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REVOLVING CREDIT AGREEMENT
dated as of October 1, 1996
among
BEST PRODUCTS CO., INC.,
as debtor and debtor-in-possession
AS BORROWER,
THE FINANCIAL INSTITUTIONS PARTY HERETO,
AS LENDERS,
and
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS AGENT
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$250,000,000
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Table of Contents
Section Title Page
ARTICLE I DEFINITIONS; CONSTRUCTION........................................................................1
1.01. Certain Definitions..............................................................................1
1.02. Construction.....................................................................................18
1.03. Accounting Principles............................................................................18
ARTICLE II THE CREDITS......................................................................................19
2.01. Revolving Credit Loans...........................................................................19
2.02. Notes............................................................................................19
2.03. Notice of Borrowing; Making of Loans.............................................................19
2.04. Reduction of Commitment; Mandatory Prepayment; Optional Prepayment...............................22
2.05. Interest Rate....................................................................................24
2.06. Interest Payment Dates...........................................................................24
2.07. Amortization.....................................................................................24
2.08. Payments.........................................................................................24
2.09. Use of Proceeds..................................................................................27
2.10. Eurodollar Rate Not Determinable; Illegality or Impropriety......................................27
2.11. Reserve Requirements; Capital Adequacy Circumstances.............................................28
2.12. Indemnity........................................................................................29
2.13. Sharing of Setoffs...............................................................................30
2.14. Continuation and Conversion of Loans.............................................................30
2.15. Taxes............................................................................................31
ARTICLE III LETTERS OF CREDIT AND ACCEPTANCES................................................................33
3.01. Letters of Credit and Acceptances................................................................33
3.02. Participations...................................................................................37
ARTICLE IV BORROWING BASE...................................................................................38
4.01. Condition of Lending and Assisting in Establishing or Opening Letters of Credit..................38
4.02. Mandatory Prepayment.............................................................................38
4.03. Rights and Obligations Unconditional.............................................................39
4.04. Borrowing Base Certificate.......................................................................39
4.05. General Provisions...............................................................................39
ARTICLE V ACKNOWLEDGEMENT, RATIFICATION, SECURITY AND ADMINISTRATIVE PRIORITY...............................40
5.01. Pre-Petition Obligations..........................................................................40
5.02. Acknowledgment of Security Interests..............................................................40
5.03. Binding Effect of Documents.......................................................................40
5.04. Grant of Lien and Security Interest...............................................................40
5.05. Administrative Priority...........................................................................41
5.06. Grants, Rights and Remedies.......................................................................41
5.07. No Filings Required...............................................................................41
5.08. Survival..........................................................................................41
ARTICLE VI CONDITIONS OF EFFECTIVENESS, LETTER OF CREDIT ISSUANCE AND LENDING................................42
6.01. Conditions Precedent to Effectiveness.............................................................42
6.02. Conditions Precedent to Loans and Letters of Credit...............................................45
ARTICLE VII REPRESENTATIONS AND WARRANTIES....................................................................46
7.01. Organization, Good Standing, Etc..................................................................46
7.02. Authority and Authorization.......................................................................47
7.03. Execution and Binding Effect......................................................................47
7.04. Governmental Approvals............................................................................47
7.05. Absence of Conflicts..............................................................................47
7.06. Subsidiaries......................................................................................47
7.07. Litigation........................................................................................48
7.08. Financial Condition...............................................................................48
7.09. Compliance with Law, Etc..........................................................................48
7.10. ERISA.............................................................................................48
7.11. Taxes, Etc........................................................................................49
7.12. Full Disclosure...................................................................................49
7.13. Operating Lease Obligations; Existing Liens; Unpaid Rent..........................................50
7.14. Environmental Matters.............................................................................50
7.15. Schedules.........................................................................................50
7.16. Insurance.........................................................................................50
7.17. Use of Proceeds...................................................................................51
7.18. Financial Accounting Practices, Etc...............................................................51
7.19. No Material Adverse Effect........................................................................51
7.20. Real Property; Leases.............................................................................51
7.21. Location of Bank Accounts.........................................................................51
7.22. No Event of Default...............................................................................52
7.23. Capitalized Leases................................................................................52
7.24. Inventory.........................................................................................52
7.25. Administrative Priority; Lien Priority............................................................52
7.26. Bankruptcy Court Order............................................................................52
ARTICLE VIII AFFIRMATIVE COVENANTS...........................................................................52
8.01. Reporting Requirements............................................................................52
8.02. Compliance with Laws, Etc.........................................................................56
8.03. Preservation of Existence, Etc....................................................................56
8.04. Keeping of Records and Books of Account...........................................................57
8.05. Inspection Rights.................................................................................57
8.06. Maintenance of Properties, Etc....................................................................57
8.07. Maintenance of Insurance..........................................................................58
8.08. Environmental.....................................................................................58
8.09. Further Assurances................................................................................59
8.10. Financial Accounting Practices, Etc...............................................................59
8.11. Cash Management System............................................................................59
8.12. Store Closings....................................................................................60
ARTICLE IX NEGATIVE COVENANTS................................................................................61
9.01 Bankruptcy Court Order; Final Bankruptcy Court Order; Administrative Priority; Lien
Priority; Payment of Claims......................................................................61
9.02. Liens, Etc........................................................................................62
9.03. Indebtedness......................................................................................63
9.04. Guarantees,Etc....................................................................................63
9.05. Merger, Consolidation, Sale of Assets, Etc........................................................64
9.06. Change in Nature of Business......................................................................64
9.07. Loans, Advances and Investments, Etc..............................................................64
9.08. Lease Obligations.................................................................................65
9.09. Dividends, Prepayments, Etc.......................................................................65
9.10. Transactions with Affiliates......................................................................65
9.11. Sale Policies.....................................................................................65
9.12. Environmental.....................................................................................65
9.13. ERISA65
9.14. Store Openings....................................................................................66
9.15. Subsidiaries......................................................................................66
9.16. Availability......................................................................................66
9.17. Payments..........................................................................................66
ARTICLE X DEFAULTS.........................................................................................67
10.01. Events of Default................................................................................67
10.02. Consequences of an Event of Default..............................................................69
10.03. Deposit for Letters of Credit....................................................................70
10.04. Certain Remedies.................................................................................70
ARTICLE XI MISCELLANEOUS....................................................................................71
11.01. Holidays.........................................................................................71
11.02. Records..........................................................................................71
11.03. Amendments and Waivers...........................................................................71
11.04. No Implied Waiver; Cumulative Remedies...........................................................72
11.05. Notices..........................................................................................72
11.06. Expenses; Taxes; Attorneys' Fees; Indemnification................................................73
11.07. Application......................................................................................74
11.08. Severability.....................................................................................74
11.09. Governing Law....................................................................................74
11.10. Prior Understandings.............................................................................75
11.11. Duration; Survival...............................................................................75
11.12. Counterparts.....................................................................................75
11.13. Assignments; Participations......................................................................75
11.14. Successors and Assigns...........................................................................77
11.15. Agent as Party in Interest.......................................................................77
11.16. Confidentiality..................................................................................77
11.17. Waiver of Jury Trial.............................................................................78
11.18. Right of Setoff..................................................................................79
11.19. Headings.........................................................................................79
ARTICLE XII THE AGENT........................................................................................79
12.01. Appointment......................................................................................79
12.02. Nature of Duties.................................................................................80
12.03. Rights, Exculpation, Etc.........................................................................80
12.04. Reliance.........................................................................................81
12.05. Indemnification..................................................................................81
12.06. CIT Individually.................................................................................81
12.07. Successor Agent..................................................................................82
12.08. Collateral Matters...............................................................................82
Exhibit A - Form of Note
Exhibit B - Form of Interim Bankruptcy Court Order
Exhibit C - Form of Letter of Credit Application
Exhibit D - Form of Borrowing Base Certificate
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Credit Card Depository Account Agreement
Exhibit G - Form of Notice Letter to Depository Banks
Exhibit H - Form of Depository Account Agreement
Schedule 1.01(A) - Locations of Eligible Inventory
Schedule 1.01(B) - Revolving Credit Commitments
Schedule 3.01(c) - Existing Letters of Credit
Schedule 7.06 - Subsidiaries
Schedule 7.07 - Litigation
Schedule 7.10 - Employee Plans
Schedule 7.13 - Operating Lease Obligations
Schedule 7.14 - Environmental Matters
Schedule 7.16 - Insurance
Schedule 7.20 - Real Property; Leases
Schedule 7.21 - Bank Accounts
Schedule 9.02 - Existing Liens
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of October 1, 1996,
among BEST PRODUCTS CO., INC., as debtor and debtor-in-possession, a Virginia
corporation (the "Borrower"), the financial institutions from time to time party
hereto (collectively, the "Lenders" and individually, a "Lender"), the co-agents
from time to time party hereto (collectively the "Co-Agents" and individually a
"Co-Agent") and THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT"), as agent for the
Lenders (in such capacity, the "Agent").
RECITALS
WHEREAS, the Borrower has commenced a case (the "Chapter 11
Case") under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy
Code") in the United States Bankruptcy Court for the Eastern District of
Virginia (the "Bankruptcy Court"), and the Borrower has retained possession of
its assets and is authorized under Sections 1107 and 1108 of the Bankruptcy Code
to continue the operation of its business as a debtor-in-possession; and
WHEREAS, prior to the commencement of the Chapter 11 Case by
the Borrower, CIT and certain other lenders (the "Pre-Petition Lenders") made
loans and advances and provided certain other financial accommodations to the
Borrower secured by substantially all personal property assets and certain real
property assets of the Borrower; and
WHEREAS, the Borrower has requested that the Lenders make
post-petition loans, advances and other extensions of credit to the Borrower in
an aggregate principal amount not to exceed $250,000,000, including a
$100,000,000 subfacility for the issuance of letters of credit (which facility
shall be limited to $195,000,000 with a $100,000,000 subfacility for the
issuance of letters of credit until the Final Bankruptcy Court Order (as
hereinafter defined) shall have been signed by the Bankruptcy Court), and,
subject to the terms and conditions set forth herein, the Lenders have agreed to
provide such facility.
In consideration of the mutual covenants herein contained and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.01. Certain Definitions. In addition to other words and terms
defined elsewhere in this Agreement, as used herein the following words and
terms shall have the following meanings, respectively, unless the context hereof
otherwise clearly requires:
"Acceptance" shall have the meaning given that term in Section
3.01(a) hereof.
"Accountant's Opinion" shall have the meaning given that term
in Section 8.01(a) hereof.
"Affiliate" of a Person shall mean any other Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For purposes of
this definition (i) "control" of a Person means the power, directly or
indirectly, either to (A) vote 10% or more of the securities having ordinary
voting power for the election of directors of such Person or (B) direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise and (ii) CIT and The Chase Manhattan Bank are not Affiliates of the
Borrower.
"Agent Account" shall mean an account in the name of the Agent
designated to the Borrower from time to time into which the Borrower shall make
all payments to the Agent under this Agreement.
"Agent Advances" shall have the meaning given that term in
Section 12.08 hereof.
"Agreed Administrative Expense Priorities" shall mean that
administrative expenses with respect to the Borrower and, with respect to clause
(ii) of clause "first", any official committee appointed by the United States
Trustee in the Chapter 11 Case shall have the following order of priority:
first, (i) amounts payable pursuant to 28 U.S.C. ss.
1930(a)(6) and (ii) allowed fees and expenses of attorneys, accountants and
other professionals retained in the Chapter 11 Case pursuant to Sections 327 and
1103 of the Bankruptcy Code, but the amount entitled to priority under clause
(ii) of this clause first ("Priority Professional Expenses") shall not exceed
$5,000,000 outstanding in the aggregate at any time (inclusive of any holdbacks
required by the Bankruptcy Court) (the "Professional Expense Cap"); provided,
however, that after the occurrence and during the continuance of an Event of
Default hereunder or under the Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order, any payments actually made to such professionals after
such occurrence or during such continuance, under Sections 330 and 331 of the
Bankruptcy Code or otherwise, shall reduce the Professional Expense Cap on a
dollar-for-dollar basis.
second, all Obligations, and
third, all other allowed administrative expenses.
"Agreement" shall mean this Revolving Credit Agreement, as
amended, modified, supplemented or restated from time to time.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the Agent,
substantially in the form of Exhibit E hereto.
"Availability" shall mean, at any time, the difference between
(i) the Borrowing Base and (ii) the sum of (A) the aggregate outstanding
principal amount of all Loans and (B) the Letter of Credit Exposure.
"Avoided Payments" shall have the meaning given to that term
in Section 2.04(c) hereof.
"Bank" shall mean The Chase Manhattan Bank, its successors or
any other bank designated by the Agent to the Borrower from time to time that is
reasonably acceptable to the Borrower.
"Bank One Credit Card Agreement" shall mean the agreement by
and between the Borrower and Bank One, Dayton, NA, made on July 12, 1996, as
amended or as otherwise may be extended or replaced.
"Bankruptcy Code" shall have the meaning given that term in
the RECITALS to this Agreement.
"Bankruptcy Court" shall have the meaning given that term in
the RECITALS to this Agreement.
"Board" means the Board of Governors of the Federal Reserve
System of the United States.
"Book Value" shall mean, as to the aggregate value of
Inventory in respect of which such amount is to be determined, cost (as
reflected in the Flash Inventory Report) determined in accordance with GAAP
calculated on an average cost basis.
"Borrower" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Borrower's DIP Account" shall have the meaning given that
term in Section 2.08(a) hereof.
"Borrowing Base" shall mean an amount equal to the difference
between (i) the sum of (A) 55% of the Book Value of Eligible Inventory and (B)
55% of the L/C Inventory, provided that (1) during the period from August 15
through and including December 15 of each year, the percentage of Book Value of
Eligible Inventory and L/C Inventory in subclauses (A) and (B) of this clause
(i) shall be increased to 60% and (2) in the case of L/C Inventory, the
Inventory with respect thereto is not otherwise included in the Borrowing Base,
and (ii) the sum of (A) during each period of December 16 through and including
August 14, $2,500,000 and (B) such additional reserves as the Agent, in the
exercise of its reasonable business judgment, may deem appropriate.
"Borrowing Base Certificate" shall have the meaning given that
term in Section 4.04(a) hereof.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions are authorized or obligated to
close in New York, New York, provided, that with respect to the borrowing,
payment, conversion to or continuation of Eurodollar Loans, Business Day shall
also mean a day on which dealings in Dollars are carried on in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of the Bank's eurodollar loans are then being conducted.
"Capitalized Lease" shall mean any lease which is required
under GAAP to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligations" shall mean the aggregate
amount which is required under GAAP to be reported as a liability on the balance
sheet of a Person as lessee under a Capitalized Lease.
"Carve-Out Expenses" shall mean those amounts, fees, expenses
and claims set forth in clause "first" of the definition of the term "Agreed
Administrative Expense Priorities."
"Cash Concentration Account" shall mean the deposit account
maintained by the Agent at the Cash Concentration Account Bank, which deposit
account shall be under the sole dominion and control of the Agent.
"Cash Concentration Account Agreement" shall mean an
agreement, in form and substance satisfactory to the Agent, between the Cash
Concentration Account Bank and the Agent delivered to the Agent pursuant to
Section 8.11 hereof, as such Agreement may be modified and supplemented and in
effect from time to time.
"Cash Concentration Account Bank" shall mean a bank mutually
acceptable to the Borrower and the Agent.
"Chapter 11 Case" shall have the meaning given that term in
the RECITALS to this Agreement.
"CIT" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Closing Date" shall mean the date on which the conditions set
forth in Section 6.01 hereof shall be satisfied.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import. References to sections of
the Code shall be construed also to refer to any successor sections.
"Collateral" shall have the meaning given that term in Section
5.04 hereof.
"Consolidated Subsidiary" of a Person at any time shall mean
those Subsidiaries or other Affiliates of such Person whose accounts are or
should in accordance with GAAP be consolidated with those of such Person.
"Credit Extension" shall mean (a) the making of any Loan by a
Lender or the Agent on behalf of the Lenders or (b) the issuance, increase in
the Stated Amount, or extension of the expiration date, of any Letter of Credit
which CIT or any Lender assists the Borrower in opening or establishing.
"Current Commitment" shall have the meaning assigned to that
term in Section 2.01 hereof.
"Depository Accounts" shall mean the lock-box or blocked
depository accounts maintained by the Borrower for the collection of the cash of
the Borrower and the proceeds from the sale of the Inventory of the Borrower.
"Depository Account Agreements" shall mean each agreement,
substantially in the form of Exhibit H hereto, among a Depository Bank, the
Borrower and the Agent delivered to the Agent pursuant to Section 8.11 hereof,
as each such Agreement may be modified and supplemented and in effect from time
to time.
"Depository Bank" shall mean each financial institution at
which a Depository Account is maintained.
"Designated Borrowing Officer" shall mean the chief financial
officer or treasurer of the Borrower, or such other officer as shall be
designated from time to time in writing by the Borrower to the Agent.
"Designated Financial Officer" of a Person shall mean the
individual designated from time to time by the chief executive officer of such
Person to be the chief financial officer or treasurer of such Person (and
individuals designated from time to time by the chief executive officer of such
Person to act in lieu of the chief financial officer or the treasurer).
"Disbursement Account" shall mean the deposit account in the
name of the Borrower maintained at a bank in the United States designated by the
Borrower to the Agent into which there shall be deposited proceeds of Loans and
funds disbursed to the Borrower by the Agent.
"Dollar," "Dollars" and the symbol "$" shall mean lawful money
of the United States of America.
"Eligible Inventory" shall mean finished goods Inventory,
diamonds and other color gems (excluding uncut gems) of the Borrower which at
the time of determination meets all the following qualifications:
(i) it is lawfully owned by the Borrower and not subject
to any Lien and it is not held on consignment and may
be lawfully sold;
(ii) it is (A) located in the Borrower's distribution
centers, warehouses or retail locations listed on
Schedule 1.01(A) hereto, (B) located in other
locations in the continental United States as the
Agent shall have approved in writing from time to
time, which approval shall be given upon the Borrower
providing the Agent with evidence, reasonably
satisfactory to the Agent, of the absence of any
Liens on any Inventory of the Borrower located in
such locations or (C) located in a warehouse or other
facility at a port of entry into the United States
listed on Schedule 1.01(A) hereto, in transit between
any such port of entry and any location in subclauses
(A) or (B) above or in transit between any locations
in subclauses (A) or (B) above;
(iii) it is determined in the reasonable judgment of the
Agent to be, when taken as a whole, substantially
similar in quality and mix to the Inventory
maintained by the Borrower in recent historical
operations prior to the Filing Date; and
(iv) it is Inventory that has been valued after deducting
the greater of (A) 10% of the Book Value of all Flash
Inventory of the Borrower as shown in the most recent
Flash Inventory Report (after deducting the Inventory
that does not meet the qualifications in clauses (i),
(ii) and (iii) above), and (B) the aggregate amount
of reserves, without duplication, for (1) markdowns,
(2) shrinkage to the extent not already deducted from
the "Flash Inventory" shown in the most recent Flash
Inventory Report, (3) lay-a-ways to the extent
included in the "Flash Inventory" shown in the most
recent Flash Inventory Report, (4) displays and open
stock to the extent such stock is the type of stock
that is customarily sold in a package, (5) rejected,
defective, damaged, aged or otherwise unsalable
Inventory, (6) SLAC (selling lower than average cost)
Inventory and (7) other reserves required by the
Agent in the exercise of its reasonable business
judgment.
"Entry Date" shall mean the date the Interim Bankruptcy Court
Order is signed by the Bankruptcy Court.
"Environmental Actions" shall mean any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation,
proceeding, judgment, letter or other communication from any Governmental
Authority or any third party involving a Release (i) from or onto any of the
properties presently or formerly owned or leased by the Borrower or its
Subsidiaries or (ii) from or onto any facilities which received Hazardous
Materials from the Borrower or its Subsidiaries, or involving any violation of
any Environmental Law.
"Environmental Law" shall mean all federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect relating
to the regulation and protection of human health, safety, the environment and
natural resources. Environmental Laws include but are not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. ss. 9601 et seq.) ("CERCLA"); the Hazardous Material
Transportation Act, as amended (49 U.S.C. ss. 180 et seq.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. ss. 6901 et seq.) ("RCRA");
the Toxic Substance Control Act, as amended (15 U.S.C. ss. 2601 et seq.); the
Clean Air Act, as amended (42 U.S.C. ss. 7401 et seq.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. ss. 1251 et seq.); and their state
and local counterparts or equivalents.
"Environmental Liabilities and Costs" shall mean all
liabilities, monetary obligations, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, expert and
consulting and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any Environmental
Action relating to any environmental condition, violation of Environmental Law,
Remedial Actions or a Release of Hazardous Materials from or onto (i) any
property presently or formerly owned by the Borrower or any of its Subsidiaries
(ii) any facility which received Hazardous Materials generated by the Borrower
or any of its Subsidiaries.
"Environmental Lien" shall mean any Lien securing
Environmental Liabilities and Costs incurred by a Governmental Authority.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import. References to
sections of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" shall mean any (i) corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with the Borrower, or (iii) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Borrower, any corporation described in clause (i) above or any partnership
or trade or business described in clause (ii) above.
"Eurodollar Base Rate" shall mean, with respect to a
Eurodollar Loan for the relevant Interest Period, the rate determined by the
Agent to be the rate at which deposits in Dollars are offered by the Bank to
first-class banks in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of its eurodollar loans are
then being conducted at approximately 11:00 a.m., New York City time, two
Business Days prior to the first day of such Interest Period, in the approximate
amount of the relevant Eurodollar Loan and having a maturity equal to such
Interest Period.
"Eurodollar Loan" shall mean a Loan bearing interest at the
Eurodollar Rate.
"Eurodollar Rate" means with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100 of 1%):
Eurodollar Base Rate
---------------------------
1.00 - Reserve Requirements
"Event of Default" shall mean any of the Events of Default
described in Section 10.01 hereof.
"Existing Acceptance" shall have the meaning given that term
in Section 3.01(c) hereof.
"Existing Letter of Credit" shall have the meaning given that
term in Section 3.01(c) hereof.
"Fee Letter" shall mean the letter agreement, dated as of the
date hereof, between the Borrower and the Agent obligating the Borrower to pay
certain fees to the Agent in connection with this Agreement, as such letter
agreement may be modified, supplemented or amended from time to time.
"Filing Date" shall mean the date on which the Chapter 11 Case
was commenced.
"Final Bankruptcy Court Order" shall mean the order of the
Bankruptcy Court approving the Loans made and to be made to the Borrower in
accordance with this Agreement, substantially in the form of the Interim
Bankruptcy Court Order, as the same may be amended, modified or supplemented
from time to time with the express written joinder or consent of the Agent and
the Borrower.
"Flash Inventory Report" shall mean the Weekly Flash Report
prepared by the Borrower in the form delivered to the Pre-Petition Lenders
pursuant to the Pre-Petition Credit Agreement.
"GAAP" shall mean generally accepted accounting principles as
such principles shall be in effect in the United States at the relevant date.
"GOB Letter of Credit" shall have the meaning given that term
in Section 8.12 hereof.
"Governmental Authority" shall mean any nation or government,
any federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee" of or by any Person shall mean any obligation of
such Person guaranteeing any Indebtedness of any other Person (the "primary
obligor"), directly or indirectly through an agreement (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (ii) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness against
loss, or (iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness; provided, however, that the term
Guarantee shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"Hazardous Materials" shall mean (i) any element, compound or
chemical that is defined, listed or otherwise classified as a solid waste,
contaminant, pollutant, toxic pollutant, hazardous substance, extremely
hazardous substance, toxic substance, hazardous waste, or special waste under
any Environmental Law; (ii) petroleum and its refined fractions, (iii) any
polychlorinated biphenyls, (iv) any flammable, explosive or radioactive
materials; and (v) any asbestos-containing materials.
"Indebtedness" shall mean as to any Person (i) indebtedness
for borrowed money; (ii) indebtedness for the deferred purchase price of
property or services (other than current trade payables incurred in the ordinary
course of business and payable in accordance with customary practices); (iii)
indebtedness evidenced by bonds, debentures, notes or other similar instruments
(other than performance, surety and appeal or other similar bonds arising in the
ordinary course of business); (iv) obligations and liabilities secured by a Lien
upon property owned by such Person, whether or not owing by such Person and even
though such Person has not assumed or become liable for the payment thereof; (v)
obligations and liabilities directly or indirectly Guaranteed by such Person;
(vi) obligations or liabilities created or arising under any conditional sales
contract or other title retention agreement with respect to property used and/or
acquired by such Person, even though the rights and remedies of the lessor,
seller and/or lender thereunder are limited to repossession of such property;
(vii) Capitalized Lease Obligations; (viii) all liabilities in respect of
letters of credit, acceptances and similar obligations created for the account
of such Person, and (ix) net liabilities of such Person under interest rate cap
agreements, interest rate swap agreements, foreign currency exchange agreements
and other hedging agreements or arrangements calculated on a basis satisfactory
to the Agent and in accordance with accepted practice.
"Indemnified Parties" shall have the meaning given that term
in Section 11.06 hereof.
"Interest Period" shall mean, with respect to any Eurodollar
Loan, the period commencing on the borrowing date for, or the date of any
continuation of or conversion to, such Eurodollar Loan, as the case may be, and
ending one, two, three or six months thereafter as the Borrower may elect in the
applicable notice given to the Agent pursuant to Section 2.03 or Section 2.14,
as appropriate; provided that (i) any Interest Period that would otherwise end
on a day that is not a Business Day shall be extended to the next succeeding
Business Day, unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day; (ii) any
Interest Period that begins on the last Business Day of a calendar month or on a
day for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period shall end on the last Business Day of the
applicable calendar month; and (iii) no Interest Period for any Loan shall end
after the Termination Date. Interest shall accrue from and include the first
date of an Interest Period, but exclude the last day of such Interest Period.
"Interim Bankruptcy Court Order" shall mean the order of the
Bankruptcy Court with respect to the Borrower substantially in the form of
Exhibit B hereto, as the same may be amended, modified or supplemented from time
to time with the express written joinder or consent of the Agent and the
Borrower.
"Inventory" shall mean all goods and merchandise of the
Borrower including, but not limited to, all raw materials, work in process,
finished goods, materials and supplies of every nature used or usable in
connection with the shipping, storing, advertising or sale of such goods and
merchandise, whether now owned or hereafter acquired and all such property, the
sale or disposition of which would give rise to accounts receivable or cash.
"Jewelry Store" shall mean a retail store of the Borrower that
primarily sells diamonds, gems and other jewelry.
"L/C Inventory" means the undrawn Stated Amount of documentary
Letters of Credit for the importation of Eligible Inventory which has been or
will be consigned to a common carrier that has or will issue documents of title
covering such Inventory to CIT or the Letter of Credit Issuer, provided that,
for purposes of this definition, documentary Letters of Credit shall include the
undrawn amount of all documentary letters of credit that are listed on Schedule
3.01(c) hereto.
"L/C Notice" shall have the meaning given that term in Section
3.01(b).
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Governmental Authority.
"Lease" shall mean any lease of real property to which the
Borrower is a party as lessee or lessor.
"Lenders" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Letter of Credit" shall have the meaning given that term in
Section 3.01(a).
"Letter of Credit Application" shall have the meaning given
that term in Section 3.01(a) hereof.
"Letter of Credit Cash Collateral Account" shall mean the
deposit account maintained at the Bank or such other bank as CIT may select,
which deposit account shall be under the sole dominion and control of CIT.
"Letter of Credit Exposure" shall mean, at any time, the sum
at such time of (a) the aggregate amount of all Unreimbursed Draws under Letters
of Credit (whether or not such Letters of Credit are then outstanding), (b) the
aggregate Undrawn Letter of Credit Availability under all outstanding Letters of
Credit and (c) the aggregate amount of all Acceptances outstanding.
"Letter of Credit Fee" shall have the meaning given that term
in Section 2.08(f) hereof.
"Letter of Credit Guaranty" shall mean the guaranty delivered
by CIT to the Letter of Credit Issuer or other agreement between CIT and the
Letter of Credit Issuer, guaranteeing or making other arrangements with respect
to the Borrower's reimbursement obligations with respect to Letters of Credit
and Acceptances under a reimbursement agreement, Letter of Credit Application or
other like document.
"Letter of Credit Issuer" shall mean the issuer of the Letters
of Credit and the creator of Acceptances, which shall initially be The Chase
Manhattan Bank, provided that, the Letter of Credit Issuer may be replaced with
an issuer acceptable to the Agent and the Borrower if (i) such substitute issuer
is a Lender and (ii) such substitute issuer and CIT agree upon the mechanics and
documentation with respect to such substitution, which mechanics and
documentation shall be reasonably acceptable to CIT.
"Lien" shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement of any
nature whatsoever, including but not limited to any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease intended
as, or having the effect of, security.
"Loan" or "Loans" shall mean any and all loan or loans made by
the Lenders or by the Agent on behalf of the Lenders to the Borrower or made as
a result of charges made to the Borrower's DIP Account, in each case pursuant to
the terms of this Agreement.
"Loan Documents" shall have the meaning given that term in the
definition of "Related Documents" set forth in this Section 1.01.
"Majority Lenders" shall mean, at any time, Lenders whose Pro
Rata Shares aggregate at least sixty-six and two-thirds percent (66-2/3%).
"Material Adverse Effect" shall mean a material adverse effect
upon (i) the business, operations, condition (financial or otherwise),
properties or prospects of the Borrower, (ii) the ability of the Borrower to
perform its obligations hereunder, under the Fee Letter or under any other
Related Document, or (iii) the legality, validity or enforceability of this
Agreement or any Related Document.
"Minority Lenders" shall have the meaning given that term in
Section 11.03(b).
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 3(37) of ERISA and subject to Title IV of ERISA which is, or
within the immediately preceding six (6) years was, contributed to by the
Borrower or any ERISA Affiliate.
"Net GOB Sale Proceeds" shall mean the amount of cash received
by the Borrower in connection with any going out of business sales conducted in
connection with the closing of the Projected GOB Sale Stores net of the sum of
(i) the amount of any Indebtedness (including, without limitation, principal,
interest and fees) secured by any Permitted Lien on the assets subject to the
going out of business sales (other than Indebtedness assumed by the purchaser of
such assets) which is required to be, and is, repaid in connection with the sale
or other disposition thereof (other than Indebtedness under this Agreement),
(ii) expenses incurred by the Borrower in connection with such going out of
business sales, whenever such expenses are incurred, whether such expenses are
allocated to the Borrower or a liquidator under any contract governing such
going out of business sales and whether such expenses are paid by the Borrower
or such liquidator, and (iii) transfer taxes paid by the Borrower in connection
therewith.
"Net Proceeds" shall mean, for any asset sale or disposition,
the amount of cash and other payments received (directly or indirectly) by the
Borrower and/or its Subsidiaries net of the sum of (i) the amount of any
Indebtedness (including, without limitation, principal, interest and fees)
secured by any Permitted Lien on such asset (other than Indebtedness assumed by
the purchaser of such asset) which is required to be, and is, repaid in
connection with the sale or other disposition thereof (other than Indebtedness
under this Agreement), (ii) reasonable expenses incurred by the Borrower and/or
its Subsidiaries in connection therewith, and (iii) transfer taxes paid by the
Borrower and/or its Subsidiaries in connection therewith.
"Notes" shall mean the promissory notes of the Borrower
executed and delivered to the Lenders under this Agreement and substantially in
the form of Exhibit A hereto, as modified or restated from time to time and any
promissory note or notes issued in exchange or replacement thereof, including
all extensions, renewals, refinancings or refundings thereof in whole or part.
"Notice of Borrowing" shall have the meaning given that term
in Section 2.03(a) hereof.
"Obligations" shall mean all indebtedness, obligations and
liabilities of the Borrower and its Subsidiaries to any Lender or the Agent
incurred under or related to this Agreement, the Notes, the Fee Letter or any
other Related Document, whether such indebtedness, obligations or liabilities
are direct or indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising, including without limitation those which are
described in either of the following clauses (i) or (ii):
(i) All indebtedness, obligations (including
Reimbursement Obligations) and liabilities of any
nature whatsoever, including amounts due under
Section 11.06 hereof and similar agreements contained
in the other Related Documents, from time to time
arising under or in connection with or evidenced or
secured by this Agreement, the Notes, the Letters of
Credit or any other Related Document, including but
not limited to the principal amount of Loans
outstanding, together with interest thereon, the
amount of the Letter of Credit Exposure, together
with interest thereon and all expenses, fees and
indemnities hereunder or under any other Related
Document. Without limitation, such amounts include
all Loans and interest thereon and the amount of all
Letter of Credit Exposure whether or not such Loans
were made or any Letters of Credit or Acceptances to
which such Letter of Credit Exposure relates were
issued or created, as the case may be, in compliance
with the terms and conditions hereof or in excess of
any Lender's obligation to lend and arrange for the
issuance of Letters of Credit or the creation of
Acceptances hereunder or any Lender's obligation to
participate therein. If and to the extent any amounts
in any account (including the Agent Account, the
Letter of Credit Cash Collateral Account, the
Depository Accounts, the Cash Concentration Account
or otherwise) constituting Collateral are applied to
Obligations hereunder, and any Lender or the Agent is
subsequently obligated to return or repay any such
amounts to any Person for any reason, the amount so
returned or repaid shall be deemed a Loan hereunder
and shall constitute an Obligation.
(ii) All indebtedness, obligations and liabilities from
time to time arising under or in connection with any
account from time to time maintained by the Borrower
with any Lender or the Agent, including but not
limited to all reimbursement obligations, service
charges and interest in connection with any
overdrafts or returned items from time to time
arising under or in connection with any such account,
or arising under or in connection with any investment
services, cash management services or other services
from time to time performed by any Lender or the
Agent pursuant to or in connection with this
Agreement or any other Related Document.
