, by-laws or
other organizational documents, or (b) any other instruments, documents or
agreements, in each case to the extent that such amendment, modification or
waiver would be adverse to the interests of the Lenders.
6.11 Fixed Charge Coverage Ratio. In the event that the outstanding Credit
Extensions at any time exceed eighty (80%) percent of the lesser of the Total
Commitments or the then Borrowing Base, the Borrowers shall not thereafter
permit the Fixed Charge Coverage Ratio to be less than 1.5:1.0.
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6.12 Environmental Laws. The Borrowers shall not (a) fail to comply with
any Environmental Law or to obtain, maintain or comply with any permit, license
or other approval required under any Environmental Law, or (b) become subject to
any Environmental Liability, in each case which is reasonably likely to have a
Material Adverse Effect.
6.13 Fiscal Year. The Borrowers shall not change their fiscal year without
the prior written consent of the Administrative Agent, which consent shall not
be unreasonably withheld.
6.14 Certain Borrower Subsidiaries. The Borrowers shall not permit either
of Babbage's Etc. LLC or EB Services Company, LLP to have any interest in any
assets or property of the nature that would be included in the Borrowing Base if
owned by the Borrowers.
7. EVENTS OF DEFAULT.
7.1 Events of Default. If any of the following events ("Events of Default")
shall occur:
(a) the Borrowers shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any L/C Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrowers shall fail to pay any interest on any Loan or any fee or
any other amount (other than an amount referred to in clause (a) of this
Section) payable under this Agreement or any other Loan Document, within three
(3) Business Days when the same shall become due and payable;
(c) any representation or warranty made or deemed made by or on behalf of
any Borrower or any other member of the Borrower Affiliated Group in or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) the Borrowers shall fail to observe or perform any covenant, condition
or agreement contained in Sections 2.21, 5.1(e), 5.4, 5.7, 5.13, or in Section
6;
(e) the Borrowers shall fail to observe or perform any covenant, condition
or agreement contained in Sections 5.1(a), 5.1(b), 5.1(c), 5.1(d), 5.2, 5.9, or
5.14 within three (3) Business Days after notice from the Administrative Agent
to the Lead Borrower that the Borrowers have failed to observe or perform such
covenant, condition or agreement;
(f) any Borrower or any other member of the Borrower Affiliated Group shall
fail to observe or perform any covenant, condition or agreement contained in any
Loan
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Document (other than those specified in clause (a), (b), (c), or (d) of this
Section), and such failure shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent to the Lead Borrower;
(g) any Borrower shall fail to make any payment (whether of principal or
interest and regardless of amount) in respect of any Material Indebtedness when
and as the same shall become due and payable (after giving effect to the
expiration of any grace or cure period set forth therein);
(h) (i) any Borrower or any other member of the Borrower Affiliated Group
shall fail to perform any material covenant or condition contained in any
material contract or agreement to which it is party as and when such performance
is required (after giving effect to the expiration of any grace or cure period
set forth therein); or (ii) any Borrower or any other member of the Borrower
Affiliated Group shall fail to perform any material covenant or condition
contained in any contract or other agreement between any member of the Borrower
Affiliated Group, which failure has a Material Adverse Effect;
(i) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits the
holder or holders of any such Material Indebtedness or any trustee or agent on
its or their behalf to cause any such Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity;
(j) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of any Borrower or any other member of the Borrower Affiliated Group or
its debts, or of a substantial part of its assets, under any federal or state
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Borrower or any other member of the
Borrower Affiliated Group or for a substantial part of its assets, and, in any
such case, such proceeding or petition shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect for 60 days;
(k) any Borrower or any other member of the Borrower Affiliated Group shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any federal or state
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Section, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Borrower or any
other member of the Borrower Affiliated Group or for a substantial part of its
assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any
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such proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;
(l) any Borrower or any other member of the Borrower Affiliated Group shall
become unable, admit in writing its inability or fail generally to pay its debts
as they become due;
(m) one or more uninsured judgments for the payment of money in an
aggregate amount in excess of $25,000,000 shall be rendered against any Borrower
or any other member of the Borrower Affiliated Group or any combination thereof
and the same shall remain undischarged for a period of 45 consecutive days
during which execution shall not be effectively stayed, or any action shall be
successfully legally taken by a judgment creditor to attach or levy upon any
material assets of any Borrower or any other member of the Borrower Affiliated
Group to enforce any such judgment;
(n) any challenge by or on behalf of any Borrower to the validity of any
Loan Document or the applicability or enforceability of any Loan Document
strictly in accordance with the subject Loan Document's terms or which seeks to
void, avoid, limit, or otherwise adversely affect any security interest created
by or in any Loan Document or any payment made pursuant thereto;
(o) any challenge by or on behalf of any other Person to the validity of
any Loan Document or the applicability or enforceability of any Loan Document
strictly in accordance with the subject Loan Document's terms or which seeks to
void, avoid, limit, or otherwise adversely affect any security interest created
by or in any Loan Document or any payment made pursuant thereto, in each case,
as to which an order or judgment has been entered adverse to the Agents and the
Lenders.