"Office" when used in connection with the Agent shall mean its
office located at 1211 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 00000 or at
such other office or offices of the Agent as may be designated in writing from
time to time by the Agent to the Borrower and when used in connection with the
Bank or the Letter of Credit Issuer shall mean the office of such entity
designated in writing from time to time by the Agent to the Borrower. In the
event The Chase Manhattan Bank shall be the Bank or the Letter of Credit Issuer,
the Office for such entity shall until further written notice from the Agent to
the Borrower be its office located at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Operating Lease Obligations" shall mean all obligations and
indebtedness of the Borrower and its Subsidiaries in respect of leases of
property (whether real, personal or mixed) other than Capitalized Lease
Obligations.
"Other Taxes" shall have the meaning given that term in
Section 2.15.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Permitted Investments" shall mean (a) direct obligations of
the United States of America or of any agency thereof or obligations guaranteed
as to principal and interest by the United States of America or of any agency
thereof, in either case maturing not more than 90 days from the date of
acquisition thereof by such Person; (b) deposit accounts with or certificates of
deposit and bankers' acceptances issued by any bank or trust company organized
under the laws of the United States of America or any state thereof and having
capital, surplus and undivided profits of at least $500,000,000, maturing not
more than 90 days from the date of acquisition thereof by such Person; (c)
commercial paper rated A-1 or better or P-1 or better by Standard & Poor's
Corporation ("S&P") or Xxxxx'x Investors Services, Inc. ("Moody's"),
respectively, maturing not more than 90 days from the date of acquisition
thereof by such Person; and (d) Investments in money market funds rated AAAm or
AAAm-G by S&P and Aaa by Moody's.
"Permitted Liens" shall have the meaning given that term in
Section 9.02.
"Person" shall mean an individual, corporation, partnership,
limited liability company, limited liability partnership, trust, unincorporated
association, joint venture, joint-stock company, government (including political
subdivisions), Governmental Authority or agency, or any other entity.
"Plan" shall mean an employee benefit plan defined in Section
3(3) of ERISA (other than a Multiemployer Plan) in respect of which the Borrower
or any ERISA Affiliate is, or within the immediately preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA.
"Potential Default" shall mean any event or condition which,
with notice or passage of time, or any combination of the foregoing, would
constitute an Event of Default.
"Pre-Petition Agreements" shall mean the Pre-Petition Credit
Agreement, the Pre-Petition Collateral Agreements and the Pre-Petition Related
Documents.
"Pre-Petition Collateral" shall mean all "Collateral" as such
term is defined in the Pre-Petition Agreements and all other security for the
Pre-Petition Obligations as provided in the Pre-Petition Agreements immediately
prior to the Filing Date.
"Pre-Petition Collateral Agreements" shall have the meaning
given to the term "Security Documents" in the Pre-Petition Credit Agreement.
"Pre-Petition Credit Agreement" shall mean the Revolving
Credit Agreement, dated as of February 7, 1996, as amended, among Best Products
Co., Inc., the Pre-Petition Lenders, and The CIT Group/Business Credit, Inc., as
agent for the Pre-Petition Lenders.
"Pre-Petition Lenders" shall have the meaning given that term
in the RECITALS to this Agreement.
"Pre-Petition Letter of Credit Exposure" shall mean the Letter
of Credit Exposure (as defined in the Pre-Petition Credit Agreement) outstanding
under the Pre-Petition Credit Agreement immediately prior to the Filing Date.
"Pre-Petition Loans" shall mean all loans made by the
Pre-Petition Lenders to the Borrower under the Pre-Petition Credit Agreement and
outstanding immediately prior to the Filing Date.
"Pre-Petition Obligations" shall mean all indebtedness,
obligations and liabilities of the Borrower to the Pre-Petition Lenders incurred
prior to the Filing Date arising from or related to the Pre-Petition Agreements
plus fees, expenses, indemnities and reimbursement obligations due thereunder
and interest thereon accruing both before and after the Filing Date to the
extent allowable under Section 506(b) of the Bankruptcy Code, whether such
indebtedness, obligations or liabilities are direct or indirect, joint or
several, absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising.
"Pre-Petition Related Documents" shall have the meaning given
to the term "Related Documents" in the Pre-Petition Credit Agreement.
"Prime Loan" shall mean a Loan bearing interest at the Regular
Rate.
"Prime Rate" shall mean the interest rate per annum publicly
announced from time to time by the Bank in New York, New York as its Prime Rate,
such interest rate to change automatically from time to time effective as of the
announced effective date of each change in the Prime Rate. The Prime Rate is not
intended to be the lowest rate of interest charged by the Bank to its borrowers.
"Priority Professional Expenses" shall mean those expenses
entitled to a priority as set forth in clause (ii) of the clause "first" of the
definition of the term "Agreed Administrative Expense Priorities".
"Projected GOB Sale Stores" shall have the meaning given that
term in Section 8.12 hereof.
"Pro Rata Share" shall mean, with respect to any Lender, a
fraction (expressed as a percentage), the numerator of which shall be the amount
of such Lender's Revolving Credit Commitment and the denominator of which shall
be the aggregate amount of all of the Lenders' Revolving Credit Commitments, as
adjusted from time to time in accordance with the provisions of Section 11.13
hereof, provided that, if the Revolving Credit Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letter of Credit Exposure and the denominator shall be the aggregate
amount of all unpaid Loans and Letter of Credit Exposure.
"Realization Rate" shall mean in connection with the sale,
liquidation or other disposition of Inventory resulting from the closings of the
Projected GOB Sale Stores, the percentage obtained by dividing (i) the Net GOB
Sale Proceeds received in cash by the Borrower from such sale, liquidation or
other disposition of such Inventory by (ii) the original cost of such Inventory
determined in accordance with GAAP.
"Register" shall have the meaning given that term in Section
11.13(c) hereof.
"Regular Rate" shall mean, for any day, the Prime Rate for
such day plus 1%.
"Reimbursement Obligation" shall mean the obligation of the
Borrower to reimburse CIT or the Lenders for amounts payable by CIT or the
Lenders under a Letter of Credit Guaranty in respect of any payments made and
Acceptances created under any Letter of Credit issued by the Letter of Credit
Issuer, together with interest thereon and all fees and expenses related
thereto.
"Related Documents" or "Loan Documents" shall mean this
Agreement, the Notes, the Letters of Credit, each Letter of Credit Application,
the Letter of Credit Guaranty, the Interim Bankruptcy Court Order, the Final
Bankruptcy Court Order, the Fee Letter, the Cash Concentration Account
Agreement, the Depository Account Agreements, each notice letter and credit card
depository account agreement delivered to a Depository Bank or other financial
institution pursuant to the Pre-Petition Credit Agreement or Section 8.11 hereof
and the other documents, instruments and agreements referred to in Section 6.01
hereof, and all other instruments, agreements and documents from time to time
delivered in connection with or otherwise relating to any Related Document.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, injection, discharging, injecting, escaping, leaching,
dumping or disposing (including abandonment or discarding of barrels, containers
and other closed receptacles containing any hazardous substance, pollutant or
contaminant) of a Hazardous Material into the indoor or outdoor environment or
onto or from any property presently or formerly owned or operated by the
Borrower or any of its Subsidiaries, or at any disposed facility that received
Hazardous Materials generated by the Borrower or any of its Subsidiaries
including the migration of Hazardous Materials through or in the air, soil,
surface water, groundwater or property.
"Remedial Action" shall mean all actions taken to (i) monitor,
assess, evaluate, investigate, clean up, remove, remediate, treat, contain or in
any other way address Hazardous Materials in the indoor or outdoor environment;
(ii) prevent or minimize a Release or threatened Release of Hazardous Materials
so that the Release or threatened Release does not migrate or endanger or
threaten to endanger public health or welfare or the environment; or (iii)
perform pre-remedial studies and investigations and post-remedial operation and
maintenance activities, or any other actions authorized by 42 U.S.C. 9601.
"Reportable Event" shall mean any of the events described in
Section 4043(b) of ERISA with respect to a Plan (other than events for which the
notice requirements have been waived).
"Reserve Requirements" shall mean, for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities
and to be subject to such reserve requirements without benefit of or credit for
proration, exceptions or offsets which may be available from time to time to any
Lender or the Affiliate of any Lender under Regulation D.
"Retail Store" shall mean a retail store of the Borrower other
than a Jewelry Store.
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the amount set forth on Schedule 1.01(B) to this Agreement or assigned
to such Lender in accordance with Section 11.13, as such amounts may be reduced
from time to time pursuant to the terms of this Agreement, and "Revolving Credit
Commitments" shall, collectively, mean the aggregate amount of the Revolving
Credit Commitments of all the Lenders, the maximum amount of which shall not
exceed $250,000,000.
"Settlement Period" shall have the meaning set forth in
Section 2.03(f) hereof.
"Stated Amount" shall mean, with respect to a Letter of
Credit, the face amount thereof, drawn or undrawn, regardless of the existence
or satisfaction of any conditions or limitations on drawing.
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited or general partnership, limited liability company, limited
liability partnership, trust, association or other business entity of which an
aggregate of 50% or more of the outstanding stock or other interests entitled to
vote in the election of the board of directors of such corporation (irrespective
of whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency), managers, trustees or other controlling persons, or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned or controlled by such Person and/or one or more Subsidiaries
of such Person.
"Syndication Date" shall mean the earlier of (i) the date
which is 60 days after the date of the initial Loan and (ii) the date on which
the Agent determines in its sole discretion (and notifies the Borrower and the
Lenders) that the primary syndication (and the resulting addition of
institutions as Lenders pursuant to Section 11.13) has been completed.
"Taxes" shall have the meaning given that term in Section
2.15.
"Termination Date" shall have the meaning given that term in
Section 2.01(a) hereof.
"Termination Event" shall mean (i) a Reportable Event with
respect to any Plan other than the commencement of the Chapter 11 Case; (ii) the
withdrawal of the Borrower, or any ERISA Affiliate from a Plan during a plan
year in which the Borrower or any ERISA Affiliate was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA; (iii) the imposition of an obligation
on the Borrower, or any ERISA Affiliate under Section 4041 of ERISA to provide
affected parties written notice of intent to terminate a Plan in a distress
termination described in Section 4041(c) of ERISA; or (iv) the institution by
the PBGC of proceedings to terminate a Plan.
"Test Stores" shall mean a group of up to ten Retail Stores
containing a mix of Inventory that the Borrower intends to use for the Retail
Stores remaining after the closing of the Projected GOB Sale Stores.
"Undrawn Letter of Credit Availability" shall mean with
respect to a Letter of Credit, at any time, the maximum amount available to be
drawn under such Letter of Credit at such time, regardless of the existence or
satisfaction of any conditions or limitations on drawing.
"Unfunded Current Liability" of any Plan shall mean the
amount, if any, by which the actuarial present value of the accumulated plan
benefits under the Plan as of the close of its most recent plan year, determined
in accordance with Statement of Financial Accounting Standards No. 35, based
upon the actuarial assumptions used by the Plan's actuary in the most recent
annual valuation of the Plan, exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
"Unreimbursed Draws" shall mean with respect to a Letter of
Credit or any Acceptance created thereunder, at any time, the aggregate amount
at such time of all payments made by the Letter of Credit Issuer or payments
made by CIT or the Lenders under a Letter of Credit Guaranty in respect of such
payments under such Letter of Credit or any Acceptance created thereunder, to
the extent not repaid by the Borrower, provided that Unreimbursed Draws shall
not include any such payments that have been charged to the Borrower's DIP
Account and constitute a Loan pursuant to the terms of this Agreement.
"Unused Line Fee" shall have the meaning given that term in
Section 2.08(e).
1.02. Construction. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular, the
singular the plural and the part the whole and "or" has the inclusive meaning
represented by the phrase "and/or." References in this Agreement to
"determination" by the Agent include good faith estimates by the Agent (in the
case of quantitative determinations) and good faith beliefs by the Agent (in the
case of qualitative determinations). The words "hereof," "herein," "hereunder"
and similar terms in this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement. The section and other headings
contained in this Agreement and the Table of Contents preceding this Agreement
are for reference purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any respect. Section,
subsection and exhibit references are to this Agreement unless otherwise
specified.
1.03. Accounting Principles. Except as otherwise provided in
this Agreement, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP. Notwithstanding
the definition of GAAP contained in this Agreement, no change in GAAP that would
affect the method or calculation of any of the financial covenants, restrictions
or standards or definitions of terms used herein shall be given effect in such
calculations until such financial covenants, restrictions or standards or
definitions are amended in a manner satisfactory to the Borrower and the
Majority Lenders so as to reflect such change in GAAP.
ARTICLE II
THE CREDITS
2.01. Revolving Credit Loans. Subject to the terms and
conditions and relying upon the representations and warranties herein set forth
and subject to the Interim Bankruptcy Court Order and the Final Bankruptcy Court
Order, each Lender severally agrees to make Loans to the Borrower at any time
and from time to time on or after the date hereof and to, but not including, the
Termination Date, in an aggregate principal amount not exceeding at any one time
its Pro Rata Share of the Current Commitment at such time. The "Current
Commitment" at any time shall be equal to the lesser of (i) $195,000,000 during
the period when the Interim Bankruptcy Court Order is in effect, and
$250,000,000 during the period when the Final Bankruptcy Court Order is in
effect, as such amount may have been reduced pursuant to the terms of this
Agreement at such time, and (ii) the Borrowing Base. No Lender shall have an
obligation to make Loans hereunder or arrange for the issuance of Letters of
Credit on or after the Termination Date or which, when added to the aggregate
amount of all outstanding and contemporaneous Loans and the Letter of Credit
Exposure at such time, would cause the aggregate amount of all Loans and the
Letter of Credit Exposure at any time to exceed the Current Commitment at such
time. Notwithstanding anything to the contrary, prior to the Syndication Date,
all Loans shall be incurred and be maintained as Prime Loans. The "Termination
Date" means the date on which the Revolving Credit Commitment of each Lender
expires, which shall be the earliest of (1) October 4, 1996, if the Interim
Bankruptcy Court Order has not been entered on or prior to such date, (2) 30
days from the Entry Date if the Final Bankruptcy Court Order shall not have been
entered during such 30 days period, (3) the date of the substantial consummation
(as defined in Section 1101(2) of the Bankruptcy Code) of a plan of
reorganization in the Chapter 11 Case that has been confirmed by an order of the
Bankruptcy Court, and (4) March 24, 1999. Within the limits of time and amount
set forth in this Section 2.01, and subject to the provisions of this Agreement,
the Borrower may borrow, repay and reborrow hereunder.
2.02. Notes. The obligation of the Borrower to repay the unpaid
principal amount of the Loans made to it by each Lender and to pay interest
thereon shall be evidenced in part by a Note dated the Entry Date in the
principal amount of such Lender's Revolving Credit Commitment with the blanks
appropriately filled in. An executed Note for each Lender shall be delivered by
the Borrower to the Agent on the Entry Date.
2.03. Notice of Borrowing; Making of Loans.
(a) Whenever the Borrower desires to borrow, it shall
provide notice to the Agent of such proposed borrowing (a "Notice of
Borrowing"), each such notice, to be given (i) not later than 12:00 noon (New
York City time) on the date of such proposed borrowing, in the case of a
borrowing consisting of Prime Loans, or (ii) not later than 12:00 noon (New York
City time) on the third Business Day before the date of such borrowing, in the
case of a borrowing consisting of Eurodollar Loans, setting forth: (a) the date,
which shall be a Business Day, on which such borrowing is to occur, (b) whether
such Loan is requested to be a Prime Loan or a Eurodollar Loan and, if a
Eurodollar Loan, the Interest Period requested with respect thereto, (c) the
principal amount of the Loan being borrowed, and (d) the account information
where such Loan is to be received. Such notice shall be given by telephone or in
writing by a Designated Borrowing Officer, provided, that, if requested by the
Agent, any such telephonic notice shall be confirmed in writing by delivery to
the Agent on or before the date on which such Loan is to be made a notice
containing the original or facsimile signature of a Designated Borrowing
Officer. Except for a Notice of Borrowing when the Agent will fund the related
Loan pursuant to Section 2.03(e) hereof, the Agent shall provide each Lender
with prompt notice of each Notice of Borrowing. Except as otherwise provided in
Section 2.03(e), on the date specified in such notice, each Lender shall,
subject to the terms and conditions of this Agreement, make its Pro Rata Share
of such Loan in immediately available funds by wire transfer to the Agent at its
Office not later than 1:30 p.m. (New York City time). Unless the Agent
determines that any applicable conditions in Section 6.02 have not been
satisfied, the Agent shall make the funds so received from the Lenders available
to the Borrower not later than 2:30 p.m. (New York City time), on the date
specified in such notice in immediately available funds by (i) depositing such
proceeds in the Disbursement Account if the Disbursement Account is located at
the Bank and (ii) initiating a wire transfer if the Disbursement Account is not
located at the Bank.
(b) The Agent and each Lender shall be entitled to
rely conclusively on each Designated Borrowing Officer's authority to request a
Loan on behalf of the Borrower until the Agent receives written notice to the
contrary. The Agent and the Lenders shall have no duty to verify the
authenticity of the signature appearing on any written Notice of Borrowing and,
with respect to an oral request for a Loan, the Agent and the Lenders shall have
no duty to verify the identity of any Person representing himself as a
Designated Borrowing Officer.
(c) The Agent and the Lenders shall not incur any
liability to the Borrower in acting upon any telephonic notice referred to above
which the Agent and the Lenders believe in good faith to have been given by a
Designated Borrowing Officer or for otherwise acting in good faith under this
Section 2.03 and, upon the funding of a Loan by the Lenders (or by the Agent on
behalf of the Lenders) in accordance with this Agreement pursuant to any such
telephonic notice, the Borrower shall have effected a Loan hereunder.
(d) Each Notice of Borrowing pursuant to this Section
2.03 shall be irrevocable and the Borrower shall be bound to make a borrowing in
accordance therewith. Each Prime Loan shall be in a minimum amount of $1,000,000
and in multiples of $100,000 if in excess thereof, and each Eurodollar Loan
shall be in a minimum amount of $5,000,000 and in multiples of $1,000,000 if in
excess thereof, provided that the Borrower shall not be entitled to request any
Loan that, if made, would result in an aggregate of more than fifteen separate
Eurodollar Loans of any Lender being outstanding hereunder at any one time.
(e) (i) Except as otherwise provided in this
subsection 2.03(e), all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares, it being understood
that no Lender shall be responsible for any default by any other Lender in that
other Lender's obligation to make a Loan requested hereunder nor shall the
Revolving Credit Commitment of any Lender be increased or decreased as a result
of the default by any other Lender in that other Lender's obligation to make a
Loan requested hereunder.
(ii) Notwithstanding any other provision of this
Agreement, and in order to reduce the number of fund transfers among the
Borrower, the Lenders and the Agent, the Borrower, the Lenders and the Agent
agree that the Agent may (but shall not be obligated to), and the Borrower and
the Lenders hereby irrevocably authorize the Agent to, fund, on behalf of the
Lenders, Loans pursuant to Section 2.01, subject to the procedures for
settlement set forth in subsection 2.03(f); provided, however, that (a) the
Agent shall in no event fund such Loans if the Agent shall have received written
notice from the Majority Lenders on the Business Day prior to the day of the
proposed Loan that one or more of the conditions precedent contained in Section
6.02 will not be satisfied on the day of the proposed Loan, and (b) the Agent
shall not otherwise be required to determine that, or take notice whether, the
conditions precedent in Section 6.02 have been satisfied.
(iii) Unless (A) the Agent has notified the
Lenders that the Agent, on behalf of the Lenders, will fund a particular Loan
pursuant to subsection 2.03(e)(ii), or (B) the Agent shall have been notified by
any Lender on the Business Day prior to the day of a proposed Loan that such
Lender does not intend to make available to the Agent such Lender's Pro Rata
Share of the Loan requested on such day, the Agent may assume that such Lender
has made such amount available to the Agent on such day and the Agent, in its
sole discretion, may, but shall not be obligated to, cause a corresponding
amount to be made available to the Borrower on such day. If the Agent makes such
corresponding amount available to the Borrower and such corresponding amount is
not in fact made available to the Agent by such Lender, the Agent shall be
entitled to recover such corresponding amount on demand from such Lender
together with interest thereon, for each day from the date such payment was due
until the date such amount is paid to the Agent, at the customary rate set by
the Agent for the correction of errors among banks for three Business Days and
thereafter at the Regular Rate. During the period in which such Lender has not
paid such corresponding amount to the Agent, notwithstanding anything to the
contrary contained in this Agreement or any other Related Document, the amount
so advanced by the Agent to the Borrower shall, for all purposes hereof, be a
Loan made by the Agent for its own account. Upon any such failure by a Lender to
pay the Agent, the Agent shall promptly thereafter notify the Borrower of such
failure and the Borrower shall immediately pay such corresponding amount to the
Agent for its own account.
(iv) Nothing in this subsection 2.03(e) shall be
deemed to relieve any Lender from its obligation to fulfill its Revolving Credit
Commitment hereunder or to prejudice any rights that the Agent or the Borrower
may have against any Lender as a result of any default by such Lender hereunder.
(f) (i) With respect to all periods for which the
Agent has funded Loans pursuant to subsection 2.03(e), on the Friday, or the
next Business Day if such Friday is not a Business Day, following the last day
of each week, or such shorter period as it may from time to time select (any
such week or shorter period being herein called a "Settlement Period"), the
Agent shall notify each Lender of the average daily unpaid principal amount of
the Loans outstanding during such Settlement Period. In the event that such
amount is greater than the average daily unpaid principal amount of the Loans
outstanding during the Settlement Period immediately preceding such Settlement
Period (or, if there has been no preceding Settlement Period, the amount of the
Loans made on the date of such Lender's initial funding), each Lender shall
promptly make available to the Agent its Pro Rata Share of the difference in
immediately available funds. In the event that such amount is less than such
average daily unpaid principal amount, the Agent shall promptly pay over to each
other Lender its Pro Rata Share of the difference in immediately available
funds. In addition, if the Agent shall so request at any time when a Potential
Default or an Event of Default shall have occurred and be continuing, or any
other event shall have occurred as a result of which the Agent shall determine
that it is desirable to present claims against the Borrower for repayment, each
Lender shall promptly remit to the Agent or, as the case may be, the Agent shall
promptly remit to each Lender, sufficient funds to adjust the interests of the
Lenders in the then outstanding Loans to such an extent that, after giving
effect to such adjustment, each Lender's interest in the then outstanding Loans
will be equal to its Pro Rata Share thereof. The obligations of each Lender
under this subsection 2.03(f) shall be absolute and unconditional. Each Lender
shall only be entitled to receive interest on its Pro Rata Share of the Loans
which have been funded by such Lender.
(ii) In the event that any Lender fails to make
any payment required to be made by it pursuant to subsection 2.03(f)(i), the
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from the date such payment
was due until the date such amount is paid to the Agent, at the customary rate
set by the Agent for the correction of errors among banks for three Business
Days and thereafter at the Regular Rate. During the period in which such Lender
has not paid such corresponding amount to the Agent, notwithstanding anything to
the contrary contained in this Agreement or any other Related Document, the
amount so advanced by the Agent to the Borrower shall, for all purposes hereof,
be a Loan made by the Agent for its own account. Upon any such failure by a
Lender to pay the Agent, the Agent shall promptly thereafter notify the Borrower
of such failure and the Borrower shall immediately pay such corresponding amount
to the Agent for its own account. Nothing in this subsection 2.03(f)(ii) shall
be deemed to relieve any Lender from its obligation to fulfill its Revolving
Credit Commitment hereunder or to prejudice any rights that the Borrower or the
Agent may have against any Lender as a result of any default by such Lender
hereunder.
2.04. Reduction of Commitment; Mandatory Prepayment; Optional
Prepayment.
(a) Reduction of the Commitment. The Borrower may at
any time or from time to time and without penalty or premium reduce the
Revolving Credit Commitments of the Lenders to an amount (which may be zero) not
less than the sum of the unpaid principal amount of all Loans then outstanding
plus the principal amount of all Loans not yet made as to which notice has been
given by the Borrower under Section 2.03 hereof plus the Letter of Credit
Exposure at such time plus the Stated Amount of all Letters of Credit not yet
issued as to which a request has been made unless the request is withdrawn and
the Letter of Credit is not issued by the Letter of Credit Issuer under Section
3.01 hereof. Any reduction shall be in an amount which is an integral multiple
of $10,000,000. Reduction of the Revolving Credit Commitments of the Lenders
shall be made by providing not less than two Business Days' written notice
(which notice shall be irrevocable) to such effect to the Agent (which notice
the Agent shall promptly transmit to each Lender). Reductions of the Revolving
Credit Commitments of the Lenders are irrevocable and may not be reinstated.
Each such reduction shall reduce the Revolving Credit Commitment of each Lender
proportionately in accordance with its Pro Rata Share.
(b) Mandatory Prepayment. (i) Exceeding Current
Commitment. If at any time the Current Commitment is less than the aggregate
unpaid principal amount of the Loans then outstanding plus the Letter of Credit
Exposure at such time, the Borrower shall prepay an amount of the Loans not less
than the amount of such difference or, if the Loans then outstanding are less
than the amount of such difference, provide cash collateral to the Agent in an
amount equal to 105% of such excess, which cash collateral shall be deposited
and held in the Letter of Credit Cash Collateral Account until such time as such
excess no longer exists. Any such prepayment will not otherwise reduce the
Revolving Credit Commitments of the Lenders. Concurrently with any notice of
reduction of the Revolving Credit Commitments of the Lenders, the Borrower shall
give notice to the Agent of any mandatory prepayment which notice shall specify
a prepayment date no later than the effective date of such reduction of the
Revolving Credit Commitments of the Lenders.
(ii) Asset Sales. Simultaneously with the
consummation of any sale or disposition of assets permitted under Section
9.05(b) hereof, whether by the Borrower or its Subsidiaries, the Borrower shall
prepay the Loans in an aggregate principal amount equal to 100% of the Net
Proceeds or the Net GOB Sale Proceeds, as the case may be, of such sale or
disposition.
(iii) Failure to Obtain Final Bankruptcy
Court Order. Without limiting any other provision of this Agreement or any other
Related Document permitting or requiring prepayment of the Loans in whole or
part, the Borrower shall prepay the Loans in whole without premium or penalty on
the thirtieth (30th) day following the Entry Date in the event the Final
Bankruptcy Court Order shall not have been entered on or before such date and
shall provide cash collateral to the Agent in an amount equal to 105% of the
Stated Amount of all outstanding Letters of Credit, which cash collateral shall
be deposited and held in the Letter of Credit Cash Collateral Account until all
Obligations have been paid in full in cash.
(iv) Other Mandatory Prepayments. The Agent
shall on each Business Day apply all funds deposited in the Agent Account to the
payment, in whole or in part, of the Obligations outstanding.
(c) Avoided Payments. In the event that the
Pre-Petition Lenders are required to repay or disgorge to the Borrower, or any
representatives of the Borrower 's estate, all or any portion of the
Pre-Petition Obligations authorized and directed to be repaid pursuant to the
Interim Bankruptcy Court Order or the Final Bankruptcy Court Order, as the case
may be, or any payment on account of the Pre-Petition Obligations made to any
Pre-Petition Lender is rescinded for any reason whatsoever, including, but not
limited to, as a result of any action, suit, proceeding or claim brought in
connection with or pursuant to 11 U.S.C. xx.xx. 105, 510, 544, 547, 548, 549,
550 or 553, or any other provision of the Bankruptcy Code or any applicable
state law, or any other similar provisions under any other state or federal
statutory or common law (all such amounts being hereafter referred to as the
"Avoided Payments"), then, in such event, (i) the Borrower shall prepay the
Loans in amount equal to 100% of such Avoided Payments immediately upon receipt
of the Avoided Payments by the Borrower or any representative of the Borrower's
estate and (ii) the Revolving Credit Commitments of the Lenders shall be
permanently reduced by an amount equal to 100% of such Avoided Payments.
(d) Optional Prepayment. The Borrower may at any time
or from time to time prepay, in whole or in part, any or all Loans then
outstanding. Any partial prepayment of a Eurodollar Loan shall not reduce the
aggregate principal amount of such Eurodollar Loan to less than $5,000,000.
(e) Prepayment Penalty. All prepayments of Loans
under this Section 2.04 shall be without premium or penalty, except that any
prepayment of Eurodollar Loans shall be subject to the provisions of Section
2.12 hereof.
2.05. Interest Rate.
(a) Each Prime Loan shall bear interest at a rate per
annum for each day until paid equal to the Regular Rate for such day.
(b) Each Eurodollar Loan shall bear interest at a
rate per annum equal to the Eurodollar Rate plus 2% for the Interest Period in
effect for such Eurodollar Loan.
2.06. Interest Payment Dates. The Borrower shall pay interest
on the unpaid principal amount of each Loan from the date of such Loan until
such principal amount shall be paid in full, which interest shall be payable (i)
if such Loan is a Prime Loan, monthly in arrears on the first day of each month,
commencing October 1, 1996, and (ii) if such Loan is a Eurodollar Loan, (A) on
the last day of the Interest Period of such Eurodollar Loan and (B) for any
Interest Period longer than three months, on the day that occurs during such
Interest Period every three (3) months from the first day of such Interest
Period. After maturity of any principal amount of any Loan (by acceleration, at
scheduled maturity or otherwise), interest on such amount shall be due and
payable on demand.
2.07 Amortization. To the extent not due and payable earlier
pursuant to the terms of this Agreement, the entire unpaid principal amount of
each of the Loans shall be due and payable on the Termination Date.
2.08. Payments.
(a) Time, Place and Manner. All payments and
prepayments to be made in respect of principal, interest, fees or other amounts
due from the Borrower hereunder, under the Fee Letter, the Notes or any other
Related Document shall be payable at or before 12:00 noon, New York City time,
on the day when due without presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived. Such payments shall be made to the
Agent for the account of the Agent, CIT or the Lenders, as the case may be, at
the Agent Account in Dollars in funds immediately available at the Bank's Office
without setoff, counterclaim or other deduction of any nature. The Agent shall
maintain a separate loan account (the "Borrower's DIP Account") on its books in
the name of the Borrower in which the Borrower will be charged with Loans made
by the Agent or the Lenders to the Borrower hereunder and with any other
Obligations. The Borrower and the Lenders hereby authorize the Agent to, and the
Agent may, from time to time charge the Borrower's DIP Account with any
interest, fees, expenses and other Obligations that are due and payable under
this Agreement or any Related Document. The Borrower and the Lenders confirm
that any charges which the Agent may so make to the Borrower's DIP Account as
herein provided will be made as an accommodation to the Borrower and solely at
the Agent's discretion and shall constitute a Loan to the Borrower funded by the
Agent on behalf of the Lenders and subject to subsections 2.03(e) and 2.03(f) of
this Agreement. Each of the Lenders and the Borrower agrees that the Agent shall
have the right to make such charges regardless of whether any Event of Default
or Potential Default shall have occurred and be continuing or whether any of the
conditions precedent in Section 6.02 have been satisfied. The Borrower's DIP
Account will be credited upon receipt of "good funds" in the Agent Account with
all amounts actually received by the Agent from the Borrower or others for the
account of the Borrower. Interest on all Loans and all fees that accrue on a per
annum basis shall be computed on the basis of the actual number of days elapsed
in the period during which interest or such fee accrues and a year of 360 days.
In computing interest on any Loan, the date of the making of such Loan shall be
included and the date of payment shall be excluded; provided, however, that if a
Loan is repaid on the same day in which it is made, one day's interest shall be
paid on such Loan.
(b) Periodic Statements. The Agent shall provide the
Lenders and the Borrower promptly after the end of each calendar month a summary
statement (in the form from time to time used by the Agent) of (A) the opening
and closing daily balances in the Borrower's DIP Account during such month, (B)
the amounts and dates of all Loans made during such month, (C) the amounts and
dates of all payments on account of the Loans made during such month and each
Lender's interest in the Loans, (D) the amount of interest accrued on the Loans
during such month, (E) any Letters of Credit issued by and Acceptances created
by the Letter of Credit Issuer during such month, specifying the Stated Amount
thereof, (F) the amount of charges to the Borrower's DIP Account or Loans to be
made during such month to reimburse CIT, the Lenders or the Letter of Credit
Issuer for drawings made under Letters of Credit, payments made on Acceptances
or payments made by CIT or the Lenders under the Letter of Credit Guaranty, and
(G) the amount and nature of any charges to the Borrower's DIP Account made
during such month on account of interest, fees and expenses and other
Obligations. All entries on any such statement shall, 30 days after the same is
sent, be presumed to be correct and shall constitute prima facie evidence of the
information contained in such statement, subject to the Borrower's and each
Lender's express right to rebut such presumption by conclusively demonstrating
the existence of any error on the part of the Agent.
(c) Apportionment of Payments. Except as otherwise
provided in this subsection, aggregate principal and interest payments shall be
apportioned among all outstanding Loans to which such payments relate and
payments of the Unused Line Fee and Letter of Credit Fee required to be paid by
the Borrower to the Lenders under subsections 2.08(e) and (f) shall, as
applicable, be apportioned ratably among the Lenders, in each case according to
their Pro Rata Shares. All payments shall be remitted to the Agent and all such
payments and any other amounts, including, without limitation, proceeds of
Collateral received by the Agent from or on behalf of the Borrower shall be
applied subject to the provisions of this Agreement first, to pay principal of
and interest on any Obligations funded by the Agent on behalf of the Lenders and
any fees, expense reimbursements or indemnities then due to the Agent from the
Borrower; second, to pay any fees, expense reimbursements or indemnities then
due to the Lenders or the Letter of Credit Issuer hereunder; third, to pay
interest due in respect of Loans and Unreimbursed Draws under Letters of Credit;
and fourth, to pay, prepay or provide cash collateral in respect of principal of
Loans and Letter of Credit Exposure. The Agent shall promptly distribute to each
Lender at its primary address set forth on the appropriate signature page
hereof, or at such other address as such Lender may designate in writing, such
funds as it may be entitled to receive. The foregoing apportionment of payments
is solely for the purpose of determining the obligations of the Borrower
hereunder and, notwithstanding such apportionment, any Lender may on its books
and records allocate payments received by it in a manner different from that
contemplated hereby. No such different allocation shall alter the rights and
obligations of the Borrower under this Agreement determined in accordance with
the apportionments contemplated by this Section 2.08(c). To the extent that the
Borrower makes a payment or payments to the Agent or the Agent receives any
payment or other amount, which payment(s) or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause then, to the
extent of such payment or proceeds received, the Obligations or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by the Agent.
(d) Interest Upon Events of Default. To the extent
permitted by law, after there shall have occurred and so long as there is
continuing an Event of Default pursuant to Section 10.01, all principal,
interest, fees, indemnities or any other Obligations of the Borrower hereunder,
under the Fee Letter or under any Note or any other Related Document (and
including interest accrued under this subsection 2.08(d)) shall compound on a
daily basis as provided in this subsection 2.08(d) and shall bear interest for
each day until paid (before and after judgment), payable on demand, at a rate
per annum of 3% above the Prime Rate for such day, such interest rate to change
automatically from time to time effective as of the announced effective date of
each change in the Prime Rate.
(e) Unused Line Fee. From and after the Closing Date
until the Termination Date, the Borrower shall pay to the Agent, for the account
of each Lender in accordance with such Lender's Pro Rata Share, an unused line
fee (the "Unused Line Fee") accruing at the rate of one-half of one percent
(0.50%) per annum, on the excess, if any, of the aggregate Revolving Credit
Commitments over the sum of the Loans and Letter of Credit Exposure outstanding
from time to time. All Unused Line Fees shall be payable monthly in arrears on
the first day of each month commencing October 1, 1996.
(f) Letter of Credit Fees. From and after the Closing
Date until the Termination Date, the Borrower shall pay to the Agent, for the
account of each Lender in accordance with such Lender's Pro Rata Share, (i) a
letter of credit fee accruing at the rate of one and one-half percent (1.50%)
per annum on the average daily Undrawn Letter of Credit Availability of all
Letters of Credit and (ii) an acceptance fee accruing at the rate of one and
one-half percent (1.50%) per annum on the average daily outstanding Acceptances
(collectively, the "Letter of Credit Fee"). All Letter of Credit Fees shall be
payable monthly in arrears on the first day of each month commencing October 1,
1996. The Borrower shall also pay the customary letter of credit fees,
acceptance fees and charges of CIT and the Letter of Credit Issuer for the
administration, issuance, amendment and processing of any Letters of Credit
issued by and Acceptances created by the Letter of Credit Issuer. Promptly
following the Agent's receipt of any Letter of Credit Fees described above, the
Agent shall pay to each Lender its Pro Rata Share of the amount of the Letter of
Credit Fees received by the Agent.
(g) Fees. The Borrower shall pay to the Agent the
fees set forth in the Fee Letter at the times set forth in the Fee Letter. All
fees required to be paid to the Agent pursuant to the Fee Letter, this Agreement
and any other Related Document shall be paid to the Agent for its own account as
required therein. All fees under this Agreement, the Fee Letter and the other
Related Documents are non-refundable under all circumstances.
2.09. Use of Proceeds. The proceeds of the Loans shall be used
to repay the Pre-Petition Obligations under the Pre-Petition Credit Agreement
and for other general corporate purposes (including, without limitation,
payments of fees and expenses to professionals under Sections 330 and 331 of the
Bankruptcy Code and administrative expenses of the kind specified in Section
503(b) of the Bankruptcy Code incurred in the ordinary course of business of the
Borrower). The Letters of Credit will be used to support insurance policies and
customs bonds, to import Inventory in the ordinary course of the Borrower's
business, and for other general corporate purposes, provided that the aggregate
Stated Amount of Letters of Credit issued to support general corporate purposes
shall not exceed $10,000,000.
2.10. Eurodollar Rate Not Determinable; Illegality or
Impropriety.
(a) In the event, and on each occasion, that on or
before the day on which the Eurodollar Rate is to be determined for a borrowing
that is to include Eurodollar Loans, the Agent has determined in good faith
that, or has been advised by the Bank that, the Eurodollar Rate cannot be
determined for any reason or the Eurodollar Rate will not adequately and fairly
reflect the cost of maintaining Eurodollar Loans or Dollar deposits in the
principal amount of the applicable Eurodollar Loans are not available in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of the Bank's eurodollar loans are then being
conducted, the Agent shall, as soon as practicable thereafter, give written
notice of such determination to the Borrower and the other Lenders. In the event
of any such determination, any request by the Borrower for a Eurodollar Loan
pursuant to Section 2.03 shall, until the Agent shall have advised the Borrower
and the other Lenders that the circumstances giving rise to such notice no
longer exist, be deemed to be a request for a Prime Loan. Each determination by
the Agent hereunder shall be conclusive and binding absent manifest error.
(b) In the event that it shall be unlawful or
improper for any Lender to make, maintain or fund any Eurodollar Loan as
contemplated by this Agreement, then such Lender shall forthwith give notice
thereof to the Agent and the Borrower describing such illegality or impropriety
in reasonable detail. Effective immediately upon the giving of such notice, the
obligation of such Lender to make Eurodollar Loans shall be suspended for the
duration of such illegality or impropriety and, if and when such illegality or
impropriety ceases to exist, such suspension shall cease, and such Lender shall
notify the Agent and the Borrower. If any such change shall make it unlawful or
improper for any Lender to maintain any outstanding Eurodollar Loan as a
Eurodollar Loan, such Lender shall, upon the happening of such event, notify the
Agent and the Borrower, and the Borrower shall immediately, or if permitted by
applicable law, rule, regulation, order, decree, interpretation, request or
directive, no later than the date permitted thereby, convert each such
Eurodollar Loan into a Prime Loan.
2.11. Reserve Requirements; Capital Adequacy Circumstances.
(a) Notwithstanding any other provision herein, if
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall impose any tax on or change the basis of taxation of payments to the
Letter of Credit Issuer or any Lender or any Affiliate of a Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or of any
amounts payable hereunder (other than taxes imposed on the overall net income of
the Letter of Credit Issuer or such Lender or such Affiliate by the jurisdiction
in which the Letter of Credit Issuer or such Lender or such Affiliate has its
principal office or by any political subdivision or taxing authority therein),
or shall 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 the Letter of Credit Issuer or such Lender or Affiliate of
such Lender (except any such reserve requirement that is reflected in Reserve
Requirements) or shall impose on the Letter of Credit Issuer or such Lender or
such Affiliate any other condition affecting this Agreement or any Eurodollar
Loans made by such Lender or any Letter of Credit or Acceptance, and the result
of any of the foregoing shall be to increase the cost to the Letter of Credit
Issuer or such Lender of making or maintaining any Eurodollar Loan or issuing or
participating in any Letter of Credit or creating or participating in
Acceptances or to reduce the amount of any sum received or receivable by the
Letter of Credit Issuer or such Lender hereunder (whether of principal, interest
or otherwise) in respect thereof by an amount deemed by the Letter of Credit
Issuer or such Lender to be material, then the Borrower shall pay to the Letter
of Credit Issuer or such Lender such additional amount or amounts as will
compensate the Letter of Credit Issuer or such Lender for such additional costs
incurred or reduction suffered. Any amount or amounts payable by the Borrower to
the Letter of Credit Issuer or any Lender in accordance with the provisions of
this Section 2.11(a) shall be paid by the Borrower to the Letter of Credit
Issuer or such Lender within ten (10) days after receipt by the Borrower from
the Letter of Credit Issuer or such Lender of a statement setting forth in
reasonable detail the amount or amounts due and the basis for the determination
from time to time of such amount or amounts, which statement shall be conclusive
and binding absent manifest error.
(b) If the Letter of Credit Issuer or any Lender
shall have reasonably determined that the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Letter of Credit Issuer or by such
Lender (or any lending office of such Lender) or by any Affiliate of such
Lender, as the case may be, with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has the effect of reducing the rate of return on the
Letter of Credit Issuer's or such Lender's capital or on the capital of such
Lender's Affiliate, as the case may be, as a consequence of the Letter of Credit
Issuer's obligations or such Lender's obligations under this Agreement and the
Related Documents to a level below that which the Letter of Credit Issuer or
such Lender or such Lender's Affiliate, as the case may be, could have achieved
but for such adoption, change or compliance (taking into consideration the
Letter of Credit Issuer's or such Lender's policies or such Lender's Affiliate's
policies, as the case may be, with respect to capital adequacy) by an amount
deemed by the Letter of Credit Issuer or such Lender to be material, then, from
time to time, the Borrower shall reimburse the Letter of Credit Issuer or such
Lender for such reduction. Any amount or amounts payable by the Borrower to the
Letter of Credit Issuer or any Lender in accordance with the provisions of this
Section 2.11(b) shall be paid by the Borrower to the Letter of Credit Issuer or
such Lender within ten (10) days after receipt by the Borrower from the Letter
of Credit Issuer or such Lender of a statement setting forth (i) in reasonable
detail the amount or amounts due, (ii) the basis for the determination from time
to time of such amount or amounts and (iii) that such amount(s) have been
determined in good faith, which statement shall be conclusive and binding absent
manifest error.
(c) The Letter of Credit Issuer or any Lender may
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period;
provided that the Letter of Credit Issuer or such Lender shall provide to the
Borrower a certificate setting forth the basis on which such demand is made. The
protection of this Section 2.11 shall be available to the Letter of Credit
Issuer or any Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
2.12. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender actually sustains or incurs as a
consequence of (a) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article VI, (b) any
failure by the Borrower to borrow any Eurodollar Loan hereunder or to convert
any Prime Loan into a Eurodollar Loan after notice of such borrowing or
conversion has been given pursuant to Section 2.03 or Section 2.14, as the case
may be, (c) any payment, prepayment (mandatory or optional) or conversion of a
Eurodollar Loan required by any provision of this Agreement or otherwise made on
a date other than the last day of the Interest Period applicable thereto, (d)
any default in payment or prepayment of the principal amount of any Eurodollar
Loan or any part thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, by notice of prepayment or otherwise), or (e)
the occurrence of any Event of Default, including, in each such case, any loss
(including, without limitation, loss of margin) or reasonable expense sustained
or incurred in liquidating or employing deposits from third parties acquired to
effect or maintain such Loan or any part thereof as a Eurodollar Loan. Such loss
or reasonable expense shall include but not be limited to an amount equal to the
excess, if any, as reasonably determined by such Lender, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid or converted or not
borrowed or converted (based on the Eurodollar Rate applicable thereto) for the
period from the date of such payment, prepayment, conversion or failure to
borrow or convert to the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow or convert, the last day of the Interest Period
for such Loan that would have commenced on the date of such failure to borrow or
convert) over (ii) the amount of interest (as reasonably determined by such
Lender) that would be realized by such Lender in re-employing the funds so paid,
prepaid or converted or not borrowed or converted for such Interest Period. A
certificate of any Lender setting forth in reasonable detail any amount or
amounts that such Lender is entitled to receive pursuant to this Section 2.12
and the basis for the determination of such amount or amounts shall be delivered
to the Borrower and shall be conclusive and binding absent manifest error.
2.13. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Obligation as a result of
which the aggregate unpaid amount of the Obligations owing to it shall be
proportionately less than the aggregate unpaid amount of the Obligations owing
to any other Lender, it shall simultaneously purchase from such other Lender at
face value a participation in the Obligations owing to such other Lender, so
that the aggregate unpaid amount of the Obligations and participations in
Obligations held by each Lender shall be in the same proportion to the aggregate
unpaid amount of all Obligations owing to such Lender prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the aggregate unpaid
amount of all Obligations outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; provided that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.13 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustments restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in an Obligation deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Lender by reason
thereof as fully as if such Lender had made a loan directly to the Borrower in
the amount of such participation.
2.14. Continuation and Conversion of Loans. Subject to Section
2.03 and Section 2.10 hereof, the Borrower shall have the right, at any time,
(i) on three (3) Business Days' prior irrevocable written or telecopy notice to
the Agent, to continue any Eurodollar Loan or any portion thereof into a
subsequent Interest Period or, after the Syndication Date, to convert any Prime
Loan or portion thereof into a Eurodollar Loan, or (ii) on one (1) Business
Day's prior irrevocable written or telecopy notice to the Agent, to convert any
Eurodollar Loan or portion thereof into a Prime Loan, subject to the following:
(A) in the case of a continuation of a
Eurodollar Loan or portion thereof as such
or a conversion of a Prime Loan or portion
thereof into a Eurodollar Loan (1) no Event
of Default or Potential Default shall have
occurred and be continuing at the time of
such continuation or conversion and (2)
Eurodollar Loans resulting from this Section
2.14 shall be limited in number as provided
in Section 2.03(d);
(B) in the case of a continuation or conversion
of less than all Loans, the aggregate
principal amount of any Eurodollar Loan
continued or converted shall not be less
than $5,000,000 and in multiples of
$1,000,000 if in excess thereof;
(C) each conversion shall be effected by the
Lenders by applying the proceeds of the new
Loan to the Loan (or portion thereof) being
converted; and, in the case of a conversion
from a Eurodollar Loan to a Prime Loan,
accrued interest on the Eurodollar Loan (or
portion thereof) being converted shall be
paid by the Borrower at the time of
conversion;
(D) if the new Loan made in respect of a
conversion shall be a Eurodollar Loan, the
first Interest Period with respect thereto
shall commence on the date of conversion;
(E) no portion of any Loan shall be continued or
converted to a Eurodollar Loan with an
Interest Period ending later than the
Termination Date; and
(F) if any conversion of a Eurodollar Loan shall
be effected on a day other than the last day
of an Interest Period, the Borrower shall
reimburse each Lender on demand for any loss
incurred or to be incurred by it in the
reemployment of the funds released by such
conversion as provided in Section 2.12
hereof.
In the event that the Borrower shall not give notice to continue any Eurodollar
Loan into a subsequent Interest Period, such Loan (unless repaid) shall
automatically become a Prime Loan at the expiration of the then current Interest
Period.
2.15. Taxes. (a) All payments made by the Borrower hereunder,
under the Notes or under any Loan Document will be made without setoff,
counterclaim, deduction or other defense. All such payments shall be made free
and clear of and without deduction for any present or future income, franchise,
sales, use, excise, stamp or other taxes, levies, imposts, deductions, charges,
fees, withholdings, restrictions or conditions of any nature now or hereafter
imposed, levied, collected, withheld or assessed by any jurisdiction (whether
pursuant to United States Federal, state, local or foreign law) or by any
political subdivision or taxing authority thereof or therein, and all interest,
penalties or similar liabilities, excluding taxes on the overall net income of
the Lenders or the Letter of Credit Issuer (such nonexcluded taxes are
hereinafter collectively referred to as the "Taxes"). If the Borrower shall be
required by law to deduct or to withhold any Taxes from or in respect of any
amount payable hereunder, (i) the amount so payable shall be increased to the
extent necessary so that after making all required deductions and withholdings
(including Taxes on amounts payable to the Lenders or the Letter of Credit
Issuer pursuant to this sentence) the Lenders or the Letter of Credit Issuer
receive an amount equal to the sum they would have received had no such
deductions or withholdings been made, (ii) the Borrower shall make such
deductions or withholdings, and (iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxation authority in accordance with
applicable law. Whenever any Taxes are payable by the Borrower, as promptly as
possible thereafter, the Borrower shall send the Lenders, the Letter of Credit
Issuer and the Agent an official receipt showing payment. In addition, the
Borrower agrees to pay any present or future taxes, charges or similar levies
which arise from any payment made hereunder or from the execution, delivery,
performance, recordation or filing of, or otherwise with respect to, this
Agreement, the Notes, the Letters of Credit or any other Loan Document
(hereinafter referred to as "Other Taxes").
(b) The Borrower will indemnify the Lenders and the
Letter of Credit Issuer for the amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.15) paid by any Lender or the Letter of
Credit Issuer and any liability (including penalties, interest and expenses for
nonpayment, late payment or otherwise) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be paid within 30 days from the date on
which such Lender or such Letter of Credit Issuer makes written demand.
(c) Each Lender which is a foreign person (i.e., a
Person other than a United States Person for United States Federal income tax
purposes) hereby agrees that:
(i) it shall, no later than the Entry Date
(or, in the case of a Lender which becomes a party hereto pursuant to
Section 11.13 hereof after the Entry Date, the date upon which such
Lender becomes a party hereto) deliver to the Borrower through the
Agent:
(A) two accurate and complete
signed originals of Form 4224,
or
(B) two accurate and complete
signed originals of Form 1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account of
its lending installation under this Agreement free from withholding of United
States Federal income tax;
(ii) if at any time such Lender changes its
lending installation or installations or selects an additional lending
installation it shall, at the same time or reasonably promptly
thereafter, deliver to the Borrower through the Agent in replacement
for, or in addition to, the forms previously delivered by it
hereunder:
(A) if such changed or additional
lending installation is
located in the United States,
two accurate and complete
signed originals of Form 4224,
or
(B) otherwise, two accurate and
complete signed originals of
Form 1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account of
such changed or additional lending installation under this Agreement free from
withholding of United States Federal income tax; and
(iii) it shall, promptly upon the Borrower's
reasonable request to that effect, deliver to the Borrower such other
forms or similar documentation as may be required from time to time by
any applicable law, treaty, rule or regulation in order to establish
such Lender's tax status for withholding purposes.
(d) If the Borrower fails to perform its obligations
under this Section 2.15, the Borrower shall indemnify the Agent, the Lenders and
the Letter of Credit Issuer for any incremental taxes, interest or penalties
that may become payable as a result of any such failure.
ARTICLE III
LETTERS OF CREDIT AND ACCEPTANCES
3.01. Letters of Credit and Acceptances.
(a) General. In order to assist the Borrower in (i)
establishing or opening documentary and standby letters of credit, which shall
not have expiration dates that exceed one year from the date of issuance (the
"Letters of Credit") with the Letter of Credit Issuer and (ii) obtaining the
acceptance of drafts by the Letter of Credit Issuer or providing for the
deferred payment of trade Letters of Credit pursuant to customary agreements or
methods (the "Acceptances"), the Borrower has requested CIT to join in the
applications for such Letters of Credit, and/or guarantee payment or performance
of such Letters of Credit and any drafts or Acceptances thereunder through the
issuance of a Letter of Credit Guaranty, thereby lending CIT's credit to the
Borrower, and CIT has agreed to do so. These arrangements shall be handled by
CIT subject to the terms and conditions set forth below. CIT shall have no
obligation to arrange for the issuance of Letters of Credit or the creation of
Acceptances on or after the Termination Date or which, when added to the
aggregate amount of all outstanding and contemporaneous Loans and the Letter of
Credit Exposure at such time, would cause the amount of all Loans and the Letter
of Credit Exposure at any time to exceed the Current Commitment at such time. In
addition, CIT shall not be required to be the issuer of any Letter of Credit or
to create any Acceptance. The Borrower will be the account party for any
application for a Letter of Credit, which shall be substantially in the form of
Exhibit C hereto or on a computer transmission system approved by CIT and the
Letter of Credit Issuer or such other written form or computer transmission
system as may from time to time be approved by the Letter of Credit Issuer and
CIT, and shall be duly completed in a manner acceptable to CIT, together with
such other certificates, agreements, documents and other papers and information
as the Letter of Credit Issuer or CIT may request (the "Letter of Credit
Application"), provided that, if the Borrower wishes the Letter of Credit Issuer
to accept a draft or otherwise create an Acceptance, the Letter of Credit
Application shall state that a time draft may be submitted in support of a
drawing under a trade Letter of Credit or that payment under a trade Letter of
Credit may otherwise be deferred. In the event of any conflict between the terms
of the Letter of Credit Application and this Agreement, the terms of this
Agreement shall control.
(i) During the period when the Interim
Bankruptcy Court Order is in effect, the aggregate Letter of Credit Exposure
shall not exceed $100,000,000 and during the period when the Final Bankruptcy
Court Order is in effect, the aggregate Letter of Credit Exposure shall not
exceed $100,000,000. In addition, changes or modifications of the Letters of
Credit or Acceptances by the Borrower and/or the Letter of Credit Issuer of the
terms and conditions thereof shall in all respects be subject to the prior
approval of CIT in the exercise of its reasonable discretion, provided, however,
that (x) the expiry date of all Letters of Credit and the maturity date of all
Acceptances shall be no later than 5 days prior to the Termination Date unless,
in the case of Letters of Credit, on or prior to 5 days prior to the Termination
Date such Letters of Credit shall be cash collateralized in an amount equal to
at least 105% of the Stated Amount of such Letters of Credit, (y) the Letters of
Credit, drafts and Acceptances all documentation in connection therewith shall
be in form and substance satisfactory to CIT and the Letter of Credit Issuer,
and (z) Letters of Credit shall not be issued for the benefit of domestic trade
creditors in connection with the purchase of Inventory by the Borrower.
(ii) The Agent shall have the right, without
notice to the Borrower, to charge the Borrower's DIP Account with the amount of
any and all indebtedness, liability or obligation of any kind (including
indemnification for breakage costs, capital adequacy and reserve requirement
charges) incurred by the Agent, CIT or the Lenders under the Letter of Credit
Guaranty at the earlier of (x) payment by CIT or the Lenders under the Letter of
Credit Guaranty, or (y) with respect to any Letter of Credit which is not cash
collateralized as provided in this Agreement or an Acceptance, the occurrence of
an Event of Default. Any amount charged to the Borrower's DIP Account shall be
deemed a Loan hereunder made by the Lenders to the Borrower, funded by the Agent
on behalf of the Lenders and subject to subsections 2.03(e) and (f) of this
Agreement. Any charges, fees, commissions, costs and expenses charged to CIT for
the account of the Borrower by the Letter of Credit Issuer in connection with or
arising out of Letters of Credit and Acceptances issued pursuant to this
Agreement or out of transactions relating thereto will be charged to the
Borrower's DIP Account in full when charged to or paid by CIT and any such
charges by CIT to the Borrower's DIP Account shall be conclusive and binding on
the Borrower and the Lenders absent manifest error. Each of the Lenders and the
Borrower agree that the Agent shall have the right to make such charges
regardless of whether any Event of Default or Potential Default shall have
occurred and be continuing or whether any of the conditions precedent in Section
6.02 have been satisfied.
(iii) The Borrower agrees to unconditionally
indemnify the Agent, CIT and each Lender and to hold the Agent, CIT and each
Lender harmless from any and all loss, claim or liability incurred by the Agent,
CIT or any such Lender arising from any transactions or occurrences relating to
Letters of Credit established or opened for the Borrower's account and any
drafts or Acceptances thereunder, and all Obligations thereunder, including any
such loss or claim due to any action taken by the Letter of Credit Issuer, other
than for any such loss, claim or liability arising out of the gross negligence
or willful misconduct of the Agent, CIT or any Lender as determined by a final
judgment of a court of competent jurisdiction. The Borrower further agrees to
hold the Agent, CIT and each Lender harmless from any errors or omission,
negligence or misconduct by the Letter of Credit Issuer. The Borrower's
unconditional obligation to the Agent, CIT and each Lender hereunder shall not
be modified or diminished for any reason or in any manner whatsoever, other than
as a result of the Agent's, CIT's or such Lender's gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. The Borrower agrees that any charges incurred by CIT for the
Borrower's account shall be conclusive and binding on the Borrower absent
manifest error and may be charged to the Borrower's DIP Account.
(iv) None of the Agent, CIT, the Letter of
Credit Issuer or any of the Lenders shall be responsible for the existence,
character, quality, quantity, condition, packing, value or delivery of the goods
purporting to be represented by any documents; any difference or variation in
the character, quality, quantity, condition, packing, value or delivery of the
goods from that expressed in the documents; the validity, sufficiency or
genuineness of any documents or of any endorsements thereof even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; the time, place, manner or order in which
shipment is made; partial or incomplete shipments, or failure or omission to
ship any or all of the goods referred to in the Letters of Credit or documents;
any deviation from instructions; delay, default, or fraud by the shipper and/or
anyone else in connection with any such goods or the shipping thereof; or any
breach of contract between the shipper or vendors and the Borrower. Furthermore,
without being limited by the foregoing, none of the Agent, CIT, the Letter of
Credit Issuer or any of the Lenders shall be responsible for any act or omission
with respect to or in connection with any goods covered by Letters of Credit or
financed by Acceptances.
(v) The Borrower agrees that any action
taken by the Agent, CIT, the Letter of Credit Issuer or any Lender, if taken in
good faith, under or in connection with the Letters of Credit, the guarantees,
the drafts or Acceptances, or the goods purported to be represented by any
documents, shall be binding on the Borrower (with respect to the Letter of
Credit Issuer, the Agent, CIT and the Lenders) and shall not put the Agent, CIT,
the Letter of Credit Issuer or the Lenders in any resulting liability to the
Borrower. In furtherance thereof, CIT shall have the full right and authority to
clear and resolve any questions of non-compliance of documents; to give any
instructions as to acceptance or rejection of any documents or goods; to execute
any and all steamship or airways guaranties (and applications therefore),
indemnities or delivery orders; to grant any extensions of the maturity of, time
of payment for, or time of presentation of, any drafts, Acceptances, or
documents; and to agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or Acceptances; all in CIT's sole name,
and the Letter of Credit Issuer shall be entitled to comply with and honor any
and all such documents or instruments executed by or received solely from CIT,
all without any notice to or any consent from the Borrower, provided that,
notwithstanding the foregoing, in the absence of a continuing Event of Default,
CIT shall not take any of the foregoing actions that result in a departure in
any material respect from the terms of the relevant Letter of Credit or Letter
of Credit Application.
(vi) Without CIT's express consent and
endorsement in writing, which, in the case of clause (x) below, in the absence
of a continuing Event of Default shall not be unreasonably withheld or delayed,
the Borrower agrees: (x) not to execute any applications for steamship or airway
guaranties, indemnities or delivery orders; to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
Acceptances or documents; or to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, drafts or Acceptances; and (y) after the
occurrence and during the continuance of an Event of Default not to (A) clear
and resolve any questions of non-compliance of documents, or (B) give any
instructions as to acceptances or rejection of any documents or goods.
(vii) The Borrower agrees that any necessary
and material import, export or other license or certificates for the import or
handling of Inventory will have been promptly procured; all foreign and domestic
governmental laws and regulations in regard to the shipment and importation of
Inventory or the financing thereof will have been promptly and fully complied
with where the failure to comply with any such law or regulation is reasonably
likely to have a Material Adverse Effect, and any certificates in that regard
that CIT may at any time reasonably request will be promptly furnished. In this
connection, the Borrower represents and warrants that all shipments made under
any such Letters of Credit are in compliance with the laws and regulations of
the countries in which the shipments originate and terminate, except where any
such failure to comply is not reasonably likely to result in a Material Adverse
Effect. As between the Borrower, on the one hand, and the Agent, CIT, the
Lenders and the Letter of Credit Issuer, on the other hand, the Borrower assumes
all risk, liability and responsibility for, and agrees to pay and discharge, all
present and future local, state, federal or foreign taxes, duties, or levies. As
between the Borrower, on the one hand, and the Agent, CIT, the Lenders and the
Letter of Credit Issuer, on the other hand, any embargo, restriction, laws,
customs or regulations of any country, state, city, or other political
subdivision, where such Inventory is or may be located, or wherein payments are
to be made, or wherein drafts may be drawn, negotiated, accepted, or paid, shall
be solely the Borrower's risk, liability and responsibility.
(viii) Upon any payments made to the Letter
of Credit Issuer under the Letter of Credit Guaranty, CIT or the Lenders, as the
case may be, shall, without prejudice to its rights under this Agreement
(including that such unreimbursed amounts shall constitute Loans hereunder),
acquire by subrogation, any rights, remedies, duties or obligations granted or
undertaken by the Borrower to the Letter of Credit Issuer in any Letter of
Credit Application, any drafts or applications for Acceptances, any standing
agreement relating to Letters of Credit drafts, Acceptances or otherwise, all of
which shall be deemed to have been granted to CIT, the Agent and the Lenders and
apply in all respects to CIT, the Agent and the Lenders and shall be in addition
to any rights, remedies, duties or obligations contained herein.
(ix) In the event that the Borrower is
required to provide cash collateral for any Letter of Credit, the Borrower shall
deposit such cash collateral in the Letter of Credit Cash Collateral Account,
which cash collateral shall be held in the Letter of Credit Cash Collateral
Account until all Obligations have been paid in full in cash; provided, that,
when the Borrower elects, and is not required to provide cash collateral for a
Letter of Credit, the cash collateral for such Letter of Credit shall be
returned to the Borrower if at such time (A) an Event of Default or Potential
Default has not occurred and is not continuing and (B) no amounts are available
to be drawn on such Letter of Credit and all Unreimbursed Draws have been paid
in full.
(x) Upon the creation of an Acceptance, the
Letter of Credit with respect thereto shall for purposes of this Agreement be
deemed to be no longer outstanding or undrawn to the extent of the amount of
such Acceptance. At no time will more than one Acceptance be used to finance the
same transaction. Notwithstanding any provision of this Agreement, CIT and the
Letter of Credit Issuer shall not be obligated to create Acceptances if the
Letter of Credit Issuer is not making deferred payment of trade Letters of
Credit or Acceptances generally available to its customers.
(b) Request for Issuance. The Borrower may from time
to time, upon notice (an "L/C Notice") not later than 12:00 noon, New York City
time, at least three Business Days in advance, request CIT to assist the
Borrower in establishing or opening a Letter of Credit by delivering to the
Agent and the Letter of Credit Issuer, a Letter of Credit Application, together
with any necessary related documents. CIT shall not provide support, pursuant to
the Letter of Credit Guaranty, if the Agent shall have received written notice
from the Majority Lenders on the Business Day immediately preceding the proposed
issuance day for such Letter of Credit that one or more of the conditions
precedent in Section 6.02 will not have been satisfied on such date, and neither
CIT nor the Agent shall otherwise be required to determine that, or take notice
whether, the conditions precedent set forth in Section 6.02 have been satisfied.
(c) Pre-Petition Letters of Credit and Acceptances.
Schedule 3.01(c) hereto contains a description of all undrawn letters of credit
issued pursuant to the Pre-Petition Credit Agreement and all outstanding
acceptances created pursuant to the Pre-Petition Credit Agreement and, in each
case, outstanding on the Entry Date. Each such letter of credit outstanding on
the Closing Date (each, as amended, renewed or extended from time to time in
accordance with the terms thereof and hereof, an "Existing Letter of Credit")
shall constitute a "Letter of Credit" for all purposes of this Agreement and
each such acceptance outstanding on the Closing Date (each as renewed or
extended from time to time in accordance with the terms thereof and hereof, an
"Existing Acceptance") shall constitute an "Acceptance" for all purposes of this
Agreement.
3.02. Participations.
(a) Purchase of Participations. Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit in accordance
with the procedures set forth in Section 3.01, each Lender (other than CIT)
shall be deemed to have irrevocably and unconditionally purchased and received
from CIT, without recourse or warranty, an undivided interest and participation,
to the extent of such Lender's Pro Rata Share, in all obligations of CIT with
respect to such Letter of Credit and each Acceptance created thereunder
(including, without limitation, all Undrawn Letter of Credit Availability and
Reimbursement Obligations of the Borrower with respect thereto pursuant to the
Letter of Credit Guaranty or otherwise).
(b) Sharing of Letter of Credit Payments. In the
event that CIT makes any payment in respect of the Letter of Credit Guaranty
with respect to a Letter of Credit or Acceptance and the Borrower shall not have
repaid such amount to the Agent for the account of CIT, the Agent shall charge
the Borrower's DIP Account in the amount of the Reimbursement Obligation, in
accordance with Section 3.01(a)(ii).
(c) Obligations Irrevocable. The obligations of a
Lender to make payments to the Agent for the account of the Agent or CIT with
respect to a Letter of Credit or Acceptance shall be irrevocable, not subject to
any qualification or exception whatsoever and shall be made in accordance with,
but not subject to, the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability
of this Agreement or any of the other Related Documents;
(ii) the existence of any claim, setoff,
defense or other right which the Borrower may have at any time against
a beneficiary named in a Letter of Credit or any transferee of any
Letter of Credit or any holder of a draft (or any Person for whom any
such transferee may be acting), the Agent, Letter of Credit Issuer,
any Lender, or any other Person, whether in connection with this
Agreement, any Letter of Credit, draft or Acceptance the transactions
contemplated herein or any unrelated transactions (including any
underlying transactions between the Borrower or any other party and
the beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other
document presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any
security for the performance or observance of any of the terms of any
of the Related Documents;
(v) any failure by the Agent to provide any
notices required pursuant to this Agreement relating to Letters of
Credit drafts or Acceptances; or
(vi) the occurrence of any Event of Default
or Potential Default.
ARTICLE IV
BORROWING BASE
4.01. Condition of Lending and Assisting in Establishing or
Opening Letters of Credit. CIT and the other Lenders shall have no obligation to
make a Loan or assist in establishing or opening a Letter of Credit to the
extent that the aggregate unpaid principal amount of the Loans plus the Letter
of Credit Exposure exceeds, or after giving effect to a requested Credit
Extension would exceed, the Current Commitment at such time.
4.02. Mandatory Prepayment. Concurrently with the delivery of
any Borrowing Base Certificate, the Borrower shall give notice to the Agent of
any mandatory prepayment pursuant to Section 2.04(b)(i), which notice shall
specify a prepayment date no later than the earlier of the date on which such
Borrowing Base Certificate is given and the date on which such Borrowing Base
Certificate is required to be provided to the Lenders.
4.03. Rights and Obligations Unconditional. Without limitation
of any other provision of this Agreement, the rights of the Agent, CIT and the
Lenders and the obligations of the Borrower under this Article IV are absolute
and unconditional, and the Agent, CIT and the Lenders shall not be deemed to
have waived the condition set forth in Section 4.01 hereof or their right to
payment in accordance with Section 4.02 hereof in any circumstance whatever,
including but not limited to circumstances wherein, the Agent or the Lenders
(knowingly or otherwise) make an advance hereunder in excess of the Borrowing
Base.
4.04. Borrowing Base Certificate.
(a) By 12:00 noon, New York City time four (4)
Business Days after the Saturday of each week, the Borrower shall furnish to the
Agent a certificate (a "Borrowing Base Certificate") substantially in the form
attached hereto as Exhibit D, certified as true and correct by a Designated
Financial Officer, setting forth the Borrowing Base and the other information
required therein as of the Borrower's close of business on the Saturday of the
preceding week, together with such other information with respect to the
Inventory of the Borrower as the Agent may reasonably request.