(p) any Lien purported to be created under any Security Document shall be
asserted by any Borrower or any other member of the Borrower Affiliated Group
not to be a valid and perfected Lien on any Collateral, with the priority
required by the applicable Security Document, except as a result of the sale or
other disposition of the applicable Collateral in a transaction permitted under
the Loan Documents;
(q) a Change in Control shall occur;
(r) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Borrowers in an
aggregate amount exceeding $25,000,000;
(s) the occurrence of any uninsured loss to any material portion of the
Collateral;
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(t) the indictment of any Borrower or any other member of the Borrower
Affiliated Group, under any federal, state, municipal, and other civil or
criminal statute, rule, regulation, order, or other requirement having the force
of law where the relief, penalties, or remedies sought or available include the
forfeiture of any assets of any Borrower or any other member of the Borrower
Affiliated Group having a fair market value in excess of $25,000,000;
(u) the imposition of any stay or other order against any Borrower or any
other member of the Borrower Affiliated Group, the effect of which (i) is to
restrain in any material way the conduct by the Borrower Affiliated Group, taken
as a whole, of their business in the ordinary course and (ii) would have a
Material Adverse Effect; or
(v) except as otherwise permitted hereunder, the determination by any
Borrower or any other member of the Borrower Affiliated Group, whether by vote
of such Person's board of directors or otherwise to: suspend the operation of
such Person's business in the ordinary course, liquidate all or a material
portion of such Person's assets or store locations, or employ an agent or other
third party to conduct any so-called store closing, store liquidation or
"Going-Out-Of-Business" sales.
then, and in every such event (other than an event with respect to each
Borrower or any other member of the Borrower Affiliated Group described in
clause (h) or (i) of this Section), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Lead Borrower, take either or both
of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrowers; and (iii) require the
Borrowers to furnish cash collateral in an amount equal to 105% of the Letter of
Credit Outstandings, and in case of any event with respect to any Borrower
described in clause (h) or (i) of this Section, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers.
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7.2 When Continuing. For all purposes under this Agreement, each Default
and Event of Default that has occurred shall be deemed to be continuing at all
times thereafter unless it either (a) is cured or corrected to the reasonable
written satisfaction of the Lenders in accordance with Section 9.2, or (b) is
waived in writing by the Lenders in accordance with Section 9.2.
7.3 Remedies on Default. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the maturity of the
Loans shall have been accelerated pursuant hereto, the Administrative Agent may
proceed to protect and enforce its rights and remedies under this Agreement, the
Notes or any of the other Loan Documents by suit in equity, action at law or
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement and the other Loan Documents
or any instrument pursuant to which the Obligations are evidenced, and, if such
amount shall have become due, by declaration or otherwise, proceed to enforce
the payment thereof or any other legal or equitable right of the Agents or the
Lenders. No remedy herein is intended to be exclusive of any other remedy and
each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or any other provision of law.
7.4 Application of Proceeds. After the occurrence of an Event of Default
and acceleration of the Obligations, all proceeds realized from any Borrower or
on account of any Collateral shall be applied in the manner set forth in Section
6.2 of the Security Agreement. All amounts required to be applied to Loans
hereunder (other than Swingline Loans) shall be applied ratably in accordance
with each Lender's Commitment Percentage.
8. THE AGENTS.
8.1 Administration by Administrative Agent. Each Lender, the Collateral
Agent and the Issuing Banks hereby irrevocably designate Bank of America as
Administrative Agent under this Agreement and the other Loan Documents. The
general administration of the Loan Documents shall be by the Administrative
Agent. The Lenders, the Collateral Agent and the Issuing Banks each hereby
irrevocably authorizes the Administrative Agent (i) to enter into the Loan
Documents to which it is a party and (ii) at its discretion, to take or refrain
from taking such actions as agent on its behalf and to exercise or refrain from
exercising such powers under the Loan Documents and the Notes as are delegated
by the terms hereof or thereof, as appropriate, together with all powers
reasonably incidental thereto. The Administrative Agent shall have no duties or
responsibilities except as set forth in this Agreement and the remaining Loan
Documents, nor shall it have any fiduciary relationship with any Lender, and no
implied covenants, responsibilities, duties, obligations, or liabilities shall
be read into the Loan Documents or otherwise exist against the Administrative
Agent.
8.2 The Collateral Agent. Each Lender, the Administrative Agent and the
Issuing Banks hereby irrevocably (i) designate Bank of America as Collateral
Agent under this
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Agreement and the other Loan Documents, (ii) authorize the Collateral Agent to
enter into the Security Documents and the other Loan Documents to which it is a
party and to perform its duties and obligations thereunder, together with all
powers reasonably incidental thereto, and (iii) agree and consent to all of the
provisions of the Security Documents. All Collateral shall be held or
administered by the Collateral Agent (or its duly-appointed agent) for its
benefit and for the ratable benefit of the other Secured Parties. Any proceeds
received by the Collateral Agent from the foreclosure, sale, lease or other
disposition of any of the Collateral and any other proceeds received pursuant to
the terms of the Security Documents or the other Loan Documents shall be paid
over to the Administrative Agent for application as provided in Sections 2.18,
2.22, or 7.4, as applicable. The Collateral Agent shall have no duties or
responsibilities except as set forth in this Agreement and the remaining Loan
Documents, nor shall it have any fiduciary relationship with any Lender, and no
implied covenants, responsibilities, duties, obligations, or liabilities shall
be read into the Loan Documents or otherwise exist against the Collateral Agent.