(b) In the event of any dispute about the eligibility
of any asset for inclusion in the Borrowing Base or the valuation thereof, the
Agent's good faith judgment shall control.
(c) The Borrowing Base set forth in a Borrowing Base
Certificate shall be effective from and including the date such Borrowing Base
Certificate is duly received by the Agent to but not including the date on which
a subsequent Borrowing Base Certificate is duly received by the Agent, unless
the Agent disputes the eligibility of any asset for inclusion in the Borrowing
Base or the valuation thereof by notice of such dispute to the Borrower, in
which case the value of such asset shall, at the discretion of the Borrower,
either not be included in the Borrowing Base or be included in the Borrowing
Base with a value reasonably acceptable to the Agent.
(d) Each Borrowing Base Certificate shall be
accompanied by backup schedules showing the derivation thereof and containing
such detail and such other and further information as the Agent may reasonably
request from time to time.
4.05. General Provisions. Notwithstanding anything to the
contrary in this Article IV, in no event shall any single element of value or
asset be counted twice in determining the Borrowing Base.
ARTICLE V
ACKNOWLEDGEMENT, RATIFICATION,
SECURITY AND ADMINISTRATIVE PRIORITY
5.01 Pre-Petition Obligations. The Borrower hereby
acknowledges, confirms and agrees that the Borrower is indebted to the
Pre-Petition Lenders for the Pre-Petition Obligations, as of September 24, 1996,
in respect of Pre-Petition Letter of Credit Exposure and Pre-Petition Loans in
the aggregate principal amount of $171,546,457.11, together with interest
accrued and accruing thereon, and costs, expenses, fees (including attorneys'
fees) and other charges now or hereafter owed by the Borrower to the
Pre-Petition Lenders, all of which are unconditionally owing by the Borrower to
the Pre-Petition Lenders, without offset, defense or counterclaim of any kind,
nature and description whatsoever.
5.02 Acknowledgment of Security Interests. The Borrower hereby
acknowledges, confirms and agrees that the Pre-Petition Lenders have valid,
enforceable and perfected first priority liens upon and security interests in
all Pre-Petition Collateral pursuant to the Pre-Petition Agreements as in effect
on the Filing Date to secure all of the Pre-Petition Obligations.
5.03 Binding Effect of Documents. The Borrower hereby
acknowledges, confirms and agrees that: (a) each of the Pre-Petition Agreements
to which it is a party is in full force and effect as of the date hereof, (b)
the agreements and obligations of the Borrower contained in the Pre-Petition
Agreements constitute the legal, valid and binding obligations of the Borrower
enforceable against it in accordance with their respective terms and the
Borrower has no valid defense, offset or counterclaim to the enforcement of such
obligations (other than those arising as a consequence of the Chapter 11 Case),
and (c) the Pre-Petition Lenders are and shall be entitled to all of the rights,
remedies and benefits provided for in the Pre-Petition Agreements.
5.04 Grant of Lien and Security Interest
(a) As security for the full and timely payment and
performance of all of the Obligations, the Borrower hereby as of the Entry Date,
assigns, pledges, transfers, grants, bargains and sells, conveys, releases,
confirms and sets over unto the Agent, for the ratable benefit of each of the
Lenders, and hereby grants and creates in favor of the Agent, for the ratable
benefit of each of the Lenders, a security interest in and to, the Letter of
Credit Cash Collateral Account, all funds held therein from time to time and all
certificates and instruments, if any, from time to time representing or
evidencing the same and all proceeds and profits of any of the foregoing (all
property of the Borrower subject to the security interest referred to in this
Section 5.04(a) being hereinafter referred to as the "Collateral").
(b) The liens and security interests in favor of the
Agent referred to in Section 5.04(a) hereof shall be valid and perfected liens
and security interests, prior to all other liens and interests hereafter
arising, except for Permitted Liens. Such liens and security interests and their
priority shall remain in effect until the Revolving Credit Commitments have been
terminated and all Obligations have been repaid in cash in full.
5.05 Administrative Priority. The Borrower hereby agrees that
the Obligations of the Borrower shall constitute allowed administrative expenses
in the Chapter 11 Case having priority over all administrative expenses of and
unsecured claims against the Borrower now existing or hereafter arising, of any
kind or nature whatsoever, including without limitation all administrative
expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy
Code, subject, as to priority, only to Carve-Out Expenses having priority over
the Obligations to the extent set forth in the definition of Agreed
Administrative Expense Priorities.
5.06 Grants, Rights and Remedies. The liens and security
interests granted pursuant to Section 5.04 hereof and administrative priority
granted pursuant to Section 5.05 hereof may be independently granted by the
Related Documents and by other Related Documents hereafter entered into. This
Agreement, the Interim Bankruptcy Court Order, the Final Bankruptcy Court Order
and such other Related Documents supplement each other, and the grants,
priorities, rights and remedies of the Agent and the Lenders hereunder and
thereunder are cumulative.
5.07 No Filings Required. The liens and security interests
referred to herein shall be deemed valid and perfected by entry of the Interim
Bankruptcy Court Order and the Final Bankruptcy Court Order, as the case may be,
and entry of the Interim Bankruptcy Court Order shall have occurred on or before
the date of the initial Credit Extension hereunder. The Agent shall not be
required to file any financing statements, notices of lien or similar
instruments in any jurisdiction or filing office or to take any other action in
order to validate or perfect the lien and security interest granted by or
pursuant to this Agreement, the Interim Bankruptcy Court Order, the Final
Bankruptcy Order or any other Related Document.
5.08 Survival. The Liens, lien priority, administrative
priorities and other rights and remedies granted to the Lenders pursuant to this
Agreement, the Interim Bankruptcy Court Order, the Final Bankruptcy Court Order
and the other Related Documents (specifically including but not limited to the
existence, perfection and priority of the liens and security interests provided
herein and therein, and the administrative priority provided herein and therein)
shall not be modified, altered or impaired in any manner by any other financing
or extension of credit or incurrence of debt by the Borrower (pursuant to
Section 364 of the Bankruptcy Code or otherwise), or by any dismissal or
conversion of the Chapter 11 Case, or by any other act or omission whatever.
Without limitation, notwithstanding any such order, financing, extension,
incurrence, dismissal, conversion, act or omission:
(a) except for the Carve-Out Expenses having priority
over the Obligations to the extent set forth in the definition of Agreed
Administrative Expense Priorities, no costs or expenses of administration which
have been or may be incurred in the Chapter 11 Case or any conversion of the
same or in any other proceedings related thereto, and no priority claims, are or
will be prior to or on a parity with any claim of the Agent and the Lenders
against the Borrower in respect of any Obligation,
(b) the Liens in favor of the Lenders set forth in
Section 5.04 hereof shall constitute a valid and perfected first priority Lien,
subject only to the Permitted Liens, to which such lien and security interest
shall or may be subordinate and junior, and shall be prior to all other liens
and interests, now existing or hereafter arising, in favor of any other creditor
or any other Person whatever, and
(c) the Liens in favor of the Lenders set forth in
Section 5.04 hereof shall continue valid and perfected without the necessity
that the Agent file financing statements or otherwise perfect its Lien under
applicable nonbankruptcy law.
ARTICLE VI
CONDITIONS OF EFFECTIVENESS,
LETTER OF CREDIT ISSUANCE AND LENDING
6.01. Conditions Precedent to Effectiveness. This Agreement
shall become effective as of the Business Day when each of the following
conditions precedent shall have been satisfied and the obligation of any Lender
to make the initial Loan hereunder or the obligation of CIT or any Lender to
assist the Borrower in obtaining the issuance of the initial Letter of Credit
hereunder shall be subject to the satisfaction of the following conditions
precedent:
(a) Form of Order. The Interim Bankruptcy Court Order
or the Final Bankruptcy Court Order, as the case may be, shall have been signed
by the Bankruptcy Court and the Agent shall have received a copy of such order,
and such order shall be in full force and effect and shall not have been
reversed, stayed, modified or amended absent the consent of the Agent and the
Borrower.
(b) Payment of Fees, Etc. The Borrower shall have
paid all fees, costs and expenses then payable by the Borrower including,
without limitation, those due and payable pursuant to Sections 2.08 and 11.06
hereof. The Borrower shall have paid to counsel to the Agent all reasonable fees
and other client charges due to such counsel on the Closing Date.
(c) Representations and Warranties; No Event of
Default. The representations and warranties contained in Article VII of this
Agreement and in each other Loan Document and certificate or other writing
delivered to the Agent, the Lenders or the Letter of Credit Issuer pursuant
hereto or thereto or prior to the Closing Date shall be correct on and as of the
Closing Date as though made on and as of such date; and no Potential Default or
Event of Default shall have occurred and be continuing on the Closing Date or
would result from this Agreement becoming effective in accordance with its
terms.
(d) Legality. The making of the initial Loans and the
issuance of the initial Letter of Credit shall not contravene any law, rule or
regulation applicable to CIT, the Lenders or the Letter of Credit Issuer.
(e) Delivery of Documents. The Agent shall have
received on or before the Closing Date the following, each in form and substance
satisfactory to the Agent and, unless indicated otherwise, dated the Closing
Date:
(i) a Note payable to the order of each
Lender, duly executed by the Borrower and dated the Closing
Date;
(ii) a copy of the resolutions adopted by
the Board of Directors of the Borrower, certified by
authorized officers thereof, authorizing (A) the transactions
contemplated by the Loan Documents to which the Borrower is or
will be a party, and (B) the execution, delivery and
performance by the Borrower of each Loan Document and the
execution and delivery of the other documents to be delivered
by the Borrower in connection therewith;
(iii) a certificate of an authorized officer
of the Borrower, certifying the names and true signatures of
the officers of the Borrower authorized to sign each Loan
Document to which the Borrower is or will be a party and the
other documents to be executed and delivered by the Borrower
in connection therewith, together with evidence of the
incumbency of such authorized officers;
(iv) a copy of the charter of the Borrower
certified as of a date not more than 10 Business Days prior to
the Closing Date by the appropriate official(s) of the state
of incorporation of the Borrower and as of the Closing Date by
an authorized officer of the Borrower;
(v) a copy of the by-laws of the Borrower,
certified as of the Closing Date by an authorized officer of
the Borrower;
(vi) an opinion of Weil, Gotshal & Xxxxxx
LLP, counsel to the Borrower, in form and substance
satisfactory to the Agent, covering, among other things, entry
of the Interim Bankruptcy Court Order or the Final Bankruptcy
Court Order, as appropriate, and notice having been given in
accordance with the applicable provisions of the Bankruptcy
Code, the Bankruptcy Rules promulgated pursuant to the
Bankruptcy Code and any order of the Bankruptcy Court, and as
to such other matters as the Agent may reasonably request;
(vii) a certificate of a Designated
Financial Officer of the Borrower, certifying as to the
matters set forth in subsection (c) of this Section 6.01;
(viii) a copy of the financial statements
and projections of the Borrower referred to in Section 7.08
hereof certified by a Designated Financial Officer;
(ix) a Borrowing Base Certificate, current
as of the close of business on September 28, 1996, certified
by a Designated Financial Officer of the Borrower;
(x) a certificate of an authorized officer
of the Borrower certifying the names and true signatures of
those officers or agents of the Borrower that are authorized
to provide Notices of Borrowing and all other notices under
this Agreement and the Loan Documents;
(xi) copies of each credit card agreement,
certified as true and correct copies thereof by a Designated
Financial Officer of the Borrower;
(xii) a certificate of an Authorized Officer
of the Borrower stating that copies of (A) for each Plan that
is a "single-employer plan" (as defined in Section 4001(a)
(15) of ERISA), the most recently completed actuarial
valuation prepared therefor by such Plan's regular enrolled
actuary and the Schedule B, "Actuarial Information" to the IRS
Form 5500 (Annual Report) most recently filed with the
Internal Revenue Service and (B) for each Plan that is a
"multiemployer plan" (as defined in Section 4001(a) (3) of
ERISA), each of the documents referred to in clause (A) either
in the possession of the Borrower or reasonably available
thereto from the sponsor or trustees of such Plan were, in
each case, delivered to CIT in connection with the closing of
the Pre-Petition Credit Agreement and have not been modified,
amended or otherwise superseded;
(xiii) a certificate of insurance evidencing
insurance on the property of the Borrower as is required by
Section 8.07 of this Agreement, naming the Agent as additional
insured, for all insurance maintained by the Borrower; and
(xiv) such other agreements, instruments,
approvals, opinions and other documents as the Agent may
reasonably request.
(f) Proceedings; Receipt of Documents. All
proceedings in connection with the transactions contemplated by this Agreement
and the Related Documents and all documents incidental thereto, shall be
satisfactory to the Agent and its special counsel, and the Agent and such
special counsel shall have received all such information and such counterpart
originals or certified or other copies of such documents, in form and substance
reasonably satisfactory to the Agent, as the Agent or such special counsel may
reasonably request.
(g) Cash Management System. The cash management
system of the Borrower and its Subsidiaries shall be satisfactory to the Agent.
(h) Lien Priority. The Liens in favor of the Agent
pursuant to Section 5.04 hereof shall be valid and perfected first priority
Liens on the Collateral, which shall be subject to no other Liens except for
Permitted Liens.
(i) Compliance. The Agent shall have received
evidence reasonably satisfactory to the Agent of the Borrower's compliance with
all Environmental Laws, ERISA, tax and labor matters.
(j) Appraisal. The Agent shall have completed and
shall be satisfied (in its sole discretion) with the results of an update of the
appraisal of the Inventory and the Borrower shall have paid all fees and
expenses payable in connection with such update.
(k) Payment of Pre-Petition Obligations. All
Pre-Petition Obligations outstanding as of the Closing Date (excluding each
Existing Letter of Credit and each Existing Acceptance) shall be repaid in full
(which may be with the proceeds of the initial Loans made hereunder) and the
Borrower shall have obtained and delivered to the Agent an order signed by the
Bankruptcy Court, in form and substance satisfactory to the Agent, providing for
such payment.
6.02. Conditions Precedent to Loans and Letters of Credit6.02.
Conditions Precedent to Loans and Letters of Credit. In addition to the
requirements of Section 6.01, the obligation of each Lender to make any Loan and
the obligation of CIT or any Lender to assist the Borrower in obtaining the
issuance of any Letter of Credit is subject to the fulfillment, in a manner
satisfactory to the Agent, of each of the following conditions precedent:
(a) Payment of Fees, Etc. The Borrower shall have
paid all fees, costs, expenses and taxes then payable by the Borrower pursuant
to Sections 2.08 and 11.06 hereof.
(b) Representations and Warranties; No Event of
Default. The following statements shall be true, and the submission by the
Borrower to the Agent of a Notice of Borrowing with respect to a Loan and the
Borrower's acceptance of the proceeds of such Loan, or the submission by the
Borrower to the Agent and the Letter of Credit Issuer of an L/C Notice with
respect to a Letter of Credit and the issuance of such Letter of Credit shall be
deemed to be a representation and warranty by the Borrower on the date of such
Loan and the date of the issuance of such Letter of Credit that, (i) the
representations and warranties contained in Article VII of this Agreement and in
each other Loan Document and certificate or other writing delivered to the
Agent, the Lenders and the Letter of Credit Issuer pursuant hereto on or prior
to the date of such Loan or Letter of Credit are correct on and as of such date
as though made on and as of such date (except for representations and warranties
which relate to a specific date); and (ii) no Potential Default or Event of
Default has occurred and is continuing or would result from the making of the
Loan to be made on such date or the issuance of the Letter of Credit to be
issued on such date.
(c) Bankruptcy Court Order. On the date of such Loan
or issuance of such Letter of Credit, the Interim Bankruptcy Court Order or the
Final Bankruptcy Court Order, as the case may be, shall have been signed by the
Bankruptcy Court, and the Agent shall have received a certified copy of the same
and such order shall be in full force and effect and shall not have been
reversed, stayed, modified or amended absent the consent of the Agent and the
Borrower.
(d) Final Bankruptcy Court Order. With respect to any
Loan or issuance of any Letter of Credit to be made on or after the thirtieth
day following the Entry Date, the Final Bankruptcy Court Order shall be in full
force and effect and shall not have been reversed, stayed, modified or amended
absent the consent of the Agent and the Borrower.
(e) Legality. The making of such Loan or the issuance
of such Letter of Credit shall not contravene any law, rule or regulation
applicable to CIT, the Lenders or the Letter of Credit Issuer.
(f) Borrowing Notice. The Agent shall have received a
Notice of Borrowing pursuant to Section 2.03 hereof no later than 12:00 noon
(New York City time) three Business Days prior to the date of the proposed
borrowing with respect to a Eurodollar Loan or on the date of a proposed
borrowing of a Prime Loan or an L/C Notice and a Letter of Credit Application
pursuant to Section 3.01 hereof not later than 12:00 noon (New York City time)
three Business Days prior to the proposed date of issuance of a Letter of
Credit.
(g) Delivery of Documents. The Agent shall have
received such other agreements, instruments, approvals and other documents, each
in form and substance satisfactory to the Agent, as the Agent may reasonably
request.
(h) Proceedings; Receipt of Documents. All
proceedings in connection with the making of such Loan or the issuance of such
Letter of Credit and the other transactions contemplated by this Agreement, and
all documents incidental thereto, shall be satisfactory to the Agent and its
special counsel, and the Agent and such special counsel shall have received all
such information and such counterpart originals or certified or other copies of
such documents, in form and substance satisfactory to the Agent, as the Agent or
such special counsel may reasonably request.
(i) Commitment. The aggregate unpaid principal amount
of the Loans and the Letter of Credit Exposure shall not exceed, and after
giving effect to the requested Credit Extension will not exceed, the Current
Commitment.
Any oral or written request by the Borrower for any Credit Extension hereunder
shall constitute a representation and warranty by the Borrower that the
conditions set forth in this Section 6.02 have been satisfied as of the date of
such request. Failure of the Agent to receive notice from the Borrower to the
contrary before such Credit Extension is made shall constitute a further
representation and warranty by the Borrower that the conditions set forth in
this Section 6.02 have been satisfied as of the date of such Credit Extension.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Agent and the Lenders as
follows:
7.01. Organization, Good Standing, Etc. Each of the Borrower
and its Subsidiaries (i) is a corporation duly organized, validly existing and
in good standing under the laws of the state of its organization, except for any
such failure to be in good standing resulting from the failure of the Borrower
or any of its Subsidiaries to pay franchise taxes, (ii) has all requisite power
and authority to conduct its business as now conducted and as presently
contemplated and (in the case of the Borrower) to make the borrowings hereunder
and to consummate the transactions contemplated hereby, and (iii) is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary, except for any
such failure to be qualified or in good standing resulting from the failure of
the Borrower or any of its Subsidiaries to pay franchise taxes.
7.02 Authority and Authorization. The Borrower has all
necessary corporate power to execute and deliver this Agreement and the other
Loan Documents to which it is or is to be a party. As of the Entry Date, the
Borrower will have the power and authority to perform its obligations hereunder
and thereunder, and all such action has been duly and validly authorized by all
necessary corporate and judicial action other than, during the period between
the Entry Date and the date of the Final Bankruptcy Court Order, the Final
Bankruptcy Court Order.
7.03 Execution and Binding Effect. As of the entry of the
Interim Bankruptcy Court Order, this Agreement and each of the other Loan
Documents required to be executed and delivered on or prior to the date hereof
have been duly and validly executed and delivered by the Borrower and constitute
legal, valid and binding obligations of the Borrower enforceable in accordance
with the terms hereof or thereof. Each Loan Document that is not required to be
executed and delivered by the Borrower prior to the Entry Date, when executed
and delivered, will be validly executed and delivered by the Borrower and will
constitute legal, valid and binding obligations of the Borrower enforceable in
accordance with the terms thereof.
7.04. Governmental Approvals. No authorization, consent,
approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Governmental
Authority is or will be necessary in connection with the execution and delivery
by the Borrower and its Subsidiaries of each Loan Document to which it is a
party, consummation of the transactions therein contemplated, performance of or
compliance with the terms and conditions thereof or to ensure the legality,
validity, enforceability and admissibility in evidence thereof, except for the
Interim Bankruptcy Court Order and the Final Bankruptcy Court Order.
7.05 Absence of Conflicts. Neither the execution and delivery
of this Agreement or the other Loan Documents to which the Borrower is a party
nor consummation of the transactions herein or therein contemplated nor
performance of or compliance with the terms and conditions hereof or thereof
will (a) violate any Law, (b) conflict with or result in a breach of or default
under its charter or by-laws, or any material agreement or instrument to which
the Borrower is a party or by which it or any of its properties (now owned or
hereafter acquired) may be subject or bound (other than conflicts, breaches and
defaults the enforcement of which will be stayed by virtue of the filing of the
Chapter 11 Case) or (c) result in the creation or imposition of any Lien upon
any property (now owned or hereafter acquired) of the Borrower, except the Lien
in favor of the Agent with respect to the Collateral.
7.06. Subsidiaries. Schedule 7.06 hereto is a complete and
correct description of the name, jurisdiction of incorporation and ownership of
the outstanding capital stock of each Subsidiary of the Borrower in existence on
the Entry Date. All shares of such stock owned by the Borrower or one or more of
its Subsidiaries, as indicated in such Schedule, are owned free and clear of all
Liens. The aggregate fair market value of all assets owned by all Subsidiaries
of the Borrower is not in excess of $500,000 and no Subsidiary conducts any
business.
7.07. Litigation. Except as set forth in the financial
statements referred to in Section 7.08 hereof and on Schedule 7.07 hereto (which
has previously been delivered to the Agent), there is not, to the best knowledge
of the Borrower, any pending or threatened proceeding by or before any
Governmental Authority, arbitrator or grand jury against or affecting the
Borrower or any ERISA Affiliate with respect to any Environmental Law or ERISA
law, which, if adversely decided, can reasonably be expected to have a Material
Adverse Effect.
7.08. Financial Condition.
(a) Historical Statements. The Borrower has
heretofore furnished to the Lenders a balance sheet of the Borrower and its
Consolidated Subsidiaries for the fiscal year ended February 3, 1996 and the
related statements of operations and cash flows for the fiscal year then ended,
as examined and reported on by KPMG Peat Marwick LLP, independent certified
public accountants, and a balance sheet and related statements of operations and
cash flows of the Borrower and its Consolidated Subsidiaries for and as of the
end of the seven month period ended August 31, 1996, as certified by a
Designated Financial Officer. Such financial statements (in the case of the
statements as of February 3, 1996, including the notes thereto) present fairly,
in all material respects, the financial condition of the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal year and as of the end of
such period, as applicable, and the results of its operations and the cash flows
for the fiscal year then ended and for the period then ended, as applicable, all
in conformity with GAAP applied on a basis consistent with that of the preceding
fiscal year, subject (in the case of the interim financial statements) to
year-end adjustments.
(b) The Borrower has heretofore furnished to the
Lenders projections for the period from September 1, 1996 through January 31,
1998 and such projections have been prepared in accordance with the standard set
forth in the second sentence of Section 7.12 hereof.
7.09. Compliance with Law, Etc. Each of the Borrower and its
Subsidiaries are not in violation of its charter or by-laws, any law (including
but not limited to violations pertaining to the conduct of its business or the
use, maintenance or operation of the real and personal properties owned or
possessed by it) or any material term of any agreement or instrument binding on
or otherwise affecting it or any of its properties, except for the noncompliance
with any law, agreement or instrument which could not, in the aggregate for all
such instances of noncompliance, have a Material Adverse Effect and except for
violations or any enforcement actions which will be stayed by virtue of the
filing of the Chapter 11 Case.
7.10. ERISA. Except as disclosed on Schedule 7.10 hereto, (i)
each Plan is in substantial compliance with ERISA and the Code, (ii) no
Termination Event has occurred nor is reasonably expected to occur with respect
to any Plan, (iii) the most recent annual report (Form 5500 Series) with respect
to each Plan, including Schedule B (Actuarial Information) thereto, copies of
which have been filed with the Internal Revenue Service, is complete and correct
and fairly presents the funding status of such Plan; and to the best of
Borrower's knowledge, there has been no material adverse change in such funding
status since the date of such report; (iv) no Plan has an Unfunded Current
Liability (other than an Unfunded Current Liability resulting from interest rate
fluctuations); (v) no Plan had an accumulated or waived funding deficiency or
permitted decreases which would create a deficiency in its funding standard
account within the meaning of Section 412 of the Code at any time during the
previous 60 months, (vi) all contributions required to be made with respect to a
Plan have been timely made; (vii) neither the Borrower nor any ERISA Affiliate
has incurred any material liability to or on account of a Plan pursuant to
Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204, or 4212(c)
of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or reasonably expects
to incur any material liability (including any indirect, contingent, or
secondary liability) under any of the foregoing Sections with respect to any
Plan; (viii) no proceedings have been instituted to terminate or appoint a
trustee to administer any Plan; (ix) no condition exists which presents a
material risk to the Borrower or any ERISA Affiliate of incurring a material
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; and (x) no Lien imposed under the Code or ERISA exists or is
likely to arise on account of any Plan within the meaning of Section 412 of the
Code. Neither the Borrower nor any of its ERISA Affiliates has incurred any
material withdrawal liability under ERISA with respect to any Multiemployer
Plan, and neither the Borrower nor any ERISA Affiliate expects to incur a
material withdrawal liability. Except as required by Section 4980B of the Code,
or as otherwise disclosed on Schedule 7.10 hereto, neither the Borrower nor any
of its ERISA Affiliates maintains a welfare plan (as defined in Section 3(1) of
ERISA) which provides benefits or coverage after a participant's termination of
employment. All Plans in existence on the Filing Date are set forth on Schedule
7.10 hereto.
7.11. Taxes, Etc. All tax returns required to be filed by the
Borrower and any of its Subsidiaries have been properly prepared, executed and
filed. All taxes, assessments, fees and other governmental charges upon the
Borrower and its Subsidiaries or upon any of their respective properties,
income, sales or franchises which are shown thereon as due and payable have been
paid. The reserves and provisions for taxes, if any, on the books of the
Borrower are adequate for all open years and for its current fiscal period. The
Borrower does not know of any proposed additional assessment or basis for any
material assessment for additional taxes (whether or not reserved against). The
federal income tax liabilities of the Borrower and its Subsidiaries have been
finally determined by the Internal Revenue Service, or the time for audit has
expired, for all fiscal periods ended on or prior to February 1, 1992 and all
such liabilities (including all deficiencies assessed following audit) have been
satisfied.
7.12. Full Disclosure. No representation or warranty made by
the Borrower or its Subsidiaries under this Agreement or any other Loan Document
is false or misleading in any material respect and no Loan Document or schedule
or exhibit thereto and no certificate, report, statement or other document or
information furnished to the Agent or the Lenders in connection herewith or
therewith or with the consummation of the transactions contemplated hereby and
thereby, contains any material misstatement of fact or omits to state a material
fact or any fact necessary to make the statements contained herein or therein
not misleading. To the extent the Borrower furnishes any projections of the
financial position and results of operations of the Borrower and its
Subsidiaries for, or as at the end of, certain future periods, such projections
were believed at the time furnished to be reasonable, have been or will have
been prepared on a reasonable basis and in good faith by the Borrower, and have
been or will be based on assumptions believed by the Borrower to be reasonable
at the time made and upon the best information then reasonably available to the
Borrower; provided, however, that such projections may not reflect store
closings permitted by Section 9.05(b) of this Agreement. The Borrower has
disclosed to the Agent all relevant information, which to the best of its
knowledge is reasonably likely to result in a Material Adverse Effect.
7.13. Operating Lease Obligations; Existing Liens; Unpaid Rent.
On the Closing Date, the Borrower and its Subsidiaries do not have any
obligations as lessee for the payment of rent for any real property other than
the Operating Lease Obligations set forth in Schedule 7.13 hereto. There are no
Liens on any assets of the Borrower other than (i) the Lien created as of the
Entry Date in favor of the Agent hereunder, (ii) Liens securing Capitalized
Lease Obligations of the Borrower, and (iii) Permitted Liens. As of the Entry
Date, the aggregate amount of accrued and unpaid rent for the leased
distribution centers, warehouses and retail stores of the Borrower does not
exceed $3,500,000.
7.14. Environmental Matters. Except as disclosed in Schedule
7.14 hereto (i) none of the operations of the Borrower or its Subsidiaries are
the subject of any federal, state or local investigation to determine whether
any Remedial Action is needed to address the presence, disposal, Release or
threatened Release, (ii) the Borrower and its Subsidiaries do not have any
contingent liability in connection with any Release, (iii) the operations of the
Borrower and its Subsidiaries are in compliance with all Environmental Laws;
(iv) there has been no Release at any of the properties owned or operated by the
Borrower, its Subsidiaries or any predecessor in interest or title, or at any
disposal or treatment facility which received Hazardous Materials generated by
the Borrower, its Subsidiaries or any predecessor in interest or title which is
reasonably likely to result in Environmental Liabilities and Costs of $100,000
or more; (v) no Environmental Actions have been asserted against the Borrower,
its Subsidiaries or any predecessor in interest or title nor does the Borrower
or its Subsidiaries have knowledge or notice of any threatened or pending
Environmental Action against the Borrower, its Subsidiaries or any predecessor
in interest or title which, if adversely determined, is reasonably likely to
result in Environmental Liabilities and Costs of $100,000 or more; (vi) the
Borrower and its Subsidiaries have obtained all permits, approvals,
authorizations and licenses required by Environmental Laws necessary for their
operations, and all such permits, approvals, authorizations and licenses are in
effect and the Borrower and its Subsidiaries are in compliance with all terms
and conditions of such permits, approvals, authorizations and licenses, (vii) no
Environmental Actions have been asserted against any facilities that may have
received Hazardous Materials generated by the Borrower, its Subsidiaries or any
predecessor in interest or title which, if adversely determined, is reasonably
likely to result in Environmental Liabilities and Costs of $100,000 or more.
7.15. Schedules. All of the information which is required to be
scheduled to this Agreement is set forth on the Schedules attached hereto, is
correct and accurate and does not omit to state any information material
thereto.
7.16. Insurance. The Borrower and its Subsidiaries keep their
properties adequately insured and maintain (i) insurance to such extent and
against such risks, including fire, as is customary with companies in the same
or similar businesses, (ii) workmen's compensation insurance in the amount
required by applicable law, (iii) public liability insurance in the amount
customary with companies in the same or similar business against claims for
personal injury or death on properties owned, occupied or controlled by it, and
(iv) such other insurance as may be required by law or by the Loan Documents.
Schedule 7.16 hereto sets forth a list of all insurance maintained by the
Borrower and its Subsidiaries on the Closing Date.
7.17. Use of Proceeds. The proceeds of the Loans shall be used
to repay the Pre-Petition Obligations under the Pre-Petition Credit Agreement
and for other general corporate purposes (including, without limitation,
payments of fees and expenses to professionals under Sections 330 and 331 of the
Bankruptcy Code and administrative expenses of the kind specified in Section
503(b) of the Bankruptcy Code incurred in the ordinary course of business of the
Borrower, subject to the priorities set forth in the definition of "Agreed
Administrative Expense Priorities" herein). The Letters of Credit will be used
to support insurance policies and customs bonds, to import Inventory in the
ordinary course of the Borrower's business, and for other general corporate
purposes, provided that the aggregate Stated Amount of Letters of Credit issued
to support general corporate purposes shall not exceed $10,000,000.
7.18. Financial Accounting Practices, Etc.
(a) The Borrower and its Subsidiaries make and keep
books, records and accounts which, in reasonable detail, accurately and fairly
reflect their respective transactions and dispositions of their respective
assets and maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization, and (ii) transactions are
recorded as necessary (A) to permit preparation of financial statements in
conformity with GAAP except as previously disclosed to the Agent and (B) to
maintain accountability for assets.
(b) The Borrower and its Subsidiaries maintain a
system of internal procedures and controls sufficient to provide reasonable
assurance that the information required to be set forth in each Borrowing Base
Certificate (including, without limitation, information relating to the
identification of assets which are Inventory and the valuation thereof) is
accurate.
7.19. No Material Adverse Effect. Since August 31, 1996 there
has not occurred any event which may be reasonably expected to have a Material
Adverse Effect, other than events that have occurred as a result of events
leading up to and following the commencement of the Chapter 11 Case.
7.20. Real Property; Leases. Schedule 7.20 hereto sets forth a
complete and accurate description and list as of the Entry Date of the location,
by state and street address, of all real property owned and leased by the
Borrower and its Subsidiaries, together with, in the case of real property that
is owned, a statement as to whether such real property is the subject of a
contract of sale (and, if so, a statement as to the status of such sale).
7.21. Location of Bank Accounts. Schedule 7.21 hereto sets
forth a complete and accurate list as of the Entry Date of all deposit and other
accounts, including the Cash Concentration Account and all Depository Accounts,
maintained by the Borrower and its Subsidiaries together with a description
thereof (i.e. the bank at which such deposit or other account is maintained and
the account number and the purpose thereof).
7.22. No Event of Default. No event has occurred and is
continuing and no condition exists which constitutes an Event of Default or
Potential Default.
7.23. Capitalized Leases. As of the Closing Date, Capitalized
Lease Obligations of the Borrower and its Subsidiaries do not exceed $90,000,000
in the aggregate.
7.24. Inventory. There is no location at which the Borrower has
any Inventory (except for Inventory in transit) other than (i) those locations
listed on Schedule 1.01(A) hereto and, (ii) any other locations approved in
writing by the Agent pursuant to the definition of "Eligible Inventory".
Schedule 1.01(A) hereto contains a true, correct and complete list, as of the
Filing Date, of the legal names and addresses of each warehouse at which
Inventory of the Borrower is stored. None of the receipts received by the
Borrower from any warehouse states that the goods covered thereby are to be
delivered to bearer or to the order of a named Person or to a named Person and
such named Person's assigns.
7.25. Administrative Priority; Lien Priority
(a) After the Entry Date, the Obligations of the
Borrower will constitute allowed administrative expenses in the Chapter 11 Case
having priority in payment over all other administrative expenses and unsecured
claims against the Borrower now existing or hereafter arising, of any kind or
nature whatsoever, including without limitation all administrative expenses of
the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code,
subject, as to priority, only to Carve-Out Expenses having priority over the
Obligations to the extent set forth in the Agreed Administrative Expense
Priorities.