8.3 Sharing of Excess Payments. Each of the Lenders, the Agents and the
Issuing Banks agrees that if it shall, through the exercise of a right of
banker's lien, setoff or counterclaim against the Borrowers, including, but not
limited to, a secured claim under Section 506 of the Bankruptcy Code or other
security or interest arising from, or in lieu of, such secured claim and
received by such Lender, any Agent or any Issuing Bank under any applicable
bankruptcy, insolvency or other similar law, or otherwise, obtain payment in
respect of the Obligations owed it (an "excess payment") as a result of which
such Lender, such Agent or such Issuing Bank has received payment of any Loans
or other Obligations outstanding to it in excess of the amount that it would
have received if all payments at any time applied to the Loans and other
Obligations had been applied in the order of priority set forth in Section 7.4,
then such Lender, Agent or Issuing Bank shall promptly purchase at par (and
shall be deemed to have thereupon purchased) from the other Lenders, such Agent
and such Issuing Bank, as applicable, a participation in the Loans and
Obligations outstanding to such other Persons, in an amount determined by the
Administrative Agent in good faith as the amount necessary to ensure that the
economic benefit of such excess payment is reallocated in such manner as to
cause such excess payment and all other payments at any time applied to the
Loans and other Obligations to be effectively applied in the order of priority
set forth in Section 7.4 pro rata in proportion to its Commitment Percentage;
provided, that if any such excess payment is thereafter recovered or otherwise
set aside such purchase of participations shall be correspondingly rescinded
(without interest). The Borrowers expressly consent to the foregoing
arrangements and agree that any Lender, any Agent or any Issuing Bank holding
(or deemed to be holding) a participation in any Loan or other Obligation may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by such Borrower to such Lender, such Agent
or such Issuing Bank as fully as if such Lender, Agent or such Issuing Bank held
a Note and was the original obligee thereon, in the amount of such
participation.
8.4 Agreement of Required Lenders. Upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the part of
only the Required Lenders, action shall be taken by the Agents for and on behalf
or for the benefit of all Lenders upon the
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direction of the Required Lenders, and any such action shall be binding on all
Lenders. No amendment, modification, consent, or waiver shall be effective
except in accordance with the provisions of Section 9.2.
Upon the occurrence of an Event of Default, the Agents shall (subject to
the provisions of Section 9.2) take such action with respect thereto as may be
reasonably directed by the Required Lenders; provided that unless and until the
Agents shall have received such directions, the Agents may (but shall not be
obligated to) take such action as they shall deem advisable in the best
interests of the Lenders. In no event shall the Agents be required to comply
with any such directions to the extent that the Agents believe that the Agents'
compliance with such directions would be unlawful.
8.5 Liability of Agents.
(a) Each of the Agents, when acting on behalf of the Lenders and the
Issuing Banks, may execute any of its respective duties under this Agreement by
or through any of its respective officers, agents and employees, and none of the
Agents nor their respective directors, officers, agents or employees shall be
liable to the Lenders or the Issuing Banks or any of them for any action taken
or omitted to be taken in good faith, or be responsible to the Lenders or the
Issuing Banks or to any of them for the consequences of any oversight or error
of judgment, or for any loss, except to the extent of any liability imposed by
law by reason of such Agent's own gross negligence or willful misconduct. The
Agents and their respective directors, officers, agents and employees shall in
no event be liable to the Lenders or the Issuing Banks or to any of them for any
action taken or omitted to be taken by them pursuant to instructions received by
them from the Required Lenders or in reliance upon the advice of counsel
selected by it. Without limiting the foregoing, none of the Agents, nor any of
their respective directors, officers, employees, or agents (A) shall be
responsible to any Lender or any Issuing Bank for the due execution, validity,
genuineness, effectiveness, sufficiency, or enforceability of, or for any
recital, statement, warranty or representation in, this Agreement, any Loan
Document or any related agreement, document or order, or (B) shall be required
to ascertain or to make any inquiry concerning the performance or observance by
any Borrower of any of the terms, conditions, covenants, or agreements of this
Agreement or any of the Loan Documents, or (C) shall be responsible to any
Lender or any Issuing Bank for the state or condition of any properties of the
Borrowers or any other obligor hereunder constituting Collateral for the
Obligations of the Borrowers hereunder, or any information contained in the
books or records of the Borrowers; or (D) shall be responsible to any Lender or
any Issuing Bank for the validity, enforceability, collectibility, effectiveness
or genuineness of this Agreement or any other Loan Document or any other
certificate, document or instrument furnished in connection therewith; or (E)
shall be responsible to any Lender or any Issuing Bank for the validity,
priority or perfection of any lien securing or purporting to secure the
Obligations or the value or sufficiency of any of the Collateral.
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(b) The Agents may execute any of their duties under this Agreement or any
other Loan Document by or through their agents or attorneys-in-fact, and shall
be entitled to the advice of counsel concerning all matters pertaining to their
rights and duties hereunder or under the Loan Documents. The Agents shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by them with reasonable care.
(c) None of the Agents nor any of their respective directors, officers,
employees, or agents shall have any responsibility to the Borrowers on account
of the failure or delay in performance or breach by any Lender (other than by
any Agent in its capacity as a Lender) or any Issuing Bank of any of their
respective obligations under this Agreement or the Notes or any of the Loan
Documents or in connection herewith or therewith.
(d) The Agents shall be entitled to rely, and shall be fully protected in
relying, upon any notice, consent, certificate, affidavit, or other document or
writing believed by them to be genuine and correct and to have been signed, sent
or made by the proper person or persons, and upon the advice and statements of
legal counsel (including, without, limitation, counsel to the Borrowers),
independent accountants and other experts selected by the Agents. The Agents
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless they shall first receive such advice
or concurrence of the Required Lenders as they deem appropriate or they shall
first be indemnified to their satisfaction by the Lenders against any and all
liability and expense which may be incurred by them by reason of the taking or
failing to take any such action.
8.6 Notice of Default. The Agents shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the Agents
have actual knowledge of the same or has received notice from a Lender or the
Lead Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Agents obtain such actual knowledge or receives such a notice, the Agents
shall give prompt notice thereof to each of the Lenders. The Agents shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders. Unless and until the Agents shall
have received such direction, the Agents may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to any such
Default or Event of Default as they shall deem advisable in the best interest of
the Lenders.
8.7 Lenders' Credit Decisions. Each Lender acknowledges that it has,
independently and without reliance upon the Agents or any other Lender, and
based on the financial statements prepared by the Borrowers and such other
documents and information as it has deemed appropriate, made its own credit
analysis and investigation into the business, assets, operations, property, and
financial and other condition of the Borrowers and has made its own decision to
enter into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it
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will, independently and without reliance upon the Agents or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in determining whether or not
conditions precedent to closing any Loan hereunder have been satisfied and in
taking or not taking any action under this Agreement and the other Loan
Documents.
8.8 Reimbursement and Indemnification. Each Lender agrees (i) to reimburse
(x) each Agent for such Lender's Commitment Percentage of any expenses and fees
incurred by such Agent for the benefit of the Lenders or the Issuing Banks under
this Agreement, the Notes and any of the Loan Documents, including, without
limitation, counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders or the Issuing Banks, and any other
expense incurred in connection with the operations or enforcement thereof not
reimbursed by the Borrowers and (y) each Agent for such Lender's Commitment
Percentage of any expenses of such Agent incurred for the benefit of the Lenders
or the Issuing Banks that the Borrowers have agreed to reimburse pursuant to
Section 9.3 and has failed to so reimburse and (ii) to indemnify and hold
harmless the Agents and any of their directors, officers, employees, or agents,
on demand, in the amount of such Lender's Commitment Percentage, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against it
or any of them in any way relating to or arising out of this Agreement, the
Notes or any of the Loan Documents or any action taken or omitted by it or any
of them under this Agreement, the Notes or any of the Loan Documents to the
extent not reimbursed by the Borrowers (except such as shall result from their
respective gross negligence or willful misconduct). The provisions of this
Section 8.8 shall survive the repayment of the Obligations and the termination
of the Commitments.
8.9 Rights of Agents. It is understood and agreed that Bank of America
shall have the same rights and powers hereunder (including the right to give
such instructions) as the other Lenders and may exercise such rights and powers,
as well as its rights and powers under other agreements and instruments to which
it is or may be party, and engage in other transactions with the Borrowers, as
though it were not the Administrative Agent or the Collateral Agent,
respectively, of the Lenders under this Agreement. Without limiting the
foregoing, the Agents and their Affiliates may accept deposits from, lend money
to, and generally engage in any kind of commercial or investment banking, trust,
advisory or other business with the Borrowers and their Subsidiaries and
Affiliates as if it were not the Agent hereunder.
8.10 Notice of Transfer. The Agents may deem and treat a Lender party to
this Agreement as the owner of such Lender's portion of the Loans for all
purposes, unless and until, and except to the extent, an Assignment and
Acceptance shall have become effective as set forth in Section 9.5(b).
8.11 Successor Agent. Any Agent may resign at any time by giving five (5)
Business Days' written notice thereof to the Lenders, the Issuing Banks, the
other Agents and the Lead
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Borrower. Upon any such resignation of any Agent, the Required Lenders shall
have the right to appoint a successor Agent, which so long as there is no
Default or Event of Default shall be reasonably satisfactory to the Lead
Borrower (whose consent shall not be unreasonably withheld or delayed). If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
of notice of resignation, the retiring Agent may, on behalf of the Lenders, the
other Agents and the Issuing Banks, appoint a successor Agent which shall be a
commercial bank (or affiliate thereof) organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of a least $500,000,000 which, so long as there is no Default or Event
of Default, shall be reasonably satisfactory to the Lead Borrower (whose consent
shall not be unreasonably withheld or delayed). Upon the acceptance of any
appointment as Agent by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as such Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was such
Agent under this Agreement.
8.12 Reports and Financial Statements. Promptly after receipt thereof from
the Borrowers, the Administrative Agent shall remit to each Lender and the
Collateral Agent copies of all financial statements required to be delivered by
the Borrowers hereunder, all commercial finance examinations and appraisals of
the Collateral received by the Administrative Agent and all notices received by
the Administrative Agent under Section 5.2 hereof, and on request of any Lender,
a copy of any Borrowing Base Certificate so received.
8.13 Delinquent Lender. If for any reason any Lender shall fail or refuse
to abide by its obligations under this Agreement, including without limitation
its obligation to make available to Administrative Agent its Commitment
Percentage of any Revolving Loans, expenses or setoff or purchase its pro rata
share of a participation interest in the Swingline Loans (a "Delinquent Lender")
and such failure is not cured within ten (10) days of receipt from the
Administrative Agent of written notice thereof, then, in addition to the rights
and remedies that may be available to Agents, other Lenders, the Borrowers or
any other party at law or in equity, and not in limitation thereof, (i) such
Delinquent Lender's right to participate in the administration of, or
decision-making rights related to, the Loans, this Agreement or the other Loan
Documents shall be suspended during the pendency of such failure or refusal, and
(ii) a Delinquent Lender shall be deemed to have assigned any and all payments
due to it from the Borrowers, whether on account of outstanding Loans, interest,
fees or otherwise, to the remaining non-delinquent Lenders for application to,
and reduction of, their proportionate shares of all outstanding Loans until, as
a result of application of such assigned payments the Lenders' respective
Commitment Percentages of all outstanding Loans shall have returned to those in
effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency. The Delinquent Lender's decision-making and
participation rights and rights to payments as set forth in clauses (i) and (ii)
hereinabove shall be restored only upon the payment by the Delinquent Lender of
its Commitment Percentage of any Loans, any
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participation obligation, or expenses as to which it is delinquent, together
with interest thereon at the rate set forth in Section 2.10 hereof from the date
when originally due until the date upon which any such amounts are actually
paid.