(b) The Lien on the Collateral shall be a valid and
perfected first priority Lien.
7.26. Bankruptcy Court Order. The Interim Bankruptcy Court
Order or the Final Bankruptcy Court Order, as the case may be, is in full force
and effect, and has not been reversed, stayed, modified or amended absent the
consent of the Agent and the Borrower.
ARTICLE VIII
AFFIRMATIVE COVENANTS
So long as any principal of or interest on the Loans or the
Reimbursement Obligations or any other Obligations (whether or not due) shall
remain unpaid or the Lenders shall have any Revolving Credit Commitment
hereunder, the Borrower will, unless the Majority Lenders shall otherwise
consent in writing:
8.01. Reporting Requirements. Furnish to the Lenders:
(a) As soon as practicable and in any event within 90
days after the close of each fiscal year of the Borrower, a consolidated
statement of operations and cash flows of the Borrower and its Consolidated
Subsidiaries for such fiscal year and a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the close of such fiscal year,
and notes to each, all in reasonable detail, setting forth in comparative form
the corresponding figures for the preceding fiscal year, which statements and
balance sheet shall be certified by KPMG Peat Marwick LLP or other independent
certified public accountants of recognized national standing selected by the
Borrower and reasonably satisfactory to the Agent. The certificate or report of
such accountants (the "Accountant's Opinion") shall be without an exception or
qualification arising out of the scope of the audit with respect to such
statements and balance sheet being prepared in compliance with GAAP and shall in
any event contain a written statement of such accountants substantially to the
effect that (i) such accountants examined such statements and balance sheet in
accordance with generally accepted auditing standards and accordingly made such
tests of accounting records and such other auditing procedures as such
accountants considered necessary in the circumstances and (ii) in the opinion of
such accountants such statements and balance sheet present fairly, in all
material respects, the financial position of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the results of its operations
and the changes in its financial position for such fiscal year, in conformity
with GAAP (except for changes in application in which such accountants concur).
A copy of the Accountant's Opinion shall be delivered to the Agent and each
Lender and signed by such independent public accountants. Each set of statements
and balance sheets delivered pursuant to this Section 8.01(a) shall be
accompanied by (1) a certificate or report dated the date of the Accountant's
Opinion by the accountants who certified or reported on such statements and
balance sheet stating in substance that they have reviewed this Agreement and
that in making the examination necessary for their certification of such
statements and balance sheet they did not become aware of any Event of Default
or Potential Default, or if they did become so aware, such certificate or report
shall state the nature and period of existence thereof, if determinable and
(2)(A) a certificate dated the date of the delivery of such statements and
balance sheet by the Designated Financial Officer stating in substance that he
has reviewed this Agreement and that in making the examination necessary for
this certification, he did not become aware of any Event of Default or Potential
Default, or if he did become so aware, such certificate shall state the nature
and period of existence thereof if determinable and (B) a reconciliation between
"Flash Inventory" as shown on the Flash Inventory Report of the Borrower at such
year end and the inventory as shown on such audited financial statements, in
form and substance satisfactory to the Agent.
(b) As soon as practicable and in any event within 45
days after the close of each of the first three fiscal quarters of each of the
Borrower's fiscal years, unaudited consolidated statements of operations and
cash flows of the Borrower and its Consolidated Subsidiaries and a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the close
of such fiscal quarter, all in reasonable detail setting forth in comparative
form the corresponding figures for the corresponding fiscal quarter for the
preceding fiscal year, which statements and balance sheet shall be certified by
a Designated Financial Officer of the Borrower as presenting fairly, in all
material respects, the financial position of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the results of its operations and
the changes in its financial position for such quarter, in conformity with GAAP
applied in a manner consistent except as otherwise disclosed therein with that
of the most recent audited financial statements furnished to the Lenders,
subject to year-end adjustments. Each set of statements and balance sheets
delivered pursuant to this Section 8.01(b) shall be accompanied by a certificate
of a Designated Financial Officer dated the date of the delivery of such
statements and balance sheet stating that he has reviewed this Agreement and
that to the best of his knowledge he did not become aware of any Event of
Default or Potential Default, or if he did become so aware, such certificate
shall state the nature and period of existence thereof, if determinable, and a
reconciliation between "Flash Inventory" as shown on Flash Inventory Report of
the Borrower at such quarter end and the inventory as shown on such quarterly
financial statements delivered pursuant to this Section 8.01(b), in form and
substance satisfactory to the Agent.
(c) As soon as practicable and in any event within
(i) 30 days after the end of each fiscal month of the Borrower, other than the
twelfth and first fiscal months of each fiscal year of the Borrower, (ii) 60
days after the end of the first fiscal month of each fiscal year of the Borrower
and (iii) 90 days after the end of the twelfth fiscal month of each fiscal year
of the Borrower, unaudited consolidated statements of operations and cash flows
for the Borrower and its Consolidated Subsidiaries for such fiscal month and for
the period from the beginning of such fiscal year to the end of such fiscal
month, and an unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal month, all in reasonable
detail, setting forth in comparative form the corresponding figures for the
corresponding fiscal month during the preceding fiscal year (except for the
balance sheet, which shall set forth in comparative form the corresponding
balance sheet as of the prior fiscal year end), and accompanied by a certificate
of a Designated Financial Officer of the Borrower stating that (1) such
statements present fairly, in all material respects, the financial position of
the Borrower and its Consolidated Subsidiaries as of the end of such fiscal
month and the results of its operations and cash flows for such fiscal month, in
conformity with GAAP applied in a manner consistent except as otherwise
disclosed therein with that of the most recent adjusted financial statements
furnished to the Lenders, subject to year-end adjustments, (2) he has reviewed
this Agreement and that to the best of his knowledge he did not become aware of
any Event of Default or Potential Default, or if he did become so aware, such
certificate shall state the nature and period of existence thereof, if
determinable, and (3) a reconciliation between the "Flash Inventory" as shown on
the Flash Inventory Report of the Borrower at such month end and the inventory
as shown on such monthly financial statements delivered pursuant to this Section
8.01(c), in form and substance satisfactory to the Agent.
(d) As soon as practicable and in any event within 4
Business Days after the Saturday of each week (including the week in which this
Agreement is executed), a Flash Inventory Report and a Borrowing Base
Certificate each as of the Borrower's close of business on the Saturday of the
preceding week, each in form and substance reasonably satisfactory to the Agent
and certified by a Designated Financial Officer of the Borrower.
(e) As soon as possible, and in any event within 5
days after the occurrence of a Potential Default or an Event of Default or a
Material Adverse Effect, the written statement of the Designated Financial
Officer of the Borrower, setting forth the details of such Potential Default or
Event of Default, Material Adverse Effect and the action which the Borrower
proposes to take with respect thereto.
(f) Upon the reasonable request of the Agent, copies
of all consultants' reports, investment bankers' reports, accountants'
management letters, business plans and similar documents.
(g) The Borrower shall give or cause to be given or
served on the Agent and its counsel copies of all pleadings, motions,
applications, financial information and other papers and documents filed by the
Borrower in the Chapter 11 Case.
(h) Promptly after the sending thereof, the Borrower
shall give the Agent copies of all written reports given by the Borrower to any
official or unofficial creditors' committee in the Chapter 11 Case, provided
that the Borrower may redact confidential information contained in any such
report if it provides a summary of the nature of the information redacted to the
Agent.
(i) Promptly upon their becoming available, a copy of
(1) all reports, financial statements or other information delivered by the
Borrower to its shareholders, (2) all reports, proxy statements, financial
statements and other information generally distributed by the Borrower to its
creditors or the financial community in general, and (3) any audit or other
reports submitted to the Borrower by independent accountants in connection with
any annual, interim or special audit of the Borrower.
(j) (1) As soon as possible and in any event within
10 days after the Borrower or any ERISA Affiliate knows or has reason to know
that a Termination Event with respect to any Plan has occurred, or that the
Borrower or any ERISA Affiliate has failed to make a required installment to a
Plan within the meaning of Section 412(m) of the Code, a statement of the
Designated Financial Officer of the Borrower describing such Termination Event
and the action, if any, which the Borrower or ERISA Affiliate proposes to take
with respect thereto, (2) promptly and in any event within two Business Days
after receipt thereof by the Borrower or any ERISA Affiliate from the PBGC,
copies of each notice received by the Borrower or any ERISA Affiliate of the
PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan, (3) promptly and in any event within 30 days after the
filing thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with respect to
each Plan and Multiemployer Plan, (4) promptly and in any event within five
Business Days after receipt thereof by the Borrower or any ERISA Affiliate from
a sponsor of a Multiemployer Plan or from the PBGC, a copy of each notice
received by the Borrower or any ERISA Affiliate concerning the imposition or
amount of withdrawal liability under Section 4202 of ERISA or indicating that
such Multiemployer Plan may enter reorganization status under Section 4241 of
ERISA, (5) promptly and in any event within 10 days after the Borrower or any
ERISA Affiliate takes action to establish an employee Plan as defined in Section
3(3) of ERISA, a statement of the Designated Financial Officer of the Borrower
describing such employee Plan and a copy of such employee Plan, and (6) promptly
and in any event within 5 days after the Borrower files any notice with the PBGC
under Section 4043(b) of ERISA, a copy of such notice.
(k) As soon as possible and in any event no later
than July 31, 1997, a financial plan of the Borrower containing updated
financial projections for the fiscal year of the Borrower ending March 31, 1999
prepared by management of the Borrower, in form and substance reasonably
satisfactory to the Agent;
(l) Promptly after, and in any event within 5 days
after, an officer of the Borrower learns of any of the following, notice
thereof:
(i) the receipt by the Borrower or any of
its Subsidiaries of notification that any real or personal property of
the Borrower or its Subsidiaries is subject to any Environmental Lien;
(ii) notice of violation of any
Environmental Law which could reasonably be expected to subject the
Borrower or any of its Subsidiaries to Environmental Liabilities and
Costs of $100,000 or more; or
(iii) notice of the commencement of any
judicial or administrative proceeding or investigation alleging a
violation by the Borrower or any of its Subsidiaries of any
Environmental Law, which if adversely determined, could reasonably be
expected to subject the Borrower or any of its Subsidiaries to
Environmental Liabilities and Costs of $100,000 or more.
(m) Promptly after submission to any Governmental
Authority all documents and information furnished to such Governmental Authority
in connection with any investigation of the Borrower or any of its Subsidiaries
which, if adversely determined, could have a Material Adverse Effect, provided
the Borrower and its Subsidiaries shall not be required to disclose any
documents and information that counsel has advised Borrower should not be
disclosed under any applicable law.
(n) Promptly upon request, such other information
concerning the condition or operations, financial or otherwise, of the Borrower
or any of its Subsidiaries as the Agent or any Lender from time to time may
reasonably request.
8.02. Compliance with Laws, Etc. Comply and cause each of its
Subsidiaries to comply, with all applicable Laws (including but not limited to
Environmental Laws and compliance in respect of products that they sell or
service they perform, conduct of their businesses, or use, maintenance or
operation of real and personal properties owned or possessed by them) with
respect to which failure to comply could have a Material Adverse Effect.
8.03. Preservation of Existence, Etc. Subject to Section
9.05(b) hereof, maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve (which may be by virtue of the stay imposed in the Chapter
11 Case), its existence, rights and privileges, and become or remain duly
qualified and in good standing in each jurisdiction in which the character of
the properties owned or leased by them or in which the transaction of their
business makes such qualification necessary.
8.04. Keeping of Records and Books of Account. Keep, and cause
each of its Subsidiaries to keep, adequate records and books of account, with
complete entries made in accordance with GAAP.
8.05. Inspection Rights.
(a) Permit, and cause each of its Subsidiaries to permit, the
Agent or any Lender, or any agents or representatives thereof or such
professionals or other Persons as the Agent may designate (i) to examine and
inspect the books and records of the Borrower and its Subsidiaries and take
copies and extracts therefrom, (ii) to verify materials, leases, notes,
receivables, deposit accounts and other assets and liabilities of the Borrower
and its Subsidiaries from time to time, and (iii) to conduct Inventory
appraisals and/or valuations at the distribution centers and retail stores of
the Borrower, provided that, in the absence of a continuing Event of Default,
all such actions described in clauses (i) through (iii) above shall be conducted
at reasonable times and during normal business hours. In addition, the Borrower
and its Subsidiaries will cause to be conducted a physical inventory count on or
about January 28, 1997 and shall promptly after such count becomes available
provide to the Agent a copy of the written results of such physical Inventory
count.
(b) The Borrower shall advise the Agent of (i) the closing of
the Projected GOB Sale Stores and the completion of the going out of business
sales conducted in connection therewith and (ii) the identity of the Test
Stores, in each case, together with any additional information in connection
with such closings, sales and Test Stores as the Agent may reasonably request.
Upon the closing of the Projected GOB Sale Stores and the completion of the
going out of business sales conducted in connection therewith, the Borrower
shall permit the Agent or any agents or representatives thereof or such
professionals as the Agent may designate to conduct a review of the cost
structure of the Borrower to determine if the cost assumptions used by the Agent
to determine the components of the Borrowing Base remain valid after the
downsizing that will occur as a result of such store closings and sales. When
the Borrower advises the Agent that the Test Stores have opened for business,
the Borrower shall permit the Agent or any agents or representatives thereof or
such professionals as the Agent may designate to conduct an appraisal of the
Inventory contained in the Test Stores to determine if the assumptions used by
the Agent to determine the components of the Borrowing Base, including without
limitation, the mix of the Inventory contained in such Test Stores and the
Realization Rate of such Inventory, remain valid for the Inventory contained in
the Test Stores. The Borrower understands and agrees that the Agent may use the
results of the foregoing reviews and/or appraisals to insert reserves into the
Borrowing Base pursuant to clause (ii)(B) thereof, provided that nothing in this
paragraph (b) or otherwise shall be intended to limit the reasonable business
judgment of the Agent to impose reserves pursuant to such clause (ii)(B) for the
circumstances described in this paragraph or for any other circumstances.
8.06. Maintenance of Properties, Etc. Maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, all of their
properties (including all real properties leased or owned by them) which are
necessary or useful in the proper conduct of their business in good working
order and condition, ordinary wear and tear excepted, and comply, and cause each
of its Subsidiaries to comply, at all times with the provisions of all Leases to
which each of them is a party as lessee or under which each of them occupies
property, so as to prevent any loss or forfeiture thereof or thereunder in each
case other than sales of property or rejection of Leases approved by the
Bankruptcy Court and otherwise permitted by the terms of this Agreement.
8.07. Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, with responsible and reputable insurance companies or
associations insurance (including, without limitation, comprehensive general
liability, hazard, rent and business interruption insurance) with respect to
their properties (including all real properties leased or owned by them) and
business, in such amounts and covering such risks, as is required by any
Governmental Authority or other regulatory body having jurisdiction with respect
thereto or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated and in any event in amount,
adequacy and scope reasonably satisfactory to the Agent and with such
deductibles or self-insured retentions as are in accordance with normal industry
practice and all applicable laws, rules and regulations, provided that in no
event will any such deductible or self-insured retention in respect of liability
claims or in respect of casualty damage exceed, in each such case, $2,500,000
per occurrence. All original policies or true copies thereof are to be delivered
to the Agent, premium prepaid, with the additional insured endorsement in the
Agent's favor, and shall provide for not less than thirty (30) days prior
written notice to the Agent of the exercise of any right of cancellation. At the
Borrower's request, or if the Borrower fails to maintain such insurance, the
Agent may arrange for such insurance, but at the Borrower's expense and without
any responsibility on the Agent's part for: obtaining the insurance, the
solvency of the insurance companies, the adequacy of the coverage, or the
collection of claims.
8.08. Environmental. Comply, and cause each of its Subsidiaries
to comply in all material respects, with the requirements of all Environmental
Laws and provide to the Agent all documentation in connection with such
compliance that the Agent may reasonably request; and not cause or permit the
Collateral or any property or facility owned, operated or occupied by the
Borrower or any of its Subsidiaries to be used for any activities involving,
directly or indirectly, the use, generation, treatment, storage, release or
disposal of any Hazardous Materials except in compliance with applicable laws.
On behalf of the Borrower and its Subsidiaries, the Borrower hereby agrees to
defend, indemnify, and hold harmless the Agent, the Lenders and the Letter of
Credit Issuer, their employees, agents, officers, and directors, from and
against any claims, demands, penalties, fines, liabilities (including strict
liability), settlements, damages, costs, or expenses (including, without
limitation, attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses) and Environmental Liabilities and Costs
arising out of (i) any Release, or threatened Release on any property presently
or formerly owned or occupied by the Borrower or any of its Subsidiaries (or
their predecessors in interest or title) or at any disposal facility which
received Hazardous Materials generated by the Borrower or any of its
Subsidiaries; (ii) any violation of Environmental Laws, (iii) any Environmental
Actions, (iv) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to exposure to Hazardous Materials
used, handled, generated, transported or deposited by the Borrower or any of its
Subsidiaries (or any predecessor in interest or title); and/or (v) the breach of
any representation or warranty made by the Borrower in Section 7.14 hereof or
the breach of any covenant made by any of the Borrower or its Subsidiaries in
this Section 8.08. This Environmental Indemnity shall survive the repayment of
the Obligations and discharge or release of any security interest granted under
the Loan Documents.
8.09. Further Assurances. Do, execute, acknowledge, deliver,
record, file, register and perform and cause each of its Subsidiaries to do,
execute, acknowledge, deliver, record, file, register and perform at the sole
cost and expense of the Borrower all such further acts, deeds, conveyances,
mortgages, assignments, estoppel certificates, financing statements, notices of
assignment, transfers and assurances as the Agent may require from time to time
in order (a) to carry out more effectively the purposes of this Agreement or any
other Loan Document, (b) to subject to valid and perfected first priority Liens
all the Collateral (subject, as to priority, to Carve-Out Expenses having a
priority over the Obligations to the extent set forth in the definition of
Agreed Administrative Expense Priorities), (c) to perfect and maintain the
validity, effectiveness and priority of any of the Loan Documents and the Lien
intended to be created thereby, and (d) to better assure, convey, grant, assign,
transfer and confirm unto the Agent, the Lenders and the Letter of Credit Issuer
the rights now or hereafter intended to be granted to the Agent, the Lenders and
the Letter of Credit Issuer under this Agreement, any Loan Document or any other
instrument under which the Borrower or any Subsidiary may be or may hereafter
become bound to convey, or assign to the Agent, the Lenders and the Letter of
Credit Issuer. The assurances contemplated by this Section 8.09 shall be given
under applicable nonbankruptcy Law (to the extent not inconsistent with the
Bankruptcy Code and orders of the Bankruptcy Court) as well as the Bankruptcy
Code, it being the intention of the parties that the Agent may request
assurances under applicable nonbankruptcy Law, and such request shall be
complied with (if otherwise made in good faith by the Agent) whether or not the
Interim Bankruptcy Court Order or the Final Bankruptcy Court Order, as the case
may be, is in force and whether or not dismissal of the Chapter 11 Case or any
other action by the Bankruptcy Court is imminent, likely or threatened.
8.10. Financial Accounting Practices, Etc
(a) Make and keep books, records and accounts which,
in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets of the Borrower and its Subsidiaries and maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization, (ii) transactions are recorded as necessary
(A) to permit preparation of financial statements in conformity with GAAP and
(B) to maintain accountability for assets, and (iii) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(b) Maintain a system of internal procedures and
controls sufficient to provide reasonable assurance that the information
required to be set forth in each Borrowing Base Certificate (including, without
limitation, information relating to the identification of assets which are
Eligible Inventory as provided herein and the valuation thereof) is accurate in
all material respects.
8.11. Cash Management System
(a) The Borrower agrees and covenants to (i) cause
all cash and all proceeds from accounts receivable and the sale of Inventory
including, without limitation, all proceeds from all going out of business sales
conducted in connection with the closings of the Projected GOB Sale Stores, to
be deposited into the Depository Accounts in the ordinary course of business of
the Borrower consistent with past practice but in any event not less than twice
each week, (ii) cause all remittances on credit card sales to be transferred
into the Cash Concentration Account or a Depository Account on a daily basis,
(iii) cause all funds in the Depository Accounts to be transferred into the Cash
Concentration Account in the ordinary course of business of the Borrower
consistent with past practice but in any event not less than twice each week,
(iv) cause all cash deposited in the Cash Concentration Account to be sent by
wire transfer to the Agent Account on a daily basis, (v) instruct the Agent to
cause all funds transferred to the Agent Account to be credited to the
Borrower's DIP Account and applied to reduce the Obligations outstanding from
time to time, (vi) take all such actions as the Agent deems necessary or
advisable to send all cash, all proceeds from the sale of Inventory, all
remittances or other proceeds of Collateral to the Agent Account to be applied
to the Obligations, (vii) on or before October 24, 1996, (A) execute and deliver
to the Agent an original notice letter for each Depository Bank listed on
Schedule 7.21 to this Agreement, substantially in the form of Exhibit G hereto,
which will be sent to each such Depository Bank, (B) deliver to the Agent a Cash
Concentration Account Agreement executed by the Cash Concentration Account Bank
identified on Schedule 7.21 to this Agreement, (C) deliver to the Agent a credit
card bank depository account agreement, substantially in the form of Exhibit F
hereto, or substantially in the form of the credit card depository account
agreement delivered to the Agent in connection with the Pre-Petition Credit
Agreement or in such other form that is reasonably acceptable to the Agent, duly
executed by the Borrower and each credit card servicer of the Borrower, and (D)
take such other actions as the Agent deems necessary or advisable to grant to
the Agent dominion and control over the funds in the Cash Concentration Account.
(b) The Borrower shall promptly, and in any event not
later than five (5) days after the opening of any new Depository Account, notify
the Agent in writing of the creation of such new Depository Account and shall at
the time of such notice execute and deliver to the Agent a notice letter,
substantially in the form of Exhibit G hereto. Upon and during the continuance
of an Event of Default, the Borrower shall, upon the request of the Agent, use
its best efforts to cause each Depository Bank maintaining a Depository Account
to promptly, and in any event within thirty (30) days after the date of such
request, enter into a Depository Account Agreement. If, after any such request
by the Agent, the Borrower is unable to obtain a Depository Account Agreement
from any financial institution that receives remittances or other proceeds of
sales of Inventory within such thirty (30) day period, the Borrower shall
promptly thereafter terminate such accounts and establish new accounts at a
financial institution that will enter into a Depository Account Agreement.
(c) The Borrower shall promptly, and in any event not
later than five (5) days after the establishment of any new credit card
relationship, notify the Agent in writing of the creation of such new
relationship and shall use its best efforts (but not requiring any payment to be
made by the Borrower) to deliver to the Agent a credit card bank depository
account agreement, substantially in the form of Exhibit F hereto, duly executed
by the Borrower and such new credit card servicer.
8.12. Store Closings. The Borrower shall use its best efforts
to close the number of Retail Stores projected to be closed in the projections
of the Borrower delivered to the Agent pursuant to Section 6.01(e)(viii) hereof
(the "Projected GOB Sale Stores") at the times the Borrower has projected to
close the Projected GOB Sale Stores in such projections, provided that (i) 100%
of the Net GOB Sale Proceeds of all going out of business sales conducted in
connection with the closing of the Projected GOB Sale Stores shall (A) be
guaranteed by a standby letter of credit (a "GOB Letter of Credit"), in form and
substance reasonably satisfactory to the Agent, issued for the benefit of the
Borrower prior to the commencement of such going out of business sales or (B) be
received by the Borrower in cash prior to the commencement of such going out of
business sales and, in each such case, 100% of such Net GOB Sale Proceeds or the
proceeds from any drawings under a GOB Letter of Credit shall promptly, after
the receipt thereof, be deposited in a Depository Account or the Cash
Concentration Account, (ii) (A) the average Realization Rate from all such going
out of business sales shall not be less than 68% and (B) the Realization Rate
set forth in any contract between the Borrower and a liquidator governing the
conduct of any going out of business sale, and the actual Realization Rate from
each such sale, shall not be less than 60%, (iii) all material terms and
conditions of the contract between the Borrower and a liquidator governing the
conduct of such going out of business sales (other than those set forth in
clauses (i) and (ii) of this Section 8.12 which are acceptable to the Agent and
the Lenders) shall be reasonably acceptable to the Agent, and (iv) the order of
the Bankruptcy Court with respect to the closing of the Projected GOB Sale
Stores and the going out of business sales in connection therewith shall be in
form and substance reasonably acceptable to the Agent.
ARTICLE IX
NEGATIVE COVENANTS
So long as any principal of or interest on the Loans or the
Reimbursement Obligations or any Obligations (whether or not due) shall remain
unpaid or any Lender shall have any Revolving Credit Commitment hereunder, the
Borrower will not, without the prior written consent of the Majority Lenders:
9.01 Bankruptcy Court Order; Final Bankruptcy Court Order;
Administrative Priority; Lien Priority; Payment of Claims.
(a) Seek, consent to or suffer to exist any
modification, stay, vacation or amendment of the Interim Bankruptcy Court Order
or the Final Bankruptcy Court Order except for modifications and amendments
agreed to by the Agent.
(b) Suffer to exist a priority for any administrative
expense or unsecured claim against the Borrower (now existing or hereafter
arising of any kind or nature whatsoever, including without limitation any
administrative expenses of the kind specified in Sections 503(b) and 507(b) of
the Bankruptcy Code) equal or superior to the priority of the Lenders in respect
of the Obligations, except for the Carve-Out Expenses having priority over the
Obligations to the extent set forth in the definition of Agreed Administrative
Expense Priorities.
(c) Suffer to exist any Lien on the Collateral having
a priority equal or superior to the Lien in favor of the Lenders in respect of
the Collateral or any Liens except for Permitted Liens.
(d) Prior to the date on which the Obligations have
been paid in full in cash, all Letters of Credit have been cash collateralized
or returned for cancellation and the Revolving Credit Commitment has been
terminated, pay any administrative expense claims except (i) Priority
Professional Expenses and (ii) other administrative expense claims incurred in
the ordinary course of the business of the Borrower or for the general corporate
purposes of the Borrower consistent with past practice, in each case subject to
the order of priority set forth in the Agreed Administrative Expense Priorities.
For purposes of this Section 9.01(d), the fact that the Borrower obtained the
approval of the Bankruptcy Court for the payment of an administrative expense
claim will not create the presumption that such payment was outside the ordinary
course of business.
9.02. Liens, Etc. Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any Lien upon or with respect to
any of their properties, rights or other assets, whether now owned or hereafter
acquired, or assign or otherwise transfer, or permit any of its Subsidiaries to
assign or otherwise transfer, any right to receive income, other than the
following ("Permitted Liens"):
(a) Liens created pursuant to the Loan Documents;
(b) Liens existing on the Filing Date, as set forth
in Part A of Schedule 9.02 hereof, provided that the Borrower shall have until
October 31, 1996 to update Part A of Schedule 9.02 hereof only for Liens on
assets of the Borrower located in those locations listed on Part B of Schedule
9.02 hereof, provided further that the Borrower shall not be permitted to update
Part A of Schedule 9.02 hereof for any Liens on Inventory of the Borrower
located in the locations listed on Part B of Schedule 9.02 hereof and any Liens
(other than those otherwise permitted by other clauses of this Section 9.02) on
Inventory of the Borrower located in the locations listed on Part B of Schedule
9.02 hereof shall constitute a violation of this Section 9.02;
(c) Liens in connection with any taxes, assessments,
governmental charges, levies, or claims that are not yet due and payable or
which the Borrower is contesting in good faith and by appropriate proceedings
diligently conducted so long as reserves or other appropriate provisions as may
be required by GAAP have been made therefor and so long as the failure to pay
the same does not have a Material Adverse Effect;
(d) Liens created by operation of law other than
Environmental Liens, such as materialmen's liens, mechanics' liens and other
similar liens, arising in the ordinary course of business which secure amounts
not overdue for a period of more than 60 days or which are being contested in
good faith by appropriate proceedings;
(e) deposits (including utility security deposits),
pledges or Liens (other than Liens arising under ERISA), securing (1)
obligations incurred in respect of workers' compensation, unemployment insurance
or other forms of governmental insurance or benefits, (2) the performance of
bids, tenders, leases, contracts (other than for the payment of money) and
statutory obligations, or (3) obligations on surety or appeal bonds, but only to
the extent such deposits, pledges or Liens are incurred or otherwise arise in
the ordinary course of business and secure obligations which are not past due;
(f) restrictions on the use of real property and
minor irregularities in the title thereto which do not (1) secure obligations
for the payment of money or (2) materially impair the value of such property or
its use by the Borrower or any of its Subsidiaries in the normal conduct of such
Person's business;
(g) purchase money Liens on or purchase money
security interests in equipment or real property acquired or held in the
ordinary course of its business securing Indebtedness not exceeding the
aggregate principal amount of $10,000,000 in any year;
(h) leases or subleases granted to third Persons not
interfering with the ordinary course of business of the Borrower or any of its
Subsidiaries;
(i) Liens securing Capitalized Leases permitted by
Section 9.08;
(j) to the extent the same constitutes Liens, the
interest of the consignor in Inventory held by the Borrower on consignment.
9.03. Indebtedness. Create, incur or suffer to exist, or permit
any of its Subsidiaries to create, incur or suffer to exist, any Indebtedness,
other than:
(a) Indebtedness created hereunder or under the Notes
or any Letter of Credit;
(b) Indebtedness existing on the Filing Date;
(c) Indebtedness in connection with Capitalized
Leases permitted by Section 9.08 of this Agreement; and
(d) Indebtedness secured by Liens or security
interests permitted by Section 9.02(g).
9.04. Guarantees, Etc. Become liable, or permit any of its
Subsidiaries to become liable, under any Guarantee in connection with any
Indebtedness of any other Person, other than:
(a) guaranties by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business; and
(b) guaranties existing on the Filing Date.
9.05. Merger, Consolidation, Sale of Assets, Etc.
(a) Merge or consolidate with any Person, or permit
any of its Subsidiaries to merge or consolidate with any Person.
(b) Sell, assign, lease or otherwise transfer or
dispose of, or permit any of its Subsidiaries to sell, assign, lease or
otherwise transfer or dispose of, whether in one transaction or in a series of
related transactions, any of its properties, rights or other assets whether now
owned or hereafter acquired to any Person, provided that (i) the Borrower may
sell Inventory in the ordinary course of business, (ii) the Borrower may dispose
of obsolete or worn-out property in the ordinary course of business, (iii) the
Borrower and its Subsidiaries may sell or discount without recourse its accounts
receivable only in connection with the compromise thereof or the assignment of
past due accounts receivable for collection, (iv) the Borrower may sell
Inventory and other assets for fair market value in connection with the closing
of the Projected GOB Sale Stores, Jewelry Stores and up to three of its
distribution centers provided that (x) the Borrower obtains all approvals of the
Bankruptcy Court necessary to conduct such closings, and (y) the going out of
business sales conducted in connection with the closing of the Projected GOB
Sale Stores are conducted pursuant to the terms set forth in Section 8.12
hereof, and (v) the Borrower may sell or otherwise dispose of assets, other than
Inventory and other than sales or dispositions of assets in connection with
store closings, for fair market value, provided that the Net Proceeds or the Net
GOB Sale Proceeds, as the case may be, of all such sales, transfers or other
dispositions permitted by this Section 9.05(b) are paid to the Agent pursuant to
the terms of Section 2.04(b)(ii).
9.06. Change in Nature of Business. Except as disclosed in
writing to the Agent prior to the Entry Date, make, or permit any of its
Subsidiaries to make, any change in the nature of its business as carried on at
the date hereof.
9.07. Loans, Advances and Investments, Etc. Make, or permit any
of its Subsidiaries to make, any loan or advance to any Person or purchase or
otherwise acquire, or permit any of its Subsidiaries to purchase or otherwise
acquire, any capital stock, properties, assets or obligations of, or any
interest in, any Person, other than:
(a) Permitted Investments;
(b) receivables owing to the Borrower or any of its
Subsidiaries if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with the customary trade terms of the
Borrower or its applicable Subsidiary, as the case may be;
(c) loans and advances to employees in the ordinary
course of business in an aggregate principal amount not to exceed $500,000 at
any time outstanding;
(d) investments (including debt obligations) received
in connection with the bankruptcy or reorganization of suppliers and customers
and in settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business; and
(e) investments existing on the Filing Date.
9.08. Lease Obligations. Create, incur or suffer to exist, or
permit any of its Subsidiaries to create, incur or suffer to exist, any
obligations as lessee (i) for the payment of rent for any real or personal
property in connection with any sale and leaseback transaction or (ii) for the
payment of rent for any real property under Leases entered into after the Filing
Date (other than renewals or extensions of existing Leases), provided that the
Borrower may enter into leases after the Filing Date requiring the payment of
rent not in excess of $2,250,000 in the aggregate in any year.
9.09. Dividends, Prepayments, Etc. Declare or pay any
dividends, purchase or otherwise acquire for value any of its capital stock now
or hereafter outstanding, return any capital to its stockholders as such, or
make any other payment or distribution of assets to its stockholders as such, or
permit any of its Subsidiaries to do any of the foregoing or to purchase or
otherwise acquire for value any stock of the Borrower.
9.10. Transactions with Affiliates. Enter into or be a party
to, or permit any of its Subsidiaries to enter into or be a party to, any
transaction with any Affiliate of the Borrower except as otherwise provided
herein or in the ordinary course of business in a manner and to an extent
consistent with past practice and necessary or desirable for the prudent
operation of its business for fair consideration and on terms no less favorable
to the Borrower or such Subsidiary as are available from unaffiliated third
parties.
9.11. Sale Policies. Except in connection with the closings of
the Projected GOB Sale Stores and the going out of business sales conducted in
connection therewith and in connection with the discontinuance of certain lines
of the Borrower's Inventory, engage in policies or procedures with respect to
the selling price of Inventory, which policies and procedures are inconsistent
in any material respect with the past practices of the Borrower absent the prior
written consent of the Agent.