The non-delinquent Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to acquire for no
cash consideration, (pro rata, based on the respective Commitments of those
Lenders electing to exercise such right) the Delinquent Lender's Commitment to
fund future Loans (the "Delinquent Lender's Future Commitment"). Upon any such
purchase of the Commitment Percentage of any Delinquent Lender's Future
Commitment, the Delinquent Lender's share in future Loans and its rights under
the Loan Documents with respect thereto shall terminate on the date of purchase,
and the Delinquent Lender shall promptly execute all documents reasonably
requested to surrender and transfer such interest, including, if so requested,
an Assignment and Acceptance. Each Delinquent Lender shall indemnify the Agents
and each non-delinquent Lender from and against any and all loss, damage or
expenses, including but not limited to reasonable attorneys' fees and funds
advanced by any Agent or by any non-delinquent Lender, on account of a
Delinquent Lender's failure to timely fund its pro rata share of a Loan or to
otherwise perform its obligations under the Loan Documents.
8.14 Syndication Agent and Documentation Agent. Neither the Syndication
Agent or Documentation Agent, in their capacity as such, shall have any
obligation, responsibility or required performance hereunder and shall not
become liable in any manner to any party hereto. No party shall have any
obligation or liability, or owe any performance, hereunder, to the Syndication
Agent or Documentation Agent in their capacity as such.
9. MISCELLANEOUS.
9.1 Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
(a) if to any Borrower, to it at GameStop Corp., 000 Xxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxx 00000, Attention: Xxxxx Xxxxxxx, Chief Financial Officer
(Telecopy No. (000) 000-0000), with a copy to Xxxxx Xxxx LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxx Xxxxxx, Esquire (Telecopy No.
(000) 000-0000;
(b) if to the Administrative Agent or the Collateral Agent, to Bank of
America, N.A., 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention of
Xxxxxxx Xxxxxx (Telecopy No. (000) 000-0000), with a copy to Xxxxxx & Xxxxxxxxxx
LLP, Xxxxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxx X.
Xxxxxx, Esquire (Telecopy No. (000) 000-0000);
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(c) if to any other Lender, to it at its address (or telecopy number) set
forth on the signature pages hereto or on any Assignment and Acceptance for such
Lender. Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
9.2 Waivers; Amendments.
(a) No failure or delay by the Agents, any Issuing Bank or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Agents, the
Issuing Banks and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of
a Loan or issuance of a Letter of Credit shall not be construed as a waiver of
any Default, regardless of whether the Agents, any Lender or any Issuing Bank
may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by the
Borrowers and the Required Lenders or, in the case of any other Loan Document,
pursuant to an agreement or agreements in writing entered into by the Agents and
the Borrowers that are parties thereto, in each case with the consent of the
Required Lenders, provided that no such agreement shall (i) increase the
Commitment of any Lender or the Total Commitments without the written consent of
all of the Lenders, (ii) reduce the principal amount of any Loan or L/C
Disbursement or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan or
L/C Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, without the written
consent of each Lender affected thereby, or postpone the scheduled date of
expiration of the Commitments or the Maturity Date, without the written consent
of all of the Lenders; (iv) change Sections 2.18, 2.21, or 2.22 or Section 6.2
of the Security Agreement, without the written consent of each Lender, (v)
change any of the provisions of this Section 9.2 or the definition of the term
"Required Lenders" or any other provision of any Loan Document specifying the
number or percentage of Lenders required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender, (vi) release any Borrower owning Inventory
or the proceeds thereof from its obligations under any Loan Document, or limit
its liability in respect of such Loan Document, without the written consent of
each Lender, (vii) except for sales described in Section 6.5 or as permitted in
the Security Documents, release any material portion of the Collateral from the
Liens of the Security Documents, without the written consent of each Lender,
(viii) change the definition of the term "Borrowing Base" or any component
definition thereof if as a result thereof the amounts available to be borrowed
by the Borrowers would be increased, without the written consent of each Lender,
provided that the foregoing shall not limit the discretion of the Administrative
Agent to change, establish or eliminate any Reserves, (ix) change the definition
of "Permitted Overadvance", without the written consent of each Lender, (x)
subordinate the Obligations hereunder, or the Liens granted hereunder or under
the other Loan Documents, to any other Indebtedness or Lien, as the case may be
without the prior written consent of each Lender, and provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Agents or the applicable Issuing Bank without the prior written consent of
the Agents or such Issuing Bank, as the case may be.
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(c) Notwithstanding anything to the contrary contained in this Section 9.2,
in the event that the Borrowers request that this Agreement or any other Loan
Document be modified, amended or waived in a manner which would require the
consent of the Lenders pursuant to Section 9.2(b) and such amendment is approved
by the Required Lenders, but not by the requisite percentage of the Lenders, the
Borrowers, and the Required Lenders shall be permitted to amend this Agreement
without the consent of the Lender or Lenders which did not agree to the
modification or amendment requested by the Borrowers (such Lender or Lenders,
collectively the "Minority Lenders") to provide for (w) the termination of the
Commitment of each of the Minority Lenders, (x) the addition to this Agreement
of one or more other financial institutions, or an increase in the Commitment of
one or more of the Required Lenders, so that the aggregate Commitments after
giving effect to such amendment shall be in the same amount as the aggregate
Commitments immediately before giving effect to such amendment, (y) if any Loans
are outstanding at the time of such amendment, the making of such additional
Loans by such new or increasing Lender or Lenders, as the case may be, as may be
necessary to repay in full the outstanding Loans (including principal, interest,
and fees) of the Minority Lenders immediately before giving effect to such
amendment and (z) such other modifications to this Agreement or the Loan
Documents as may be appropriate and incidental to the foregoing.
(d) No notice to or demand on any Borrower shall entitle any Borrower to
any other or further notice or demand in the same, similar or other
circumstances. Each holder
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of a Note shall be bound by any amendment, modification, waiver or consent
authorized as provided herein, whether or not a Note shall have been marked to
indicate such amendment, modification, waiver or consent and any consent by a
Lender, or any holder of a Note, shall bind any Person subsequently acquiring a
Note, whether or not a Note is so marked. No amendment to this Agreement shall
be effective against the Borrowers unless signed by the Borrowers.
9.3 Expenses; Indemnity; Damage Waiver.
(a) Except as otherwise limited herein, the Borrowers shall jointly and
severally pay (i) all reasonable out-of-pocket expenses incurred by the Agents,
the Syndication Agent, the Documentation Agent, and their Affiliates, including
the reasonable fees, charges and disbursements of counsel for the Agents,
outside consultants for the Agents, appraisers, and for commercial finance
examinations, in connection with the arrangement of the credit facilities
provided for herein, the preparation and administration of the Loan Documents or
any amendments, modifications or waivers of the provisions thereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii)
all reasonable out-of-pocket expenses incurred by any Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder, and (iii) all reasonable out-of-pocket
expenses incurred by the Agents, any Issuing Bank or any Lender, including the
reasonable fees, charges and disbursements of any counsel and any outside
consultants for the Agents, any Issuing Bank or any Lender, for appraisers,
commercial finance examinations, and environmental site assessments, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit; provided that the
Lenders who are not the Agents or the Issuing Banks shall be entitled to
reimbursement for no more than one counsel representing all such Lenders (absent
a conflict of interest in which case the Lenders may engage and be reimbursed
for additional counsel).
(b) The Borrowers shall jointly and severally indemnify the Agents, the
Issuing Banks and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of any Loan Document or any other agreement or instrument contemplated
hereby, the performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of the transactions contemplated by
the Loan Documents or any other transactions contemplated hereby, (ii) any Loan
or Letter of Credit or the use of the proceeds therefrom (including
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any refusal by an Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property currently or
formerly owned or operated by any Borrower or any other member of the Borrower
Affiliated Group, or any Environmental Liability related in any way to Borrower
or any other member of the Borrower Affiliated Group, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence, bad faith or willful misconduct of such Indemnitee or any Affiliate
of such Indemnitee (or of any officer, director, employee, advisor or agent of
such Indemnitee or any such Indemnitee's Affiliates). In connection with any
indemnified claim hereunder, the Indemnitee shall be entitled to select its own
counsel and the Borrowers shall promptly pay the reasonable fees and expenses of
such counsel.
(c) To the extent that any Borrower fails to pay any amount required to be
paid by it to the Agents or any Issuing Bank under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Agents or such Issuing Bank,
as the case may be, such Lender's Commitment Percentage of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Agents or such Issuing Bank.
(d) To the extent permitted by Applicable Law, no party hereto shall
assert, and each party hereby waives, any claim against any Borrower or
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the transactions contemplated by the Loan
Documents, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
9.4 Designation of Lead Borrower as Borrowers' Agent.
(a) Each Borrower hereby irrevocably designates and appoints the Lead
Borrower as that Borrower's agent to obtain Loans and Letters of Credit
hereunder, the proceeds of which shall be available to each Borrower for those
uses as those set forth herein. As the disclosed principal for its agent, each
Borrower shall be obligated to the Agents and each Lender on account of Loans so
made and Letters of Credit so issued hereunder as if made directly by the
Lenders to that Borrower, notwithstanding the
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manner by which such Loans and Letters of Credit are recorded on the books and
records of the Lead Borrower and of any Borrower.
(b) Each Borrower recognizes that credit available to it hereunder is in
excess of and on better terms than it otherwise could obtain on and for its own
account and that one of the reasons therefor is its joining in the credit
facility contemplated herein with all other Borrowers. Consequently, each
Borrower hereby assumes, guarantees, and agrees to discharge all Obligations of
all other Borrowers as if the Borrower so assuming and guarantying were each
other Borrower.
(c) The Lead Borrower shall act as a conduit for each Borrower (including
itself, as a "Borrower") on whose behalf the Lead Borrower has requested a Loan.
The Lead Borrower shall cause the transfer of the proceeds of each Loan to the
(those) Borrower(s) on whose behalf such Loan was obtained. Neither the Agents
nor any Lender shall have any obligation to see to the application of such
proceeds.
(d) Each of the Borrowers shall remain jointly and severally liable to the
Agents and the Lenders for the payment and performance of all Obligations (which
payment and performance shall continue to be secured by all Collateral granted
by each of the Borrowers) notwithstanding any determination by the
Administrative Agent to cease making Loans or causing Letters of Credit to be
issued to or for the benefit of any Borrower.
(e) The authority of the Lead Borrower to request Loans on behalf of, and
to bind, the Borrowers, shall continue unless and until the Administrative Agent
acts as provided in subparagraph (c), above, or the Administrative Agent
actually receives
(i) written notice of: (i) the termination of such authority, and (ii)
the subsequent appointment of a successor Lead Borrower, which notice is
signed by the respective Presidents of each Borrower (other than the
President of the Lead Borrower being replaced) then eligible for borrowing
under this Agreement; and
(ii) written notice from such successive Lead Borrower (i) accepting
such appointment; (ii) acknowledging that such removal and appointment has
been effected by the respective Presidents of such Borrowers eligible for
borrowing under this Agreement; and (iii) acknowledging that from and after
the date of such appointment, the newly appointed Lead Borrower shall be
bound by the terms hereof, and that as used herein, the term "Lead
Borrower" shall mean and include the newly appointed Lead Borrower.