9.12. Environmental. Permit the use, handling, generation,
storage, treatment, Release or disposal of any Hazardous Material at property
owned or leased by the Borrower except in compliance with Environmental Laws and
so long as such use, handling, generation, storage, treatment, Release or
disposal of Hazardous Materials would not result in Environmental Liabilities
and Costs in excess of $100,000.
9.13. ERISA.
(a) Engage in any prohibited transaction described in
Section 406 of ERISA or 4975 of the Code for which a statutory or class
exemption is not available or a private exemption has not previously been
obtained from the Department of Labor;
(b) permit, or permit any ERISA Affiliate to permit,
any Lien from arising under Section 412(n) of the Code;
(c) amend or permit any ERISA Affiliate to amend any
Plan in a manner that would require security under Section 307 of ERISA; or
(d) request or permit any ERISA Affiliate to request
a waiver of the minimum funding requirements under Section 412 of the Code in
respect of any Plan.
9.14. Store Openings. Without the prior written consent of the
Majority Lenders, open more than three (3) stores not existing on the Filing
Date.
9.15. Subsidiaries. Permit its Subsidiaries existing on the
Filing Date to conduct any business or to own assets with an aggregate fair
market value for all such Subsidiaries in excess of $500,000 or create or
acquire any Subsidiaries not existing on the Filing Date.
9.16. Availability. Permit Availability to be less than
$25,000,000 at any time on and after February 28, 1997 if on such date both (i)
the Borrower has not received cash proceeds, in the aggregate amount required to
be received by the Borrower pursuant to clause (ii) of Section 8.12 hereof, from
the going out of business sales conducted in connection with the closing of the
Projected GOB Sale Stores and deposited such cash proceeds in a Depository
Account or the Cash Concentration Account and (ii) the Borrower has not received
one or more GOB Letters of Credit, in the aggregate stated amount required to be
received by the Borrower pursuant to clause (ii) of Section 8.12 hereof, from
the going out of business sales conducted in connection with the closing of the
Projected GOB Sale Stores, which GOB Letters of Credit are payable not later
than June 15, 1997.
9.17. Payments. Make any payment of principal or interest or
otherwise on account of any Indebtedness or trade payable incurred prior to the
Filing Date, provided that such payments may be made: (i) to the holders of, or
in respect of, wage, salary, commission and employee benefit obligations
(including expense reimbursements) which arose prior to the Filing Date; (ii) to
landlords in connection with the assumption of unexpired leases under Section
365 of the Bankruptcy Code in an aggregate amount not to exceed $2,000,000;
(iii) to lessors and non-debtor parties to executory contracts in connection
with the assumption of such leases and contracts under Section 365 of the
Bankruptcy Code; (iv) to the Pre-Petition Lenders to repay the Pre-Petition
Obligations; (v) in respect of workers' compensation benefits and liability and
property insurance policies of the Borrower in an aggregate amount not to exceed
$500,000; (vi) in respect of prepetition custom duties and custom broker charges
of the Borrower in an aggregate amount not to exceed $710,000; (vii) in respect
of prepetition obligations to common carriers of the Borrower in an aggregate
amount not to exceed $2,750,000; (viii) in respect of unpaid allowed claims of
vendors for reclamation rights in accordance with Section 546(c)(2)(A) of the
Bankruptcy Code, in an aggregate amount not in excess of $10,000,000; (ix) with
respect to payroll taxes, garnishment payments, sales taxes, gift certificates,
layaways or other trust fund disbursements in accordance with past practice of
the Borrower; and (x) to other Persons, in an aggregate amount not to exceed
$5,000,000; in each case after prior written notice of such payment has been
given by the Borrower to the Agent and subject to approval of the Bankruptcy
Court.
ARTICLE X
DEFAULTS
10.01. Events of Default. An Event of Default shall mean the
occurrence or existence of one or more of the following events or conditions
(whatever the reason for such Event of Default and whether voluntary,
involuntary or effected by operation of law):
(a) The Borrower shall (i) fail to make any payment
of principal under this Agreement on any Loan or any Reimbursement Obligation
when due; or (ii) fail to pay when due any other amount payable under this
Agreement or any other Related Document (including but not limited to the making
of deposits in the Depository Accounts, the Cash Concentration Account or the
Letter of Credit Cash Collateral Account), including any interest or fee due
hereunder or under the Fee Letter or any other Related Document, and in the case
of this clause (ii) such failure shall continue unremedied for more than five
(5) days; or
(b) Any representation or warranty made by the
Borrower under this Agreement or any other Related Document or any statement
made by the Borrower in any financial statement, certificate, report or document
furnished to the Agent or the Lenders pursuant to or in connection with this
Agreement or any other Related Document, shall prove to have been false or
misleading in any material respect as of the time when made (including by
omission of material information necessary to make such representation, warranty
or statement, in light of the circumstances under which it was made, not
misleading); or
(c) The Borrower shall default in the performance or
observance of any covenant contained in Sections 8.02, 8.03, 8.07 and 8.11
hereof or Article IX hereof; or
(d) The Borrower shall default in the performance or
observance of (i) the covenants contained in Section 8.01 (other than paragraphs
(d) and (e) thereof) and such default shall have continued unremedied for a
period of five (5) days, (ii) the covenants contained in paragraphs (d) and (e)
of Section 8.01 and such default shall have continued unremedied for a period of
three (3) days, and (iii) any other covenant, agreement or duty under this
Agreement or any other Related Document (to the extent not otherwise set forth
in this Section 10.01) and such default shall have continued unremedied for a
period of twenty (20) days; or
(e) An order with respect to the Chapter 11 Case
shall be entered by the Bankruptcy Court, or the Borrower shall file an
application for an order with respect to the Chapter 11 Case seeking the
appointment of (i) a trustee under Section 1104, or (ii) an examiner with
enlarged powers relating to the operation of the business (powers beyond those
set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section
1106(b) of the Bankruptcy Code; or
(f) An order with respect to the Chapter 11 Case
shall be entered by the Bankruptcy Court converting such Chapter 11 Case to a
chapter 7 case; or
(g) An order shall be entered by the Bankruptcy Court
confirming a plan of reorganization in the Chapter 11 Case which does not
contain a provision for termination of the Revolving Credit Commitment, the cash
collateralization or return for cancellation of all Letters of Credit and
payment in full in cash of all Obligations of the Borrower hereunder and under
the other Related Documents on or before the effective date of such plan or
plans upon entry thereof; or
(h) An order shall be entered by the Bankruptcy Court
dismissing the Chapter 11 Case which does not contain a provision for
termination of the Revolving Credit Commitments, the cash collateralization or
return for cancellation of all Letters of Credit and payment in full in cash of
all Obligations of the Borrower hereunder and under the other Related Documents
upon entry thereof; or
(i) An order with respect to the Chapter 11 Case
shall be entered by the Bankruptcy Court without the express prior written
consent of the Agent, (i) to revoke, reverse, stay, modify, supplement or amend
the Interim Bankruptcy Court Order or the Final Bankruptcy Court Order or (ii)
to permit any administrative expense or any claim (now existing or hereafter
arising, of any kind or nature whatsoever) to have administrative priority as to
the Borrower equal or superior to the priority of the Agent and the Lenders in
respect of the Obligations, except for allowed administrative expenses having
priority over the Obligations to the extent set forth in the Agreed
Administrative Expense Priorities, or (iii) to grant or permit the grant of a
Lien on the Collateral or the Inventory; or
(j) An application for any of the orders described in
clauses (e), (f), (g), (h) or (i) above shall be made by a Person other than the
Borrower and such application is not contested by the Borrower in good faith and
the relief requested is granted in an order that is not stayed pending appeal;
or
(k) An order shall be entered by the Bankruptcy Court
that is not stayed pending appeal granting relief from the automatic stay to any
creditor of the Borrower with respect to any claim in an amount equal to or
exceeding $5,000,000 in the aggregate; provided, however, that it shall not be
an Event of Default if relief from the automatic stay is granted (i) solely for
the purpose of allowing such creditor to determine the liquidated amount of its
claim against the Borrower, or (ii) to permit the commencement of and/or
prosecution of a proceeding to collect against an insurance company; or
(l) The Borrower or any Subsidiary shall have entered
into any consent or settlement decree or agreement or similar arrangement with a
Governmental Authority or any judgment, order, decree or similar action shall
have been entered against any such Person based on or arising from the violation
of or pursuant to any Environmental Law, or the generation, storage,
transportation, treatment, disposal or Release of any Hazardous Material and, in
connection with any of the foregoing, any such Person shall incur Environmental
Liabilities and Costs which are unstayed, due and owing in an amount in excess
of $500,000; or
(m) Any material provision of any Loan Document shall
at any time for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by the Borrower, or a proceeding shall
be commenced by the Borrower, or by any Governmental Authority or other
regulatory body having jurisdiction over the Borrower, seeking to establish the
invalidity or unenforceability thereof, or the Borrower shall deny in writing
that the Borrower has any liability or obligation purported to be created under
any Loan Document; or
(n) The Borrower or any of its ERISA Affiliates shall
have made a complete or partial withdrawal from a Multiemployer Plan, and, as a
result of such complete or partial withdrawal, the Borrower or such ERISA
Affiliate incurs a withdrawal liability in an annual amount exceeding $200,000;
or a Multiemployer Plan enters reorganization status under Section 4241 of
ERISA, and, as a result thereof, the Borrower's or such ERISA Affiliate's annual
contribution requirement with respect to such Multiemployer Plan increases in an
annual amount exceeding $200,000; or
(o) (i) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code, any Plan shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan is, shall have been or is likely to
be terminated or to be the subject of termination proceedings under ERISA, any
Plan shall have an Unfunded Current Liability, a contribution required to be
made to a Plan has not been timely made, the Borrower or any ERISA Affiliate has
incurred or is likely to incur a liability to or on account of a Plan under
Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code, or the Borrower or any
Subsidiary has incurred or is likely to incur liabilities pursuant to one or
more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that
provide benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA); and (ii) there shall result from any such
event or events the imposition of a Lien or the granting of a security interest,
or there shall result from any such event or events a liability or a material
risk of incurring a liability which shall have a Material Adverse Effect; or
(p) (i) Any person or group of persons (other than
The Chase Manhattan Bank) (within the meaning of Section 13 or 14 of the
Securities Exchange Act of 1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of 40% or more of the outstanding shares of
common stock of the Borrower; or, (ii) during any period of twelve consecutive
calendar months, individuals who were directors of the Borrower on the first day
of such period shall cease to constitute a majority of the board of directors of
the Borrower, provided that a director who has resigned or is replaced during
such time shall not be included in any determination of whether a change of
control default has occurred pursuant to this clause (ii) to the extent such
director is replaced by a successor director elected by a majority of those
directors who were directors at the commencement of such period.
10.02. Consequences of an Event of Default. If an Event of
Default shall occur and be continuing or shall exist the Agent may, and upon the
direction of the Majority Lenders shall, by notice to the Borrower, and subject
to the provisions of the Interim Bankruptcy Court Order or the Final Bankruptcy
Court Order, as the case may be,
(a) declare the Revolving Credit Commitment of each
Lender and the Current Commitment terminated, whereupon the Revolving Credit
Commitment of each Lender and the Current Commitment will terminate immediately
without further order of, or application to the Bankruptcy Court, presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived, and an action immediately accrue; and/or
(b) declare the unpaid principal amount of the Notes,
interest accrued thereon, the total amount of the Letter of Credit Exposure that
is not cash collateralized in accordance with this Agreement, any fees due
hereunder and all other amounts owing by the Borrower hereunder or under the
Notes to be immediately due and payable without further order of, or application
to the Bankruptcy Court, presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived, and an action therefor shall
immediately accrue; and/or
(c) give notice to the Borrower of the occurrence and
continuance of an Event of Default; and/or
(d) at any time when there are no Loans outstanding,
maintain cash collateral (to the extent the Borrower has or receives cash) equal
to 105% of all outstanding Letters of Credit; and/or
(e) apply all funds deposited in the Letter of Credit
Cash Collateral Account to the payment, in whole or in part, of the Obligations;
and/or
(f) set-off amounts in the Letter of Credit Cash
Collateral Account or any other accounts under the dominion and control of the
Agent and apply such amounts to the Obligations of the Borrower hereunder and
under the Related Documents.
10.03. Deposit for Letters of Credit. Upon the occurrence of an
Event of Default, the Letter of Credit Issuer may make payment of all or any
part of the Stated Amount of any Letter of Credit to the beneficiary thereof, or
to the Letter of Credit Cash Collateral Account, in which event such payment
shall be treated in all respects as a drawing under the Letter of Credit in full
compliance therewith (notwithstanding that the beneficiary shall have failed to
present all or any of the documents or satisfied all or any of the requirements
for a drawing thereunder) and shall result in an Unreimbursed Draw. In addition,
upon demand by the Letter of Credit Issuer after the occurrence of any Event of
Default, the Borrower shall deposit with the Agent for the benefit of the Letter
of Credit Issuer with respect to each Letter of Credit then outstanding cash in
an amount equal to the greatest amount for which such Letter of Credit may be
drawn. Such deposits shall be held by the Agent for the benefit of the Letter of
Credit Issuer in the Letter of Credit Cash Collateral Account as security for,
and to provide for the payment of, the Letter of Credit Exposure.
10.04. Certain Remedies. If an Event of Default occurs, each of
the Agent and the Lenders may exercise all rights and remedies which it may have
hereunder or under any other Related Document or at law (including but not
limited to the Bankruptcy Code and the Uniform Commercial Code) or in equity or
otherwise, subject to the provisions of the Interim Bankruptcy Court Order or
the Final Bankruptcy Court Order, as the case may be. All such remedies shall be
cumulative and not exclusive.
ARTICLE XI
MISCELLANEOUS
11.01. Holidays. Except as otherwise provided herein, whenever
any payment or action to be made or taken hereunder or under the Notes shall be
stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day and such extension of
time shall be included in computing interest or fees, if any, in connection with
such payment or action.
11.02. Records. The unpaid principal amount of the Notes, the
unpaid interest accrued thereon, the interest rate or rates applicable to such
unpaid principal amount, the duration of such applicability, the Current
Commitment, the Stated Amount of each Letter of Credit, the principal amount of
all Reimbursement Obligations, the Letter of Credit Exposure, and the accrued
and unpaid Agent's fees, Unused Line Fee and Letter of Credit Fees shall at all
times be ascertained from the records of the Agent, which shall be conclusive
and binding absent manifest error.
11.03. Amendments and Waivers. (a) No amendment or modification
of any provision of this Agreement or of any of the Notes or of any other
Related Document shall be effective without the written agreement of the
Majority Lenders and the Borrower and no termination or waiver of any provision
of this Agreement or of any of the Notes, or consent to any departure by the
Borrower therefrom, shall in any event be effective without the written
concurrence of the Majority Lenders, which Majority Lenders shall have the right
to grant or withhold at their sole discretion; except that any amendment,
modification, or waiver (i) of any provision of Article II or III which
amendment, modification or waiver increases the Revolving Credit Commitment of
any Lender, reduces the principal of, or interest on, the Loans or the
Reimbursement Obligations payable to any Lender, reduces the amount of any fee
payable for the account of any Lender, or postpones or extends any date fixed
for any payment of principal of, or interest or fees on, the Loans or Letter of
Credit Exposure payable to any Lender, (ii) that increases the aggregate amount
of the Revolving Credit Commitments of the Lenders, (iii) of the definitions of
"Termination Date", "Majority Lenders" or "Pro Rata Shares", (iv) of the
definitions of "Eligible Inventory" or "Borrowing Base" if the effect of such
amendment, modification or waiver is to increase the Availability of the
Borrower, (v) of any provision of this Agreement or any Related Document that
would permit Liens on the Collateral or the Inventory (except as set forth in
Section 12.08 hereof or except as otherwise permitted in a Related Document),
(vi) of any provision in this Agreement or the Related Documents which
amendment, modification, or waiver releases or subordinates the super priority
claim status of the Obligations (except as permitted in this Agreement and the
Related Documents), or (vii) of the provisions contained in this Section 11.03,
shall be effective only if evidenced by a writing signed by or on behalf of (A)
any Lender affected thereby in the case of the amendments, modifications or
waivers described in clause (i) above or (B) all Lenders in the case of the
amendments, modifications or waivers described in clauses (ii) through (vi)
above. No amendment, modification, termination, or waiver of any provision of
Article XII or any other provision referring to the Agent shall be effective
without the written concurrence of the Agent. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, waiver or consent effected in
accordance with this Section 11.03 shall be binding on each Lender, each future
Lender, and, if signed by the Borrower, on the Borrower.
(b) Notwithstanding anything to the contrary
contained in subsection 11.03(a), in the event that the Borrower requests that
this Agreement or any other Related Document be amended or otherwise modified in
a manner which would require the unanimous consent of all of the Lenders and
such amendment or other modification is agreed to by the Majority Lenders, then,
with the consent of the Borrower and the Majority Lenders, the Borrower and the
Majority Lenders may amend this Agreement without the consent of the Lender or
Lenders which did not agree to such amendment or other modification
(collectively the "Minority Lenders") to provide for (i) the termination of the
Revolving Credit Commitment of each of the Minority Lenders, (ii) the addition
to this Agreement of one or more other Lenders, or an increase in the Revolving
Credit Commitment of one or more of the Majority Lenders, so that the Revolving
Credit Commitments after giving effect to such amendment shall be in the same
aggregate amount as the Revolving Credit Commitments immediately before giving
effect to such amendment, (iii) if any Loans are outstanding at the time of such
amendment, the making of such additional Loans by such new Lenders or Majority
Lenders, as the case may be, as may be necessary to repay in full the
outstanding Loans of the Minority Lenders immediately before giving effect to
such amendment and (iv) the payment of all interest, fees and other Obligations
payable or accrued in favor of the Minority Lenders and such other modifications
to this Agreement as the Borrower and the Majority Lenders may determine to be
appropriate.
11.04. No Implied Waiver; Cumulative Remedies. No course of
dealing and no delay or failure of the Lenders or the Agent in exercising any
right, power or privilege under this Agreement, the Notes or any other Related
Document shall affect any other or future exercise thereof or exercise of any
other right, power or privilege; nor shall any single or partial exercise of any
such right, power or privilege or any abandonment or discontinuance of steps to
enforce such a right, power or privilege preclude any further exercise thereof
or of any other right, power or privilege. The rights and remedies of the
Lenders or the Agent under this Agreement, the Notes and the other Related
Documents are cumulative and not exclusive of any rights or remedies which the
Lenders or the Agent have thereunder or at law or in equity or otherwise,
subject to the provisions of the Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order, as the case may be. The Lenders or the Agent may
exercise their rights and remedies against the Borrower and the Collateral as
the Lenders and the Agent may elect, and regardless of the existence or adequacy
of any other right or remedy.
11.05. Notices.
(a) All notices, requests, demands, directions and
other communications (collectively "Notices") under the provisions of this
Agreement or the Notes shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied, or delivered
and shall be effective (i) if mailed, three days after being deposited in the
mails, (ii) if telecopied, when sent, confirmation received and (iii) if
delivered, upon delivery. All notices shall be sent to the applicable party at
the address stated on the signature page hereof together with, in the case of a
letter of credit request and Letter of Credit Application sent pursuant to
Section 3.01(a), a copy to the Agent at the address for the Agent provided on
the signature page hereof, or in accordance with the last unrevoked written
direction from such party to the other parties hereto.
(b) Nothing in this Agreement or in any other Related
Document shall be construed to limit or affect the obligation of the Borrower or
any other Person to serve upon the Agent in the manner prescribed by the
Bankruptcy Code any pleading or notice required to be given to the Agent
pursuant to the Bankruptcy Code.
(c) The Lenders and the Agent may rely, and shall be
fully protected in relying, on any notice purportedly made by or on behalf of
the Borrower and the Lenders and the Agent shall have no duty to verify the
identity or authority of any Person giving such notice. The preceding sentence
shall apply to all notices whether or not made in a manner authorized or
required by this Agreement or any other Related Document.
11.06. Expenses; Taxes; Attorneys' Fees; Indemnification. The
Borrower agrees to pay or cause to be paid, on demand, and to save the Agent
(and, in the case of clauses (c) through (m) below, the Lenders) harmless
against liability for the payment of, all reasonable out-of-pocket expenses,
regardless of whether the transactions contemplated hereby are consummated,
including but not limited to reasonable fees and expenses of counsel for the
Agent (and, in the case of clauses (c) through (m) below, the Lenders),
accounting, due diligence, periodic field audits, appraisals, investigations,
monitoring of assets, syndication, miscellaneous disbursements, examination,
travel, lodging and meals, incurred by the Agent (and, in the case of clauses
(c) through (m) below, the Lenders) from time to time arising from or relating
to: (a) the negotiation, preparation, execution, delivery, performance and
administration of this Agreement and the other Related Documents, (b) any
requested amendments, waivers or consents to this Agreement or the other Related
Documents whether or not such documents become effective or are given, (c) the
preservation and protection of any of the Agent's and the Lenders' rights under
this Agreement or the other Related Documents, (d) the defense of any claim or
action asserted or brought against the Agent or the Lenders by any Person that
arises from or relates to this Agreement, any other Related Document, the
Agent's or the Lenders' claims against the Borrower, or any and all matters in
connection therewith, (e) the commencement or defense of, or intervention in,
any court proceeding arising from or related to this Agreement or any other
Related Document, (f) the filing of any petition, complaint, answer, motion or
other pleading by the Agent or the Lenders, or the taking of any action in
respect of the Collateral or other security, in connection with this Agreement
or any other Related Document, (g) the protection, collection, lease, sale,
taking possession of or liquidation of, any Collateral or other security in
connection with this Agreement or any other Related Document, (h) any attempt to
enforce any Lien in any Collateral or other security in connection with this
Agreement or any other Related Document, (i) any attempt to collect from the
Borrower, (j) the receipt of any advice with respect to any of the foregoing,
provided that this clause (j) shall apply to all Lenders only with respect to
the matters described in clauses (c) through (i) and clauses (k) through (m) of
this Section 11.06, (k) all Environmental Liabilities and Costs arising from or
in connection with the past, present or future operations of the Borrower or any
of its Subsidiaries involving any damage to real or personal property or natural
resources or harm or injury alleged to have resulted from any Release of
Hazardous Materials on, upon or into such property, (l) any costs or liabilities
incurred in connection with the investigation, removal, cleanup and/or
remediation of any Hazardous Materials present or arising out of the operations
of any facility of the Borrower, or (m) any costs or liabilities incurred in
connection with any Environmental Lien. Without limitation of the foregoing or
any other provision of any Related Document: (x) the Borrower agrees to pay all
stamp, document, transfer, recording or filing taxes or fees (including, without
limitation, mortgage recording taxes) and similar impositions now or hereafter
determined by the Agent or any of the Lenders to be payable in connection with
this Agreement or any other Related Document, and the Borrower agrees to save
the Agent and the Lenders harmless from and against any and all present or
future claims, liabilities or losses with respect to or resulting from any
omission to pay or delay in paying any such taxes, fees or impositions, and (y)
if the Borrower fails to perform any covenant or agreement contained herein or
in any other Related Document, the Agent may itself perform or cause performance
of such covenant or agreement, and the expenses of the Agent incurred in
connection therewith shall be reimbursed on demand by the Borrower. The Borrower
agrees to indemnify and defend the Agent, the Co-Agents and the Lenders and
their directors, officers, agents, employees and affiliates (collectively, the
"Indemnified Parties") from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages, costs or expenses of any nature whatsoever
(including reasonable attorneys' fees and amounts paid in settlement) incurred
by, imposed upon or asserted against any of them arising out of or by reason of
any investigation, litigation or other proceeding or claim brought or threatened
relating to, or otherwise arising out of or relating to, the execution of this
Agreement or any other Related Document, the transactions contemplated hereby or
thereby or any Loan or proposed Loan or Letter of Credit or proposed Letter of
Credit hereunder (including, but without limitation, any use made or proposed to
be made by the Borrower of the proceeds of any thereof, or the delivery or use
or transfer of or the payment or failure to pay under any Loan or Letter of
Credit) but excluding any such losses, liabilities, claims, damages, costs or
expenses to the extent finally judicially determined to have resulted from the
gross negligence or willful misconduct of the Indemnified Party.
11.07. Application. Except to the extent, if any, expressly set
forth in this Agreement or in the Related Documents, the Agent and the Lenders
shall have the right to apply any payment received or applied by it in
connection with the Obligations to such of the Obligations then due and payable
as it may elect.
11.08. Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
11.09. Governing Law. This Agreement and the Notes shall be
deemed to be contracts under the laws of the State of New York, without regard
to choice of law principles, and for all purposes shall be governed by and
construed and enforced in accordance with the laws of said State except as the
law is governed by the Bankruptcy Code.
11.10. Prior Understandings. This Agreement supersedes all
prior understandings and agreements, whether written or oral, among the parties
hereto relating to the transactions provided for herein other than the Fee
Letter.
11.11. Duration; Survival. All representations and warranties
of the Borrower contained herein or made in connection herewith shall survive
the making of the Loans and the issuance of any Letter of Credit and shall not
be waived by the execution and delivery of this Agreement, the Notes or any
other Related Document, any investigation by or knowledge of the Agent or the
Lenders, the making of any Loan or the issuance of any Letter of Credit
hereunder, or any other event whatsoever. All covenants and agreements of the
Borrower contained herein shall continue in full force and effect from and after
the date hereof so long as the Borrower may borrow hereunder and until the
Obligations have been paid in full and no Letters of Credit remain outstanding.
Without limitation, it is understood that all obligations of the Borrower to
make payments to or indemnify the Agent and the Lenders (including, without
limitation, obligations arising under Section 11.06 hereof) shall survive the
payment in full of the Notes and all Reimbursement Obligations and of all other
obligations of the Borrower thereunder and hereunder, termination of this
Agreement and all other events whatsoever and whether or not any Loans are made
or Letters of Credit issued hereunder.
11.12. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
11.13. Assignments; Participations. (a) Each Lender may with
the written consent of the Agent, which consent shall not be unreasonably
withheld, assign to one or more commercial banks or other financial institutions
a portion of its rights and obligations under this agreement (including, without
limitation, a portion of its Revolving Credit Commitment, the Loans owing to it
and its rights and obligations as a Lender with respect to Letters of Credit)
and the other Related Documents; provided, however, that (i) each such
assignment shall be in a principal amount of not less than $10,000,000 and in
multiples of $1,000,000 in excess thereof (or the remainder of such Lender's
Revolving Credit Commitment), (ii) no such assignment shall be made, other than
by CIT, prior to the Syndication Date, and (iii) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register (as hereinafter defined), an Assignment and
Acceptance. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (A) the
assignee thereunder shall be a party hereto and to the other Related Documents
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letters of
Credit) of a Lender hereunder and thereunder and (B) the assigning Lender shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement.
(b) By executing and delivering an Assignment and
Acceptance, the assignor and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, the assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Related Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Related
Document furnished pursuant hereto; (ii) the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any of its Subsidiaries or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other Related Document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Related Documents, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the assigning Lender, the Agent or any Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Related Documents; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Related Documents as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement and the other Related Documents are required to be performed
by it as a Lender.
(c) The Agent shall maintain at its address referred
to on the signature page hereto, a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Revolving Credit Commitment of, and
principal amount of the Loans owing to and the participation interest in the
Letters of Credit of, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender, an assignee Lender, together with the Note
subject to such assignment, the Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit E hereto, (i)
accept such Assignment and Acceptance, (ii) give prompt notice thereof to the
Borrower and (iii) record the information contained therein in the Register.
Within five Business Days after its receipt of such notice, the Borrower, at its
own expense, shall execute and deliver to the Agent in exchange for the
surrendered Note a new Note to the order of such assignee Lender in an aggregate
principal amount equal to the Revolving Credit Commitment assumed by it pursuant
to such Assignment and Acceptance, and a new Note to the order of the assigning
Lender in an aggregate principal amount equal to the Revolving Credit Commitment
retained by it hereunder, in each case prepared by the Agent. Such new Note
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note, shall be dated the date of the Agent's
acceptance of such assignment and acceptance and shall otherwise be in
substantially the form of Exhibit A hereto.
(e) Each Lender may sell participations to one or
more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement and the other Related Documents (including,
without limitation, all or a portion of its Revolving Credit Commitment and the
Loans owing to it and its participation in Letters of Credit); provided, that
(i) such Lender's obligations under this Agreement (including, without
limitation, its Revolving Credit Commitment hereunder) and the other Related
Documents shall remain unchanged; (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
and the Borrower, the Agent 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 and the other Related Documents; and (iii) a
participant shall not be entitled to require such Lender to take or omit to take
any action hereunder except (A) action directly effecting an extension of the
maturity dates or decrease in the principal amount of the Loans or Reimbursement
Obligations, or (B) action directly effecting an extension of the due dates of
or a decrease in the rate of interest payable on the Loans or the fees payable
under this Agreement, or (C) actions directly effecting a release of all or a
substantial portion of the Collateral (except as set forth in Section 12.08 of
this Agreement or any Related Document).
11.14. Successors and Assigns. This Agreement and the other
Related Documents shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns (including, except for the
right to request loans or Letters of Credit, any trustee succeeding to the
rights of the Borrower pursuant to chapter 11 of the Bankruptcy Code or pursuant
to any conversion to a case under chapter 7 of the Bankruptcy Code) except that
(i) the Borrower may not assign or transfer any of its rights hereunder or
thereunder without the prior written consent of all of the Lenders and (ii) the
Lenders shall have no obligations to make any Loans or assist the Borrower in
obtaining the issuance of any Letters of Credit hereunder to any trustee in a
superseding chapter 7 case.
11.15. Agent as Party in Interest. The Borrower hereby
stipulates and agrees that the Agent is and shall remain a party in interest in
the Chapter 11 Case and shall have the right to participate, object and be heard
in any motion or proceeding in connection therewith. Nothing in this Agreement
or any other Related Document shall be deemed to be a waiver of any of the
Agent's rights or remedies under applicable law or documentation. Without
limitation of the foregoing, the Agent shall have the right to make any motion
or raise any objection it deems to be in its interest (specifically including
but not limited to objections to use of proceeds of the Loans, to payment of
professional fees and expenses or the amount thereof, to sales or other
transactions outside the ordinary course of business or to assumption or
rejection of any executory contract or lease), provided that the Agent will not
exercise such right if the action or inaction by the Borrower which is the
subject of such motion or objection is expressly permitted by any covenant or
provision of this Agreement.
11.16. Confidentiality. Upon delivering to any Lender or the
Agent, or permitting any Lender or the Agent to inspect, any written information
pursuant to this Agreement or the other Related Documents, each Lender and the
Agent shall treat such information as confidential to the extent such
information is conspicuously marked confidential. Each Lender and the Agent
agrees to hold such information in confidence from the date of disclosure
thereof. Subject to the other provisions of this Section 11.16, each Lender and
the Agent may disclose confidential information to its officers, directors,
employees, attorneys, accountants or other professionals engaged by any Lender
or the Agent only after determining that such third party has been instructed to
hold such information in confidence to the same extent as if it were a Lender.
Notwithstanding the foregoing, the provisions of this Section 11.16 shall not
apply to information within any one of the following categories or any
combination thereof: (i) information the substance of which, at the time of
disclosure by any Lender or the Agent, has been disclosed to or is known to any
creditor or official or unofficial creditors' committee (other than information
as to which such creditor or creditors' committee is then under an obligation of
nondisclosure), or any Person other than (A) a director, officer, employee or
agent of any of the Borrower or a professional engaged by the Borrower or (B) a
Person who is then under an obligation of nondisclosure (otherwise than as a
consequence of a wrongful act of any Lender or the Agent), (ii) information
which any Lender or the Agent had in its possession prior to receipt thereof
from the disclosing party, or (iii) information received by any Lender or the
Agent from a third party having no obligations of nondisclosure with respect
thereto. Nothing contained in this Section 11.16 shall prevent any disclosure:
(x) believed in good faith by any Lender or the Agent to be required by any law
or guideline or interpretation or application thereof by any Governmental
Authority, arbitrator or grand jury charged with the interpretation or
administration thereof or compliance with any request or directive of any
Governmental Authority, arbitrator or grand jury (whether or not having the
force of law), (y) determined by counsel for any Lender or the Agent to be
necessary or advisable in connection with enforcement or preservation of rights
under or in connection with this Agreement or any other Related Document or (z)
of any information which has been made public by a Person other than any Lender
or the Agent who, to the Agent's or such Lender's actual knowledge, was then
under an obligation of nondisclosure. The Lenders and the Agent shall have the
right to disclose any confidential information described in this Section 11.16
to the Letter of Credit Issuer and to an assignee or prospective assignee or to
a participant or prospective participant in Loans and Letter of Credit Exposure
hereunder, provided that the assigning or selling Lender shall have obtained
from such assignee or prospective assignee or participant or prospective
participant an agreement to hold such information in confidence to the same
extent as if it were a Lender.
11.17. Waiver of Jury Trial. BY ITS EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE AGENT, EACH LENDER AND THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY OTHER RELATED DOCUMENT, ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE
LENDERS, OR THE BORROWER IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS TO ENTER INTO THIS
AGREEMENT.
11.18. Right of Setoff. Upon the occurrence and during the
continuance of any Event of Default and, subject to the provisions of the
Interim Bankruptcy Court Order or the Final Bankruptcy Court Order, as the case
may be, any Lender, the Agent and the Letter of Credit Issuer may, and is hereby
authorized to, at any time from time to time, without notice to the Borrower
(any such notice being expressly waived by the Borrower) and to the fullest
extent permitted by law, set off and apply any and all deposits (general or
special, time or demand, provision or final) at any time held and other
indebtedness at any time owing by such Lender, the Agent or the Letter of Credit
Issuer to or for the credit or the account of the Borrower against any and all
Obligations of the Borrower now or hereafter existing under the Loan Documents,
irrespective of whether or not any Lender, the Agent and the Letter of Credit
Issuer shall have made any demand hereunder or thereunder and although such
Obligations may be contingent or unmatured, provided that nothing contained in
this Section 11.18 shall limit the application of the Borrower's cash and
proceeds from the sale of the Borrower's Inventory set forth in Section 8.11
hereof. Each Lender, the Agent and the Letter of Credit Issuer agrees promptly
to notify the Borrower after any such setoff and application made by such
Lender, the Agent or the Letter of Credit Issuer; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender, the Agent and the Letter of Credit
Issuer under this Section 11.17 are in addition to the other rights and remedies
(including, without limitation, other rights of setoff under applicable law or
otherwise) which such Lender, the Agent or the Letter of Credit Issuer may have.