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9.5 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues any
Letter of Credit), except that no Borrower may assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender (and any such attempted assignment or transfer without such consent shall
be null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
an Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Agents, the Issuing
Banks and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it), provided that (i) except in
the case of an assignment to a Lender or an Affiliate of a Lender, each of the
Lead Borrower (but only if no Event of Default then exists), the Agents and the
Issuing Banks must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld or delayed), (ii) except in the case
of an assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitment or Loans, the
amount of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $5,000,000 unless the Administrative Agent otherwise consents, (iii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender's rights and obligations, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500.
Subject to acceptance and recording thereof pursuant to paragraph (d) of this
Section, from and after the effective date specified in each Assignment and
Acceptance the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 9.3).
Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this paragraph shall be treated for purposes
of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
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(c) The Administrative Agent, acting for this purpose as an agent of the
Borrowers, shall maintain at one of its offices in Boston, Massachusetts a copy
of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and L/C Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive absent manifest error and the Borrowers, the
Administrative Agent, the Issuing Banks and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Lead Borrower,
the Issuing Banks and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the processing and recordation fee
referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(e) Any Lender may, without the consent of the Borrowers, the Agents, and
the Issuing Banks, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans owing
to it), provided that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrowers,
the Agents, the Issuing Banks and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation in the Commitments, the Loans and the
Letters of Credit Outstandings shall provide that such Lender shall retain the
sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents, provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.2(b) that affects such Participant.
Subject to paragraph (f) of this Section and Section 2.28, the Borrowers agree
that each Participant shall be entitled to the benefits (and subject to the
obligations) of Sections 2.23, 2.25, and 2.26 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.9 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.25(c) as though it were a
Lender.
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(f) A Participant shall not be entitled to receive any greater payment
under Section 2.23 or 2.26 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Lead
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.26 unless
(i) the Lead Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrowers, to comply with
Section 2.26(e) as though it were a Lender and (ii) such Participant is eligible
for exemption from the withholding tax referred to therein, following compliance
with Section 2.26(e).
(g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest, provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
9.6 Survival. All covenants, agreements, representations and warranties
made by the Borrowers in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Agents, any Issuing Bank or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.23, 2.26, and 9.3 and
Section 8 shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
9.7 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Agents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.1, this Agreement shall become effective when it shall
have been executed by the Agents and the Lenders and when the
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Administrative Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
9.8 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
9.9 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates 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 obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrowers against
any of and all the obligations of the Borrowers now or hereafter existing under
this Agreement held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement and although such obligations
may be unmatured and regardless of the adequacy of the Collateral. The rights of
each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender may have.
9.10 Governing Law; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.
(b) The Borrowers agree that any suit for the enforcement of this Agreement
or any other Loan Document may be brought in any court of the State of New York
sitting in the Borough of Manhattan or any federal court sitting therein as the
Administrative Agent may elect in its sole discretion and consent to the
non-exclusive jurisdiction of such courts. The Borrowers hereby waive any
objection which they may now or hereafter have to the venue of any such suit or
any such court or that such suit is brought in an inconvenient forum. The
Borrowers agree that any action commenced by any Borrower asserting any claim or
counterclaim arising under or in connection with this Agreement or any other
Loan Document shall be brought solely in a court of the State of New York
sitting in the Borough of Manhattan or any federal court sitting therein as the
Administrative Agent may elect in its sole discretion and consent to the
exclusive jurisdiction of such courts with respect to any such action.
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(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.1. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
9.12 Headings. Section headings and the Table of Contents used herein are
for convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
9.13 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts that are treated as interest on such Loan
under Applicable Law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") that may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
Applicable Law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
9.14 Additional Waivers.
(a) The Obligations are joint and several obligations of each Borrower. To
the fullest extent permitted by Applicable Law, the obligations of Borrower
hereunder shall not be affected by (i) the failure of any Agent or any other
Secured Party to assert any claim or demand or to enforce or exercise any right
or remedy against any other
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Borrower under the provisions of this Agreement, any other Loan Document or
otherwise, (ii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, this Agreement, any other Loan
Document, or any other agreement, with respect to any other Borrower of the
Obligations under this Agreement, or (iii) the failure to perfect any security
interest in, or the release of, any of the security held by or on behalf of the
Collateral Agent or any other Secured Party.
(b) The obligations of each Borrower hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason (other than the
payment in full in cash of the Obligations), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and
shall not be subject to any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Borrower hereunder shall
not be discharged or impaired or otherwise affected by the failure of any Agent
or any other Secured Party to assert any claim or demand or to enforce any
remedy under this Agreement, any other Loan Document or any other agreement, by
any waiver or modification of any provision of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Obligations,
or by any other act or omission that may or might in any manner or to any extent
vary the risk of any Borrower or that would otherwise operate as a discharge of
any Borrower as a matter of law or equity (other than the payment in full in
cash of all the Obligations).
(c) To the fullest extent permitted by Applicable Law, each Borrower waives
any defense based on or arising out of any defense of any other Borrower or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any other Borrower, other than the
payment in full in cash of all the Obligations. The Collateral Agent and the
other Secured Parties may, at their election, foreclose on any security held by
one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust any
part of the Obligations, make any other accommodation with any other Borrower,
or exercise any other right or remedy available to them against any other
Borrower, without affecting or impairing in any way the liability of any
Borrower hereunder except to the extent that all the Obligations have been paid
in full in cash. Pursuant to Applicable Law, each Borrower waives any defense
arising out of any such election even though such election operates, pursuant to
Applicable Law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Borrower against any other
Borrower, as the case may be, or any security.
(d) Upon payment by any Borrower of any Obligations, all rights of such
Borrower against any other Borrower arising as a result thereof by way of right
of subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be
110
subordinate and junior in right of payment to the prior payment in full in cash
of all the Obligations. In addition, any indebtedness of any Borrower now or
hereafter held by any other Borrower is hereby subordinated in right of payment
to the prior payment in full of the Obligations. Until the Obligations are paid
in full, none of the Borrowers will demand, xxx for, or otherwise attempt to
collect any such indebtedness. If any amount shall erroneously be paid to any
Borrower on account of (a) such subrogation, contribution, reimbursement,
indemnity or similar right or (b) any such indebtedness of any Borrower, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Collateral Agent to be credited against the payment of
the Obligations, whether matured or unmatured, in accordance with the terms of
the Loan Documents.
9.15 Patriot Act. Each Lender hereby notifies the Borrowers that pursuant
to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the "Act"), it is required to obtain, verify and
record information that identifies the Borrowers, which information includes the
name and address of each Borrower and other information that will allow such
Lender to identify such Borrower in accordance with the Act. Each Borrower is in
compliance, in all material respects, with the Patriot Act. No part of the
proceeds of the Loans will be used, directly or indirectly, for any payments to
any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.
9.16 Confidentiality. Each of the Lenders agrees that it will use its best
efforts not to disclose without the prior consent of the Borrowers (other than
to its employees, auditors, counsel or other professional advisors, to
Affiliates or to another Lender if the Lender or such Lender's holding or parent
company in its sole discretion determines that any such party should have access
to such information, which party shall be informed of the confidential nature
thereof) any information with respect to any Borrower which is furnished
pursuant to this Agreement provided that any Lender may disclose any such
information (a) as has become generally available to the public, (b) as may be
required or appropriate in any report, statement or testimony submitted to any
municipal, state or federal regulatory body having or claiming to have
jurisdiction over such Lender or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in response to any summons or subpoena or in connection with any litigation,
provided that if the Lender is able to do so prior to complying with the summons
or subpoena, such Lender shall provide the Borrowers with prompt notice of such
requested disclosure so that the Borrowers may seek a protective order or other
appropriate remedy (nothing contained herein however shall result in such
Lender's non-compliance with Applicable Law), (d) in order to comply with any
law, order, regulation or ruling applicable to such Lender, (e) in connection
with the enforcement of remedies under this Agreement and the other Loan
Documents, and (f) to any prospective transferee in connection
111
with any contemplated transfer of any of the Loans or Notes or any interest
therein by such Lender provided that such prospective transferee agrees to be
bound by the provisions of this Section. The Borrowers hereby agree that the
failure of a Lender to comply with the provisions of this Section 9.16 shall not
relieve the Borrowers of any of their obligations to such Lender under this
Agreement and the other Loan Documents.
[balance of page left intentionally blank; signature pages follow]
112
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as a sealed instrument as
of the day and year first above written.
GAMESTOP CORP.
GAMESTOP HOLDINGS CORP.
GAMESTOP, INC.
SUNRISE PUBLICATIONS, INC.
ELECTRONICS BOUTIQUE HOLDINGS CORP.
EB INVESTMENT CORP.
EB CATALOG COMPANY, INC.
EB GAMES CUSTOMER SERVICE, INC.
ELBO INC.
EB FINANCE INC.
EB SPECIALTY SERVICES, INC.
ELECTRONICS BOUTIQUE OF AMERICA INC.
EB SADSBURY SECOND, LLC
EB SADSBURY GENERAL PARTNER, LP
EB SADSBURY PROPERTY HOLDING, LP
EB INTERNATIONAL HOLDINGS, Inc.
as Borrowers
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
113
XXXXXXXX.XXX, INC.
MARKETING CONTROL SERVICES, INC.
GAMESTOP BRANDS, INC.
GAMESTOP (LP), LLC
as Borrowers
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Signatory
GAMESTOP OF TEXAS (GP), LLC
as Borrower
By: GameStop, Inc.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
GAMESTOP TEXAS LP
as Borrower
By: GameStop of Texas (GP), LLC, its
general partner
By: GameStop, Inc.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President and Chief
Financial Officer
114
BANK OF AMERICA, N.A.,
as Administrative Agent, as Collateral Agent,
as Issuing Bank, and as Lender
By: /s/ Xxxxxxx Xxxxxx
-------------------------
Xxxxxxx Xxxxxx
Managing Director
Address: 00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
000
XXXXXXXX XXXXX XXXXXXX, INC.,
as Issuing Bank, as Syndication Agent and
as Lender
By: /s/ Xxxxx XxXxxxxx
-------------------------
Name: Xxxxx XxXxxxxx
Title: Director/Vice President
Address: 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Mr. Xxxxx XxXxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
116
XXXXXXX XXXXX CAPITAL, A DIVISION OF XXXXXXX
XXXXX BUSINESS FINANCIAL SERVICES INC.,
as Documentation Agent and as Lender
By: /s/ Xxxxx Xxxxxxx
-------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
Address: 000 X. XxXxxxx Xx.
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
117
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Lender
By: /s/ Xxxxxxx Xxxxxx
-------------------------
Name: Xxxxxxx Xxxxxx
Title: AVP
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn:
---------------------------
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
118
GMAC COMMERCIAL FINANCE LLC,
as Lender
By: /s/ Xxxxx Xxxxxxxx
-------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
Address: 000 Xxxxxx Xx., X#0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
119
UBS LOAN FINANCE LLC,
as Lender
By: /s/ Xxxxxxx X. Saint
-------------------------
Name: Xxxxxxx X. Saint
Title: Director - Banking Products
Services US
Address: 000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
120
XXXXX FARGO RETAIL FINANCE LLC,
as Lender
By: /s/ Xxxx Lofts
-------------------------
Name: Xxxx Lofts
Title: AVP Account Exec.
Address: One Boston Pl., 10th Fl.
Xxxxxx, XX 00000
Attn:
-------------------------
Telephone: (000) 000-0000
Telecopy:
---------------------
121