11.19. Headings. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
ARTICLE XII
THE AGENT
12.01. Appointment. Each Lender (and each subsequent holder of
any Note by its acceptance thereof) hereby irrevocably appoints and authorizes
CIT, in its capacity as Agent (i) to receive on behalf of each Lender any
payment of principal of or interest on the Notes outstanding hereunder and all
other amounts accrued hereunder for the account of the Lenders and paid to the
Agent, and, subject to Section 2.03 of this Agreement, to distribute promptly to
each Lender its Pro Rata Share of all payments so received, (ii) to distribute
to each Lender copies of all material notices and agreements received by the
Agent and not required to be delivered to each Lender pursuant to the terms of
this Agreement, provided that the Agent shall not have any liability to the
Lenders for the Agent's inadvertent failure to distribute any such notice or
agreements to the Lenders, and (iii) subject to Section 11.03 of this Agreement,
to take such action as Agent deems appropriate on its behalf to administer the
Loans, Letters of Credit and the Loan Documents and to exercise such other
powers delegated to the Agent by the terms hereof or the Loan Documents
(including, without limitation, the power to give or to refuse to give notices,
waivers, consents, approvals and instructions and the power to make or to refuse
to make determinations and calculations) together with such powers as are
reasonably incidental thereto to carry out the purposes hereof and thereof. As
to any matters not expressly provided for by this Agreement and the other Loan
Documents (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders, and such instructions of the Majority Lenders shall be
binding upon all Lenders and all holders of Notes; provided, however, that the
Letter of Credit Issuer shall not be required to refuse to honor a drawing under
any Letter of Credit and the Agent shall not be required to take any action
which, in the reasonable opinion of the Agent, exposes the Agent to liability or
which is contrary to this Agreement or any Loan Document or applicable law.
12.02. Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
Related Documents. The duties of the Agent shall be mechanical and
administrative in nature. The Agent shall not have by reason of this Agreement
or any Related Document a fiduciary relationship in respect of any Lender.
Nothing in this Agreement or any of the Related Documents, express or implied,
is intended to or shall be construed to impose upon the Agent any obligations in
respect of this Agreement or any of the Related Documents except as expressly
set forth herein or therein. Each Lender shall make its own independent
investigation of the financial condition and affairs of the Borrower in
connection with the making and the continuance of the Loans hereunder and with
the issuance of the Letters of Credit and shall make its own appraisal of the
creditworthiness of the Borrower and the value of the Collateral, and the Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the initial Credit Extension hereunder
or at any time or times thereafter, provided that, upon the reasonable request
of a Lender, the Agent shall provide to such Lender any documents or reports
delivered to the Agent by the Borrower pursuant to the terms of this Agreement
or any Related Document. If the Agent seeks the consent or approval of the
Majority Lenders to the taking or refraining from taking any action hereunder,
the Agent shall send notice thereof to each Lender. The Agent shall promptly
notify each Lender any time that the Majority Lenders have instructed the Agent
to act or refrain from acting pursuant hereto. Except as expressly set forth in
Section 11.06 of this Agreement, no Co-Agent shall have any authority, duties or
responsibilities solely by virtue of its status as a Co-Agent.
12.03. Rights, Exculpation, Etc. The Agent and its directors,
officers, agents or employees shall not be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement or
the other Loan Documents, except for their own gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, the Agent (i)
may treat the payee of any Note as the holder thereof until the Agent receives
written notice of the assignment or transfer thereof, pursuant to Section 11.13
hereof, signed by such payee and in form satisfactory to the Agent; (ii) may
consult with legal counsel (including, without limitation, counsel to the Agent
or counsel to the Borrower), independent public accountants, and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, certificates,
warranties or representations made in or in connection with this Agreement or
the other Loan Documents; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the part of any
Person, the existence or possible existence of any Potential Default or Event of
Default, or to inspect the Collateral or other property (including, without
limitation, the books and records) of any Person; (v) shall not be responsible
to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; and
(vi) shall not be deemed to have made any representation or warranty regarding
the existence, value or collectibility of the Collateral, the existence,
priority or perfection of the Agent's Lien thereon, or the Borrowing Base or any
certificate prepared by the Borrower in connection therewith, nor shall the
Agent be responsible or liable to the Lenders for any failure to monitor or
maintain the Borrowing Base or any portion of the Collateral. The Agent shall
not be liable for any apportionment or distribution of payments made by it in
good faith pursuant to Section 2.08(c), and if any such apportionment or
distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount which they are determined
to be entitled. The Agent may at any time request instructions from the Lenders
with respect to any actions or approvals which by the terms of this Agreement or
of any of the Related Documents the Agent is permitted or required to take or to
grant, and if such instructions are promptly requested, the Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval under any of the Related Documents until it shall have received such
instructions from the Majority Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent acting or refraining from acting under this Agreement, the Notes,
or any of the other Related Documents in accordance with the instructions of the
Majority Lenders.
12.04. Reliance. The Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Related Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it.
12.05. Indemnification. To the extent that the Agent is not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify the Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, advances
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising out
of this Agreement or any of the Related Documents or any action taken or omitted
by the Agent under this Agreement or any of the Related Documents, in proportion
to each Lender's Pro Rata Share, including, without limitation, advances and
disbursements made pursuant to Section 12.08; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements for which there has been a final judicial determination that such
resulted from the Agent's gross negligence or willful misconduct. The
obligations of the Lenders under this Section 12.05 shall survive the payment in
full of the Loans and Reimbursement Obligations and the termination of this
Agreement.
12.06. CIT Individually. With respect to its Pro Rata Share of
the Revolving Credit Commitments hereunder, the Loans made by it and the Note
issued to or held by it, CIT shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and liabilities as and
to the extent set forth herein for any other Lender or holder of a Note. The
terms "Lenders" or "Majority Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include CIT in its individual capacity as a
Lender or one of the Majority Lenders. CIT and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of banking, trust
or other business with the Borrower or any of its Subsidiaries as if it were not
acting as Agent pursuant hereto without any duty to account to the Lenders. The
Lenders acknowledge and agree that The Chase Manhattan Bank, as the Letter of
Credit Issuer, is an Affiliate of the Agent, and may take actions which are not
in the interests of, or may have an adverse effect on, the Lenders, or may omit
to take actions which would be in the interests of, or would have a favorable
effect on, the Lenders, and the Lenders will not assert any claim against the
Agent based on actions or omissions by the Letter of Credit Issuer and will not
assert any such actions or omissions as a defense or offset to the Lenders'
obligations hereunder. The Lenders further acknowledge and agree that the
Borrower is an affiliate of CIT and The Chase Manhattan Bank.
12.07. Successor Agent.
(a) The Agent may resign from the performance of all
its functions and duties hereunder and under the other Related Documents at any
time by giving at least thirty (30) Business Days' prior written notice to the
Borrower and each Lender. Such resignation shall take effect upon the acceptance
by a successor Agent of appointment pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Majority
Lenders shall appoint a successor Agent who shall be reasonably satisfactory to
the Borrower. Upon the acceptance of any appointment as Agent hereunder 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 and the other Related Documents. After any Agent's resignation
hereunder as the Agent, the provisions of this Article XII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Related Documents.
(c) If a successor Agent shall not have been so
appointed within said thirty (30) Business Day period, the retiring Agent, with
the consent of the Borrower, shall then appoint a successor Agent who shall
serve as Agent until such time, if any, as the Majority Lenders, with the
consent of the Borrower, appoint a successor Agent as provided above.
12.08. Collateral Matters.
(a) The Agent may from time to time, during the
occurrence and continuance of an Event of Default, make such disbursements and
advances ("Agent Advances") which the Agent, in its sole discretion, deems
necessary or desirable to preserve or protect the Collateral or any portion
thereof, to enhance the likelihood or maximize the amount of repayment by the
Borrower of the Loans and other Obligations or to pay any other amount
chargeable to the Borrower pursuant to the terms of this Agreement, including,
without limitation, costs, fees and expenses as described in Section 11.06. The
Agent Advances shall be repayable on demand and be secured by the Collateral.
The Agent Advances shall not constitute Loans but shall otherwise constitute
Obligations hereunder. The Agent shall notify each Lender and the Borrower in
writing of each such Agent Advance, which notice shall include a description of
the purpose of such Agent Advance. Without limitation to its obligations
pursuant to Section 12.05, each Lender agrees that it shall make available to
the Agent, upon the Agent's demand, in Dollars in immediately available funds,
the amount equal to such Lender's Pro Rata Share of each such Agent Advance. If
such funds are not made available to the Agent by such Lender the Agent shall be
entitled to recover such funds, on demand from such Lender together with
interest thereon, for each day from the date such payment was due until the date
such amount is paid to the Agent, at the customary rate set by the Agent for the
correction of errors among banks for three Business Days and thereafter at the
Regular Rate.
(b) The Lenders hereby irrevocably authorize the
Agent, at its option and in its discretion, to release any Lien granted to or
held by the Agent upon any Collateral upon termination of the Revolving Credit
Commitments and payment and satisfaction of all Loans, Reimbursement
Obligations, other Letter of Credit Exposure (whether or not due) and all other
Obligations which have matured and which the Agent has been notified in writing
are then due and payable; or constituting property being sold or disposed of if
the Borrower certifies to the Agent that the sale or disposition is made in
compliance with Section 9.05 (b) hereof (and the Agent may rely conclusively on
any such certificate, without further inquiry); or constituting property in
which the Borrower owned no interest at the time the Lien was granted or at any
time thereafter; or if approved, authorized or ratified in writing by the
Majority Lenders. Upon request by the Agent at any time, the Lenders will
confirm in writing the Agent's authority to release particular types or items of
Collateral pursuant to this Section 12.08(b).
(c) Without in any manner limiting the Agent's
authority to act without any specific or further authorization or consent by the
Majority Lenders (as set forth in Section 12.08(b)), each Lender agrees to
confirm in writing, upon request by the Agent, the authority to release
Collateral conferred upon the Agent under Section 12.08(b). So long as no Event
of Default is then continuing, upon receipt by the Agent of confirmation from
the Majority Lenders of its authority to release any particular item or types of
Collateral, and upon prior written request by the Borrower, the Agent shall (and
is hereby irrevocably authorized by the Lenders to) execute such documents as
may be necessary to evidence the release of the Liens granted to the Agent for
the benefit of the Lenders upon such Collateral; provided, however, that (i) the
Agent shall not be required to execute any such document on terms which, in the
Agent's opinion, would expose the Agent to liability or create any obligations
or entail any consequence other than the release of such Liens without recourse
or warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Lien upon (or obligations of the Borrower in
respect of) all interests in the Collateral retained by the Borrower.
(d) The Agent shall have no obligation whatsoever to
any Lenders to assure that the Collateral exists or is owned by the Borrower or
is cared for, protected or insured or has been encumbered or that the Lien
granted to the Agent pursuant to the Security Documents has been properly or
sufficiently or lawfully created, perfected, protected or enforced or is
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
the Agent in this Section 12.08 or in any of the Related Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Agent's own interest in the Collateral as one
of the Lenders and that the Agent shall have no duty or liability whatsoever to
any other Lender.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed and delivered this Agreement as of the
date first above written.
BORROWER:
BEST PRODUCTS CO., INC.
By:_________________________________
Name:
Title:
Address for Notices:
Best Products Co., Inc.
0000 Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
AGENT AND LENDER:
THE CIT GROUP/BUSINESS
CREDIT, INC.
By:_________________________________
Name:
Title:
Address for Notices:
The CIT Group/Business
Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
EXHIBIT A
NOTE
$___________ New York, New York
October 1, 1996
FOR VALUE RECEIVED, the undersigned, BEST PRODUCTS CO., INC.,
as debtor and debtor-in-possession, a Virginia corporation, (the "Borrower"),
hereby promises to pay to the order of ___________________________________ (the
"Lender") on or before the Termination Date (as defined in the Credit Agreement
referred to below), and at such earlier dates as may be required by the Credit
Agreement, the lesser of (i) the principal amount of _________________________
______________ ($___________) and (ii) the aggregate unpaid principal amount of
all Loans made by the Lender to the Borrower pursuant to the Credit Agreement.
The Borrower further promises to pay to the order of the Lender interest on the
unpaid principal amount hereof from time to time outstanding at the rate or
rates per annum determined pursuant to the Credit Agreement, payable on the
dates set forth in the Credit Agreement. Payments of principal and interest on
this Note shall be made in lawful money of the United States of America in the
manner set forth in the Credit Agreement.
This Note is one of the "Notes" referred to in, and is
entitled to the benefits of, the Revolving Credit Agreement, dated as of October
1, 1996 (as the same may be amended, restated, modified or supplemented from
time to time, the "Credit Agreement"), among the Borrower, the Lenders party
thereto, the co-agents party thereto and The CIT Group/Business Credit, Inc., as
agent for the Lenders (the "Agent"), which among other things, provides for the
acceleration of the maturity hereof upon the occurrence of certain events and
for prepayments in certain circumstances, all upon certain terms and conditions
specified therein. Notwithstanding any other provision of this Note, interest
paid or becoming due hereunder shall in no event exceed the maximum rate
permitted by applicable law. Terms defined in the Credit Agreement have the same
meanings herein.
This Note is secured by and is entitled to the benefits of the
lien and security interest granted by the Credit Agreement. The obligations of
the Borrower hereunder constitute allowed administrative expense claims in the
Chapter 11 Case entitled to priority over all administrative expenses and
unsecured claims against the Borrower, now existing or hereafter arising, of any
kind or nature whatsoever, including without limitation all administrative
expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy
Code, subject to certain exceptions set forth in the Credit Agreement.
This Note is entitled to the benefits of the Credit Agreement
and the other Related Documents referred to in the Credit Agreement. The
Borrower hereby expressly waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note and the Credit Agreement, and
an action for amounts due hereunder or thereunder shall immediately accrue.
This Note and interests herein may only be transferred to the
extent and in the manner set forth in the Credit Agreement.
This Note shall be governed by, construed and enforced in
accordance with, the internal laws of the State of New York applicable to
contracts made and to be performed therein without consideration as to choice of
law.
BEST PRODUCTS CO., INC.,
as debtor and debtor-in-possession
By: ____________________________
Name: ____________________________
Title: ____________________________
EXHIBIT B
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF VIRGINIA
RICHMOND DIVISION
...............................................x
:
In re: :
:
BEST PRODUCTS CO., INC., : Chapter 11 Case 96-35267-T
:
Debtor. :
...............................................x
FINAL ORDER, PURSUANT TO SECTION 364 (c)(1) AND (2) OF THE
BANKRUPTCY CODE AND FED. R. BANKR. P. 4001, AUTHORIZING
DEBTOR TO OBTAIN AND INCUR POST-PETITION FINANCING AND
POST-PETITION INDEBTEDNESS WITH SUPERPRIORITY OVER
CERTAIN ADMINISTRATIVE EXPENSES AND A SECURITY
INTEREST IN LETTER OF CREDIT CASH COLLATERAL ACCOUNT
BEST PRODUCTS CO., INC. ("Best"), having filed with this Court a
voluntary petition for relief under chapter 11 of title 11 of the United States
Code on September 24, 1996 (the "Filing Date"); and having filed a motion, dated
September 25, 1996, pursuant to 11 U.S.C. Section 364(c) (1) and (2) and Fed. R.
Bankr. P. 4001 (the "Motion"), for an order, inter alia:
(1) Authorizing Best to borrow or obtain cash advances and Letters of
Credit on a revolving credit basis from The CIT Group/Business Credit, Inc.
("CIT"), as lender and agent for a syndicate of lenders (together with CIT, the
"Lenders"), up to the aggregate principal amount of $195 million (inclusive of a
$100 million subfacility for the issuance of letters of Credit) for an interim
period pending entry of a final order, and upon entry of a final order up to the
aggregate principal amount of $250 million (inclusive of a $100 million sub
facility for the issuance of Letters of Credit) (the "CIT Facility"),
outstanding at any one time pursuant to the terms of a Revolving Credit
Agreement, dated as of September 25, 1996 and the Related Documents (as defined
in the Revolving Credit Agreement), as each may be hereafter amended or modified
from time to time (collectively, the "Loan Documents");
(2) Approving the terms and conditions of the Loan Documents and
authorizing Best to execute, deliver and enter into the Loan Documents;
(3) Authorizing Best to execute and deliver, from time to time, all
such other documents, instruments and agreements and perform such other acts as
may be required in connection with the Loan Documents;
(4) Authorizing Best, under 11 U.S.C. Section 364(c)(1) and (2), to
obtain post-petition financing and incur post-petition indebtedness under the
CIT Facility which indebtedness due and owing by Best to the Lenders shall (a)
pursuant to 11 U.S.C. 364(c) (1), have priority over any and all expenses and
claims of the kind specified in, inter alia, 11 U.S.C. Sections 105, 326, 328,
503(b), 506(c), 507(a), 507(b), 726 and 1114 and (b) pursuant to 11 U.S.C.
Section 364(c)(2) be secured by a first priority lien on and security interest
in all cash maintained in the Letter of Credit Cash Collateral Account (as
defended in the Revolving Credit Agreement) and any direct investment of funds
contained therein (all of the foregoing property being hereafter referred to in
this Order as "Letter of Credit Cash Collateral"), subject only to the Carveout
(as defined in Paragraph 9 below);
(5) Authorizing the payment of certain expenses to the Lenders;
(6) Authorizing the use of the proceeds of the CIT Facility for the
purposes set forth in the Loan Documents, including, without limitation, the
satisfaction of Best's pre-petition obligations (collectively, the "Pre-Petition
Obligations") under the Revolving Credit Agreement dated as of February 7, 1996,
as subsequently amended the (the "Pre- Petition Credit Agreement") between Best
Products Co., Inc. and the lenders thereunder (each, a "Pre-Petition Lender" and
collectively, the "Pre-Petition Lenders");
(7) Authorizing and directing that all letters of credit outstanding
under the Pre-Petition Credit Agreement shall constitute Letters of Credit under
the Loan Documents without further action by Best or the Pre-Petition Lenders;
(8) Requesting, pursuant to Bankruptcy Rule 4001, that an interim
hearing (the "Interim Hearing") on the Motion be held to consider entry of an
interim order and requesting that a final hearing (the"Final Hearing") be
scheduled for this Court to consider entry of a final order authorizing
borrowing in accordance with the Loan Documents up to the aggregate amounts
described in paragraph (1) above; and
(9) Granting to Best such other and further relief as the Court deems
necessary, appropriate, equitable and proper. Best having requested in the
Motion, pursuant to Fed R. Bankr. P. 4001, that the Court consider the proposed
financing requested in the Motion; and pursuant to Fed. R. Bankr. P. 4001(c)(1),
it appearing that any and all necessary notice of each of the Interim Hearing
and the Final Hearing on the Motion was duly provided; and upon the record of
the Interim Hearing on the Motion held before this court on September 30, 1996
and the record of the Final Hearing held before this Court on October 10, 1996;
and this Court having noted the appearances of all parties in interest in the
record of this Court; and no objections having been served and filed to the
relief requested in the Motion; and it appearing to this Court that the relief
requested in the Motion is in the best interests of Best, its creditors and its
estate and is essential for the continued operation of its business; and it
further appearing that Best is unable to obtain unsecured credit for money
borrowed allowable as an administrative expense under 11 U.S.C. Section
503(b)(1); and due deliberation having been had; and sufficient cause appearing
therefor;
THE COURT HEREBY FINDS as follows:
A. Capitalized terms used in this Order and not otherwise defined
herein have the meanings ascribed to such terms in the Loan Documents, the terms
of which shall be, and they hereby are, incorporated herein by reference as if
fully set forth at length.
B. On the Filing Date, Best filed with this Court a voluntary petition
for relief under chapter 11 of the Bankruptcy Code and is continuing to manage
its properties and operate its business as a debtor-in-possession pursuant to 11
U.S.C. Sections 1107 and 1108.
C. This Court has jurisdiction over this case and the parties and
property affected hereby pursuant to 28 U.S.C.
Sections 157(b)(2)(D) and 1334.
D. Best is a specialty retailer operating 169 large retail outlets
located in shopping centers and malls. Best also operates 11 shopping mall based
jewelry stores. The retail stores operated by Best, other than the jewelry
stores, are an average of approximately 59,400 square feet, consisting of
selling and on-site warehouse space. In addition, Best uses or operates one
jewelry distribution center and four distribution centers located in Denver,
Colorado, Las Vegas, Nevada, Ashland, Virginia, and Tacoma, Washington.
E. Based upon the record made at the Interim Hearing, on September 30,
1996 this Court entered the Interim Order, Pursuant To Section 364(c)(1) and (2)
of the Bankruptcy Code and Fed. R. Bankr. P. 4001, Authorizing Debtor to Obtain
and Incur Post-Petition Financing and Post-Petition Indebtedness With
Superpriority Over Certain Administrative Expenses and a Security Interest in
Letter of Credit Cash Collateral Account (the "Interim Order").
F. Pursuant to 11 U.S.C. Sections 102(1) and 364(c) and Fed. R.
Bankr. P. 2002 and 4001(c), Best has provided due and sufficient notice of the
Final Hearing on the Motion held this day, and its request for the relief set
forth in the Motion and the relief granted in this Order, and no further notice
of the request for the relief granted in this Order is required. In accordance
with Paragraph 30 of the Interim Order, Best has provided actual notice, by
telecopier, overnight courier or hand delivery, of the Motion, the terms of this
Order and the Interim Order to (a) attorneys for any official committee of
unsecured creditors appointed in this case, (b) the Office of the United States
Trustee for the Eastern District of Virginia, (c) all parties who have filed
requests for notice under Bankruptcy Rule 2002, (d) the Prepetition Lenders, (e)
the 20 largest unsecured creditors of Best at their last known addresses, (f)
attorneys for the Postpetition Lenders, (g) the Internal Revenue Service, and
(h) the Securities and Exchange Commission. Such notice is appropriate, adequate
and proper under the circumstances of this case as set forth herein, in the
Motion and as presented to the Court.
G. Best is unable to obtain financing allowable under 11 U.S.C. Section
503(b)(1) as an administrative expense pursuant to 11 U.S.C. Sections 364(a) or
(b) or without the granting of the superpriority claims, negative pledge on
assets and first priority lien on and security interest in the Letter of Credit
Cash Collateral and the Letter of Credit Cash Collateral Account as set forth
herein and in the Loan Documents. After considering all alternatives, Best has
concluded, in the exercise of its best reasonable business judgment, that the
CIT Facility represents the best working capital financing available.
H. Prior to the Filing Date, Best and the Pre-Petition Lenders entered
into the Pre-Petition Credit Agreement and certain documents related thereto
(collectively, the "Pre-Petition Loan Documents"), pursuant to which the
Pre-Petition Lenders extended certain financial accommodations to Best. As of
the Filing Date, Best was indebted to the Pre-Petition Lenders for Pre-Petition
Obligations in the aggregate amount of $171,546,457.11, consisting of
outstanding principal of $170,934,124.23, accrued and unpaid interest of
$563,968.62, and unpaid fees and costs of $48,364.26.
I. Best has represented that, and has provided evidence that (a) the
Pre-Petition Obligations are secured by all of Best's pre-filing date personal
property and certain real property assets, (the "Pre-Petition Collateral"), (b)
the Pre-Petition Lenders have properly perfected their liens on, and security
interests in, the Pre-Petition Collateral and, thus, the liens and security
interests of the Pre-Petition Lenders in the Pre-Petition Collateral appear to
be valid, perfected, enforceable and unavoidable, (c) the liens and security
interests in the Pre-Petition Collateral were granted for fair consideration and
reasonably equivalent value, and were granted contemporaneously with the making
of the loans secured thereby, (d) Best is unaware of any action taken by the
Pre-Petition Lenders which would result in the subordination of any of the
Pre-Petition Obligations to any other obligations of, or claims against, Best
and (e) the fair saleable value of the Pre-Petition Collateral exceeds the
amount of the Pre-Petition Obligations.
J. Good cause has been shown for the entry of this Order. Among other
things, Debtor has a critical need for financing in order to allow for the
purchase of inventory, meet payroll and operate on daily basis. The preservation
and maintenance of the going-concern value of Best is essential to its
successful reorganization pursuant to the provisions of chapter 11 of the
Bankruptcy Code. The terms of the borrowings and the issuance of Letters of
Credit authorized hereby are fair under the circumstances. Entry of this Order
is in the best interests of Best, it estate and its creditors.
Accordingly, it is hereby FOUND, ORDERED, DETERMINED AND DECREED, as
follows:
1. The Motion Shall be, and it hereby is, approved in all respects.
2. Good and sufficient notice of Best's request, pursuant to the
Motions for approval of the CIT Facility and the other relief requested therein
has been provided in accordance with, inter alia, Paragraph 30 of the Interim
Order and 11 U.S.C.Sections 102(1) and 364(c) and Fed. R. Bankr. P. 2002 and
4001(c), and any requirement for other and further notice shall be, and it
hereby is, dispensed with and waived.
3. An immediate need exists for Best to have the ability to obtain cash
advances and letters of credit in order to continue the ordinary course
operation of its business.
4. Best is unable to obtain cash advances and letter of credit as
unsecured credit allowable under 11 U.S.C. Section 503(b)(1). If Best is unable
to finance its working capital needs, Best will be unable to preserve the
going-concern value of its business. The preservation and maintenance of the
going-concern value of Best is of utmost significance and importance to a
successful reorganization of Best pursuant to the provisions of chapter 11 of
the Bankruptcy Code.
5. As set forth in the Motion and based upon the record of these
proceedings, this Court finds that the terms of the financing requested in the
Motion has been negotiated in good faith and at arm's length between Best and
the Lenders, and any credit extended by the Lenders pursuant to the terms of the
Loan Documents and this Order shall be, and it hereby is, deemed to have been
extended in good faith (as that term is used in 11 U.S.C. Section 364(e)).
6. Best will receive post-petition loans and/or advances and credit,
and other direct or indirect benefits from the CIT Facility authorized by this
Order.
7. Best is immediately authorized to (a) borrow or obtain cash advances
and Letters of Credit up to the aggregate principal amount of $250 million
outstanding at any one time pursuant to the terms of the Loan Documents, as the
same may be amended from time to time, which Loan Documents are hereby approved
in all respects (including all rights and remedies set forth or referred to in
the Loan Documents) and (b) use the proceeds of the CIT Facility for the
purposes set forth in the Loan Documents, including the satisfaction in full and
in cash of the Pre-Petition Obligations under the Pre-Petition Loan Documents
from the proceeds of the initial advance under the Revolving Credit Agreement.
8. Best is authorized to do and perform all acts, to make, execute and
deliver all instruments and documents as contemplated by the Loan Documents, all
of which are hereby approved, and to pay all fees as provided in the Loan
Documents and other amounts which may be required or necessary for the
performance by Best under the terms of this Order, the Loan Documents and the
financing hereby approved.
9. All of Best's Obligations to the Lenders are hereby authorized and
granted superpriority administrative expense status, in accordance with 11
U.S.C. Section 364(c)(1), over any and all expenses and claims of each of Best,
whether heretofore or hereafter incurred, of the kind specified in 11 U.S.C.
Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b), 726 or 1114, subject and
subordinate only to:
(i) amounts payable to the United States Trustee pursuant to
28 U.S.C. Section 1930(a)(6); and
(ii)the payment of allowed fees and expenses of professionals
retained in this chapter 11 case
pursuant to 11 U.S.C. Sections 327 and 1103, by Best or any official
committee, and the expenses of members of any official committee appointed in
this chapter 11 case, not to exceed $5,000,000 in the aggregate outstanding at
any time from and after the date of entry of this Order (inclusive of any
holdbacks on interim compensation required by this Court) (the "Professional
Expense Cap"); provided, however, that after the occurrence of any Event of
Default hereunder or under the Loan Documents, any payments actually made to
such professionals after or during such period, under 11 U.S.C. Sections 330 and
331 or otherwise in respect of fees and expenses, shall reduce the Professional
Expense Cap on a dollar-for-dollar basis. All of the dollar amounts set forth in
subparagraphs (i) and (ii) are collectively referred to as the "Carveout". No
other claim or expense, having a priority senior or pari passu to that granted
to CIT in this Order shall be granted in this chapter 11 case, or any
superseding chapter 7 case, while any portion of the Obligations, the CIT
Facility or the commitment thereunder remains outstanding.
10. Notwithstanding the foregoing, Best shall be permitted to pay, as
the same may become due and payable (i) administrative expenses of the kind
specified in 11 U.S.C. Section 503(b) incurred in the ordinary course of its
business as provided in Section 7.17 of the Revolving Credit Agreement and (ii)
subject to the provisions of Paragraph 9(ii) hereof, compensation and
reimbursement of expenses to professionals allowed and payable under 11 U.S.C.
Sections 330 and 331. No costs or expenses of administration shall be imposed
against the Lenders for Best's Obligations hereunder and under the Loan
Documents, under 11 U.S.C.Sections 105, 506(c) or 552, or otherwise (other than
the Carveout).
11. As security for the full and timely payment and performance of each
the Obligations of Best with respect to the issuance of Letters of Credit under
and pursuant to the Loan Documents and the CIT Facility authorized hereby, the
Lenders are hereby granted, pursuant to 11 U.S.C. Section 364(c)(2), a first
priority lien on and security interest in all of the Letter of Credit Cash
Collateral, senior to all other liens and security interest therein.
12. The lien and security interest granted to the Lenders with respect
to the Letter of Credit Cash Collateral and the Letter of Credit Cash Collateral
Account hereunder shall not be subordinated to or pari passu with any other lien
or security interest, however arising, including but not limited to under 11
U.S.C. Section 364(d) or otherwise.
13. (a) The lien and security interest in favor of the Lenders with
respect to the Letter of Credit Cash Collateral and the Letter of Credit Cash
Collateral Account described herein and in the Loam Documents shall be deemed
valid, binding, enforceable and perfected upon entry of this Order;
(b) The Lenders shall not be required to file any financing statements,
notice of lien or similar instruments in any jurisdiction or filing office, or
to take possession of the Letter of Credit Cash Collateral, or to take any other
action in order to validate or perfect the lien and security interest with
respect to the Letter of Credit Cash Collateral or the Letter of Credit Cash
Collateral Account granted by or pursuant to this order or pursuant to the Loan
Documents;
(c) Should the Lenders, in their sole discretion, from time to time,
choose to file such financing statements, notices or lien or similar
instruments, take possession of any collateral securing the indebtedness hereby
authorized, or take any other action to validate or perfect any such security
interest or lien, all such documents shall be deemed to have been filed or
recorded at the time and on the date of entry of this Order; and
(d) A certified photocopy of this Order may, in the discretion of the
Lenders, be filed with or recorded in filing or recording offices in addition to
or in lieu of such financing statements, notices of lien or similar instruments,
and all filing offices are hereby directed to accept such certified copy of this
Order for filing and recording.
14. In making decision to make advances to or issue Letters of Credit
under the Loan Documents or to collect the indebtedness and Obligations of Best
or to exercise any other rights under the Loan Documents, the Lenders shall not
be deemed to be in control of the operations of Best or to be acting as a
"responsible person" or "owner or operator" with respect to the operation or
management of Best.
15. The provisions of this Order shall be binding upon and inure to the
benefit of each of the Lenders, Best and their respective successors and assigns
(including, without limitation, any chapter 11 or chapter 7 trustee or other
fiduciary hereafter appointed for Best or with respect to any of its respective
properties and any purchaser of an assignment of all or a portion of any
Lender's interest in the CIT Facility);
16. Except as otherwise provided for in the Loan Documents, no order
(i) dismissing the chapter 11 case of Best under 11 U.S.C. Sections 305 or 1112
or otherwise shall be entered unless prior to the entry thereof all obligations
and indebtedness owing to the Lenders under the Loan Documents shall have been
paid in full in Cash and all outstanding Letters of Credit shall have been
terminated or cash collateralized in accordance with the provisions of the Loan
Documents, and the Lenders' obligation and commitment to make loans and issue
Letters of Credit under the CIT Facility has been terminated; (ii) converting
Best's chapter 11 case under 11 U.S.C. Section or otherwise shall be entered
unless such order expressly provides that the priority of the claims of the
Lenders granted herein shall be senior in right of payment to any claim allowed
under 11 U.S.C. Sections 503 (b) or 507(b) which is incurred or arises on or
after the date of such order; or (iii) confirming any plan of reorganization in
Best's chapter 11 case shall be entered unless such order provides for the
payment in full in Cash of all Obligations and indebtedness payable or owing to
the Lenders under the Loan Documents and the termination or cash
collateralization of all outstanding Letters of Credit in accordance with the
provisions of the Loan Documents, on or before the effective date of, or
substantial consummation of, the plan of reorganization that is the subject of
such order.
17. The provisions of this Order shall be effective immediately upon
entry of this Order by the Court and any actions taken pursuant hereto shall
survive entry of, and shall govern and respect to any conflict with, any Order
which may be entered confirming any plan of reorganization, dismissing Best's
chapter 11 case or which may be entered converting Best's chapter 11 case from
chapter 11 to chapter 7. The terms and provisions of this Order, as well as the
priority of the Lenders' claims and all rights of the Lenders and Obligations of
Best created or arising pursuant hereto or the Loan Documents, shall constitute
a valid and binding obligation of Best, enforceable against Best in accordance
with its terms, and shall continue in Best's chapter 11 case and in any
superseding chapter 7 case under the Bankruptcy Code, and such claims, shall
maintain their priority as provided by this Order until satisfied and discharged
in accordance with the terms of the Loan Documents.
18. Consistent with 11 U.S.C. Section 364(e), if any or all of the
provisions of this Order are hereafter modified, vacated or stayed:
(a) such stay, modification or vacation shall not affect the
validity of any obligation, indebtedness, liability, incurred by Best to the
Lenders prior to the effective date of such stay, modification or vacation, or
the validity and enforceability of any priority or right authorized or created
hereby pursuant to the documents; and
(b) any indebtedness, obligation or liability incurred by Best
to the Lenders prior to the effective date of such stay, modification or
vacation shall be governed in all respects by the provisions of this Order, and
the Lenders shall be entitled to all the rights, remedies, privileges and
benefits, including the superpriority administrative expenses status granted
herein and pursuant to the Loan Documents, with respect to any such
indebtedness, obligation or liability.
19. All advances under the Loan Documents (including the issuance of
Letters of Credit by the Lenders or other Letter of Credit Issuers) are made in
reliance upon this Order and, therefore, the indebtedness evidenced by such
advances (and reimbursement obligations relating to Letters of Credit) prior to
the effective date of any stay, modification or vacation of this order cannot
(i) be subordinated (except as otherwise provided in this Order as to the
Carveout), (ii) lose its superpriority administrative claim status, or (iii) be
deprived of the benefit of the superpriority administrative claim status granted
to the Lenders under this Order, as a result of any subsequent order in Best's
chapter 11 case, or any superseding chapter 7 case.
20. Except as otherwise provided in the Loan Documents, so long as the
Lenders' commitment or any Obligation, liability or indebtedness under the Loan
Documents and this Order shall remain outstanding, (i) Best shall not, directly
or indirectly, create, incur, assume or permit to exist any security interest,
encumbrance, lien or other security arrangement of any kind, on or with respect
to any of its assets including, but not limited to, its inventory, or take or
fail to take any action which would grant or create a lien or security interest
in favor of any person (other than the Lenders or any agent for the Lenders) in
such assets, in either case except for Permitted Liens and (ii) there shall not
be entered in Best's chapter 11 case or any subsequent chapter 7 case any
further order which authorizes under any section of the Bankruptcy Code,
including 11 U.S.C. Sections 105, 363 or 364, the procurement of credit or the
incurring of indebtedness secured by a lien or which is entitled to
superpriority administrative claim status which is equal to or superior to that
granted to the Lenders herein, unless in each instance (x) the Lenders shall
have given their prior written consent thereto in accordance with the Loan
Documents and no such consent shall ever be implied from any other action,
inaction or acquiescence by the Lenders or (y) such other order requires that
the Obligations be indefensibly paid in full and discharged contemporaneously
with the entry of such order.
21. Subject to the provisions of the Loan Documents, and upon the
expiry of seven (7) calendar days after CIT shall have filed with the Bankruptcy
Court an affidavit (a "Default Affidavit") identifying the occurrence and
continuance of any default hereunder or Event of Default under the Loan
Documents (collectively, "Events of Default") and served the same by hand
delivery, telecopier or overnight mail upon counsel to Best and counsel to the
Official Committee of Unsecured Creditors, the automatic stay provisions of 11
U.S.C. Section 362 are vacated and modified to the extent necessary so as to
permit the Lenders to exercise all rights and remedies provided for in the Loan
Documents, without filing further pleadings or application to or order of this
Court; provided, however, that prior to the expiration of seven (7) days after
CIT shall have filed a Default Affidavit with the Bankruptcy Court, and
notwithstanding anything to the contrary in this Order or in the Loan Documents,
Best is authorized to use, cash deposited in the Cash Concentration Account (as
defined in the Revolving Credit Agreement), up to the aggregate amount of $10
million (subject to there being Availability of not less than $5 million under
the Revolving Credit Agreement), to pay the following types of administrative
expenses in the ordinary course of Best's business: occupancy costs, payments to
or on behalf of employees, taxes, payments to contractors, customer service
programs, insurance costs, Carve-Out Expenses (as defined in the Revolving
Credit Agreement), advertising expenses, all costs relating to the receipt and
shipment of merchandise, including without limitation, trade payables, customs
duties, freight and warehouse costs, as they come due in the ordinary course of
business and corporate overhead expenses incurred in the ordinary course of
business. Upon the occurrence of any Event of Default, (a) the Lenders shall be
relieved of any and all obligations to make additional advances or issue Letters
of Credit and (b) the CIT Facility and the Lenders' commitment thereunder shall
be terminated. Subject only to the provisions of this paragraph and the Loan
Documents, the Lenders shall be and are hereby authorized, in their sole
discretion, to take any and all actions and remedies which the Lenders may deem
appropriate to exercise rights and remedies in accordance with the Loan
Documents.
22. Except as expressly set forth herein, no costs or expenses of
administration including, without limitation, professional fees allowed and
payable under 11 U.S.C. Sections 330 and 331 that have been or may be incurred
in Best's case, or after any conversion of any of this case under 11 U.S.C.
Section 1112, or in any other proceeding related thereto, and no priority claims
are, or will be, senior to or on a parity with the superpriority administrative
claims of the Lenders arising hereunder.
23. Notwithstanding any other provision of this Order, none of the
proceeds of the Pre-Petition Collateral or the proceeds of the CIT Facility
shall be used by any representative of Best's estate to investigate, prosecute
or otherwise pursue any pre-Filing Date or post-Filing Date claims or causes of
action against the Pre-Petition Lenders.
24. Best, on behalf of itself and its estate, is hereby deemed to: (a)
release and discharge the Pre-Petition Lenders and their agents, attorneys,
employees, heirs, executors, officers, directors, successors and assigns from
any and all claims and causes of action arising out of, based upon or related to
the Pre-Petition Loan Documents, the Pre-Petition Obligations or the
Pre-Petition Collateral prior to the entry of this Order; and (b) waive any and
all defenses (including, without limitation, offsets and counterclaims of any
kind or nature) as to the validity, perfection, priority, enforceability and
avoidability (under the Bankruptcy code or otherwise) of the Pre-Petition
Obligations and the liens on and security interests in the Pre-Petition
Collateral; provided, however, that the Official Committee of Unsecured
Creditors appointed in Best's chapter 11 case shall have until October 20, 1996
to commence an adversary proceeding or otherwise move with respect to any
challenge to the extent, priority or validity of the liens and security
interests granted to the Pre-Petition Lenders in accordance with the
Pre-Petition Loan Documents.
25. In the event that the Pre-Petition Lenders are required to repay or
disgorge to Best, or any representatives of Best's estate, all or any portion of
the Pre-Petition Obligations authorized and directed to be repaid hereunder, or
any payment on account of the Pre-Petition obligations made to any Pre-Petition
Lender is rescinded (in either case, such amount being hereafter referred to as
an "Avoided Payment") for any reason whatsoever, including, but not limited to,
as a result of any action, suit, proceeding or claim brought in connection with
or pursuant to 11 U.S.C. Sections 105, 510, 544, 547, 548, 549, 550 or 553,
or any other provision of the Bankruptcy Code or any applicable state law, or
any other similar provisions under any other state or federal statutory or
common law, then, in such event, one hundred (100%) percent of the proceeds of
any and all such Avoided Payments shall be immediately upon receipt deposited in
the Cash Concentration Account (as defined in the Loan Documents) and applied in
accordance with the provisions of the Loan Documents.
26. The Order shall not be deemed to be, or construed as, a waiver or
relinquishment of any rights of the Pre-Petition Lenders, solely to the extent
that the Pre-Petition Obligations have not been indefeasibly paid in full and in
cash, to be heard on any matter brought before the Court or to seek the
appointment of a trustee, examiner or other representative for Best's estate
under 11 U.S.C. Section 1104, conversion of this case under 11 U.S.C. Section
1112 or oppose the extension of exclusivity under 11 U.S.C. Section 1121. This
Order shall also not be deemed to be, or construed as, a waiver of any default
under the Pre-Petition Credit Agreement pending the indefeasible payment in full
and in cash of the Pre-Petition Obligations.
27. To the extent any of the terms and conditions of the Loan Documents
or the Interim Order are in conflict with the terms and conditions of this
Order, the provisions and intent of this Order shall control.
28. The record of the Final Hearing and the Interim Hearing on the
Motion, and the findings of fact and conclusions of law set forth above are
incorporated herein by this reference.
29. Best shall promptly mail copies of this Order to (a) Otterbourg,
Steindler, Houston & Xxxxx, P.C., attorneys for the Official Unsecured
Creditors' Committee, (b) the Office of the United States Trustee for the
Eastern District of Virginia, (c) all parties who have filed requests for
notices under Bankruptcy Rule 2002, (d) the Prepetition Lenders, (e) the 20
largest unsecured creditors of Best at their last known address, (f) the
Internal Revenue Service and (g) the Securities and Exchange Commission. Any
other further obligation for notice of the relief granted in the Motion is
hereby dispensed with and waived.
30. The Clerk of Court is hereby directed to forthwith enter this Order
on the docket of this Court maintained with regard to these cases.
Dated: Richmond, Virginia
October 10, 1996
/s/ Xxxxxxx X. Xxxx, Xx.
UNITED STATES BANKRUPTCY JUDGE
EXHIBIT C
Available in hard copy upon request.
EXHIBIT D
BORROWING BASE CERTIFICATE
BEST PRODUCTS CO., INC.,
AS DEBTOR AND DEBTOR-IN-POSSESSION
BORROWING BASE CERTIFICATE
Certificate No. _______
Computation Date ______
Reference is made to the Revolving Credit Agreement, dated as
of October 1, 1996 (as amended, restated, supplemented or otherwise modified
from time to time, the "Revolving Credit Agreement") among Best Products Co.,
Inc., as debtor and debtor-in-possession (the "Borrower"), the financial
institutions from time to time party thereto (the "Lenders"), the co-agents
party thereto, and The CIT Group/Business Credit, Inc., as agent for the Lenders
(the "Agent"). Capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Revolving Credit Agreement. Pursuant to
the Revolving Credit Agreement, the undersigned hereby certifies as follows:
1. The Book Value of "Flash Inventory" of the $_____________
Borrower as shown in the most recent Flash
Inventory Report (A) in any of the locations listed in Schedule 1.01(A)
to the Revolving Credit Agreement or (B) in any of the locations in the
continental United States as the Agent shall have approved in writing
from time to time, or (C) in transit between the locations described in
clauses (A) or (B) above, in each case before deductions in Lines 5 and
6 below
2. Inventory subject to any Lien to the extent _________________
included in Line 1 above
3. Inventory constituting work-in-process or _________________
Inventory held on consignment, in each case to
the extent included in Line 1 above
4. Adjusted Book Value of Flash Inventory (Line 1 _________________
less the sum of Line 2 and Line 3)
5. 10% of Line 4 ______________
6. Sum of A-G below without duplication: ______________
(Based on definition of Eligible Inventory)
(A) Reserves for markdowns _________________
(B) Reserves for shrinkage to the _________________
extent not already deducted in Line 1 above
(C) Reserves for lay-a-ways to the _________________
extent included in Line 1 above
(D) Reserves for displays and open stock _________________
(E) Reserves for rejected, defective, _________________
damaged, aged or otherwise unsalable
inventory
(F) Reserves for SLAC (selling price lower _________________
than average cost)
(G) Other reserves required by CIT _________________
7. Book Value of Eligible Inventory (Line 4 less the ______________
greater of Line 5 and Line 6)
8. (A) if during the period from December 16 through ______________
and including August 14, 55% of Line 7 or (B) if
during the period from August 15 through and
including December 15, 60% of Line 7
9. L/C Inventory _________________
10. (A) if during the period from December 16 through ______________
and including August 14, 55% of Line 9 or (B) if
during the period from August 15 through and
including December 15, 60% of Line 9
11. (A) if during the period from December 16 through ______________
and including August 14, $2,500,000 or (B) if
during the period from August 15 through and
including December 15, zero
12. Additional reserves imposed by the Agent ______________
13. Borrowing Base: the difference between (A) the ______________
sum of Line 8 and Line 10 and (B) the sum of Line
11 and Line 12
14. Maximum amount of Revolving Credit Commitments ______________
(not to exceed $250,000,000)
15. Amount of Loans outstanding plus Letter of Credit ______________
Exposure (Sum of A through D below):
(A) Loans __________
(B) Unreimbursed Draws under Letters of __________
Credit
(C) Undrawn Letter of Credit Availability __________
(D) Acceptances outstanding __________
16. Availability: Lower of (A) Line 13 minus Line 15 ______________
and (B) Line 14 minus Line 15)
17. Borrower's estimate of cash on hand ______________
I, the undersigned Designated Financial Officer of the
Borrower, DO HEREBY CERTIFY, on behalf of the Borrower, as follows:
This certificate is furnished to the Agent pursuant to Section
4.04 of the Revolving Credit Agreement.
This Borrowing Base Certificate has been prepared in
accordance with the provisions of the Revolving Credit Agreement.
This Borrowing Base Certificate and the information attached
hereto and the schedules, if any, delivered herewith are true and complete and
represent an accurate statement of the matters purported to be set forth herein
or therein as of the computation date set forth above.
Pursuant to Section 4.04(d) of the Revolving Credit Agreement,
the Agent is entitled to request backup schedules showing the derivation of this
Borrowing Base Certificate.
By:___________________________
Name:_________________________
Title:________________________
Date:___________________
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE
ASSIGNMENT AND ACCEPTANCE dated as of ________ __, 199__
between ___________________________________ (the "Assignor"), and
__________________ (the "Assignee"). All capitalized terms used herein and not
otherwise defined have the same meanings herein as defined in the Credit
Agreement referred to below.
R E C I T A L S
A. The Assignor is party to a Revolving Credit Agreement,
dated as of October 1, 1996 (as amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), by and among BEST PRODUCTS
CO., INC., as debtor and debtor-in-possession, a Virginia corporation (the
"Borrower"), the financial institutions party thereto (collectively, the
"Lenders" and individually, a "Lender"), the co-agents party thereto, and The
CIT GROUP/BUSINESS CREDIT, INC. ("CIT"), as agent for the Lenders (in such
capacity, the "Agent").
B. The Assignor has a commitment to make Loans and participate
in the issuance of Letters of Credit (the "Commitment") [and, as of the date
hereof, the Assignor has made certain Loans under the Credit Agreement (the
"Assignor Loans"), and has participated in certain Letters of Credit under the
Credit Agreement (the "Assignor Letters of Credit")].
C. The Assignor desires to assign its rights under the Credit
Agreement, the Note made payable to the Assignor and the other Related Documents
with respect to [all] [a portion] of the Commitment [and the corresponding
portion of the Assignor Loans and the Assignor Letters of Credit] to the
Assignee and the Assignee has agreed to assume the obligations of the Assignor
under the Related Documents to the extent of the rights so assigned.
NOW, THEREFORE, in consideration of the matters recited above,
and the mutual covenants and agreements contained herein, the parties hereto
hereby agree as follows:
SECTION 1. Assignment and Assumption.
(a) The Assignor hereby assigns to the Assignee, without
recourse, representation or warranty, an undivided interest in all of the
Assignor's rights arising under the Related Documents relating to the
Commitment[, including, without limitation, the Assignor Loans and the Assignor
Letters of Credit] in an amount representing ______% of the total Commitments of
all Lenders under the Credit Agreement (the "Percentage"), including, without
limitation, (i) all amounts advanced and to be advanced or participated in by
the Assignor pursuant to the Commitment; (ii) all of the Assignor's rights and
powers contained in the Related Documents; (iii) all claims of the Assignor
against Persons who may in the future become or are now liable for repayment of
the Assignor Loans and reimbursement of amounts paid under the Assignor Letters
of Credit or reimbursement of expenses incurred by the Assignor on account of
the Assignor Loans or the Assignor Letters of Credit; and (iv) all amounts to be
received by the Assignor on account of the Assignor Loans or the Assignor
Letters of Credit, whether from the Borrower, from any guarantor, from the
disposition of the Collateral, from others who are now or may in the future
become obligated to the Assignor with respect to some or all of the amounts
owing on the Assignor Loans or the Assignor Letters of Credit, or from any other
source, including, without limitation, recovery from litigation. Except as
otherwise expressly provided in this Agreement, the Assignee shall have no
interest in the fees payable to the Agent pursuant to the Fee Letter and Section
2.08(g) of the Credit Agreement.
(b) The Assignee hereby assumes from the Assignor, and the
Assignor is hereby expressly and absolutely released from, all of the Assignor's
obligations arising under the Related Documents relating to that portion of the
Commitment (including, without limitation, the obligations with respect to the
Assignor Loans and the Assignor Letters of Credit) equal to the Percentage.
(c) The Assignor and the Assignee hereby agree that Annex I
attached hereto sets forth the amount of the Commitment and the Pro Rata Share
of the Assignee after giving effect to the assignment and assumption described
above.
(d) The Assignor and the Assignee hereby agree that, upon
giving effect to the assignment and assumption described above, the Assignee
shall have all of the obligations under the Related Documents of, and shall be
deemed to have made all of the covenants and agreements contained in the Related
Documents made by, a Lender having the Commitment and Pro Rata Share of the
Assignee reflected on Annex I attached hereto. The Assignee hereby acknowledges
and agrees that the agreement set forth in this subsection (d) is expressly made
for the benefit of the Borrower, the Agent, the Assignor and the other Lenders
and their respective successors and permitted assigns. From and after the
Assignment Effective Date (as hereinafter defined), (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Agreement,
shall have the rights and obligations of a Lender thereunder and (ii) the
Assignor shall, to the extent provided in this Agreement, relinquish its rights
and be released from its obligations under the Credit Agreement.
(e) The Assignor and the Assignee hereby acknowledge and
confirm their understanding and intent (i) that this Agreement shall effect the
assignment by the Assignor and the assumption by the Assignee of the Assignor's
rights and obligations under its Commitment and the Related Documents in an
amount equal to the Percentage and (ii) that any other assignments by the
Assignor of a portion of its rights and obligations under its Commitment and the
Related Documents shall have no effect on the Commitment and Pro Rata Share of
the Assignee set forth on Annex I attached hereto.
[(f) The Assignee agrees to pay to the Assignor, on ________
__, 199_, an amount equal to $_________, in immediately available funds
representing an amount equal to the principal amount of the Assignee's
Percentage of the Assignor Loans outstanding on the Assignment Effective Date.]
[(g) Upon receipt of the amount set forth in paragraph (f)
above, the Assignor shall pay to Assignee a closing fee in an amount equal to
$___________.]
SECTION 2. The Assignor Not Responsible for Certain Matters.
(a) The Assignee represents and warrants that it has become a
party hereto solely in reliance upon its own independent investigation of the
financial and other circumstances surrounding the Borrower, the Collateral, the
Assignor Loans and the Assignor Letters of Credit and all aspects of the
transactions evidenced by or referred to in the Related Documents, or has
otherwise satisfied itself thereto, and that it is not relying upon any
representation, warranty or statement (except any such representation, warranty
or statement expressly set forth in this Agreement) of the Assignor in
connection with the assignment made under this Agreement. The Assignee further
acknowledges that the Assignee will, independently and without reliance upon the
Agent, the Assignor or any other Lender and based upon the Assignee's review of
such documents and information as the Assignee deems appropriate at the time,
make and continue to make its own credit decisions in entering into this
Agreement and taking or not taking action under the Related Documents. The
Assignor shall have no duty or responsibility either initially or on a
continuing basis to make any such investigation or any such appraisal on behalf
of the Assignee or to provide the Assignee with any credit or other information
with respect thereto, whether coming into its possession before the making of
the initial extension of credit under the Credit Agreement or at any time or
times thereafter.
(b) The Assignee represents and warrants to the Assignor that
it has experience and expertise in the making of loans such as the Loans or with
respect to the other types of credit which may be extended under the Credit
Agreement, and that it has received, reviewed and approved copies of all Related
Documents.
(c) The Assignor shall not be responsible to the Assignee for
the execution, effectiveness, accuracy, completeness, legal effect, genuineness,
validity, enforceability, collectibility or sufficiency of any of the Related
Documents or for any representations, warranties, recitals or statements made
therein or in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents made or
furnished or made available by the Assignor to the Assignee or by or on behalf
of the Borrower to the Assignor or the Assignee in connection with the Related
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of the Borrower or any other Person liable for the
payment of any Loans or payment of amounts owed in connection with other
extensions of credit under the Credit Agreement or the value of the Collateral
or any other matter. The Assignor shall not be required to ascertain or inquire
as to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Related Documents or as to the
use of the proceeds of the Loans or other extensions of credit under the Credit
Agreement or as to the existence or possible existence of any Event of Default
or Potential Default.
(d) Each party to this Agreement represents and warrants to
the other party to this Agreement that it has full power and authority to enter
into this Agreement and to perform its obligations under this Agreement in
accordance with the provisions of this Agreement, that this Agreement has been
duly authorized, executed and delivered by such party and that this Agreement
constitutes a legal, valid and binding obligation of such party, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, moratorium or other similar laws affecting creditors' rights
generally and by general equitable principles.
(e) Each party to this Agreement represents and warrants that
the making and performance by it of this Agreement do not and will not violate
any law or regulation of the jurisdiction of its incorporation or any other law
or regulation applicable to it.
(f) Each party to this Agreement represents and warrants that
all consents, licenses, approvals, authorizations, exemptions, registrations,
filings, opinions and declarations from or with any agency, department,
administrative authority, statutory corporation or judicial entity necessary for
the validity or enforceability of its obligations under this Agreement have been
obtained, and no governmental authorizations other than any already obtained are
required in connection with its execution, delivery and performance of this
Agreement.
(g) The Assignor represents and warrants that it is the legal
and beneficial owner of the interest being assigned and that such interest is
free and clear of any Lien.
(h) The Assignor makes no representation or warranty and
assumes no responsibility with respect to the operations, condition (financial
or otherwise), business or assets of the Borrower or any of its Subsidiaries or
the performance or observance by the Borrower of any of its obligations under
the Credit Agreement or any other Related Document.
(i) The Assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Related
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto.
(j) The Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender.
(k) The Assignee confirms that it has received all documents
and information it has deemed appropriate to make its own credit analysis and
decision to enter into this Agreement.
(l) The Assignee specifies as its address for notices the
office set forth beneath its name on the signature pages hereof.
SECTION 3. Assignment Effective Date.
(a) Following the execution and delivery of this Agreement by
the Assignor and the Assignee, it will be delivered to the Agent for acceptance
and recording by the Agent. The effective date of this Agreement shall be the
date of acceptance hereof by the Agent, unless otherwise specified on Annex 1
attached hereto (the "Assignment Effective Date"); provided that this Agreement
shall not be effective unless recorded by the Agent.
(b) From and after the Assignment Effective Date, the Agent
shall make all payments under the Credit Agreement in respect of the interests
assigned hereby (including, without limitation, all payments of principal,
interest and fees with respect thereto) to the Assignee. If the Assignor
receives or collects any payment of interest or fees attributable to the
interests assigned to Assignee by this Agreement which has accrued after the
Assignment Effective Date, the Assignor shall distribute to the Assignee such
payment. If the Assignee receives or collects any payment of interest or fees
which is not attributable to the interests assigned to the Assignee by this
Agreement or which has accrued on or prior to the Assignment Effective Date, the
Assignee shall distribute to the Assignor such payment.
SECTION 4. Miscellaneous Provisions.
(a) Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated, except by an instrument in writing signed by
the party against whom enforcement of such change, waiver, discharge or
termination is sought.
(b) Title and headings of sections in this Agreement are for
convenience of reference only and shall not be used to define or limit the
provisions hereof.
(c) THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD FOR CONFLICT OF LAW PRINCIPLES.
(d) This Agreement embodies the entire agreement between the
Assignor and the Assignee with respect to the Related Documents and supersedes
all prior agreements between the Assignor and the Assignee with respect to the
Related Documents.
(e) This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but one Agreement. The signature pages of all
counterparts of this Agreement may be detached and attached to a single
counterpart of this Agreement so that all signature pages are physically
attached to the same document.
(f) This Agreement is being entered into pursuant to Section
11.13 of the Credit Agreement and the Assignor and the Assignee shall comply
with the requirements thereof.
(g) All of the terms, covenants and conditions herein
contained shall inure to the benefit of and be binding upon the parties hereto,
and their respective successors and assigns.
(h) Every provision of this Agreement is intended to be
severable. If any term or provision thereof is declared by a court of competent
jurisdiction to be illegal, invalid or unenforceable for any reason whatsoever,
such illegality, invalidity or unenforceability shall not affect the balance of
the terms and provisions hereof, which terms and provisions shall remain binding
and enforceable, and to the extent possible all of the other provisions shall
nonetheless remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
[NAME OF ASSIGNOR]
By:________________________________
Name:______________________________
Title:_____________________________
Notice Address and Payment
Instructions of Assignor:
___________________________________
___________________________________
Attention:
Telephone:
Telecopy:
[NAME OF THE ASSIGNEE]
By:________________________________
Name:______________________________
Title:_____________________________
Notice Address and Payment
Instructions of Assignee:
___________________________________
___________________________________
___________________________________
___________________________________
Accepted this ___ day of
____________, 199_
The CIT Group/Business Credit, Inc.,
as Agent
By:________________________________
Name:______________________________
Title:_____________________________
ANNEX I
ASSIGNEE'S COMMITMENT AND PRO RATA SHARE AFTER ASSIGNMENT
Commitment $_______
Pro Rata Share _____%
EXHIBIT F
CREDIT CARD BANK DEPOSITORY ACCOUNT AGREEMENT
[DATE]
[Name and
Address of Credit Card
Depository Bank]
Ladies and Gentlemen:
We refer to [Credit Card Agreement] dated _________, ___ (as
amended or otherwise modified from time to time, the "Credit Card Agreement")
between you and Best Products Co., Inc., as debtor and debtor-in-possession (the
"Company"). The Company has entered into a Revolving Credit Agreement, dated as
of October 1, 1996 (as amended or otherwise modified from time to time, the
"Credit Agreement"), with certain financial institutions party thereto, (the
"Lenders"), the co-agents party thereto, and The CIT Group/Business Credit,
Inc., as agent for the Lenders (the "Agent"), pursuant to which the Lenders have
agreed to make loans to the Company and assist the Company in obtaining letters
of credit. The Credit Agreement will replace the Revolving Credit Agreement,
dated as of February 7, 1996, as amended (the "Existing Credit Agreement") among
Best Products Co., Inc., certain financial institutions party thereto and The
CIT Group/Business Credit, Inc., as agent for such financial institutions.
This letter supersedes and replaces the letter that you
received from us in connection with the Existing Credit Agreement. By signing
this letter agreement, you agree that from and after the date hereof, all
monies, instruments or other property owing under the Credit Card Agreement to
the Company shall be held for the benefit of the Agent. You hereby further
agree, and the Company hereby irrevocably instructs you, to transfer all amounts
owing to the Company in accordance with the terms of the Credit Card Agreement,
in same day funds, to an account maintained with ________________ at:
For the account of: The CIT Group/Business Credit, Inc.
(Best Products Cash Concentration Account)
Account #:
(the "Cash Concentration Account") or such other account designated in writing
by the Agent.
From and after the date hereof, no officer or agent of the
Company shall have the authority to withdraw or transfer any funds owing under
the Credit Card Agreement and the Agent shall have the sole authority to give
you instructions with respect to the withdrawal or transfer of any funds owing
under the Credit Card Agreement including, without limitation, the authority to
designate a new Cash Concentration Account. The instructions set forth in this
letter agreement may only be changed upon written instruction from the Agent.
Any correspondence with the Agent should be to:
The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Very truly yours,
BEST PRODUCTS CO., INC.,
, as debtor and debtor-in-possession
By:
Name:
Title:
Consented to:
THE CIT GROUP/BUSINESS CREDIT, INC.
By: _________________________
Name:
Title:
Acknowledged and agreed to as of the date first above written:
________________________ [Date]
[Credit Card Depository Bank]
By: _________________________
Title: ________________________
EXHIBIT G
NOTICE LETTER TO DEPOSITORY BANKS
[DATE]
Name
Ladies and Gentlemen:
We refer to the following account[s] _______________
maintained with you by Best Products Co., Inc., as debtor and
debtor-in-possession (the "Company"), into which certain monies, instruments and
other property are deposited from time to time (collectively, the "Depository
Account"). The Company has entered into a Revolving Credit Agreement, dated as
of October 1, 1996 (as amended or otherwise modified from time to time, the
"Credit Agreement"), with certain financial institutions party thereto (the
"Lenders"), the co-agents party thereto, and The CIT Group/Business Credit,
Inc., as agent for the Lenders (the "Agent"), pursuant to which the Lenders have
agreed to make loans to the Company and assist the Company in obtaining letters
of credit. It is a condition to the effectiveness of the Credit Agreement that
the Agent, for the benefit of the Lenders, be granted dominion and control over
the Depository Account and all monies therein. The Credit Agreement will replace
the Revolving Credit Agreement, dated as of February 7, 1996, as amended (the
"Existing Credit Agreement") among Best Products Co., Inc., certain financial
institutions party thereto and The CIT Group/Business Credit, Inc., as agent for
such financial institutions.
This letter supersedes and replaces the letter that you
received from us in connection with the Existing Credit Agreement. You are
hereby instructed to honor funds transfers for the funds on deposit in the
Depository Account, subject to availability of collected funds, exclusively to
the following account maintained with Bankers Trust Company:
For the account of: The CIT Group/Business Credit, Inc.
(Best Products Cash Concentration Account)
Account #: 00-000-000
(the "Cash Concentration Account") or such other account designated in writing
by the Agent.
From and after the date hereof, no officer or agent of the
Company shall have the authority to withdraw any funds on deposit in the
Depository Account or to transfer any funds on deposit in the Depository Account
to any account other than the Cash Concentration Account and the Agent shall
have the sole authority to give you instructions with respect to the withdrawal
of any funds on deposit in the Depository Account and transfers of funds other
than to the Cash Concentration Account, including, without limitation, the
authority to designate a new Cash Concentration Account. The instructions set
forth in this Letter may only be changed upon written instruction from the
Agent. Any correspondence with the Agent should be to:
The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Very truly yours,
BEST PRODUCTS CO., INC.,
as debtor and debtor-in-possession
By:
Name:
Title:
Consented to:
The CIT Group/Business Credit, Inc.
By:_______________________________
Name:
Title:
EXHIBIT H
DEPOSITORY ACCOUNT AGREEMENT
[DATE]
[Name and
Address of
Depository Account Bank]
Ladies and Gentlemen:
We refer to the following account[s] maintained with you by
Best Products Co., Inc., as debtor and debtor-in-possession (the "Company"),
into which certain monies, instruments and other property are deposited from
time to time (collectively, the "Depository Account"). The Company has entered
into a Revolving Credit Agreement, dated as of October 1, 1996 (as amended or
otherwise modified from time to time, the "Credit Agreement"), with certain
financial institutions party thereto (the "Lenders"), the co-agents party
thereto, and The CIT Group/Business Credit, Inc., as agent for the Lenders (the
"Agent"), pursuant to which the Lenders have agreed to make loans to the Company
and assist the Company in obtaining letters of credit. It is a condition to the
continued maintenance of the Depository Account with you that you agree to this
Letter Agreement.
By signing this letter agreement, you agree that from and
after the date hereof, the Depository Account shall be under the exclusive
dominion and control of the Agent, all monies, instruments or other property of
the Company received in connection therewith, whether or not deposited in the
Depository Account, shall be held solely for the benefit of the Agent and no
officer or agent of the Company shall have the authority to withdraw or transfer
any funds on deposit in the Depository Account. The Agent shall have the sole
authority to give you instructions with respect to the withdrawal or transfer of
any funds on deposit in the Depository Account including, without limitation,
the authority to designate a new Cash Concentration Account (as hereinafter
defined). You agree to:
(a) follow your usual operating procedures for the
handling of any remittance received in the Depository Account that contains
restrictive endorsements, irregularities, such as a variance between the written
and numerical amounts, undated or postdated items, missing signature, incorrect
payee, etc.;
(b) indorse and process all eligible checks and other
remittance items, not covered by subparagraph (a) above, deposit such checks and
other remittance items in the Depository Account and transfer intact all amounts
deposited in respect thereof to the Cash Concentration Account;
(c) not commingle any cash or other payments
deposited in the Depository Account with other funds; and
(d) maintain a record of all checks and other
remittance items received in the Depository Account and, in addition to
providing the Company with a monthly statement and photostats, vouchers,
enclosures, etc. of checks and other remittance items received on a daily basis,
upon the written request of the Agent, you should furnish to the Agent, free of
any charge payable by the Agent, a copy of your regular bank statement with
respect to the Depository Account, with the words "The CIT Group/Business
Credit, Inc., as agent for the Lenders to Best Products Co., Inc., as debtor and
debtor-in-possession" included therein so that the Agent is able to properly
identify the Depository Account.
You hereby agree to transfer in same day funds, on each of
your business days, all collected funds on deposit in the Depository Account,
less charges for returned items received on such business day, to an account
maintained with _______________ at:
For the account of: The CIT Group/Business Credit, Inc.
(Best Products Cash Concentration Account)
Account #:
(the "Cash Concentration Account") or such other account designated in writing
by the Agent. In order to enable the Agent to properly reconcile the Company's
records, you agree that each such transfer of funds by you to the Cash
Concentration Account shall not reflect the rounding off of any funds so
transferred.
You waive and agree not to assert, claim or endeavor to
exercise, and by executing this letter agreement bar and estop yourself from
asserting, claiming or exercising, any right of setoff, banker's lien or other
purported form of claim with respect to the Depository Account and funds from
time to time therein, other than with respect to reasonable and customary fees
and expenses, not exceeding $___________ in any year, due to you in connection
with the Depository Account. You acknowledge that you have not heretofore
received a notice from any other party asserting, claiming or exercising any
such right or claim. Except as provided herein, you shall have no rights in the
Depository Account or the funds therein.
You may terminate this Letter Agreement only upon thirty days'
prior written notice to that effect to the Company and the Agent, by cancelling
the Depository Account maintained with you and transferring all funds, if any,
in such Depository Account to the Cash Concentration Account at the address set
forth above. After any such termination, you shall nonetheless remain obligated
promptly to transfer to the Cash Concentration Account anything from time to
time received in the Depository Account.
This Letter Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
Very truly yours,
BEST PRODUCTS CO., INC.,
as debtor and debtor-in-possession
By:
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent
By:
Name:
Title:
Acknowledged and agreed to
as of the date first above
written.
[DEPOSITORY ACCOUNT BANK]
By:
Name:
Title:
