Exhibit 10.3
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CREDIT AGREEMENT
$250,000,000
among
VENTURE STORES, INC.
as Borrower,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 11.8 HEREOF,
as Lenders,
and
BT COMMERCIAL CORPORATION,
as Agent
Dated as of April 8, 1997
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TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 General Definitions. . . . . . . . . . . . . . 1
1.2 Accounting Terms and Determinations. . . . . . 15
1.3 Other Terms; Headings. . . . . . . . . . . . . 16
ARTICLE 2. REVOLVING LOANS. . . . . . . . . . . . . . . . . . . . . 16
2.1 Revolving Credit Commitments . . . . . . . . . 16
2.2 Borrowing of Revolving Loans . . . . . . . . . 16
2.3 Notice of Request for Lender
Advances.. . . . . . . . . . . . . . . . . . . 18
2.4 Periodic Settlement of Agent Advances;
Interest and Fees; Statements. . . . . . . . . 18
2.5 Sharing of Payments. . . . . . . . . . . . . . 19
2.6 Defaulting Lenders . . . . . . . . . . . . . . 20
ARTICLE 3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . 21
3.1 Issuance of Letters of Credit. . . . . . . . . 21
3.2 Terms of Letters of Credit . . . . . . . . . . 21
3.3 Notice of Issuance . . . . . . . . . . . . . . 21
3.4 Lenders' Participation . . . . . . . . . . . . 22
3.5 Payments of Amounts Drawn Under Letters
of Credit. . . . . . . . . . . . . . . . . . . 22
3.6 Payment by Lenders . . . . . . . . . . . . . . 22
3.7 Obligations Absolute . . . . . . . . . . . . . 22
3.8 Agent's Execution of Applications
and Other Issuing Bank Documentation;
Reliance on Credit Agreement by
Issuing Bank . . . . . . . . . . . . . . . . . 23
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION
OF COMMITMENTS . . . . . . . . . . . . . . . . . . . . . 23
4.1 Interest on Revolving Loans. . . . . . . . . . 23
4.2 Unused Line Fee. . . . . . . . . . . . . . . . 24
4.3 Letter of Credit Fees. . . . . . . . . . . . . 24
4.4 Interest and Letter of Credit Fees After
Event of Default.. . . . . . . . . . . . . . . 25
4.5 Collateral Monitoring Fee. . . . . . . . . . . 25
4.6 Expenses . . . . . . . . . . . . . . . . . . . 25
4.7 Mandatory Payment; Reductions of
Commitments. . . . . . . . . . . . . . . . . . 25
4.8 Maintenance of Loan Account; Statements
of Account . . . . . . . . . . . . . . . . . . 26
4.9 Payment Procedures . . . . . . . . . . . . . . 26
4.10 Collection of Accounts . . . . . . . . . . . . 26
4.11 Distribution and Application of
Collections and other Amounts. . . . . . . . . 27
4.12 Calculations . . . . . . . . . . . . . . . . . 27
4.13 Special Provisions Relating to LIBOR
Rate Loans . . . . . . . . . . . . . . . . . . 28
4.14 Indemnification in Certain Events. . . . . . . 31
ARTICLE 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 33
5.1 Conditions Precedent to Initial Revolving
Loan and Letter of Credit. . . . . . . . . . . 33
5.2 Conditions Precedent to All Revolving Loans
and Letters of Credit. . . . . . . . . . . . . 33
ARTICLE 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 34
6.1 Organization and Qualification . . . . . . . . 34
6.2 Authority. . . . . . . . . . . . . . . . . . . 35
6.3 Enforceability . . . . . . . . . . . . . . . . 35
6.4 No Conflict. . . . . . . . . . . . . . . . . . 35
6.5 Consents and Filings . . . . . . . . . . . . . 35
6.6 Government Regulation. . . . . . . . . . . . . 35
6.7 Solvency . . . . . . . . . . . . . . . . . . . 35
6.8 Rights in Collateral; Priority of
Liens. . . . . . . . . . . . . . . . . . . . . 36
6.9 Financial Data . . . . . . . . . . . . . . . . 36
6.10 Locations of Offices, Records and
Inventory. . . . . . . . . . . . . . . . . . . 36
6.11 Subsidiaries; Ownership of Stock . . . . . . . 37
6.12 No Judgments or Litigation . . . . . . . . . . 37
6.13 No Defaults. . . . . . . . . . . . . . . . . . 37
6.14 Labor Matters. . . . . . . . . . . . . . . . . 37
6.15 Compliance with Law. . . . . . . . . . . . . . 37
6.16 ERISA. . . . . . . . . . . . . . . . . . . . . 37
6.17 Compliance with Environmental Laws . . . . . . 38
6.18 Intellectual Property. . . . . . . . . . . . . 38
6.19 Licenses and Permits . . . . . . . . . . . . . 39
6.20 Taxes and Tax Returns. . . . . . . . . . . . . 39
6.21 Material Contracts . . . . . . . . . . . . . . 40
6.22 Accuracy and Completeness of
Information. . . . . . . . . . . . . . . . . . 40
6.23 No Change. . . . . . . . . . . . . . . . . . . 40
ARTICLE 7. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . 40
7.1 Financial Reporting. . . . . . . . . . . . . . 40
7.2 Collateral Reporting . . . . . . . . . . . . . 42
7.3 Notification Requirements. . . . . . . . . . . 43
7.4 Corporate Existence. . . . . . . . . . . . . . 44
7.5 Books and Records; Inspections . . . . . . . . 45
7.6 Insurance. . . . . . . . . . . . . . . . . . . 45
7.7 Taxes. . . . . . . . . . . . . . . . . . . . . 45
7.8 Compliance with Laws . . . . . . . . . . . . . 45
7.9 Use of Proceeds. . . . . . . . . . . . . . . . 46
7.10 Fiscal Year. . . . . . . . . . . . . . . . . . 46
7.11 Maintenance of Property. . . . . . . . . . . . 46
7.12 ERISA Documents. . . . . . . . . . . . . . . . 46
7.13 Environmental and Other Matters. . . . . . . . 47
7.14 Further Assurances . . . . . . . . . . . . . . 47
ARTICLE 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 48
8.1 Minimum EBITDA to Interest Expense
Ratio. . . . . . . . . . . . . . . . . . . . . 48
8.1A Minimum Shareowner's Investment. . . . . . . . 49
8.2 Minimum Inventory to Trade Accounts
Payable Ratio. . . . . . . . . . . . . . . . . 49
8.3 Capital Expenditures . . . . . . . . . . . . . 49
8.4 Additional Indebtedness. . . . . . . . . . . . 49
8.5 Liens. . . . . . . . . . . . . . . . . . . . . 50
8.6 Contingent Obligations . . . . . . . . . . . . 51
8.7 Sale of Assets . . . . . . . . . . . . . . . . 51
8.8 Restricted Payments. . . . . . . . . . . . . . 52
8.9 Investments. . . . . . . . . . . . . . . . . . 52
8.10 Affiliate Transactions . . . . . . . . . . . . 53
8.11 Additional Bank Accounts . . . . . . . . . . . 53
8.12 Excess Cash. . . . . . . . . . . . . . . . . . 53
8.13 Additional Negative Pledges. . . . . . . . . . 53
8.14 Additional Subsidiaries. . . . . . . . . . . . 54
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . 54
9.1 Events of Default. . . . . . . . . . . . . . . 54
9.2 Acceleration, Termination of
Commitments and Cash
Collateralization. . . . . . . . . . . . . . . 55
9.3 Rescission of Acceleration . . . . . . . . . . 56
9.4 Remedies . . . . . . . . . . . . . . . . . . . 56
9.5 Right of Setoff. . . . . . . . . . . . . . . . 56
9.6 License of Use of Software and Other
Intellectual Property. . . . . . . . . . . . . 56
9.7 Application of Proceeds; Surplus;
Deficiencies . . . . . . . . . . . . . . . . . 56
ARTICLE 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . 57
10.1 Appointment of Agent . . . . . . . . . . . . . 57
10.2 Nature of Duties of Agent. . . . . . . . . . . 57
10.3 Lack of Reliance on Agent. . . . . . . . . . . 58
10.4 Certain Rights of the Agent. . . . . . . . . . 58
10.5 Reliance by Agent. . . . . . . . . . . . . . . 59
10.6 Indemnification of Agent . . . . . . . . . . . 59
10.7 The Agent in its Individual Capacity . . . . . 59
10.8 Holders of Revolving Notes . . . . . . . . . . 59
10.9 Successor Agent. . . . . . . . . . . . . . . . 60
10.10 Collateral Matters . . . . . . . . . . . . . . 60
ARTICLE 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 62
11.1 GOVERNING LAW. . . . . . . . . . . . . . . . . 62
11.2 SUBMISSION TO JURISDICTION . . . . . . . . . . 62
11.3 SERVICE OF PROCESS . . . . . . . . . . . . . . 62
11.4 JURY TRIAL . . . . . . . . . . . . . . . . . . 63
11.6 Delays . . . . . . . . . . . . . . . . . . . . 63
11.7 Notices. . . . . . . . . . . . . . . . . . . . 63
11.8 Assignments and Participations . . . . . . . . 64
11.9 Confidentiality. . . . . . . . . . . . . . . . 65
11.10 Indemnification. . . . . . . . . . . . . . . . 66
11.11 Amendments and Waivers . . . . . . . . . . . . 67
11.12 Counterparts and Effectiveness . . . . . . . . 67
11.13 Severability . . . . . . . . . . . . . . . . . 68
11.14 Maximum Rate . . . . . . . . . . . . . . . . . 68
11.15 Entire Agreement; Successors and
Assigns. . . . . . . . . . . . . . . . . . . . 69
ANNEXES
Annex I List of Lenders; Commitment Amounts;
and Applicable Lending Offices
SCHEDULES
Schedule A Closing Document List
Schedule B Disclosure Schedules
Schedule B, Part 6.1 States in which Qualified
Schedule B, Part 6.9 Contingent Obligations and Other
Liabilities
Schedule B, Part 6.10 Principal Places of Business;
Locations of Collateral
Schedule B, Part 6.12 Pending Judgments, Litigation and
other Claims
Schedule B, Part 6.14 Labor Contracts
Schedule B, Part 6.16 Plans
Schedule B, Part 6.17 Environmental Matters
Schedule B, Part 6.20 Tax Matters; Tax Sharing Agreements
Schedule B, Part 6.21 Material Contracts
Schedule B, Part 8.4 Existing Indebtedness
Schedule B, Part 8.5 Existing Liens
Schedule B, Part 8.9 Existing Investments
EXHIBITS
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Revolving Note
Exhibit D Form of Notice of Continuation
Exhibit E Form of Notice of Conversion
Exhibit F Form of Accountant's Letter
Exhibit G Form of Compliance Certificate
Exhibit H Form of Assignment and Assumption
Agreement
THIS CREDIT AGREEMENT ("Credit Agreement") is entered into as of
April 8, 1997, among VENTURE STORES, INC., a Delaware corporation
("Borrower"); each financial institution identified on Annex I (together
with its successors and assigns, hereinafter referred to individually as
a "Lender" and collectively as the "Lenders"); and BT COMMERCIAL
CORPORATION, a Delaware corporation (in its individual capacity, "BTCC"),
acting in its capacity as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Agent").
ARTICLE 1. DEFINITIONS.
1.1 General Definitions.
Account has the meaning set forth in the Security Agreement.
Advance Rate means a percentage amount equal to:
(1) sixty percent (60%), during the period commencing February
1st through and including August 31st in each calendar
year;
(2) sixty-two percent (62%), during the period commencing
September 1st through and including October 31st in each
calendar year; and
(3) sixty-five percent (65%), during the period commencing
November 1st through and including January 31st in each
calendar year;
provided that, notwithstanding the foregoing, the Advance Rate shall in
any event be (i) sixty-five percent (65%), during the period commencing
on the Closing Date through and including June 30, 1997 and (ii) sixty
percent (60%), during the period commencing on July 1, 1997 through and
including August 31, 1997.
Affiliate of a Person means another Person who directly or
indirectly controls, is controlled by, is under common control with or is
a director or officer of, such Person. For purposes of this definition,
"control" means the possession, directly or indirectly, of the power to
vote five percent (5%) or more of the securities having ordinary voting
power for the election of directors or the direct or indirect power to
direct the management and policies of a business.
Agent Advances has the meaning set forth in Section 2.2.
Applicable Lending Office means, with respect to each Lender, such
Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
Assignment and Assumption Agreement has the meaning set forth in
Section 11.8.
Auditors means a nationally recognized firm of independent public
accountants selected by the Borrower and reasonably satisfactory to the
Agent; provided, that, for purposes of this Credit Agreement, the firm of
Xxxxxx Xxxxxxxx LLP shall be deemed to be satisfactory to the Agent.
Bankruptcy Code means Title 11 of the U.S. Code (11 U.S.C. Section 101 et
seq.), as amended from time to time, and any successor statute.
Benefit Plan means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which the Borrower, any of its Subsidiaries or any
ERISA Affiliate has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
Borrowing means a borrowing of Revolving Loans of the same Type by
the Borrower on a pro rata basis from each of the Lenders on a given date
(whether pursuant to Section 2.2 or resulting from continuations or
conversions of Revolving Loans on a given date pursuant to Sections
4.13(a) and (b), respectively) having, in the case of LIBOR Loans, the
same Interest Period.
Borrowing Base means, at any time, the value at such time
(determined at the lower of cost or market on a basis consistent with
Borrower's current and historical accounting practices) of Eligible
Inventory (as defined below) multiplied by the Advance Rate in effect at
such time.
In addition, the Agent, in the exercise of its Permitted Discretion,
may (i) establish and increase or decrease reserves against Eligible
Inventory and (ii) impose additional restrictions (or eliminate the same)
to the standards of eligibility set forth in the definition of "Eligible
Inventory."
Borrowing Base Certificate means the certificate of the Borrower
concerning the Borrowing Base to be provided under Section 7.2,
substantially in the form of Exhibit A.
BT Account has the meaning set forth in Section 4.10.
Business Day means any day that is not a Saturday, a Sunday or a day
on which commercial banks in Chicago, Illinois are required or permitted
by law to be closed and, when used in connection with LIBOR Rate Loans,
this definition will also exclude any day on which commercial banks are
not open for dealing in United States dollar deposits in the London
(U.K.) interbank market.
Capital Expenditures means, for any Person for any period, the sum
of all expenditures capitalized by such Person for financial statement
purposes in accordance with GAAP during such period (whether payable in
cash or other property or accrued as a liability), including the
capitalized portion of Capital Leases and that portion of Investments
made by such Person allocable to property, plant or equipment. Capital
Expenditures shall exclude proceeds of a casualty loss applied to the
repair or replacement of the property affected by the casualty loss.
"Casualty loss", as used herein, means, for any Person, (i) the loss,
damage, or destruction of any asset or property owned or used by such
Person, (ii) the condemnation, confiscation, or other taking, in whole or
in part, of any such asset or property, or (iii) the diminishment of the
use of any such asset or property so as to render impracticable or
unreasonable the use thereof for its intended purpose.
Cash Equivalents means either of the following, so long as the same
are maintained in accounts in which the Agent has a perfected security
interest: (i) securities issued, guarantied or insured by the United
States, or any of its agencies and having maturities of not more than one
year; (ii) certificates of deposit having maturities of not more than one
year issued by a United States national or state chartered commercial
bank of recognized standing whose combined capital and unimpaired surplus
is in excess of $200,000,000 and whose short-term commercial paper
rating, or that of its parent holding company, is at least "A-1" or the
equivalent by S&P and at least "Prime-1" or the equivalent by Xxxxx'x;
and (iii) commercial paper issued by any corporation organized under the
laws of any state of the United States and rated at least "A-1" or the
equivalent by S&P or "Prime-1" or the equivalent by Xxxxx'x.
Change of Control means the occurrence of any of the following
(provided, that a merger permitted pursuant to Section 7.4(i) shall not
constitute a "Change of Control" hereunder):
(a) the acquisition by a person, entity or group of beneficial
ownership of thirty-five percent (35%) or more of the combined
voting power of the then outstanding voting securities of the
Borrower;
(b) individuals who constitute the Board of Directors of the
Borrower (any such Board, an "Incumbent Board") cease for any
reason, during a period of two (2) consecutive years, to constitute
at least a majority of such Board, provided, that any new director
who is approved by a vote of at least two-thirds of the applicable
Incumbent Board shall be considered a member of such Incumbent Board
(other than an individual initially assuming office as a result of
either an actual or threatened election contest or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person, entity or group other than such Incumbent Board); and
(c) the approval by the stockholders of the Borrower of a
merger, consolidation or reorganization involving the Borrower,
unless (i) the stockholders of the Borrower immediately before such
merger, consolidation or reorganization own immediately thereafter
at least fifty-one percent (51%) of the combined voting power of the
outstanding voting securities of the surviving corporation in
substantially the same proportion as their ownership of securities
immediately before any such transaction; (ii) the individuals
constituting an Incumbent Board immediately prior to such merger,
consolidation or reorganization constitute at least a majority of
the Board of the applicable surviving corporation; and (iii) no
person, entity or group has beneficial ownership of thirty-five
percent (35%) or more of the combined voting power of the surviving
corporation's then outstanding voting securities.
Closing Date means the date on which the initial Borrowing is
advanced or the initial Letter of Credit is issued, whichever occurs
earlier.
Closing Document List has the meaning set forth in Section 5.1.
Code has the meaning set forth in Section 1.3.
Collateral means the Accounts, Inventory and certain other real and
personal property identified in the Collateral Documents as security for
the Obligations.
Collateral Access Agreement means an agreement in form and substance
reasonably satisfactory to the Agent pursuant to which a mortgagee or
lessor of real property on which Collateral is stored or otherwise
located, or a warehouseman, processor or other bailee of Inventory,
acknowledges the Liens of the Agent and, in the case of any such
agreement with a mortgagee or lessor, permits the Agent access to and use
of such real property for a reasonable amount of time following the
occurrence and during the continuance of an Event of Default to assemble,
complete and sell any Collateral stored or otherwise located thereon.
Collateral Documents means, collectively, the Security Agreement,
the Mortgages and all other contracts, instruments and other documents
pursuant to which Liens are now or hereafter granted to the Agent to
secure any or all of the Obligations.
Collection Account has the meaning set forth in Section 4.10.
Collection Banks has the meaning set forth in Section 4.10.
Collections means all cash, funds, checks, notes, instruments and
any other form of remittance tendered by account debtors in payment of
Accounts.
Commitment of a Lender means its commitment to make Revolving Loans
and to participate in Letters of Credit, up to the amount set forth below
its name on Annex I, as such amount may be reduced from time to time in
accordance with the terms of this Credit Agreement.
Consolidated Entity means the Borrower and those of its Subsidiaries
consolidated with it for purposes of financial reporting.
Consolidated Net Income means the consolidated net income of the
Consolidated Entity.
Consolidated Tangible Net Worth means the consolidated assets of the
Consolidated Entity minus the consolidated liabilities of the
Consolidated Entity.
Contingent Obligation means, with respect to any Person, any direct,
indirect, contingent or non-contingent guaranty or obligation of such
Person for the Indebtedness of another Person, except for endorsements in
the ordinary course of business.
Credit Documents means, collectively, this Credit Agreement, the
Revolving Notes, the Letters of Credit, each of the Collateral Documents
and all other documents, agreements and instruments now or hereafter
executed in connection herewith or therewith, in each case as modified,
amended, extended, restated or supplemented from time to time.
Credit Parties means, collectively, the Borrower and each other
party to any of the Credit Documents (other than the Lenders, the Agent
or the Issuing Bank).
Default means an event, condition or default which with the giving
of notice, the passage of time or both would be an Event of Default.
Defaulting Lender has the meaning set forth in Section 2.6.
Depositary Account Agreements has the meaning set forth in Section
4.11.
Disbursement Account means the operating account of the Borrower
maintained with the Disbursement Account Bank.
Disbursement Account Bank means Bankers Trust Company or any other
financial institution selected from time to time by the Agent and
reasonably acceptable to the Borrower.
Domestic Lending Office means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" on Annex
I, as such annex may be amended from time to time, which office shall in
any event be located in the United States.
EBITDA means, for any period, the Consolidated Net Income of the
Consolidated Entity (excluding extraordinary items) for such period, plus
(a) all Interest Expense, income tax expense, depreciation and
amortization (including amortization of any goodwill or other
intangibles) for such period; minus or plus (b) gains and losses
attributable to any fixed asset sales; plus or minus (c) any other non-
cash charges or gains which have been subtracted or added in calculating
Consolidated Net Income.
Eligible Inventory means the aggregate amount of Inventory deemed by
the Agent in the exercise of its Permitted Discretion to be eligible for
inclusion in the calculation of the Borrowing Base. In determining the
amount to be so included, Inventory shall be valued at the lower of cost
or market on a basis consistent with the Borrower's current and
historical accounting practice. Unless otherwise approved in writing by
the Agent, no Inventory shall be deemed Eligible Inventory if:
(a) it is not owned solely by the Borrower or the Borrower
does not have good, valid and marketable title thereto; or
(b) it is not located in the United States; or
(c) it is not located on property owned by the Borrower or by
a third party that has executed and delivered a Collateral Access
Agreement and, in the case of Inventory located on property owned by
such a third party, it is segregated or otherwise separately
identifiable from goods of others, if any, stored on such property;
or
(d) it is not subject to a valid and perfected first priority
Lien in favor of the Agent, except with respect to Inventory stored
at sites described in clause (c) above, for Liens for unpaid rent or
normal and customary warehousing charges; or
(e) it consists of goods returned or rejected by the
Borrower's customers or goods in transit to third parties (other
than to warehouse sites covered by a Collateral Access Agreement);
or
(f) it is not first-quality finished goods, is obsolete or
slow moving, or does not otherwise conform to the representations
and warranties contained in the Credit Documents;
provided, that:
(i) Inventory shall not be deemed ineligible solely by reason
of clauses (b) and (c) above if such Inventory is being imported (or
has been imported) by Borrower and for which payment is to be
effected by presentment of an Existing LC or a Letter of Credit
issued pursuant to this Agreement, if (x) the Agent is named as
consignee on the applicable xxxx of lading or other similar document
of title (other than bills of lading or similar documents pertaining
to Inventory covered by Existing LCs), (y) such xxxx of lading or
document (other than bills of lading or similar documents pertaining
to Inventory covered by Existing LCs) has been delivered to the
Agent (or a Person designated by the Agent to act as its agent for
such purpose) and (z) the Inventory is covered by insurance
acceptable to the Agent; and
(ii) Inventory shall not be deemed ineligible solely by reason
of clause (c) above:
(x) during the period commencing on the Closing Date and ending
on May 8, 1997; and
(y) at any time thereafter, so long as at such time the
Borrower shall have delivered or caused to be delivered to the Agent
Collateral Access Agreements covering the premises on which
Inventory with an aggregate value (determined at the lower of cost
or market on a basis consistent with Borrower's current and
historical accounting practices) at least equal to seventy (70%) of
the aggregate such value of all Inventory at such time is located.
ERISA means the Employee Retirement Income Security Act of 1974, 29
U.S.C. Section 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA Affiliate means any entity required to be aggregated with the
Borrower or any of its Subsidiaries under Sections 414 (b), (c), (m) or
(o) of the Internal Revenue Code.
Event of Default has the meaning set forth in Article 9.
Existing LC means any letter of credit set forth on that certain
Standby Letter of Credit No. S819459 in the original face amount of
$26,102,249.19 issued on the Closing Date by Bankers Trust Company to
BankAmerica Business Credit, Inc., as agent.
Expenses means all reasonable costs and expenses of the Agent
incurred in connection with the Credit Documents and the transactions
contemplated therein, including, without limitation, (i) the costs of
conducting record searches, examining collateral, opening bank accounts
and lockboxes, depositing checks, and receiving and transferring funds
(including charges for checks for which there are insufficient funds),
(ii) the reasonable fees and expenses of legal counsel and paralegals
(including the allocated cost of internal counsel and paralegals),
accountants, appraisers and other consultants, experts or advisors
retained by the Agent, (iii) expenses incurred in connection with the
initial assignments of or sales of participations in the Revolving Loans
(without duplication of the processing and recordation fee payable to the
Agent pursuant to Section 11.8(b)), (iv) the cost of title insurance
premiums, real estate survey costs, and fees and taxes in connection with
the filing of financing statements, and (v) the costs of preparing and
recording Collateral Documents, releases of Collateral, and waivers,
amendments, and terminations of any of the Credit Documents. Expenses
also means all reasonable costs and expenses (including the reasonable
fees and expenses of legal counsel and other professionals) paid or
incurred by the Agent and any Lender (i) during the continuance of an
Event of Default, (ii) in enforcing or defending its rights under or in
respect of this Credit Agreement, the other Credit Documents or any other
document or instrument now or hereafter executed and delivered in
connection herewith, (iii) collecting the Revolving Loans, (iv)
foreclosing or otherwise collecting upon the Collateral or any part
thereof and (v) in obtaining any legal, accounting or other advice in
connection with any of the foregoing.
Expiration Date means April 8, 2000.
FASB 98 Indebtedness means any obligation of the Borrower, as
lessee, in respect of any sale-leaseback transfer, in each case to the
extent that (i) such obligation is characterized on the balance sheet of
the Borrower as indebtedness in accordance with the requirements of
Statement of Financial Accounting Standards No. 98 of the Financial
Accounting Standards Board and (ii) such sale-leaseback transaction
occurred prior to the date hereof or is otherwise permitted hereunder.
Federal Funds Rate means, for any period, a fluctuating interest
rate per annum for each day during such period equal to the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by
the Agent from three Federal Funds brokers of recognized standing
selected by the Agent.
Federal Reserve Board means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
Fees means, collectively, the Unused Line Fee, the Letter of Credit
Fees, the L/C Facing Fee, the Issuing Bank Fees, the Collateral
Monitoring Fee, and the other fees provided for in that certain letter
dated March 27, 1997, between BTCC and the Borrower.
Financial Statements means the consolidated and consolidating
balance sheets, statements of operations, statements of cash flows and
statements of changes in shareholder's equity of the Consolidated Entity
for the period specified, prepared in accordance with GAAP and
consistently with prior practices.
GAAP means generally accepted accounting principles in the United
States as in effect from time to time.
Governing Documents means certificates or articles of incorporation,
by-laws and other similar organizational or governing documents.
Governmental Authority means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Highest Lawful Rate means, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious
interest rate that at any time or from time to time may be contracted
for, taken, reserved, charged or received on such Obligations, under the
laws of the State of Illinois (or the law of any other jurisdiction whose
laws may be mandatorily applicable notwithstanding other provisions of
this Credit Agreement and the other Credit Documents), or under
applicable federal laws which may presently or hereafter be in effect and
which allow a higher maximum nonusurious interest rate than under
Illinois (or such other jurisdiction's) law, in any case after taking
into account, to the extent permitted by applicable law, any and all
relevant payments or charges under this Credit Agreement and any other
Credit Documents executed in connection herewith, and any available
exemptions, exceptions and exclusions.
Indebtedness of a Person means, without duplication, (a)
indebtedness for borrowed money or for the deferred purchase price of
property or services (other than trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), whether on open account or evidenced by a note, bond,
debenture or similar instrument, (b) obligations under capital leases,
(c) reimbursement obligations for letters of credit, banker's acceptances
or other credit accommodations, (d) liabilities, as determined by the
Agent, under any Interest Rate Agreement, (e) Contingent Obligations, (f)
Indebtedness secured by any Lien on any property of that Person, even if
that Person has not assumed such Indebtedness, and (g) FASB 98
Indebtedness.
Insolvency Event means, with respect to any Person, the occurrence
of any of the following: (a) such Person shall be adjudicated insolvent
or bankrupt, or generally fail to pay, or admit in writing its inability
to pay, its debts as they become due, (b) the voluntary commencement of
any proceeding or the filing of any petition under any bankruptcy,
insolvency or similar law, (c) the seeking of dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its creditors, (d)
the filing of any answer admitting the jurisdiction of the court and the
material allegations of an involuntary petition filed against it in any
bankruptcy, insolvency or similar proceeding, (e) such Person shall make
a general assignment for the benefit of its creditors, or shall consent
to, or acquiesce in the appointment of, a receiver, trustee, custodian or
liquidator for a substantial portion of its property, assets or business.
Insolvency Event shall also mean, with respect to any Person, the
occurrence of any of the following: an involuntary proceeding or
involuntary petition shall be commenced or filed against such Person
under any bankruptcy, insolvency or similar law seeking the dissolution
or reorganization of it or the appointment of a receiver, trustee,
custodian or liquidator for it or of a substantial part of its property,
assets or business, or any writ, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a
substantial part of its property, assets or business, and such
proceedings or petitions shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded, within sixty (60) days after
commencement, filing, or levy, as the case may be, or any order for
relief shall be entered in any such proceeding.
Interest Expense means, for any period, the aggregate consolidated
expense of the Consolidated Entity for interest on Indebtedness, to the
extent paid in cash during such period, including, without limitation,
original issue discount, incurrence fees (to the extent included in
interest expense), the interest portion of any deferred payment
obligation and the interest component of any capital lease obligation or
any FASB 98 Indebtedness.
Interest Period means, for any LIBOR Rate Loan, the period
commencing on the date of such Borrowing and ending on the last day of
the period selected by the Borrower pursuant to the provisions below.
The duration of each such Interest Period shall be one, two, three or six
months, in each case as the Borrower may, in an appropriate Notice of
Borrowing, Notice of Continuation or Notice of Conversion, select;
provided, that the Borrower may not select any Interest Period that ends
after the Expiration Date. Whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day; provided, that if such extension would cause the last day
of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding
Business Day.
Interest Rate Agreement means any interest rate protection or hedge
agreement, including, without limitation, interest rate future, option,
swap, and cap agreements.
Internal Revenue Code means the Internal Revenue Code of 1986,
amendments thereto, successor statutes, and regulations or guidance
promulgated thereunder.
Inventory has the meaning set forth in the Security Agreement.
Investment means all expenditures made and all liabilities incurred
(contingently or otherwise) for or in connection with the acquisition of
stock or Indebtedness of, or for loans, advances, capital contributions
or transfers of property to, or acquisition of substantially all the
assets of, a Person, other than FASB 98 Indebtedness. In determining the
aggregate amount of Investments outstanding at any particular time, (i)
the amount of any Investment represented by a guaranty shall be taken at
not less than the principal amount of the obligations guaranteed and
outstanding; (ii) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (iii) there shall not be deducted in respect
of any Investment any amounts received as earnings on such Investment,
whether as dividends, interest or otherwise; and (iv) there shall not be
deducted from the aggregate amount of Investments any decrease in the
market value thereof.
Issuing Bank means Bankers Trust Company or any Lender or other
financial institution that is acceptable to the Agent and the Borrower
which may at any time issue or be requested to issue a Letter of Credit
for the account of the Borrower.
Issuing Bank Fees has the meaning set forth in Section 4.3(b).
L/C Facing Fee has the meaning set forth in Section 4.3(a).
Lender Advances has the meaning set forth in Section 2.2.
Letter of Credit Fee has the meaning set forth in Section 4.3(a).
Letter of Credit Obligations means the sum of the aggregate undrawn
face amount of all Letters of Credit outstanding, plus the aggregate
amount of all drawings under Letters of Credit for which the Borrower has
not reimbursed the Issuing Bank, plus the aggregate amount of all
payments made by Lenders to the Issuing Bank for their participations in
Letters of Credit, for which the Borrower has not reimbursed the Lenders.
Letter of Credit Request has the meaning set forth in Section 3.3.
Letters of Credit means all letters of credit issued for the account
of the Borrower under Article 3 and all amendments, renewals, extensions
or replacements thereof.
LIBOR Lending Office means, with respect to any Lender, the office
of such Lender specified as its "LIBOR Lending Office" opposite its name
on Annex I, as such annex may be amended from time to time (or, if no
such office is specified, its Domestic Lending Office).
LIBOR Rate means, with respect to any Interest Period for each LIBOR
Rate Loan comprising part of the same Borrowing, an interest rate per
annum equal to the rate (rounded upward to the nearest whole multiple of
one-sixteenth (1/16) of one percent (1.00%) per annum, if such rate is
not such a whole multiple of one-sixteenth (1/16) of one percent (1.00%)
of the offered quotation, if any, to first class banks in the London
(U.K.) interbank market by Bankers Trust Company for United States dollar
deposits of amounts in immediately available funds comparable to the
principal amount of the LIBOR Rate Loan of BTCC for which the LIBOR Rate
is being determined with maturities comparable to the Interest Period for
which such LIBOR Rate will apply as of approximately 10:00 a.m. Chicago
time two (2) Business Days prior to the commencement of such Interest
Period.
LIBOR Rate Loan means a Revolving Loan that bears interest as
provided in Section 4.1(b) hereof.
Lien means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional
sale, retention of title, or other preferential arrangement having
substantially the same economic effect as any of the foregoing, whether
voluntary or imposed by law.
Line of Credit means the aggregate revolving line of credit extended
pursuant to this Credit Agreement by the Lenders to the Borrower for
Revolving Loans and Letters of Credit, in an amount up to $250,000,000,
as such amount may be reduced from time to time pursuant to the
respective terms and provisions hereof.
Loan Account has the meaning set forth in Section 4.8.
Majority Lenders means those Lenders holding in the aggregate more
than fifty percent (50%) of the total Commitments, or if the Commitments
are terminated, those Lenders owed more than fifty percent (50%) of the
Revolving Loans and Letter of Credit Obligations then outstanding.
Material Adverse Effect means a material adverse effect on (i) the
business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of any Credit Party,
(ii) the ability of any Credit Party to perform its obligations under the
Credit Documents to which it is a party, or on the ability of the Agent
or the Lenders to enforce the Obligations or realize upon the Collateral,
or (iii) the value of the Collateral, or the amount which the Agent or
the Lenders would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral.
Material Contract means any contract or other arrangement to which
the Borrower or any of its Subsidiaries is a party (other than the Credit
Documents) for which breach, nonperformance, cancellation or failure to
renew could reasonably be expected to have a Material Adverse Effect.
Medium Term Note Indenture means the Indenture dated as of October
1, 1994 between the Borrower and Fleet National Bank, as successor
trustee thereunder.
Medium Term Notes means the Borrower's Medium Term Notes, Series A,
issued under the Medium Term Note Indenture.
Moody's means Xxxxx'x Investors Services, Inc., or any successor
thereto.
Multiemployer Plan means a "multiemployer plan" (as defined in
Section 4001(a) (3) of ERISA) to which the Borrower, any of its
Subsidiaries or any ERISA Affiliate has contributed within the past six
years or with respect to which the Borrower or any of its Subsidiaries
could reasonably be expected to incur any liability.
Notice of Borrowing means an irrevocable and binding notice
delivered by the Borrower to the Agent either by telephone or by
facsimile transmission (and if by telephone, confirmed in writing), of
the Borrower's request for a Borrowing, which notice shall be
substantially in the form of Exhibit B.
Notice of Continuation has the meaning set forth in Section 4.13(a).
Notice of Conversion has the meaning set forth in Section 4.13(b).
Obligations means the unpaid principal and interest hereunder
(including interest accruing on or after the occurrence of an Insolvency
Event), reimbursement obligations under Letters of Credit, Fees, Expenses
and all other obligations and liabilities of the Borrower to the Agent,
the Issuing Bank or to the Lenders under this Credit Agreement, the
Revolving Notes, or any other Credit Document.
Permitted Discretion means the Agent's judgment exercised in good
faith and not in an irrational manner based upon its consideration of any
factor which the Agent believes in good faith could affect the value of
any Collateral, including any Inventory, or the amount which the Agent
and the Lenders would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral. In exercising such judgment, the Agent may consider such
factors which are already included in or tested by the definition of
Eligible Inventory, as well as any of the following: (i) the financial
and business climate of the Borrower's industry and general macroeconomic
conditions, (ii) changes in levels of backlog of firm purchase orders and
demand for, and pricing of, Inventory, (iii) changes in any concentration
of risk with respect to Inventory, and (iv) any other factors that change
the credit risk of lending to the Borrower on the security of the
Inventory.
Permitted Liens means the Liens referred to in clauses (a) through
(j) of Section 8.5.
Permitted Recourse Programs means recourse programs with respect to
private label credit cards currently maintained and hereafter established
by the Borrower in accordance with the usual and customary business
practices in effect from time to time in the retail industry generally.
Person means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (including any division, agency
or department thereof), and its successors, heirs and assigns.
Plan means any Benefit Plan, Multiemployer Plan, or Retiree Health
Plan, or any employee pension plan, fund, program or arrangement as
defined in Section 3(2) of ERISA, whether oral or written, maintained or
contributed to by the Borrower or any of its Subsidiaries, or with
respect to which any of them could reasonably be expected to incur
liability.
Preferred Stock means the Cumulative Convertible Preferred Stock of
the Borrower, par value $1.00 per Share.
Prime Lending Rate means the rate which Bankers Trust Company
announces as its prime lending rate, from time to time. The Prime Lending
Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. Bankers Trust Company and
each of the Lenders may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
Prime Rate Loan means a Revolving Loan that bears interest as
provided in Section 4.1(a) hereof.
Proportionate Share of a Lender means a fraction, expressed as a
percentage, obtained by dividing its Commitment by the Line of Credit or,
if the Commitments are terminated, by dividing its then outstanding
Revolving Loans and Letter of Credit participations by the then
outstanding aggregate Revolving Loans and Letter of Credit Obligations.
Purchase Money Liens has the meaning set forth in Section 8.4.
Register has the meaning set forth in Section 11.8.
Regulation D means Regulation D of the Federal Reserve Board, as in
effect from time to time.
Regulation G means Regulation G of the Federal Reserve Board, as in
effect from time to time.
Regulation Z means Regulation Z of the Federal Reserve Board, as in
effect from time to time.
Reportable Event means any of the events described in Section 4043
of ERISA and the regulations thereunder other than those events for which
the 30-day notice period has been waived.
Requirement of Law means, with respect to any Person, (a) the
Governing Documents of such Person, (b) any material law, treaty, rule or
regulation or determination of an arbitrator, court or other Governmental
Authority binding on such Person, or (c) any material franchise, license,
lease, permit, certificate, authorization, qualification, easement, right
of way, right or approval binding on a Person or any of its property.
Retiree Health Plan means an "employee welfare benefit plan" within
the meaning of Section 3(1) of ERISA, and any other plan, program or
arrangement, whether oral or written, sponsored or maintained by the
Borrower, any of its Subsidiaries or any ERISA Affiliate, that provides
health benefits to persons after termination of employment, other than as
required by Section 601 of ERISA.
Revolving Loans has the meaning set forth in Section 2.1.
Revolving Note means a promissory note of the Borrower payable to
the order of any Lender, substantially in the form of Exhibit C.
S&P means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., or any successor thereto.
Security Agreement means the Security Agreement of even date
herewith executed in favor of the Agent by the Borrower.
Settlement Date has the meaning set forth in Section 2.4(a).
Subsidiary of a Person means a corporation or other entity in which
that Person directly or indirectly owns or controls the shares of stock
or other ownership interests having ordinary voting power to elect a
majority of the board of directors or appoint other managers of such
corporation or other entity.
Termination Event means (i) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan; (ii) the withdrawal of the Borrower,
any of its Subsidiaries or any ERISA Affiliate from a Benefit Plan during
a plan year in which it was a "substantial employer" (as defined in
Section 4001(a) (2) of ERISA); (iii) the providing of notice of intent to
terminate a Benefit Plan in a distress termination (as described in
Section 4041 (c) of ERISA); (iv) the institution by the Pension Benefit
Guaranty Corporation of proceedings to terminate a Benefit Plan or
Multiemployer Plan; (v) any event or condition (a) which could reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Benefit Plan or Multiemployer Plan, or (b) that may result in termination
of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the
partial or complete withdrawal, within the meaning of Sections 4203 and
4205 of ERISA, of the Borrower, any of its Subsidiaries or any ERISA
Affiliate from a Multiemployer Plan.
Type means a LIBOR Rate Loan or a Prime Rate Loan.
Unused Line Fee has the meaning set forth in Section 4.2.
1.2 Accounting Terms and Determinations.
Unless otherwise defined or specified herein, all accounting terms
used in this Credit Agreement shall be construed in accordance with GAAP,
applied on a basis consistent in all material respects with the Financial
Statements referred to in Section 6.9. All accounting determinations for
purposes of determining compliance with the financial covenants contained
in Article 8 shall be made in accordance with GAAP as in effect on the
Closing Date and applied on a basis consistent in all material respects
with the audited Financial Statements delivered to the Agent on or before
the Closing Date. The Financial Statements required to be delivered
hereunder from and after the Closing Date, and all financial records,
shall be maintained in accordance with GAAP. If GAAP shall change from
the basis used in preparing the audited Financial Statements delivered to
the Agent on or before the Closing Date, the certificates required to be
delivered pursuant to Section 7.1 demonstrating compliance with the
covenants contained herein shall include, at the election of the Borrower
or upon the request of the Majority Lenders, calculations setting forth
the adjustments necessary to demonstrate how the Borrower is in
compliance with the financial covenants based upon GAAP as in effect on
the Closing Date.
1.3 Other Terms; Headings.
Terms used herein and not otherwise defined in Article 1 that are
defined in the Uniform Commercial Code in effect in the State of Illinois
(the "Code") shall have the meanings given in the Code. Each of the words
"hereof," "herein," and "hereunder" refer to this Credit Agreement as a
whole. An Event of Default shall "continue" or be "continuing" until
such Event of Default has been waived in accordance with Section 11.11
hereof. References to Articles, Sections, Annexes, Schedules, and
Exhibits are internal references to this Credit Agreement, and to its
attachments, unless otherwise specified. The headings and the Table of
Contents are for convenience only and shall not affect the meaning or
construction of any provision of this Credit Agreement.
ARTICLE 2. REVOLVING LOANS.
2.1 Revolving Credit Commitments.
Subject to the terms and conditions set forth in this Credit
Agreement, and in reliance on the representations and warranties of the
Borrower set forth herein, on and after the Closing Date and to and
excluding the Expiration Date, each Lender severally agrees to make loans
and advances to the Borrower (each a "Revolving Loan") in an amount not
to exceed at any time its Proportionate Share of the lesser at such time
of the Line of Credit and the Borrowing Base minus, in each case, the
then outstanding Letter of Credit Obligations.
2.2 Borrowing of Revolving Loans.
Revolving Loans shall be made available to the Borrower directly by
the Lenders ("Lender Advances") or, in the circumstances described in
Section 2.2(b), from the Agent acting on behalf of the Lenders ("Agent
Advances").
(a) Lender Advances. Subject to the determination by the
Agent and the Lenders that the conditions for borrowing contained in
Section 5.2 are satisfied, upon receipt of a Notice of Borrowing
from the Borrower, received by the Agent before noon Chicago time on
a Business Day, Lender Advances of Revolving Loans may be made to
the extent of each Lender's Proportionate Share of the requested
Borrowing. Each Notice of Borrowing shall specify whether the
requested Borrowing is of Prime Rate Loans or LIBOR Rate Loans.
(b) Agent Advances. The Agent is authorized by the Lenders,
but is not obligated, to make Agent Advances upon a receipt of any
Notice of Borrowing received by the Agent before 3:00 P.M. Chicago
time on a Business Day. Agent Advances shall be subject to periodic
settlement with the Lenders under Section 2.4. Agent Advances may
be made only in the following circumstances:
(i) Normal Course Agent Advances. For administrative
convenience, the Agent may, but is not obligated, to make Agent
Advances up to the amount available for borrowing under Section
2.1 in reliance upon the actual or deemed representations of
the Borrower under Section 5.2 that the conditions for
borrowing are satisfied.
(ii) Other Agent Advances. When the conditions for
borrowing under Section 5.2 cannot be fulfilled, and
notwithstanding the Borrowing Base limitation of Section 2.1,
the Agent may, but is not obligated, to continue to make Agent
Advances for seven (7) Business Days or until sooner instructed
by the Majority Lenders to cease, in an aggregate amount at any
time not to exceed $5,000,000.
(c) Disbursement of Revolving Loans. The proceeds of
Revolving Loans shall be transmitted: (x) in the circumstances
described in Section 3.5, by the Agent directly to the Issuing Bank,
and (y) in all other circumstances, by the Agent or Lenders, as the
case may be.
(d) Notices of Borrowing. Notices of Borrowing may be given
under this Section by telephone or facsimile transmission, and, if
by telephone, promptly confirmed in writing. The Borrower shall
specify in each Notice of Borrowing whether the conditions for the
requested Borrowing are satisfied. The Borrower may request one or
more Borrowings of Revolving Loans constituting Prime Rate Loans on
the same Business Day. Each Notice of Borrowing for LIBOR Rate
Loans shall be given not later than noon Chicago time on the third
Business Day prior to the proposed Borrowing. Each Notice of
Borrowing shall, unless otherwise specifically provided herein,
consist entirely of Revolving Loans of the same Type and, if such
Borrowing is to consist of LIBOR Rate Loans, shall be in an
aggregate amount of not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof. The right of the Borrower to
choose LIBOR Rate Loans is subject to the provisions of Section
4.13. Once given, a Notice of Borrowing is irrevocable by and
binding on the Borrower. The Borrower shall provide to the Agent a
list, with specimen signatures, of officers authorized to request
Revolving Loans. The Agent is entitled to rely upon such list until
it is replaced by the Borrower.
2.3 Notice of Request for Lender Advances.
Subject to the last sentence of this Section, the Agent shall give
each Lender prompt notice by telephone or facsimile transmission of a
Notice of Borrowing that is received pursuant to Section 2.2(a) and is to
be satisfied by Lender Advances. No later than 3:00 P.M. Chicago time on
the date of receipt of such notice, each Lender shall make available for
the account of its Applicable Lending Office to the Agent at the Agent's
address for deposit into the Loan Disbursement Account, its Proportionate
Share of such Borrowing in immediately available funds. Unless the Agent
receives contrary written notice prior to any such Borrowing, it is
entitled to assume that each Lender will make available its Proportionate
Share of the Borrowing and in reliance upon that assumption, but without
any obligation to do so, may advance such Proportionate Share on behalf
of the Lender, without the necessity of giving daily notice to each
Lender of the receipt of a Notice of Borrowing.
2.4 Periodic Settlement of Agent Advances; Interest and Fees;
Statements.
(a) The Settlement Date; Allocation of Interest and Fees. The
amount of each Lender's Proportionate Share of Revolving Loans shall
be computed weekly (or more frequently in the Agent's discretion)
and shall be adjusted upward or downward based on all Loans
(including Agent Advances) and repayments received by the Agent as
of 5:00 P.M. Chicago time on the last Business Day of the period
specified by the Agent (such date, the "Settlement Date").
(b) Summary Statements; Settlements. The Agent shall deliver
to the Borrower and each of the Lenders promptly after the
Settlement Date a summary statement of the account of outstanding
Loans (including Agent Advances) for the period, the amount of
repayments received for the period, and the amount allocated to each
Lender of the interest and Unused Line Fee for the period. After
application of payments under Section 4.11, as reflected on the
summary statement: (i) the Agent shall transfer to each Lender its
allocated share of interest and Unused Line Fee, and its
Proportionate Share of repayments; and (ii) each Lender shall
transfer to the Agent, or the Agent shall transfer to each Lender,
such amounts as are necessary to insure that, after giving effect to
all such transfers, the amount of Loans made by each Lender shall be
equal to such Lender's Proportionate Share of the aggregate amount
of Loans outstanding as of such Settlement Date. If the summary
statement requires transfers to be made to the Agent by the Lenders
and is received by the Lenders prior to 12:00 noon Chicago time on
a Business Day, such transfers shall be made in immediately
available funds no later than 3:00 P.M. Chicago time that day; and,
if received after 12:00 noon Chicago time, then no later than 3:00
P.M. Chicago time on the next Business Day. The obligation of each
Lender to transfer such funds is irrevocable, unconditional and
without recourse to or warranty by the Agent.
(c) Distribution of Interest and Unused Line Fees. Interest
on the Revolving Loans (including Agent Advances) and the Unused
Line Fee shall be allocated by the Agent to each Lender (i) in the
case of interest, in accordance with the Revolving Loans actually
advanced by and repaid to such Lender and (ii) in the case of the
Unused Line Fee, in accordance with the Proportionate Share of such
Lender. Interest shall accrue from and including the date Revolving
Loans are advanced and to but excluding the date such Revolving
Loans are either repaid by the Borrower or, if later, actually
settled under this Section. Promptly after the end of each month,
the Agent shall distribute to each Lender its portion, allocated as
provided above, of the interest and Unused Line Fee which has
accrued during such month.
2.5 Sharing of Payments.
If any Lender shall obtain any payment (whether made voluntarily or
involuntarily, or through the exercise of any right of set-off, or
otherwise) on account of the Revolving Loans made by it or its
participation in the Letter of Credit Obligations in excess of its
Proportionate Share of payments on account of the Revolving Loans or
Letter of Credit Obligations obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in
the Revolving Loans made by them or in their participation in Letters of
Credit as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, that if all or any
portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and
each such Lender shall repay to the purchasing Lender the purchase price
to the extent of such recovery, together with an amount equal to such
Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect to the total amount so
recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.5, to the
fullest extent permitted by law, may exercise all of its rights of
payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
2.6 Defaulting Lenders.
(a) A Lender who fails to pay the Agent its Proportionate
Share of any Revolving Loans (including Agent Advances) made
available by the Agent on such Lender's behalf, or who fails to pay
any other amounts owing by it to the Agent, is a "Defaulting
Lender". The Agent is entitled to recover from such Defaulting
Lender all such amounts owing by such Defaulting Lender on demand.
If the Defaulting Lender does not pay such amounts on the Agent's
demand, the Agent shall promptly notify the Borrower and the
Borrower shall pay such amounts within five (5) Business Days of its
receipt of such notice. In addition, the Defaulting Lender or the
Borrower shall pay to the Agent for its own account interest on such
amount for each day from the date it was made available by the Agent
to the Borrower to the date it is recovered by the Agent at a rate
per annum equal to (x) the overnight Federal Funds Rate, if paid by
the Defaulting Lender, or (y) the then applicable rate of interest
calculated under Section 4.1, if paid by the Borrower; plus, in the
case of the Defaulting Lender, the Expenses and losses, if any,
incurred as a result of the Defaulting Lender's failure to perform
its obligations. Nothing herein shall be deemed to relieve any
Lender of its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Borrower may have against any Lender
pursuant to applicable law as a result of any default by such Lender
hereunder, including, without limitation, the right of the Borrower
to seek specific performance or reimbursement from any Defaulting
Lender for any amounts paid by the Borrower under clause (y) above
on account of such Defaulting Lender's default.
(b) The failure of any Lender to fund its Proportionate Share
of a Revolving Loan shall not relieve any other Lender of its
obligation to fund its Proportionate Share of a Revolving Loan.
Conversely, no Lender shall be responsible for the failure of
another Lender to fund its Proportionate Share of a Revolving Loan.
(c) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by the Borrower to the Agent for
the Defaulting Lender's benefit; nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder. Amounts payable
to a Defaulting Lender shall instead be paid to or retained by the
Agent. The Agent may hold and, in its discretion, re-lend to the
Borrower the amount of all such payments received by it for the
account of such Lender. For purposes of voting or consenting to
matters with respect to the Credit Documents and determining
Proportionate Shares, such Defaulting Lender shall be deemed not to
be a "Lender" and such Lender's Commitment shall be deemed to be
zero (-0-). This section shall remain effective with respect to
such Lender until (x) the Obligations under this Credit Agreement
shall have been declared or shall have become immediately due and
payable or (y) the Majority Lenders, the Agent and the Borrower
shall have waived such Lender's default in writing. The operation
of this Section shall not be construed to increase or otherwise
affect the Commitment of any Lender, or relieve or excuse the
performance by the Borrower of its duties and obligations hereunder.
ARTICLE 3. LETTERS OF CREDIT.
3.1 Issuance of Letters of Credit.
Subject to the terms and conditions hereof and in reliance on the
representations and warranties of the Borrower set forth herein, the
Agent shall cause the Issuing Bank to issue Letters of Credit hereunder
at the request of the Borrower and for its account, as more specifically
described below. The Agent shall not be obligated to cause the Issuing
Bank to issue any Letter of Credit if:
(a) issuance of the requested Letter of Credit (i) would cause
the Letter of Credit Obligations then outstanding to exceed
$125,000,000 or (ii) would cause the sum of the Revolving Loans plus
the Letter of Credit Obligations then outstanding to exceed the
lesser of (x) the Line of Credit then in effect and (y) the
Borrowing Base then in effect; or
(b) issuance of the Letter of Credit is enjoined, restrained
or prohibited by any Governmental Authority, Requirement of Law or
any request or directive of any Governmental Authority (whether or
not having the force of law) or would impose upon the Agent or the
Issuing Bank any material restriction, reserve, capital requirement,
loss, cost or expense (for which the Agent or the Issuing Bank is
not otherwise compensated) not in effect or known as of the Closing
Date.
3.2 Terms of Letters of Credit.
The proposed amount, terms and conditions, and form of each Letter
of Credit (and of any drafts or acceptances thereunder) shall be subject
to approval by the Issuing Bank. The term of each standby Letter of
Credit shall not exceed 360 days, but may be subject to annual renewal.
The term of each documentary Letter of Credit shall not exceed 120 days
or, with the prior consent of the Agent, 180 days. No Letter of Credit
shall have an expiry date later than five (5) Business Days prior to the
Expiration Date.
3.3 Notice of Issuance.
A request for issuance of a Letter of Credit (a "Letter of Credit
Request") may be given in writing or electronically and, if requested by
the Agent, promptly confirmed in writing. A Letter of Credit Request
must be received by the Agent no later than 1:00 P.M. Chicago time at
least three (3) Business Days (or such shorter period as may be agreed to
by the Issuing Bank) in advance of the proposed date of issuance.
3.4 Lenders' Participation.
Immediately upon issuance or amendment of any Letter of Credit, each
Lender shall be deemed to have irrevocably and unconditionally purchased
and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation in all rights and obligations under
such Letter of Credit (other than fees and other amounts owing to the
Issuing Bank) in accordance with such Lender's Proportionate Share.
3.5 Payments of Amounts Drawn Under Letters of Credit.
The Agent shall notify the Borrower of the receipt by the Agent of
notice from the Issuing Bank of a draft or other presentation for payment
or drawing under a Letter of Credit not later than 11:00 A.M. Chicago
time on the Business Day immediately prior to the date on which the
Issuing Bank intends to honor such drawing. Unless the procedures set
forth in Section 9.2(c) shall be applicable, the Borrower shall be deemed
to have concurrently given a Notice of Borrowing to the Agent to make a
Revolving Loan in the amount of and at the time of such drawing, the
proceeds of which shall be applied directly by the Agent to reimburse the
Issuing Bank for the amount of such drawing.
3.6 Payment by Lenders.
If a Revolving Loan is not made in an amount sufficient to reimburse
the Issuing Bank in full for the amount of any draw under a Letter of
Credit, the Agent shall promptly notify each Lender of the unreimbursed
amount of such drawing and of such Lender's respective participation
therein. Each Lender shall make available to the Agent, for the account
of the Issuing Bank, the amount of its participation in immediately
available funds not later than 1:00 P.M. Chicago time on the next
Business Day after such Lender receives notice from the Agent of the
amount of such Lender's participation in such unreimbursed amount. If
any Lender fails to make available to the Agent the amount of such
Lender's participation, the Issuing Bank shall be entitled to recover
such amount on demand from such Lender together with interest at the
Federal Funds Rate for the first three Business Days and thereafter at
the Prime Lending Rate. For each Letter of Credit, the Agent shall
promptly distribute to each Lender which has funded the amount of its
participation its Proportionate Share of all payments subsequently
received by the Agent from the Borrower in reimbursement of honored
drawings.
3.7 Obligations Absolute.
The obligations of the Borrower to reimburse the Lenders under
Section 3.6 shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Credit Agreement under all
circumstances including, without limitation, upon the occurrence and
during the continuance of an Event of Default.
3.8 Agent's Execution of Applications and Other Issuing Bank
Documentation; Reliance on Credit Agreement by Issuing Bank.
The Agent shall be authorized to execute, deliver and perform on
behalf of the Lenders such letter of credit applications, shipping
indemnities, letter of credit modifications and consents and other
undertakings for the benefit of the Issuing Bank as may be reasonably
necessary or appropriate in connection with the issuance or modification
of Letters of Credit requested by the Borrower hereunder. The Lenders,
the Agent and the Borrower all expressly agree that the terms of this
Article 3 and various other provisions of this Credit Agreement
identifying the Issuing Bank are also intended to benefit the Issuing
Bank and the Issuing Bank shall be entitled to enforce the provisions
hereof which are for its benefit.
ARTICLE 4. COMPENSATION, REPAYMENT AND
REDUCTION OF COMMITMENTS.
4.1 Interest on Revolving Loans.
(a) Interest on the unpaid principal amount of Revolving Loans
which are Prime Rate Loans shall be payable monthly in arrears, on
the first Business Day of each month, at an interest rate per annum
equal to the Prime Lending Rate plus one percent (1.0%) calculated
on the net balances owing to the Agent and the Lenders at the close
of business each day during such month. The rate hereunder shall
change each day the Prime Lending Rate changes.
(b) Interest on Revolving Loans which are LIBOR Rate Loans
shall be payable on the last day of each Interest Period with
respect to such LIBOR Rate Loans, at the date of conversion of such
LIBOR Rate Loans (or a portion thereof) to a Prime Rate Loan and at
maturity of such LIBOR Rate Loans at an interest rate per annum
equal during the Interest Period for such LIBOR Rate Loans to the
LIBOR Rate for the Interest Period in effect for such LIBOR Rate
Loans plus two and three-quarters percent (2.75%). After maturity
of such LIBOR Rate Loans (whether by acceleration or otherwise),
interest shall be payable upon demand. The Agent upon determining
the LIBOR Rate for any Interest Period shall promptly notify the
Borrower and the Lenders by telephone (confirmed promptly in
writing) or in writing thereof. Each determination by the Agent of
an interest rate hereunder shall be conclusive and binding for all
purposes, absent demonstrable error.
(c) Notwithstanding the provisions of Sections 4.1(a) and (b),
the Borrower shall pay to each Lender, so long as and to the extent
such Lender shall be required under regulations of the Board of
Governors of the Federal Reserve System to maintain reserves with
respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid
principal amount of each Revolving Loan comprised of LIBOR Rate
Loans of such Lender, from the date of such LIBOR Rate Loan until
such principal amount is paid in full, at an interest rate per annum
equal at all times to the remainder obtained by subtracting (a) the
LIBOR Rate for the applicable Interest Period for such LIBOR Rate
Loan from (b) the rate obtained by dividing such LIBOR Rate by a
percentage equal to 1 minus the stated maximum rate (stated as a
decimal) applicable two (2) Business Days before the first day of
such Interest Period of all reserves, if any, required to be
maintained against "Eurocurrency liabilities" as specified in
Regulation D (or against any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR
Rate Loans is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of
any Lender to United States residents) having a term equal to the
Interest Period applicable to such LIBOR Rate Loan. Such Lender
shall as soon as practicable provide notice to the Agent and the
Borrower of any such additional interest arising in connection with
such LIBOR Rate Loan, which notice shall be conclusive and binding,
absent demonstrable error.
4.2 Unused Line Fee.
The Borrower shall pay to the Agent, for the ratable benefit of the
Lenders, a non-refundable fee (the "Unused Line Fee") equal to three
eighths of one percent (0.375%) per annum of the unused portion of the
Line of Credit. The Unused Line Fee shall accrue daily from the Closing
Date until the Expiration Date, and shall be due and payable monthly in
arrears, on the first Business Day of each month and on the Expiration
Date.
4.3 Letter of Credit Fees.
(a) The Agent, for the ratable benefit of the Lenders, shall
be entitled to charge to the account of the Borrower on the first
Business Day of each month, a fee (each a "Letter of Credit Fee"),
in an amount equal to (i) in the case of standby Letters of Credit,
two and three-quarters percent (2.75%) per annum of the daily
weighted average undrawn amount of such Letters of Credit and (ii)
in the case of documentary Letters of Credit, one and one-quarter
percent (1.25%) per annum of the daily weighted average undrawn
amount of such Letters of Credit, in each case outstanding during
the immediately preceding month. In addition, the Agent, for its
own account, shall be entitled to charge to the account of the
Borrower on the date of issuance of any standby Letter of Credit, a
facing fee equal to one-half of one percent (0.5%) on the initial
face amount of each such standby Letter of Credit (the "L/C Facing
Fee").
(b) The Agent shall also be entitled to charge to the account
of the Borrower, as and when incurred by the Agent or any Lender,
the customary charges, fees, costs and expenses charged to the Agent
or any Lender for the Borrower's account by any Issuing Bank (the
"Issuing Bank Fees") in connection with the issuance, transfer,
drawing, amendment or negotiation of any Letters of Credit by the
Issuing Bank. Each determination by the Agent of Letter of Credit
Fees, L/C Facing Fees, Issuing Bank Fees and other fees, costs and
expenses charged under this Section shall be conclusive and binding
for all purposes, absent manifest error.
4.4 Interest and Letter of Credit Fees After Event of Default.
From the date of occurrence of an Event of Default until the earlier
of the date upon which (i) all Obligations shall have been paid and
satisfied in full or (ii) such Event of Default shall have been waived,
interest on the Revolving Loans and Letter of Credit Fees on Letter of
Credit Obligations shall each be payable on demand at a rate per annum
equal to, with respect to the Revolving Loans, the rate in effect under
Section 4.1, plus two percent (2%), and with respect to the Letter of
Credit Obligations, the rate at which Letter of Credit Fees are charged
pursuant to the first sentence of Section 4.3(a), plus two percent (2%).
4.5 Collateral Monitoring Fee.
The Borrower shall pay to the Agent, for its own account, a non-
refundable annual collateral monitoring fee (the "Collateral Monitoring
Fee") in the amount of $100,000. The Collateral Monitoring Fee shall be
fully earned and payable on the Closing Date and on each anniversary
thereof.
4.6 Expenses.
The Borrower shall reimburse the Expenses of the Agent, or any
Lender, as the case may be, promptly upon demand.
4.7 Mandatory Payment; Reductions of Commitments.
(a) Except during the period described in Section 2.2(b)(ii),
the aggregate outstanding principal amount of Revolving Loans plus
Letter of Credit Obligations at any time in excess of the lesser at
such time of (i) the Borrowing Base and (ii) the Line of Credit,
shall be immediately due and payable without the necessity of any
demand.
(b) On the Expiration Date, the Commitment of each Lender
shall automatically reduce to zero (-0-) and may not be reinstated.
(c) The Borrower may reduce or terminate the Line of Credit at
any time and from time to time in whole or in part; provided, that
each such reduction must be in an amount not less than $5,000,000
(and in increments of $1,000,000 in excess thereof). Once reduced,
no portion of the Line of Credit may be reinstated. If the Borrower
seeks to reduce the Line of Credit to an amount less than
$25,000,000, then the Line of Credit shall be reduced to zero (-0-).
4.8 Maintenance of Loan Account; Statements of Account.
The Agent shall maintain an account on its books in the name of the
Borrower (the "Loan Account") in which the Borrower will be charged with
all loans and advances made by the Lenders to the Borrower or for the
account of the Borrower, including the Revolving Loans, and all Letter of
Credit Obligations, the Fees, the Expenses and any other Obligations, as
and when such payments become due. The Loan Account will be credited
with all payments received by the Agent from the Borrower or for the
account of the Borrower, including all amounts received in the BT Account
from the Collection Banks. After the end of each month, the Agent shall
send the Borrower a monthly statement accounting for the charges, loans,
advances and other transactions occurring among and between the Agent,
the Lenders and the Borrower during that month, provided, that the
failure of the Agent to send such statement to the Borrower shall not
relieve the Borrower of any Obligations. Absent manifest error, each
monthly statement shall be an account stated and shall be final,
conclusive and binding on the Borrower, unless, within thirty (30) days
after receipt of any such statement, the Borrower shall deliver to the
Agent a written objection thereto specifying the error or errors, if any,
contained therein.
4.9 Payment Procedures.
Payments of principal, interest, Fees and Expenses shall be made not
later than 2:00 P.M. Chicago time on the day when due, in immediately
available United States dollars, to the offices of the Agent, at the
address set forth in Section 11.7, or as the Agent may otherwise direct
the Borrower. Any such payment received later than 2:00 P.M. Chicago
time shall be credited to the Borrower's Loan Account on the immediately
succeeding Business Day. The Borrower hereby authorizes the Agent to
charge the Loan Account with the amount of all payments to be made
hereunder and under the other Credit Documents, including all Fees and
Expenses, as and when such payments become due. The obligation of the
Borrower to the Lenders with respect to such payments shall be discharged
by making such payments to the Agent pursuant to this Section or by the
charging of the Loan Account by the Agent.
4.10 Collection of Accounts.
Until instructed otherwise by the Agent, the Borrower shall be
entitled to receive Collections directly from account debtors and other
obligors in accordance with its historical practices. The Borrower, the
Agent and financial institutions selected by the Borrower and acceptable
to the Agent (the "Collection Banks") shall enter into agreements in form
and substance satisfactory to the Agent (the "Depositary Account
Agreements", which among other things shall provide for the opening of an
account for the deposit of Collections (a "Collection Account") at a
Collection Bank. All Collections and other amounts received by the
Borrower from any account debtor, in addition to all other cash received
from any other Collateral, shall upon receipt be deposited into a
Collection Account. Termination of such arrangements shall also be
subject to approval by the Agent. Upon the terms and subject to the
conditions set forth in the Depositary Account Agreements, all available
amounts held in each Collection Account shall be wired each Business Day
into an account (the "BT Account") maintained by the Agent at Bankers
Trust Company. Amounts received in the BT Account from the Collection
Banks shall be credited to the Loan Account and distributed and applied
as set forth in Section 4.11.
4.11 Distribution and Application of Collections and other Amounts.
All Collections received by the Agent, and all other amounts
received by the Borrower from any account debtor and delivered to the
Agent, shall be credited to the Loan Account, unless an Event of Default
has occurred and is continuing, in which case such Collections and other
amounts shall be distributed and applied in the following order: first,
to the payment of any Fees, Expenses or other Obligations due and payable
to the Agent under any of the Credit Documents, including Agent Advances
and any other amounts advanced by the Agent on behalf of the Lenders;
second, to the payment of any Fees, Expenses or other Obligations due and
payable to the Issuing Bank under any of the Credit Documents; third, to
the ratable payment of any Fees, Expenses or other Obligations due and
payable to the Lenders under any of the Credit Documents other than those
Obligations specifically referred to in this Section; fourth, to the
ratable payment of interest due on the Revolving Loans; fifth, to the
ratable payment of principal outstanding on the Prime Rate Loans; and,
sixth, to the ratable payment of principal outstanding on the LIBOR Rate
Loans; provided that if any such application of Collections to the LIBOR
Rate Loans would result in the repayment of any LIBOR Rate Loan other
than on the last day of the Interest Period for such Loan, and so long as
at such time a Default or an Event of Default shall not have occurred and
be continuing, at the request of the Borrower, the Agent shall invest all
or any part of such Collections in an overnight interest bearing cash
collateral account maintained by the Agent for the benefit of the
Borrower with a financial institution selected by the Agent until such
time as the Agent is directed by the Borrower to apply such Collections
to the Revolving Loans as provided above.
4.12 Calculations.
All calculations of (i) interest hereunder and (ii) Fees, including,
without limitation, Unused Line Fees and Letter of Credit Fees, shall be
made by the Agent, on the basis of a year of 360 days, or, if such
computation would cause the interest and fees chargeable hereunder to
exceed the Highest Lawful Rate, 365/366 days, in each case for the actual
number of days elapsed (including the first day but excluding the last
day) occurring in the period for which such interest or Fees are payable.
Each determination by the Agent of an interest rate, Fee or other payment
hereunder shall be conclusive and binding for all purposes, absent
manifest error, unless, within thirty (30) days after the Borrower's
receipt of notice of such determination, the Borrower shall deliver to
the Agent a written objection thereto, specifying the error or errors, if
any, contained therein.
4.13 Special Provisions Relating to LIBOR Rate Loans.
(a) Continuation. With respect to any Borrowing consisting of
LIBOR Rate Loans, the Borrower may, subject to the provisions of
Section 4.13(c), elect to maintain such Borrowing or any portion
thereof as consisting of LIBOR Rate Loans by selecting a new
Interest Period for such Borrowing, which new Interest Period shall
commence on the last day of the immediately preceding Interest
Period. Each selection of a new Interest Period shall be made by
notice given not later than Noon Chicago time on the third Business
Day prior to the date of any such continuation relating to LIBOR
Rate Loans, by the Borrower to the Agent. Such notice by the
Borrower of a continuation (a "Notice of Continuation") shall be by
telephone or facsimile transmission, and if by telephone, promptly
confirmed in writing, substantially in the form of Exhibit D, in
each case specifying (i) the date of such continuation, (ii) the
Type of Revolving Loans subject to such continuation, (iii) the
aggregate amount of Revolving Loans subject to such continuation and
(iv) the duration of the selected Interest Period. The Borrower may
elect to maintain more than one Borrowing consisting of LIBOR Rate
Loans by combining such Borrowings into one Borrowing and selecting
a new Interest Period pursuant to this Section 4.13(a). If the
Borrower shall fail to select a new Interest Period for any
Borrowing consisting of LIBOR Rate Loans in accordance with this
Section 4.13(a), such Revolving Loans will automatically, on the
last day of the then existing Interest Period therefor, convert into
Prime Rate Loans. The Agent shall give each Lender prompt notice by
telephone or facsimile transmission of each Notice of Continuation.
(b) Conversion. The Borrower may on any Business Day (so long
as no Default or Event of Default has occurred and is continuing),
upon notice (each such notice, a "Notice of Conversion") given to
the Agent, and subject to the provisions of Section 4.13(c), convert
the entire amount of or a portion of all Revolving Loans of one Type
comprising the same Borrowing into Revolving Loans of another Type;
provided, that any conversion of any LIBOR Rate Loans into Revolving
Loans of another Type shall be made on, and only on, the last day of
an Interest Period for such LIBOR Rate Loans and, upon conversion of
any Prime Rate Loans into Revolving Loans of another Type, the
Borrower shall pay accrued interest to the date of conversion on the
principal amount converted. Each such Notice of Conversion shall be
given not later than Noon Chicago time on the Business Day prior to
the date of any proposed conversion into Prime Rate Loans and on the
third Business Day prior to the date of any proposed conversion into
LIBOR Rate Loans. Subject to the restrictions specified above, each
Notice of Conversion shall be by telephone or facsimile
transmission, and if by telephone, promptly confirmed in writing,
substantially in the form of Exhibit E, in each case specifying (i)
the requested date of such conversion, (ii) the Type of Revolving
Loans to be converted (iii) the portion of such Type of Revolving
Loan to be converted, (iv) the Type of Revolving Loans such
Revolving Loans are to be converted into and (v) if such conversion
is into LIBOR Rate Loans, the duration of the Interest Period of
such Loan. Each conversion shall be in an aggregate amount for the
Revolving Loans of not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof. The Borrower may elect to convert
the entire amount of or a portion of all Revolving Loans of one Type
comprising more than one Borrowing into Revolving Loans of another
Type by combining such Borrowings into one Borrowing; provided, that
if the Borrowings so combined consist of LIBOR Rate Loans, such
Loans shall have Interest Periods ending on the same date.
(c) Certain Limitations on LIBOR Rate Loans. The right of the
Borrower to maintain, select, continue or convert LIBOR Rate Loans
shall be limited as follows:
(i) If the Agent is advised by Bankers Trust Company that
it is not offering United States dollar deposits (in the
applicable amounts) in the London interbank market, or the
Agent determines that adequate and fair means do not otherwise
exist for ascertaining the LIBOR Rate or LIBOR Rate Loans
comprising any requested Borrowing, continuation or conversion,
the right of the Borrower to select or maintain LIBOR Rate
Loans for such Borrowing or any subsequent Borrowing shall be
suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no
longer exists, and each Revolving Loan shall be made as a Prime
Rate Loan.
(ii) If the Majority Lenders shall, at least one Business
Day before the date of any requested Borrowing, continuation or
conversion, notify the Agent that the LIBOR Rate for Revolving
Loans comprising such Borrowing will not adequately reflect the
cost to such Lenders of making or funding their respective
Revolving Loans for such Borrowing, the right of the Borrower
to select LIBOR Rate Loans for such Borrowing shall be
suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no
longer exist, and each Revolving Loan comprising such Borrowing
and each other Borrowing requested during such period of
suspension shall be made as a Prime Rate Loan.
(iii) If at any time any Lender determines (which
determination shall, absent manifest error, be conclusive and
binding on all parties) that the making, continuation or
conversion of any Revolving Loan as a LIBOR Rate Loan by such
Lender has become unlawful or impermissible by reason of
compliance by that Lender with any law, governmental rule,
regulation or order of any Governmental Authority (whether or
not having the force of law), then, and in any such event, such
Lender may give notice of that determination in writing, to the
Agent and the Borrower and the Agent shall promptly transmit
the notice to each other Lender. Until such Lender gives
notice otherwise, the right of the Borrower to select LIBOR
Rate Loans from that Lender shall be suspended and each
Revolving Loan made by that Lender, notwithstanding the Type of
Revolving Loan made by the other Lenders, shall be a Prime Rate
Loan and each LIBOR Rate outstanding from that Lender shall
automatically, on the last day of the existing Interest Period
therefor (or earlier, if so required under such law, rule,
regulation or order), convert to a Prime Rate Loan.
(iv) No Agent Advance shall be made as a LIBOR Rate Loan.
(v) No Revolving Loans may be made, continued or
converted as or to LIBOR Rate Loans at any time that a Default
or Event of Default shall have occurred and be continuing.
(vi) The Borrower may not select a LIBOR Rate Loan prior
to the date which is ninety (90) days after the Closing Date.
(d) Compensation.
(i) Each Notice of Continuation and Notice of Conversion
shall be irrevocable by and binding on the Borrower. In the
case of any Borrowing, continuation or conversion that the
related Notice of Borrowing, Notice of Continuation or Notice
of Conversion specifies is to be comprised of LIBOR Rate Loans,
the Borrower shall indemnify each Lender against any loss, cost
or expense incurred by such Person as a result of any failure
to fulfill, on or before the date for such Borrowing,
continuation or conversion specified in such Notice of
Borrowing, Notice of Continuation or Notice of Conversion, the
applicable conditions set forth in Article 5, including,
without limitation, any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation
or re-employment of deposits or other funds acquired by such
Lender to fund the Revolving Loan to be made by such Lender as
part of such Borrowing, continuation or conversion.
(ii) If any payment of principal of, or conversion or
continuation of, any LIBOR Rate Loan is made other than on the
last day of the Interest Period for such Loan as a result of a
payment, prepayment, conversion or continuation of such Loan or
acceleration of the maturity of the Revolving Notes or for any
other reason, the Borrower shall, upon demand by any Lender
(with a copy of such demand to the Agent), pay to the Agent for
the account of such Lender any amounts required to compensate
such Lender for any additional losses, costs or expenses which
it may reasonably incur as a result of such payment, including,
without limitation, any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation
or re-employment of deposits or other funds acquired by any
Lender to fund or maintain such Loan.
(iii) Calculation of all amounts payable to a Lender
under this Section 4.13(d) shall be made as though such Lender
elected to fund all LIBOR Rate Loans by purchasing United State
dollar deposits in its LIBOR Lending Office's interbank
eurodollar market.
4.14 Indemnification in Certain Events.
(a) Increased Costs. If after the Closing Date, either (i)
any change in or in the interpretation of any law or regulation is
introduced, including, without limitation, with respect to reserve
requirements applicable to the Agent, to any of the Lenders, Bankers
Trust Company or any other banking or financial institution from
whom any of the Lenders borrows funds or obtains credit (a "Funding
Bank"), or (ii) the Agent, a Funding Bank or any of the Lenders
complies with any future guideline or request from any central bank
or other Governmental Authority proposed or promulgated after the
date of the Agreement or (iii) the Agent, a Funding Bank or any of
the Lenders determines 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 announced after
the date of this Credit Agreement has or would have the effect
described below, or the Agent, a Funding Bank or any of the Lenders
complies 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 announced after the date of this
Credit Agreement and in the case of any event set forth in this
clause (iii), such adoption, change or compliance has or would have
the direct or indirect effect of reducing the rate of return on any
of such Person's capital as a consequence of its obligations
hereunder to a level below that which such Person could have
achieved but for such adoption, change or compliance (taking into
consideration such Person's policies with respect to capital
adequacy) by an amount deemed by such Person to be material, and any
of the foregoing events described in clauses (i), (ii) or (iii)
increases the cost to the Agent, or any of the Lenders of (A)
funding or maintaining its Commitments or (B) issuing, causing the
issuance of making or maintaining any Letter of Credit or of
purchasing or maintaining any participation therein, or reduces the
amount receivable in respect thereof by the Agent or any Lender,
then the Borrower shall upon demand by the Agent at any time within
one hundred eighty (180) days after the date on which an officer of
the Agent, such Funding Bank or such Lender, as the case may be,
responsible for overseeing this Credit Agreement knows or has reason
to know of its right to additional compensation under this Section
4.14(a), pay to the Agent, for the account of such Lender or, as
applicable, the Agent or a Funding Bank, additional amounts
sufficient to reimburse the Agent, such Funding Bank and such Lender
against such increase in cost or reduction in amount receivable;
provided, however, that if the Agent or any such Lender or Funding
Bank, as the case may be, fails to deliver such demand within such
180 day period, such entity shall only be entitled to additional
compensation for any such costs incurred from and after the date
that is one hundred eighty (180) days prior to the date the Borrower
receives such demand; and provided further, however, that before
making any such demand, the Agent and each Lender agree to use
reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the
need for, or reduce the amount of, such increased cost and would
not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender. A certificate as to the amount of
such increased cost, and setting forth in reasonable detail the
calculation thereof, shall be submitted to the Borrower by the
Agent, or the applicable Lender or Funding Bank, and shall be
conclusive absent demonstrable error.
(b) Each Lender will promptly notify the Borrower and the
Agent, and the Agent will promptly notify the Borrower, of any event
of which it has knowledge that would entitle such entity to
additional compensation under this Section 4.14. Neither the Agent
nor any Lender shall request any additional compensation under this
Section 4.14 unless it is generally making similar requests of other
borrowers similarly situated, and the Agent and each Lender agrees
to use a reasonable basis for calculating amounts allocable to its
commitment to lend or its Revolving Loans and Letter of Credit
Obligations hereunder.
ARTICLE 5. CONDITIONS PRECEDENT.
5.1 Conditions Precedent to Initial Revolving Loan and Letter of
Credit.
The obligation of each Lender to fund its Proportionate Share of the
initial Borrowing, or the obligation of the Agent to cause the issuance
by the Issuing Bank of the initial Letter of Credit, is subject to the
satisfaction or waiver of the following conditions precedent:
(a) Closing Document List. The Agent and the Lenders shall
have received each of the agreements, opinions, reports, approvals,
consents, certificates and other documents set forth on the closing
document list attached hereto as Schedule A (the "Closing Document
List").
(b) Material Adverse Change. (i) Since January 25, 1997, no
event shall have occurred which has had or could reasonably be
expected to have a Material Adverse Effect; or (ii) there shall not
have occurred a substantial impairment of the financial markets
generally that is reasonably likely to materially and adversely
affect the transactions contemplated hereby, in each case as
determined by the Agent and each Lender in their sole discretion.
(c) Fees and Expenses. All Fees and Expenses payable by the
Borrower hereunder on the Closing Date shall have been paid in full
(or provision shall have been made for payment thereof with proceeds
of the initial Borrowing).
(d) Borrowing Base; Unused Availability. After giving pro
forma effect to the funding of the initial Revolving Loans, the
issuance of the initial Letters of Credit and the payment of all
costs, fees and expenses incurred by or for the account of the
Borrower in connection with the execution and delivery of this
Credit Agreement and the other Credit Documents, there shall be
unused availability under the Borrowing Base of at least
$35,000,000.
(e) Vendor Terms. The Agent shall have completed such due
diligence as the Agent shall deem reasonably necessary or prudent
with respect to the credit terms and other financing arrangements
extended to the Borrower by its respective vendors, with results
reasonably satisfactory to the Agent.
5.2 Conditions Precedent to All Revolving Loans and Letters of
Credit.
The obligation of each Lender to fund its Proportionate Share of any
requested Revolving Loan or of the Issuing Bank to issue any requested
Letter of Credit is subject to the satisfaction of the conditions
precedent set forth below. Each Notice of Borrowing, each Letter of
Credit Request, and each issuance by the Borrower of a check drawn
against, or request for transfer from, the Disbursement Account shall
constitute a representation and warranty by the Borrower that such
conditions are satisfied.
(a) All representations and warranties contained in this
Credit Agreement and the other Credit Documents are true and correct
in all material respects on and as of the date of such Notice of
Borrowing, Letter of Credit Request or issuance of a check drawn
against or request for transfer from the Disbursement Account, as if
then made, other than representations and warranties that relate
solely to a date earlier than the date of such Notice of Borrowing,
Letter of Credit Request or issuance of a check drawn against or
request for transfer from the Disbursement Account, in which case,
such representations and warranties were true and accurate in all
material respects on and as of such earlier date;
(b) No Default or Event of Default shall have occurred or
could reasonably be expected to result from the making of the
requested Revolving Loan or the issuance of the requested Letter of
Credit, which has not been waived pursuant to the terms hereof; and
(c) Since January 25, 1997, no event has occurred which has
had or could reasonably be expected to have a Material Adverse
Effect.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
To induce the Agent and the Lenders to enter into this Credit
Agreement and to induce the Lenders to make the Revolving Loans and other
financial accommodations described herein, the Borrower hereby represents
and warrants to the Agent and the Lenders that the representations and
warranties contained in this Article 6 are true and correct. Such
representations and warranties, and all other representations and
warranties made by the Borrower in any other Credit Documents, shall
survive the execution and delivery of this Credit Agreement and such
other Credit Documents.
6.1 Organization and Qualification.
The Borrower and each of its Subsidiaries (i) are corporations duly
organized, validly existing and in good standing under the laws of the
respective states of their incorporation, (ii) have the power and
authority to own their respective properties and assets and to transact
their respective businesses in which they presently are, or propose to
be, engaged and (iii) are duly qualified and are authorized to do
business and are in good standing in each of the respective
jurisdictions where they presently are, or propose to be, engaged in
business. Schedule B, Part 6.1 lists all jurisdictions in which the
Borrower and each of its Subsidiaries are qualified to do business as
foreign corporations.
6.2 Authority.
The Borrower and each of its Subsidiaries have the requisite
corporate power and authority to execute, deliver and perform the
respective Credit Documents to which they are parties. All corporate
action necessary for the execution, delivery and performance of any of
the Credit Documents by the Borrower and each of its Subsidiaries has
been taken.
6.3 Enforceability.
This Credit Agreement and each of the other Credit Documents are the
legal, valid and binding obligations of the Borrower and each of its
Subsidiaries which are parties thereto, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency or similar laws affecting creditors' rights
generally, and (ii) general principles of equity.
6.4 No Conflict.
The execution, delivery and performance of each Credit Document by
the Borrower and each of its Subsidiaries which are parties thereto are
not in contravention of (i) the Governing Documents of such Persons, or
(ii) any Requirement of Law, or (iii) any material indenture, contract,
agreement or instrument or other commitment to which any or all of such
Persons are parties or by which any of such Persons or any of its
properties are bound, and will not, except as contemplated herein, result
in the imposition of any Liens upon any of the properties of any of such
Persons.
6.5 Consents and Filings.
No consent, authorization, permit or filing is required in
connection with the execution, delivery and performance of this Credit
Agreement or any Credit Document by the Borrower and each of its
Subsidiaries which are parties thereto, or in connection with the
continuing operations of such Persons, except (i) those that have been
obtained or made and (ii) filings necessary to create, perfect or retain
the perfection of Liens against the Collateral.
6.6 Government Regulation.
Neither Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Investment Company Act of 1940, or any other
similar Requirement of Law that limits the respective abilities of such
Persons to incur indebtedness or consummate the transactions contemplated
in this Credit Agreement and the other Credit Documents.
6.7 Solvency.
The fair saleable value of the assets of the Borrower exceeds all
its probable liabilities, including those to be incurred pursuant to this
Credit Agreement and the other Credit Documents. The Borrower (i) does
not have unreasonably small capital in relation to the business in which
it is or proposes to be engaged and (ii) has not incurred and does not
believe that it will incur, after giving effect to the transactions
contemplated by this Credit Agreement, debts beyond its ability to pay as
such debts become due.
6.8 Rights in Collateral; Priority of Liens.
All property constituting Collateral is owned or leased by the
Borrower, free and clear of any and all Liens in favor of third parties,
other than Permitted Liens. Upon the proper filing of the UCC financing
(and termination statements, if any) listed in the Closing Document List,
the security interests granted pursuant to the Credit Documents
constitute valid and enforceable first, prior (subject to Permitted
Liens) and perfected Liens on the Collateral, to the extent such Liens
can be perfected by the filing of such financing statements.
6.9 Financial Data.
The Borrower has provided to the Agent complete and accurate copies
of draft annual audited Financial Statements for the Consolidated Entity
for the fiscal year ended January 25, 1997 and unaudited Financial
Statements for the one-month fiscal period ended February 22, 1997. Such
Financial Statements have been prepared in accordance with GAAP
consistently applied throughout the periods involved, except as otherwise
disclosed therein, and fairly present the respective consolidated
financial positions, results of operations and cash flows of the
Consolidated Entity for each of the periods covered. The Consolidated
Entity has no material Contingent Obligation, or liability for taxes or
long-term leases, which is not reflected in such Financial Statements or
the footnotes thereto, or is not otherwise disclosed on Schedule B, Part
6.9.
6.10 Locations of Offices, Records and Inventory.
The address of the principal place of business and chief executive
office of the Borrower is set forth on Schedule B, Part 6.10, as the same
may be amended after the Closing Date in accordance with Section 11.11.
The books and records of the Borrower, and all its chattel paper, if any,
and records of Accounts, are maintained exclusively at one or more of
such locations. There is no jurisdiction in which the Borrower has any
Collateral (except for vehicles and Inventory in transit) other than
those jurisdictions identified on Schedule B, Part 6.10, as the same may
be amended after the Closing Date in accordance with Section 11.11. A
complete list of the legal name and address of each warehouse, if any, at
which Inventory of the Borrower is stored is set forth on Schedule B,
Part 6.10, as the same may be amended after the Closing Date in
accordance with Section 11.11. None of the receipts received and to be
received by the Borrower from any warehouseman state that the Inventory
covered thereby is to be delivered to bearer or to the order of a named
Person or to a named Person and such named Person's assigns, in each case
other than (i) the Agent, (ii) to the extent permitted pursuant to the
terms hereof, the Borrower and (iii) in connection with any Existing LC.
6.11 Subsidiaries; Ownership of Stock.
As of the Closing Date, the Borrower has no direct or indirect
Subsidiaries.
6.12 No Judgments or Litigation.
Except as set forth on Schedule B, Part 6.12, no judgments, orders,
writs or decrees are outstanding against the Borrower or any of its
Subsidiaries, nor is there now pending or, to the best of the Borrower's
knowledge, threatened, any litigation, contested claim, investigation,
arbitration, or governmental proceeding by or against the Borrower or any
of its Subsidiaries that could reasonably be expected singly or in the
aggregate to have a Material Adverse Effect.
6.13 No Defaults.
Neither the Borrower nor any of its Subsidiaries is in default in
any material respect under any term of any material indenture, contract,
lease, agreement, instrument or commitment to which any of them is a
party or by which any of them is bound. The Borrower knows of no
material dispute regarding any such indenture, contract, lease,
agreement, instrument or other commitment.
6.14 Labor Matters.
Schedule B, Part 6.14 accurately sets forth all labor contracts to
which the Borrower or any of its Subsidiaries is a party as of the
Closing Date (including their dates of expiration). There are no
existing or, to the knowledge of the Borrower, threatened strikes,
lockouts or other disputes relating to any collective bargaining or
similar agreement to which the Borrower or any of its Subsidiaries is a
party.
6.15 Compliance with Law.
Neither the Borrower nor any of its Subsidiaries has violated or
failed to comply in any material respect with any Requirements of Law,
including without limitation ERISA and environmental laws.
6.16 ERISA.
None of the Borrower, any of its Subsidiaries or any ERISA Affiliate
maintains or contributes to any Plan other than those listed on Schedule
B, Part 6.16. Except to the extent that any of the following would not
result in a material liability: (i) each Plan has been and is maintained
and funded in accordance with its terms and in compliance with all
applicable provisions of ERISA and the Code and (ii) the Borrower, each
Subsidiary of the Borrower and each ERISA Affiliate has fulfilled all
contribution obligations for each Plan (including obligations related to
the minimum funding standards of ERISA and the Internal Revenue Code).
No Termination Event has occurred and no other event has occurred that
may result in a Termination Event. To the knowledge of the Borrower,
none of the Borrower, any of its Subsidiaries, or any ERISA Affiliate, or
any fiduciary of any Plan has violated the terms of any agreement or any
Requirement of Law with respect to any Plan which will subject it to any
direct or indirect material liability. None of the Borrower, any of its
Subsidiaries or any ERISA Affiliate, is required to provide security to
any Plan under Section 401(a)(29) of the Internal Revenue Code.
6.17 Compliance with Environmental Laws.
Except as disclosed on Schedule B, Part 6.17, (i) the operations of
the Borrower and each of its Subsidiaries comply in all material respects
with all applicable material federal, state and local environmental
statutes, regulations, directions, ordinances, criteria and guidelines;
(ii) the Borrower has not received notice that any of the operations of
the Borrower or any of its Subsidiaries is the subject of any judicial or
administrative proceeding alleging a material violation of any material
federal, state or local environmental statute, regulation, direction,
ordinance, criteria or guideline; (iii) none of the operations of the
Borrower or any of its Subsidiaries is the subject of any federal or
state investigation evaluating whether the Borrower or any of its
Subsidiaries disposed of any hazardous or toxic waste, substance or
constituent or other substance at any site that may require remedial
action, or any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any hazardous or
toxic waste, substance or constituent or other substance into the
environment; (iv) neither the Borrower nor any of its Subsidiaries has
filed any notice under any federal or state law indicating past or
present treatment, storage or disposal of a hazardous waste, substance or
constituent or reporting a spill or release of a hazardous or toxic
waste, substance or constituent or other substance into the environment;
and (v) neither the Borrower nor any of its Subsidiaries has any material
contingent liability not adequately reserved for of which the Borrower
has knowledge, or reasonably should have knowledge, in connection with
any release or potential release of any hazardous or toxic waste,
substance or constituent or other substance into the environment, nor has
the Borrower or any of its Subsidiaries received any notice, letter or
other indication of potential liability arising from the disposal of any
hazardous or toxic waste, substance or constituent or other substance
into the environment.
6.18 Intellectual Property.
The Borrower and each of its Subsidiaries possesses such assets,
licenses, patents, patent applications, copyrights, service marks,
trademarks and trade names as are necessary or advisable to continue to
conduct their respective present and proposed business activities.
6.19 Licenses and Permits.
The Borrower and each of its Subsidiaries has obtained and holds in
full force and effect, all franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way
and other rights and approvals which are material to the operation of its
business as presently conducted.
6.20 Taxes and Tax Returns.
(a) Except as set forth on Schedule B, Part 6.20, the Borrower
and each Subsidiary of the Borrower has timely filed all income tax
returns it is required to file. The information filed is complete
and accurate in all material respects. All deductions taken in such
income tax returns are appropriate and in accordance with applicable
laws and regulations, except deductions that may have been
disallowed but are being challenged in good faith and for which
adequate reserves have been made in accordance with GAAP.
(b) All material taxes, assessments, fees and other
governmental charges for periods beginning prior to the date hereof,
have been timely paid and neither the Borrower nor any of its
Subsidiaries has any liability for taxes in excess of the amounts so
paid or reserves so established.
(c) Except as set forth in Schedule B, Part 6.20, no material
deficiencies for taxes have been claimed, proposed or assessed by
any taxing or other Governmental Authority against the Borrower or
any of its Subsidiary and no tax liens have been filed. Except as
set forth in Schedule B, Part 6.20, there are no pending or
threatened audits, investigations or claims for or relating to any
liability for taxes and there are no matters under discussion with
any Governmental Authority which could reasonably be expected to
result in a material additional liability for taxes. Either the
federal income tax returns of the Borrower have been audited by the
Internal Revenue Service and such audits have been closed (subject,
with respect to the 1993, 1994 and 1995 fiscal years of the
Borrower, to the execution of definitive agreements with the
Internal Revenue Service), or the period during which any
assessments may be made by the Internal Revenue Service has expired
without waiver or extension for all years up to and including the
fiscal year of the Consolidated Entity ended January 27, 1996.
Except as set forth in Schedule B, Part 6.20, no extension of a
statute of limitations relating to taxes, assessments, fees or other
governmental charges is in effect with respect to the Borrower or
any of its Subsidiaries.
(d) Except as set forth on Schedule B, Part 6.20, neither the
Borrower nor any of its Subsidiaries has any obligation under any
written income tax sharing agreement or agreement regarding payments
in lieu of income taxes.
6.21 Material Contracts.
Schedule B, Part 6.21, contains a true, correct and complete list of
all the Material Contracts currently in effect on the Closing Date.
Except as described on Schedule B, Part 6.21, all of the Material
Contracts are in full force and effect and no material defaults currently
exist thereunder by the Borrower, or to the Borrower's knowledge, any
other party.
6.22 Accuracy and Completeness of Information.
All factual information furnished by or on behalf of the Borrower or
any of its Subsidiaries in writing to the Agent, any Lender, or the
Auditors expressly for purposes of or in connection with this Credit
Agreement or any Credit Documents or any transaction contemplated hereby
or thereby taken as a whole is or will be true and accurate in all
material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact
necessary to make such information taken as a whole not misleading at
such time.
6.23 No Change.
Since January 25, 1997, no event has occurred which has had or could
reasonably be expected to have a Material Adverse Effect.
ARTICLE 7. AFFIRMATIVE COVENANTS.
Until termination of this Credit Agreement and payment and
satisfaction of all Obligations due hereunder:
7.1 Financial Reporting.
The Borrower shall timely deliver to the Agent the following
information (which information the Agent shall promptly thereafter
deliver to each of the Lenders):
(a) Letter to Auditor. Not later than the earlier of (i) 15
days prior to the end of each fiscal year or (ii) prior to the date
the Auditors commence work on the preparation of the annual audited
Financial Statements, a copy of a letter from Borrower to its
Auditors, which letter shall notify such Auditors that (x) such
annual audited Financial Statement will be delivered by the Borrower
to the Agent (for subsequent distribution to the Lenders) hereunder,
(y) it is a primary intention of the Borrower, in engaging such
Auditor's services in connection with its audit of the Borrower's
financial statements for such fiscal year, to satisfy the financial
reporting requirements set forth herein, and (z) stating that Agent
and Lenders intend to rely thereon with respect to the transactions
which are the subject of this Agreement.
(b) Annual Financial Statements. As soon as available, but
not later than 90 days after each fiscal year end (or, in the case
of the Management Letter referred to in clause (iii) below, 180
days): (i) the annual audited consolidated, and unaudited
consolidating, Financial Statements of the Consolidated Entity; (ii)
a comparison in reasonable detail to the prior year annual audited
and unaudited Financial Statements; (iii) the Auditors' unqualified
opinion, "Management Letter" and statement indicating whether the
Auditors have obtained knowledge of the existence of any Default or
Event of Default during their audit, together with a letter
addressed to the Borrower (with a copy thereof to the Agent) from
the Auditors substantially in the form of Exhibit F; (iv) a
narrative discussion of the consolidated financial condition and
results of operations and the consolidated liquidity and capital
resources of the Consolidated Entity for such fiscal year, prepared
by the chief financial officer of the Borrower; and (v) a compliance
certificate substantially in the form of Exhibit G with an attached
schedule of calculations demonstrating compliance with the financial
covenants set forth in Article 8.
(c) Monthly and Annual Projections. Not later than 45 days
after each fiscal year end, beginning with the fiscal year ended
January 31, 1998, monthly projections of the financial condition and
results of operations of the Consolidated Entity for the next
succeeding year, quarterly projections for the second succeeding
year, and annual projections for each succeeding fiscal year
thereafter, through and including the fiscal year in which the
Expiration Date will occur, in each case containing projected
consolidating balance sheets, statements of operations, statements
of cash flows and statements of changes in shareholders equity.
(d) Quarterly Financial Statements. As soon as available, but
not later than 45 days after each end of each of the first three
fiscal quarters, and 90 days after end of the last fiscal quarter:
(i) Financial Statements of the Consolidated Entity as of the fiscal
quarter then ended, and for the fiscal year to date; (ii) a
comparison in reasonable detail to the Financial Statements for the
corresponding periods of the prior fiscal year; (iii) the
certification of the chief executive officer or chief financial
officer of the Borrower that such Financial Statements have been
prepared in accordance with GAAP (subject to year-end adjustments);
(iv) a narrative discussion of the consolidated financial condition
and results of operations and the consolidated liquidity and capital
resources of the Consolidated Entity for such fiscal quarter and
fiscal year to date, prepared by the chief financial officer of the
Borrower; and (v) a compliance certificate substantially in the form
of Exhibit G with an attached schedule of calculations demonstrating
compliance with the financial covenants set forth in Article 8.
(e) Monthly Financial Statements. As soon as available, but
not later than (i) 30 days after the end of each month, (other than
the last month in each fiscal quarter), (ii) 45 days after the end
of the last month in the first three fiscal quarters, and (iii) 90
days after end of the last month in the fourth fiscal quarter: (i)
a balance sheet for the Borrower as at the end of such month and for
the fiscal year to date and statements of operations and cash flows
for such month and for the fiscal year to date; (ii) a comparison to
the balance sheet, statement of operations and statement of cash
flows for the same periods in the prior year; (iii) a certification
by the chief executive officer or chief financial officer of the
Borrower that such balance sheet, statement of operations and
statement of cash flows have been prepared in accordance with GAAP
(subject to year-end adjustments); and (iv) a compliance certificate
substantially in the form of Exhibit G with an attached schedule of
calculations demonstrating compliance with the financial covenants
set forth in Article 8.
(f) Monthly Comparison to Prior Projections. As soon as
available, but not later than 30 days after the end of each of the
first eleven months, and 45 days after end of the last month, a
comparison of actual results of operations, cash flow and capital
expenditures for the Borrower for such month and for the period from
the beginning of the current fiscal year through the end of such
month with amounts previously projected for those periods (see
Section 7.1(c)) and with actual results for corresponding periods in
the previous fiscal year.
7.2 Collateral Reporting.
The Borrower shall timely deliver to the Agent the following
certificates and reports:
(a) Weekly and Monthly Borrowing Base Certificates. Weekly,
on the second Business Day of each week, monthly, within seven (7)
Business Days after the last Business Day of each month, and at any
other time requested by the Agent, a Borrowing Base Certificate,
which shall be: (i) substantially in the form of Exhibit A,
detailing the Eligible Inventory as of each Saturday of the
immediately preceding week (if a weekly Borrowing Base Certificate),
or as of the last Business Day of the immediately preceding month
(if a monthly Borrowing Base Certificate), or as of such other date
as the Agent may request; and (ii) prepared by or under the
supervision of the chief executive officer or chief financial
officer of the Borrower and certified by such officer subject only
to adjustment upon completion of the normal periodic audit of
physical inventory. Each Borrowing Base Certificate shall have
attached to it such additional schedules and other information as
the Agent may reasonably request.
(b) Appraisals. When requested by the Agent, a report of
Inventory, based upon a normal periodic physical count, which shall
describe the Borrower's Inventory by category and by item (in
reasonable detail) and report the then appraised value (at lower of
cost or market) of such Inventory.
(c) Further Assurances. When reasonably requested by the
Agent, any further information regarding the Collateral, business
affairs and financial condition of the Borrower or any of its
Subsidiaries.
7.3 Notification Requirements.
The Borrower shall timely give to the Agent and each of the Lenders
the following notices:
(a) Notice of Defaults. Promptly, and in any event within two
(2) Business Days after becoming aware of the occurrence of a
Default or Event of Default, a certificate of the chief executive
officer or chief financial officer of the Borrower specifying the
nature thereof and the proposed response of the Borrower thereto,
each in reasonable detail.
(b) Proceedings or Adverse Changes. Promptly, and in any
event within five (5) Business Days after the Borrower becomes aware
of (i) any material proceeding being instituted or threatened to be
instituted by or against the Borrower or any of its Subsidiaries in
any federal, state, local or foreign court or before any commission
or other regulatory body (federal, state, local or foreign), (ii)
any order, judgment or decree in excess of $1,000,000 being entered
against the Borrower or any of its Subsidiaries or any of their
respective properties or assets or (iii) any actual or prospective
change, development or event which has had or could reasonably be
expected to have a Material Adverse Effect, a written statement
describing such proceeding, order, judgment, decree, change,
development or event and any action being taken with respect thereto
by the Borrower or any such Subsidiary.
(c) ERISA Notices. (i) Promptly, and in any event within ten
(10) Business Days after the Borrower, any of its Subsidiaries or
any ERISA Affiliate knows or has reason to know that a Termination
Event has occurred, a written statement of the chief financial
officer of the Borrower describing such Termination Event and any
action that is being taken with respect thereto by the Borrower, any
such Subsidiary or ERISA Affiliate, and any action taken or
threatened by the Internal Revenue Service, Department of Labor or
Pension Benefit Guaranty Corporation. The Borrower, such Subsidiary
and the ERISA Affiliate shall be deemed to know all facts known by
the administrator of any Benefit Plan of which it is the plan
sponsor; (ii) promptly, and in any event within three (3) Business
Days after the filing thereof with the Internal Revenue Service, a
copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by the Borrower, any of
its Subsidiaries or any ERISA Affiliate with respect to such
request; and (iii) promptly, and in any event within three (3)
Business Days after receipt by the Borrower, any of its Subsidiaries
or any ERISA Affiliate, of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit
Plan, copies of each such notice.
(d) Environmental Notices. Promptly, and in any event within
ten (10) Business Days after receipt by the Borrower or any of its
Subsidiaries of any notice, complaint or order alleging any actual
or prospective violation of any environmental Requirement of Law or
alleging responsibility for costs of a cleanup, together with a copy
of such notice, complaint, or order and a written statement
describing any action being taken with respect thereto by the
Borrower or any of its Subsidiaries.
(e) Material Contracts. Promptly, and in any event within ten
(10) Business Days after any Material Contract of the Borrower or
any of its Subsidiaries is terminated or amended or any new Material
Contract is entered into, a written statement describing such event,
with copies of amendments or new contracts, and an explanation of
any actions being taken with respect thereto.
(f) Collateral Matters. At least twenty (20) Business Days
prior written notice to the Agent of any change in the location of
any Collateral or in the location of the chief executive office or
place of business of the Borrower or any of its Subsidiaries from
the locations specified in Schedule B, Part 6.10. At least ten (10)
Business Days prior to any such change, the Borrower shall cause to
be executed and delivered to the Agent any financing statements,
Collateral Access Agreements or other documents required by the
Agent, all in form and substance satisfactory to the Agent.
7.4 Corporate Existence.
The Borrower shall, and shall cause each of its Subsidiaries to, (i)
maintain its corporate existence (except that the Borrower's Subsidiaries
may merge with each other and with the Borrower, provided, that the Agent
receives five (5) Business Days prior written notice thereof), (ii)
maintain in full force and effect all of its material licenses, bonds,
franchises, leases, trademarks and qualifications to do business, and all
patents, contracts and other rights which are material to the operation
of their respective businesses as presently conducted, (iii) continue in,
and limit their operations to, the same general lines of business as
presently conducted by them and (iv) in the case of the Borrower,
maintain all material terms and provisions of its corporate charter and
bylaws in the form in effect on the Closing Date.
7.5 Books and Records; Inspections.
The Borrower agrees to maintain, and to cause each of its
Subsidiaries to maintain, books and records pertaining to the Collateral
in such detail, form and scope as is consistent with good business
practice. The Borrower agrees that the Agent or its agents may enter
upon the premises of the Borrower or any of its Subsidiaries at any time
and from time to time, during normal business hours and upon reasonable
notice under the circumstances, and at any time at all upon the
occurrence and during the continuance of an Event of Default, for the
purposes of (i) inspecting and verifying the Collateral, (ii) inspecting
and/or copying (at the expense of the Borrower) any and all records
pertaining thereto, and (iii) discussing the affairs, finances and
business of the Borrower with any officers, employees and directors of
the Borrower or with the Auditors.
7.6 Insurance.
The Borrower agrees to maintain, and to cause each of its
Subsidiaries to maintain, public liability insurance, third party
property damage insurance and replacement value insurance on the
Collateral under such policies of insurance, with such insurance
companies, in such amounts and covering such risks as are at all times
satisfactory to the Agent in its commercially reasonable judgment. As of
the Closing Date, the deductibles in effect with respect to the
Borrower's insurance policies as disclosed to the Agent, are acceptable
to the Agent. All policies covering the Collateral are to name the Agent
as an additional insured and/or the loss payee in case of loss, and are
to contain such other provisions as the Agent may reasonably require to
fully protect the Agent's interest in the Collateral and to any payments
to be made under such policies.
7.7 Taxes.
The Borrower agrees to pay, when due, and to cause each of its
Subsidiaries to pay when due, all taxes lawfully levied or assessed
against the Borrower, any of its Subsidiaries or any of the Collateral
before any penalty or interest accrues thereon; provided, that, unless
such taxes have become a federal tax or ERISA Lien on any of the assets
of the Borrower or any of its Subsidiaries, no such tax need be paid if
the same is being contested, in good faith, by appropriate proceedings
promptly instituted and diligently conducted and if an adequate reserve
or other appropriate provision shall have been made therefor as required
in order to be in conformity with GAAP.
7.8 Compliance with Laws.
The Borrower agrees to comply, and to cause each of its Subsidiaries
to comply, in all material respects, with all Requirements of Law
applicable to the Collateral or any part thereof, or to the operation of
its business or its assets generally, unless the Borrower contests any
such Requirements of Law in a reasonable manner and in good faith.
7.9 Use of Proceeds.
Proceeds of the initial Revolving Loan shall be used by the Borrower
to refinance certain existing Indebtedness of the Borrower and pay the
costs and expenses of the transactions contemplated by this Credit
Agreement which are due and payable on the Closing Date, including
without limitation the Fees and Expenses due on the Closing Date pursuant
to Article 4 hereof; and the proceeds of any subsequent Revolving Loans
made hereunder shall be used by the Borrower solely for ongoing working
capital requirements and other general corporate purposes. The Borrower
shall not use any portion of the proceeds of any Revolving Loans for the
purpose of purchasing or carrying any "margin stock" (as defined in
Regulation G) in any manner which violates the provisions of Regulation
G or X or of the terms and conditions of this Credit Agreement or any
other Credit Document.
7.10 Fiscal Year.
The Borrower agrees to maintain, and to cause each of its
Subsidiaries to maintain, its fiscal year as a year ending on the last
Saturday of each January.
7.11 Maintenance of Property.
The Borrower agrees to keep, and to cause each of its Subsidiaries
to keep, all property useful and necessary to their respective businesses
in good working order and condition (ordinary wear and tear excepted) in
accordance with their past operating practices and not to commit or
suffer any waste with respect to any of their properties.
7.12 ERISA Documents.
The Borrower will cause to be delivered to the Agent, upon the
Agent's request, each of the following: (i) a copy of each Plan (or,
where any such plan is not in writing, a complete description thereof)
(and if applicable, related trust agreements or other funding
instruments) and all amendments thereto, all written interpretations
thereof and written descriptions thereof that have been distributed by
Borrower or any of its Subsidiaries to employees or former employees of
the Borrower or any of its Subsidiaries; (ii) the most recent
determination letter issued by the Internal Revenue Service with respect
to each Benefit Plan other than a Multiemployer Plan; (iii) for the three
most recent plan years, Annual Reports on Form 5500 Series required to be
filed with any governmental agency for each Benefit Plan other than a
Multiemployer Plan; (iv) all actuarial reports prepared for the last
three plan years for each Benefit Plan other than a Multiemployer Plan;
(v) a listing of all Multiemployer Plans, with the aggregate amount of
the most recent annual contributions required to be made by the Borrower
or any ERISA Affiliate to each such plan and copies of the collective
bargaining agreements requiring such contributions; (vi) any information
that has been provided to the Borrower or any ERISA Affiliate regarding
withdrawal liability under any Multiemployer Plan; and (vii) the
aggregate amount of the most recent annual payments made to former
employees of the Borrower or any ERISA Affiliate under any Retiree Health
Plan.
7.13 Environmental and Other Matters.
(a) The Borrower and each of its Subsidiaries will conduct
their businesses so as to comply in all material respects with all
material environmental, land use, laws, regulations, directions,
ordinances, criteria and guidelines in all jurisdictions in which
any of them is or may at any time be doing business, except to the
extent that the Borrower or such Subsidiary is contesting, in good
faith by appropriate legal proceedings, any such law, regulation,
direction, ordinance, criteria, guideline, or interpretation thereof
or application thereof; provided, that the Borrower and each of its
Subsidiaries shall comply with the order of any court or other
Governmental Authority relating to such laws unless the Borrower or
such Subsidiary shall currently be prosecuting an appeal or
proceedings for review and shall have secured a stay of enforcement
or execution or other arrangement postponing enforcement or
execution pending such appeal or proceedings for review.
(b) If the Agent reasonably believes, or the Majority Lenders
reasonably believe, that the facts or circumstances evidence or
suggest that the Borrower or any of its Subsidiaries is in material
non-compliance with any environmental law and that such non-
compliance could reasonably be expected to have a Material Adverse
Effect, then at the written request of the Agent or the Majority
Lenders, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, the Borrower will
provide at its sole cost and expense an environmental site
assessment report concerning the site owned, operated or leased by
the Borrower or such Subsidiary in respect of which such material
non-compliance is believed to have occurred and be continuing, such
report to be prepared by an environmental consulting firm approved
by the Agent and the Majority Lenders, indicating the presence,
release or absence of hazardous materials on or from such site and
the potential cost of any removal, remedial or corrective action in
connection with any such hazardous materials on such site.
7.14 Further Assurances.
The Borrower shall take, and shall cause each of its Subsidiaries to
take, all such further actions and execute all such further documents and
instruments as the Agent may at any time reasonably determine in the
exercise of its reasonable discretion to be necessary or desirable to
further carry out and consummate the transactions contemplated by the
Credit Documents, to cause the execution, delivery and performance of the
Credit Documents to be duly authorized and to perfect or protect the
Liens (and the priority status thereof) of the Agent on the Collateral.
ARTICLE 8. NEGATIVE COVENANTS.
Until termination of this Credit Agreement and payment and
satisfaction of all Obligations due hereunder, the Borrower shall comply
with, and, where required, shall cause each of its Subsidiaries to comply
with, the following covenants:
8.1 Minimum EBITDA to Interest Expense Ratio.
(a) The Borrower shall have a ratio of EBITDA to Interest
Expense, as determined as of the last day of the fiscal quarter of
the Borrower ending closest to the last day of January, 1998, for
the six-month period ending on such date, of not less than 1.85 to
1.00.
(b) The Borrower shall have a ratio of EBITDA to Interest
Expense, as determined as of the last day of the fiscal quarter of
the Borrower ending closest to the last day of April, 1998, for the
nine-month period ending on such date, of not less than 1.50 to
1.00.
(c) The Borrower shall have a ratio of EBITDA to Interest
Expense, as determined as of the last day of the fiscal quarter of
the Borrower ending closest to the last day of each month set forth
below for the twelve-month period ending on such date, of not less
than the ratio set forth opposite such date:
Date Minimum Ratio
July, 1998 1.35 to 1.00
October, 1998 1.60 to 1.00
January, 1999 1.70 to 1.00
April, 1999 1.70 to 1.00
July, 1999 1.70 to 1.00
October, 1999 1.70 to 1.00
January, 2000 2.00 to 1.00
April, 2000 2.00 to 1.00
8.1A Minimum Shareowner's Investment. The Borrower shall maintain
a shareowner's investment (exclusive of gains or losses resulting from
sales of fixed assets occurring after the Closing Date) of not less than
(i) $149,000,000 as of July 26, 1997 and (ii) $142,500,000 as of October
25, 1997.
8.2 Minimum Inventory to Trade Accounts Payable Ratio.
The Borrower shall have an Inventory to Trade Accounts Payable
Ratio, as determined as of the end of each fiscal quarter of the
Borrower, commencing with such fiscal quarter ending on July 26, 1997, of
not less than 2.00 to 1.00.
For purposes of this Section 8.2, "Inventory to Trade Accounts
Payable Ratio" means, as of the end of any fiscal quarter of the
Borrower, the ratio of (i) the average value (determined at the lower of
cost or market on a basis consistent with the Borrower's current and
historical accounting practices) of all Inventory, to (ii) the average
aggregate outstanding trade accounts payable of the Borrower, in each
case as determined as of the last day of each fiscal month during such
fiscal quarter.
8.3 Capital Expenditures.
The Borrower shall not make payments for Capital Expenditures in
excess of $18,000,000 per fiscal year. To the extent that all or any
portion of such amount is not used in any fiscal year, fifty percent
(50%) of such amount may be carried forward to the immediately following
fiscal year to be used for Capital Expenditures. The Borrower shall not
make any Capital Expenditures that are not directly related to the
business conducted on the Closing Date by the Borrower.
8.4 Additional Indebtedness.
Neither the Borrower nor any of its Subsidiaries shall directly or
indirectly incur, create, assume or suffer to exist any Indebtedness
other than:
(a) Indebtedness under the Credit Documents;
(b) Indebtedness in the ordinary course of business under
Interest Rate Agreements in form and substance satisfactory to the
Agent;
(c) Indebtedness of any Subsidiary of the Borrower to the
Borrower or any other Subsidiary of the Borrower;
(d) Indebtedness evidenced by the Medium Term Notes
outstanding on the Closing Date;
(e) FASB 98 Indebtedness;
(f) Indebtedness described on Schedule B, Part 8.4, and any
refinancing of such Indebtedness, so long as the aggregate principal
amount of the Indebtedness so refinanced shall not be increased and
the refinancing shall be on terms and conditions not more
restrictive in any material respect than the terms and conditions of
the Indebtedness to be refinanced;
(g) Indebtedness secured by purchase money Liens on equipment
acquired after the date of this Credit Agreement not to exceed
$1,000,000 in the aggregate outstanding at any one time ("Purchase
Money Liens") so long as (i) each Purchase Money Lien shall attach
only to the property to be acquired, (ii) a description shall have
been furnished to the Agent for any item of equipment for which the
purchase price is greater than $1,000,000, and (iii) the debt
incurred shall not exceed one hundred percent (100%) of the purchase
price of the item or items of equipment purchased; and
(h) other unsecured Indebtedness in an aggregate outstanding
amount not exceeding $5,000,000.
8.5 Liens.
Neither the Borrower nor any of its Subsidiaries shall directly or
indirectly create, incur, assume, or suffer to exist any Lien on any of
its property now owned or hereafter acquired except:
(a) Liens granted to the Agent for the benefit of the Agent
and the Lenders under the Credit Documents;
(b) Liens listed on Schedule B, Part 8.5;
(c) Purchase Money Liens;
(d) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, common carriers, or landlords, liens for taxes,
assessments or other governmental charges, and other similar Liens
arising by operation of law for amounts that are not yet due and
payable or that are being diligently contested in good faith by the
Borrower, so long as the Agent has been notified thereof and
adequate reserves are maintained by the Borrower for their payment;
(e) Attachment or judgment Liens not to exceed an aggregate of
$1,000,000, excluding amounts (i) bonded to the reasonable
satisfaction of the Agent or (ii) covered by insurance to the
reasonable satisfaction of the Agent;
(f) Deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, under unemployment
insurance, or to secure public or statutory obligations not to
exceed an aggregate of $10,000,000 (exclusive of the aggregate
outstanding face amount of any Letters of Credit and Existing LCs
issued for any such purpose);
(g) Deposits or pledges to secure bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of business not to exceed an
aggregate of $1,000,000;
(h) Easements, rights-of-way, restrictions and other similar
encumbrances on title to, or restrictions on the use of, real
property, which, in the aggregate, in the Agent's reasonable
determination, are not substantial in amount and which do not
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of
the Borrower or any of its Subsidiaries;
(I) Liens in favor of any Governmental Authority to secure
customs and revenue duties in connection with the importation of
Inventory; and
(j) Extensions and renewals of any of the foregoing so long as
such Liens apply to the same property previously subject thereto and
are on terms and conditions not more restrictive in any material
respect than the terms and conditions of the Liens extended or
renewed.
8.6 Contingent Obligations.
Except in connection with Permitted Recourse Programs in an
aggregate amount not to exceed $1,000,000, neither the Borrower nor any
of its Subsidiaries shall directly or indirectly incur, assume, or suffer
to exist any Contingent Obligation, excluding indemnities given in
connection with the sale of Inventory or other asset dispositions
permitted hereunder and Contingent Obligations for Indebtedness permitted
to be incurred under Section 8.4, and Investments permitted under Section
8.9.
8.7 Sale of Assets.
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell, lease, assign, transfer or otherwise
dispose of any assets other than (i) the lease or sub-lease from time to
time to third parties for not less than fair market value of space in
retail store premises or excess undeveloped land owned or leased and
currently or previously occupied at such time by the Borrower in the
ordinary course of the Borrower's business, to the extent such space or
land, as the case may be, is not used or usable at such time by the
Borrower, as determined by the Borrower in the exercise of its reasonable
business judgment. Inventory in the ordinary course of business; (ii)
individual items of Collateral with a book value of less than $1,000,000
in the aggregate during any fiscal year, (iii) obsolete or worn out
property disposed of in the ordinary course of business; and (iv)
dispositions of assets not otherwise permitted under this Section 8.7,
provided, that, (a) such dispositions are for fair value, (b) the
aggregate consideration is paid in full in cash at the time of
disposition and is thereupon (i) reinvested in the business of the
Borrower or its Subsidiaries or (II) delivered to the Agent, in which
case such consideration will be applied to repay the Revolving Loans and
(c) the aggregate amount of all such dispositions does not exceed
$2,500,000 in the aggregate for any fiscal year.
8.8 Restricted Payments.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, (a) declare or pay any dividend (other than
dividends payable solely in capital stock of such Person) on, or make any
payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of capital stock of such
Person or any warrants, options or rights to purchase any such capital
stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether
in cash or property or in obligations of such Person or any of its
Subsidiaries; (b) make any optional payment or prepayment on or
redemption (including, without limitation, by making payments to a
sinking or analogous fund) or repurchase of any Indebtedness (other than
Indebtedness pursuant to this Credit Agreement); provided, that,
notwithstanding the foregoing, (i) so long as before and after giving
effect to each such payment an Event of Default shall not exist, Borrower
may make regularly scheduled dividend payments on the Preferred Stock and
(ii) any Subsidiary of the Borrower may (x) make payments on account of
Indebtedness owing to the Borrower or any Subsidiary of the Borrower and
(y) declare and pay dividends to the Borrower or any other Subsidiary of
the Borrower.
8.9 Investments.
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make any Investment in any Person, whether in
cash, securities, or other property of any kind including, without
limitation, any Subsidiary or Affiliate of the Borrower, other than:
(a) Advances or loans made in the ordinary course of business
not to exceed $250,000 outstanding at any time to any one Person and
$500,000 in the aggregate outstanding at any one time;
(b) Loans, investments and advances between the Borrower and
its Subsidiaries in existence as of the date hereof and described on
Schedule B. Part 8.9;
(c) Cash Equivalents;
(d) Deposits with financial institutions, disclosed in
Schedule B, Part 8.9(A), and which are insured by the Federal
Deposit Insurance Corporation ("FDIC") or a similar federal
insurance program; provided, that the Borrower may, in the ordinary
course of its business, maintain in its disbursement accounts from
time to time amounts in excess of then applicable FDIC or other
program insurance limits;
(e) Deposits with financial institutions disclosed in Schedule
B, Part 8.9(b); and
(f) Such other Investments as the Agent may approve in writing
in the exercise of its sole discretion.
8.10 Affiliate Transactions.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, enter into any transaction with (including,
without limitation, the purchase, sale or exchange of property or the
rendering of any service to) any Subsidiary or Affiliate of the Borrower,
except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business, as the case
may be, and upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary than could be obtained in a comparable arm's-
length transaction with an unaffiliated Person, except for transactions
otherwise permitted under Sections 8.8 and 8.9;
8.11 Additional Bank Accounts.
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, open, maintain or otherwise have any checking,
savings or other accounts at any bank or other financial institution, or
any other account where money is or may be deposited or maintained with
any Person, other than the Disbursement Account and the accounts set
forth on Schedule B, Part 8.9.
8.12 Excess Cash.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, maintain in the aggregate in all deposit
accounts of the Borrower and its Subsidiaries (other than the Collection
Account, the Disbursement Account and payroll accounts), total cash
balances and Investments as permitted by Sections 8.9(c), (d), (e) and
(f), in excess of $5,000,000 at any time during which any Revolving Loans
are outstanding hereunder.
8.13 Additional Negative Pledges.
Except as set forth in the Medium Term Note Indenture, the Borrower
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become
effective, directly or indirectly, (i) any prohibition or restriction
(including any agreement to provide equal and ratable security to any
other Person in the event a Lien is granted to or for the benefit of the
Agent and the Lenders) on the creation or existence of any Lien upon the
Collateral; or (ii) any contractual obligation which may restrict or
inhibit the Agent's rights or ability to sell or otherwise dispose of the
Collateral or any part thereof after the occurrence of an Event of
Default.
8.14 Additional Subsidiaries.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, form or acquire any new Subsidiaries.
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.
9.1 Events of Default.
The occurrence of any of the following events shall constitute an
event of default (each an "Event of Default") hereunder:
(a) Failure to Pay. The Borrower shall fail to pay any
Obligation (other than Expenses) when the same shall become payable
or shall fail to pay, within five (5) days after the same shall
become payable, any Expenses.
(b) Breach of Certain Covenants. The Borrower shall fail to
comply with any covenant contained in Article 7 (other than Sections
7.4, 7.7, 7.8, 7.11, 7.12 and 7.13) or Article 8.
(c) Breach of Representation or Warranty. Any representation
or warranty made or deemed to be made by the Borrower in this Credit
Agreement or in any other Credit Document (and in any statement or
certificate given under this Credit Agreement or any other Credit
Document), shall be false or misleading in any material respect when
made or deemed to be made.
(d) Breach of Other Covenants. The Borrower shall fail to
comply with any covenant contained in this Credit Agreement or any
other Credit Document, other than as set forth in Section 9.1(b),
and such failure shall continue for fifteen (15) days after its
occurrence.
(e) Dissolution. The Borrower shall dissolve, wind up or
otherwise cease its business.
(f) Insolvency Event. Any Credit Party shall become the
subject of an Insolvency Event.
(g) Change of Control. A Change of Control shall occur.
(h) Cross Default. A default or event of default shall occur
(and continue beyond any applicable grace period) under any note,
agreement or instrument evidencing any other Indebtedness of the
Borrower or any Subsidiary of the Borrower, which default or event
of default permits the acceleration of its maturity, provided, that
the aggregate principal amount of all such Indebtedness for which
the default or event of default has occurred exceeds $5,000,000.
(i) Failure of Enforceability of Credit Documents; Security.
Any covenant, agreement or obligation of any Credit Party contained
in or evidenced by any of the Credit Documents shall cease to be
enforceable in accordance with their terms, or shall be determined
to be unenforceable, in accordance with its terms; any Credit Party
shall deny or disaffirm its obligations under any of the Credit
Documents or any Liens granted in connection therewith; or, any
Liens granted in any of the Collateral shall be determined to be
void, voidable, invalid or unperfected, are subordinated or not
given the priority contemplated by this Credit Agreement.
9.2 Acceleration, Termination of Commitments and Cash
Collateralization.
Upon the occurrence and during the continuance of any Event of
Default, without prejudice to the rights of the Agent or any Lender to
enforce its claims against the Borrower:
(a) Acceleration. Upon the written request of the Majority
Lenders, and by delivery of written notice to the Borrower from the
Agent, all Obligations shall be immediately due and payable (except
with respect to any Event of Default set forth in Section 9.1(f), in
which case all Obligations shall automatically become immediately
due and payable without the necessity of any request of the Majority
Lenders or notice or other demand to the Borrower) without
presentment, demand, protest or any other action or obligation of
the Agent or any Lender.
(b) Termination of Commitments. Upon the written request of
the Majority Lenders, and by delivery of written notice to the
Borrower from the Agent, the Commitments shall be immediately
terminated and, at all times thereafter, all Revolving Loans made by
any Lender pursuant to this Credit Agreement shall be, at such
Lender's sole discretion, unless such Event of Default is waived in
accordance with Section 11.11, in which case the Commitments shall
be automatically reinstated.
(c) Cash Collateralization. On demand of the Agent or the
Majority Lenders, the Borrower shall immediately deposit with the
Agent for each Letter of Credit then outstanding, cash or Cash
Equivalents in an amount equal to 110% of the greatest amount
drawable thereunder. Such deposit shall be held by the Agent and
used to reimburse the Issuing Bank for the amount of each drawing
made under such Letters of Credit, as and when each such drawing is
made.
9.3 Rescission of Acceleration.
After acceleration of the maturity of the Obligations, if the
Borrower pays all accrued interest and all principal due (other than by
reason of the acceleration) and all Defaults and Events of Default are
waived in accordance with Section 11.11, the Majority Lenders may elect
in their sole discretion, to rescind the acceleration and return to the
Borrower any cash collateral deposited with the Agent pursuant to Section
9.2(c). (This Section is intended only to bind all of the Lenders to a
decision of the Majority Lenders and not to confer any right on the
Borrower, even if the described conditions for the Majority Lenders'
election may be met.)
9.4 Remedies.
Upon the occurrence and during the continuance of an Event of
Default, upon the written request and at the direction of the Majority
Lenders, the Agent may exercise any rights and remedies available to it
under applicable law (including under the Code) and under the Collateral
Documents. The foregoing rights and remedies are not intended to be
exhaustive and the full or partial exercise of any right or remedy shall
not preclude the full or partial exercise of any other right or remedy
available under this Credit Agreement, any other Credit Document, at
equity or at law.
9.5 Right of Setoff.
In addition to and not in limitation of all rights of offset that
any Lender may have under applicable law, upon the occurrence of any
Event of Default, and whether or not any Lender has made any demand or
the Obligations of any Credit Party have matured, each Lender shall have
the right to appropriate and apply to the payment of the Obligations of
such Credit Party all deposits and other obligations then or thereafter
owing by such Lender to such Credit Party. Each Lender exercising such
rights shall notify the Agent thereof and any amount received as a result
of the exercise of such rights shall be shared by the Lenders in
accordance with Section 2.5.
9.6 License of Use of Software and Other Intellectual Property.
Unless expressly prohibited by the licensor thereof, if any, the
Agent is hereby granted a license to use all computer software programs,
data bases, processes and materials used by the Borrower in connection
with its businesses or in connection with the Collateral. The Agent
agrees not to use any such license prior to the occurrence of an Event of
Default.
9.7 Application of Proceeds; Surplus; Deficiencies.
The net cash proceeds resulting from the Agent's exercise of any of
the foregoing rights against any Collateral (after deducting all of the
Agent's Expenses related thereto) shall be applied by the Agent to the
payment of the Obligations, whether due or to become due, in the order
set forth in Section 4.11. The Borrower shall remain liable to the Agent
and the Lenders for any deficiencies, and the Agent and the Lenders in
turn agree to remit to the Borrower or its successors or assigns, any
surplus resulting therefrom.
ARTICLE 10. THE AGENT.
10.1 Appointment of Agent.
(a) Each Lender hereby designates BTCC as Agent to act as
herein specified. Each Lender hereby irrevocably authorizes, and
each holder of any Revolving Note, by the acceptance of such
Revolving Note, shall be deemed irrevocably to authorize the Agent
to take such action on its behalf under the provisions of this
Credit Agreement and the other Credit Documents and any other
instruments and agreements referred to herein and therein and to
exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Agent
by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent shall hold all Collateral
and all payments of principal, interest, Fees, (other than Fees that
are exclusively for the account of the Agent), charges and Expenses
received pursuant to this Credit Agreement or any other Credit
Document for the ratable benefit of the Lenders. The Agent may
perform any of its duties hereunder by or through its agents or
employees.
(b) Other than the Borrower's rights under Section 10.9, the
provisions of this Article 10 are for the benefit of the Agent and
the Lenders only and none of the Credit Parties or any other Persons
shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under
this Credit Agreement and the other Credit Documents, the Agent
shall act only for the Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of
agency or trust with or for any Credit Party.
10.2 Nature of Duties of Agent.
The Agent has no duties or responsibilities except those expressly
set forth in the Credit Documents. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable for any action
taken or omitted hereunder or in connection herewith, unless caused by
its or their gross negligence or willful misconduct. The duties of the
Agent shall be mechanical and administrative in nature; the Agent shall
not have by reason of this Credit Agreement or any of the other Credit
Documents a fiduciary relationship in respect of any Lender or any
participant of any Lender; and nothing in this Credit Agreement or any
other Credit Document, expressed or implied, is intended to or shall be
so construed as to impose upon the Agent any obligations in respect of
this Credit Agreement or any other Credit Document, except as expressly
set forth herein or therein.
10.3 Lack of Reliance on Agent.
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the
financial or other condition and affairs of each Credit Party in
connection with the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the creditworthiness of each
Credit Party, and, except as expressly provided in this Credit
Agreement, 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 making of the Revolving Loans or at
any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or
sufficiency of this Credit Agreement or any of the other Credit
Documents or the financial or other condition of any Credit Party.
The Agent shall not be required to make any inquiry concerning
either the performance or observance of any other terms, provisions
or conditions of this Credit Agreement or any of the other Credit
Documents, or the financial condition of any Credit Party, or the
existence or possible existence of any Default or Event of Default,
unless specifically requested to do so in writing by any Lender.
10.4 Certain Rights of the Agent.
The Agent shall have the right to request instructions from the
Majority Lenders by notice to each of the Lenders. If the Agent shall
request instructions from the Majority Lenders with respect to any act or
action (including the failure to act) in connection with this Credit
Agreement, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions
from the Majority Lenders, and the Agent shall not incur liability to any
Person by reason of so refraining. 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 hereunder in
accordance with the instructions of the Majority Lenders. The Agent may
give any notice required under Article 9 hereof without the consent of
any of the Lenders unless otherwise directed by the Majority Lenders in
writing and will, at the direction of the Majority Lenders, give any such
notice required under Article 9.
10.5 Reliance by Agent.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram,
order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or
made by the proper person. The Agent may consult with legal counsel
(including counsel for the Borrower with respect to matters concerning
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
by it in good faith in accordance with the advice of such counsel,
accountants or experts.
10.6 Indemnification of Agent.
To the extent the Agent is not reimbursed and indemnified by the
Borrower, each Lender will reimburse and indemnify the Agent, in
proportion to its respective Commitment, for and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in performing its duties
hereunder, in any way relating to or arising out of this Credit
Agreement; provided, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct.
10.7 The Agent in its Individual Capacity.
With respect to its obligation to lend under this Credit Agreement,
the Revolving Loans made by it and the Revolving Notes issued to it and
its participation in Letters of Credit issued hereunder, the Agent shall
have the same rights and powers hereunder as any other Lender or holder
of a Revolving Note or participation interests and may exercise the same
as though it was not performing the duties specified herein; and the
terms "Lenders," "Majority Lenders," "holders of Revolving Notes," or any
similar terms shall, unless the context clearly otherwise indicates,
include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, acquire equity interests in, and generally
engage in any kind of banking, trust, financial advisory or other
business with the Borrower or any Affiliate of the Borrower as if it were
not performing the duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection with this
Credit Agreement and otherwise without having to account for the same to
the Lenders.
10.8 Holders of Revolving Notes.
The Agent may deem and treat the payee of any Revolving Note as the
owner thereof for all purposes hereof unless and until a written notice
of the assignment or transfer thereof shall have been filed with the
Agent. Any request, authority or consent of any Person who, at the time
of making such request or giving such authority or consent, is the holder
of any Revolving Note, shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Revolving Note or of any Revolving
Note or Notes issued in exchange therefor.
10.9 Successor Agent.
(a) The Agent may, upon five (5) Business Days' notice to the
Lenders and the Borrower, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this
Section 10.9) by giving written notice thereof to the Lenders and
the Borrower. Upon any such resignation, the Majority Lenders shall
have the right, upon five (5) days' notice and approval by the
Borrower (which approval shall not be unreasonably withheld or
delayed), to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Majority Lenders and accepted such
appointment, within thirty (30) days after the retiring Agent's
giving of notice of resignation, then, upon five (5) days' notice
and approval by the Borrower (which approval shall not be
unreasonably withheld or delayed), the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a bank or
a trust company or other financial institution which maintains an
office in the United States, or a commercial bank organized under
the laws of the United States of America or of any State thereof, or
any Affiliate of such bank or trust company or other financial
institution which is engaged in the banking business, having a
combined capital and surplus of at least $500,000,000.
(b) 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 as Agent under this
Credit Agreement and the other Credit Documents. After any retiring
Agent's resignation hereunder as Agent, the provisions of this
Article 10 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under or in connection
with this Credit Agreement.
10.10 Collateral Matters.
(a) Each Lender authorizes and directs the Agent to enter into
the Collateral Documents for the benefit of the Lenders. Each
Lender hereby agrees, and each holder of any Revolving Note by the
acceptance thereof will be deemed to agree, that, except as
otherwise set forth herein, any action taken by the Majority Lenders
in accordance with the provisions of this Credit Agreement or any of
the Credit Documents, and the exercise by the Majority Lenders of
the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders. The Agent is hereby authorized on
behalf of all of the Lenders, without the necessity of any notice to
or further consent from any Lender, from time to time prior to an
Event of Default, to take any action with respect to any Collateral
or Collateral Documents which may be necessary to perfect and
maintain the perfection of the Liens upon the Collateral granted
pursuant to the Collateral Documents.
(b) The Lenders hereby authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral (i) with respect to which the sale or
other disposition thereof is expressly permitted hereunder (in which
case the Agent shall release such Lien upon the Borrower's request
therefor), (ii) upon termination of the Commitments and payment and
satisfaction of all of the Obligations at any time arising under or
in respect of this Credit Agreement or the Credit Documents or the
transactions contemplated hereby or thereby and (iii) if approved,
authorized or ratified in writing by the Majority Lenders, unless
such release is required to be approved by all of the Lenders
pursuant to Section 11.11. 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
10.10.
(c) The Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists
or is owned by the Borrower or is cared for, protected or insured or
that the Liens granted to the Agent in or pursuant to any of the
Collateral Documents have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise or to continue exercising at all
or in any manner or under any duty of care, disclosure or fidelity
any of the rights, authorities and powers granted or available to
the Agent in this Section 10.10 or in any of the Collateral
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 the Lenders, except for its gross negligence or
willful misconduct. The Agent agrees to conduct or cause to be
conducted at least one audit of the Collateral during each year that
this Credit Agreement shall remain in effect.
10.11 Actions with Respect to Defaults.
In addition to the Agent's right to take actions on its own accord
as permitted under this Credit Agreement, the Agent shall take such
action with respect to a Default or Event of Default as shall be directed
by the Majority Lenders; provided, that until the Agent shall have
received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable and in the
best interests of the Lenders.
10.12 Delivery of Information.
The Agent shall not be required to deliver to any Lender originals
or copies of any documents, instruments, notices, communications or other
information received by the Agent from the Borrower, any Subsidiary of
the Borrower, the Majority Lenders, any Lender or any other Person under
or in connection with this Credit Agreement or any other Credit Document
except (i) as specifically provided in this Credit Agreement or any other
Credit Document and (ii) as specifically requested from time to time in
writing by any Lender with respect to a specific document, instrument,
notice or other written communication received by and in the possession
of the Agent at the time of receipt of such request and then only in
accordance with such specific request.
ARTICLE 11. MISCELLANEOUS.
11.1 GOVERNING LAW.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS CREDIT
AGREEMENT AND THE REVOLVING NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
11.2 SUBMISSION TO JURISDICTION.
ALL DISPUTES AMONG THE BORROWER AND THE LENDERS (OR THE AGENT ACTING
ON THEIR BEHALF), WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN
CHICAGO, ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE
TAKEN; PROVIDED, HOWEVER, THAT THE AGENT, ON BEHALF OF THE LENDERS, SHALL
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED
AGAINST THE BORROWER OR ITS RESPECTIVE PROPERTIES IN ANY LOCATION
REASONABLY SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO
REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
IN FAVOR OF THE AGENT. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT HAS COMMENCED A
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON FORUM NON CONVENIENS.
11.3 SERVICE OF PROCESS.
BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY PROCESS UPON IT AND,
AS ADDITIONAL SECURITY FOR THE OBLIGATIONS, HEREBY IRREVOCABLY DESIGNATES
AND APPOINTS CT CORPORATION SYSTEM, WITH AN OFFICE ON THE DATE HEREOF AT
000 XXXXX XXXXXXX XXXXXX, XXXXXXX, XXXXXXXX 00000, AND SUCH OTHER PERSONS
AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH IRREVOCABLY AGREE IN
WRITING TO SO SERVE AS ITS AGENT, TO RECEIVE ON ITS BEHALF SERVICE OF ALL
PROCESS ISSUED BY ANY COURT IN ANY LEGAL ACTION OR OTHER PROCEEDING WITH
RESPECT TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT, SUCH
SERVICE BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE
MAILED BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS PROVIDED HEREIN
EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO
MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF
ANY AGENT APPOINTED BY BORROWER REFUSES TO ACCEPT SERVICE, BORROWER
HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT
NOTICE AND EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR SHALL LIMIT THE RIGHT OF
AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS
OF ANY OTHER JURISDICTION.
11.4 JURY TRIAL.
THE BORROWER, THE AGENT AND THE LENDERS EACH HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES WILL BE RESOLVED IN A BENCH
TRIAL.
11.5 LIMITATION OF LIABILITY.
NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY TO THE
BORROWER (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES
SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY
WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS
CREDIT AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT
OR COURT ORDER BINDING ON THE AGENT OR ANY SUCH LENDER, THAT THE LOSSES
WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.
11.6 Delays.
No delay or omission of the Agent or the Lenders to exercise any
right or remedy hereunder shall impair any such right or operate as a
waiver thereof.
11.7 Notices.
Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail,
return receipt requested, or by overnight delivery service, with all
charges prepaid, if to the Agent or any of the Lenders, then to BT
Commercial Corporation, 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Credit Department, if to the Borrower, then to Venture
Stores, Inc. at 0000 Xxxx Xxxxx Xxxx, X'Xxxxxx, Xxxxxxxx 00000-0000,
Attention: Executive Vice President/Finance and Administration, or by
facsimile transmission, promptly confirmed in writing sent by first class
mail, if to the Agent, or any of the Lenders, at (000) 000-0000 and if to
the Borrower at (000) 000-0000. All such notices and correspondence
shall be deemed given (i) if sent by certified or registered mail, three
Business Days after being postmarked, (ii) if sent by overnight delivery
service, when received at the above stated addresses or when delivery is
refused and (iii) if sent by telex or facsimile transmission, when
receipt of such transmission is acknowledged.
11.8 Assignments and Participations.
(a) Borrower Assignment. The Borrower shall have no right to
assign this Credit Agreement, or any rights or obligations
hereunder, without the prior written consent of the Agent and the
Lenders.
(b) Lender Assignments. Each Lender may assign to one or more
banks or other financial institutions all or a portion of its rights
and obligations under this Credit Agreement, the Revolving Notes and
the other Credit Documents, with the consent of the Agent; and upon
execution and delivery to the Agent, for its acceptance and
recording in the Register, of an agreement in substantially the form
of Exhibit H (an "Assignment and Assumption Agreement"), together
with surrender of any Revolving Note or Revolving Notes subject to
such assignment and a processing and recordation fee of $2,500. No
such assignment shall be for less than $10,000,000 of the
Commitments unless it is to another Lender or is an assignment of
all of such Lender's rights and obligations under this Credit
Agreement. (This Section does not apply to branches and Affiliates
of a Lender, it being understood that a Lender may make, carry or
transfer Revolving Loans at or for the account of any of its branch
offices or Affiliates without consent of the Borrower, the Agent or
any other Lender).
(c) Agent's Register. The Agent shall maintain a register of
the names and addresses of the Lenders, their Commitments, and the
principal amount of their Revolving Loans (the "Register") at the
address specified for the Agent in Section 11.7. The Agent shall
also maintain a copy of each Assignment and Assumption Agreement
delivered to and accepted by it and modify the Register to give
effect to each Assignment and Assumption Agreement. Upon its
receipt of each Assignment and Assumption Agreement and surrender of
the affected Revolving Note or Revolving Notes, the Agent will give
prompt notice thereof to the Borrower and deliver to the Borrower a
copy of the Assignment and Assumption Agreement and the surrendered
Revolving Note or Revolving Notes. Within five Business Days after
its receipt of such notice, the Borrower shall execute and deliver
to the Agent a substitute Revolving Note or Revolving Notes to the
order of the assignee in the amount of the Commitment or Commitments
assumed by it and to the assignor in the amount of the Commitment or
Commitments retained by it, if any. Such substitute Revolving Note
or Revolving Notes shall re-evidence the Indebtedness outstanding
under the surrendered Revolving Note or Revolving Notes and shall be
dated as of the Closing Date. The Agent and the Borrower shall be
entitled to rely upon the Register exclusively for purposes of
identifying the Lenders hereunder. The Register shall be available
for inspection by the Borrower and the Lenders (or any of them) at
any reasonable time and from time to time upon reasonable notice to
the Agent.
(d) Lender Participations. Each Lender may sell
participations (without the consent of the Agent, the Borrower or
any other Lender) to one or more parties in or to all or a portion
of its rights and obligations under this Credit Agreement, the
Revolving Notes and the other Credit Documents. Notwithstanding a
Lender's sale of a participation interest, its obligations hereunder
shall remain unchanged. The Borrower, the Agent, and the other
Lenders shall continue to deal solely and directly with such Lender.
No participant shall have rights to approve any amendment or waiver
of this Credit Agreement or any of the other Credit Documents except
to the extent such amendment or waiver would (i) increase the
participant's obligation in respect of the Commitment of the Lender
from whom the participant purchased its participation interest; (ii)
reduce the principal of, or stated rate or amount of interest on,
the Revolving Loans subject to such participation, (iii) postpone
any maturity date fixed for final payment of principal of the
Revolving Loans subject to the participation interest, or (iv)
release any guarantor of the Obligations or all or a substantial
portion of the Collateral, other than when otherwise permitted
hereunder.
11.9 Confidentiality.
(a) The Agent and each Lender agrees that it will use its
reasonable best efforts not to disclose without the prior consent of
the Borrower any information with respect to the Borrower or any of
its Subsidiaries which is furnished pursuant to this Credit
Agreement and which is designated by the Borrower to the Lenders in
writing as confidential (the "Borrower Information"), provided,
that, each Lender may disclose any Borrower Information (i) to its
employees, auditors, or counsel, or to another Lender if the
disclosing Lender or such disclosing Lender's holding or parent
company in its sole discretion determines that any such party should
have access to such information, (ii) as has become generally
available to the public, (iii) as may be required or appropriate in
any report, statement or testimony submitted to any Governmental
Authority having or claiming to have jurisdiction over such Lender,
(iv) as may be required or appropriate in response to any summons or
subpoena or in connection with any litigation, (v) in order to
comply with any Requirement of Law, (vi) to any such prospective or
actual transferee or participant in connection with any contemplated
transfer or participation of any of the Revolving Notes or
Commitments or any interest therein by such Lender and (vii) in the
case of the Agent, information with respect to the Borrower's
availability hereunder, requested from time to time by vendors in
the ordinary course of the Borrower's business.
(b) In the event that the Agent or any Lender is requested or
becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or
similar process) to disclose any of the Borrower Information, such
Person will:
(i) provide the Borrower with prompt written notice
so that the Borrower may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions
of this Section 11.9;
(ii) unless the Borrower waives compliance by such
Person with the provisions of this Section 11.9, make a timely
objection to the request or confirmation to provide such
Borrower Information on the basis that such Borrower
Information is confidential and subject to the agreements
contained in this Section 11.9; and
(iii) take action as is necessary to preserve such
confidentiality, such as seeking a protective order or other
appropriate remedy.
In the event that a protective order or other remedy is not obtained, or
the Borrower waives compliance with the provisions of this Section 11.9,
such party will furnish only that portion of the Borrower Information
which is legally required to be furnished and will exercise such party's
best efforts to obtain reliable assurance that confidential treatment
will be accorded to the Borrower Information.
11.10 Indemnification.
The Borrower hereby indemnifies and agrees to defend and hold
harmless the Agent and each of the Lenders and their respective
directors, officers, agents, employees and counsel from and against any
and all losses, claims, damages, liabilities, deficiencies, judgments or
expenses incurred by any of them (except to the extent that it is finally
judicially determined to have resulted from their own gross negligence or
willful misconduct) arising out of or by reason of (a) any litigation,
investigation, claim or proceeding which arises out of or is in any way
related to (i) this Credit Agreement or the transactions contemplated
hereby, (ii) the issuance of the Letters of Credit, (iii) the failure of
the Issuing Bank to honor a drawing under any Letter of Credit, as a
result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental
Authority, (iv) any actual or proposed use by the Borrower of the
proceeds of the Revolving Loans or (v) the Agent's or the Lenders'
entering into this Credit Agreement, the other Credit Documents or any
other agreements and documents relating hereto, including, without
limitation, amounts paid in settlement, court costs and the fees and
disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection
with any of the foregoing and (b) any remedial or other action taken by
the Borrower or any of the Lenders in connection with compliance by the
Borrower or any of its Subsidiaries, or any of their respective
properties, with any federal, state or local environmental laws, acts,
rules, regulations, orders, directions, ordinances, criteria or
guidelines.
11.11 Amendments and Waivers.
No amendment or waiver of any provision of this Credit Agreement,
including any part of Schedule B, or any other Credit Document shall be
effective unless in writing and signed by the Borrower and Majority
Lenders (or by the Agent on behalf of the Majority Lenders), except that:
(a) the consent of all the Lenders is required to (i) increase
the Commitments, (ii) reduce the principal of, or interest on, the
Revolving Notes, any Letter of Credit reimbursement obligations or
any Fees hereunder (other than Fees that are exclusively for the
account of the Agent), (iii) postpone any date fixed for any payment
in respect of principal of, or interest on, the Revolving Notes, any
Letter of Credit reimbursement obligations or any Fees hereunder,
(iv) change the percentage of the Commitments, or any minimum
requirement necessary for the Lenders or the Majority Lenders to
take any action hereunder, (v) amend or waive this Section 11.11(a),
or change the definition of Majority Lenders or (vi) except as
otherwise expressly provided in this Credit Agreement, and other
than in connection with the financing, refinancing, sale or other
disposition of any asset of the Borrower permitted under this Credit
Agreement, release any Liens in favor of the Lenders on any of the
Collateral; and
(b) the consent of the Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of the
Agent under any Credit Document, in addition to the consent of the
Lenders otherwise required by this Section.
The consent of the Borrower shall not be required for any amendment,
modification or waiver of the provisions of Article 10 (other than
Section 10.9). The Borrower and the Lenders each hereby authorize the
Agent to modify this Credit Agreement by unilaterally amending or
supplementing Annex I to reflect assignments of the Commitments.
Notwithstanding the foregoing, the Borrower may amend Schedule B, Parts
6.1, 6.10, 6.11 and 6.14, without the consent of the Majority Lenders.
11.12 Counterparts and Effectiveness.
This Credit Agreement and any waiver or amendment hereto may be
executed in any number of counterparts and by the different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. This Credit Agreement shall
become effective on the date on which all of the parties hereto shall
have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Agent pursuant to Section 11.7 or,
in the case of the Lenders, shall have given to the Agent written,
telecopied or telex notice (actually received) at such office that the
same has been signed and mailed to it.
11.13 Severability.
In case any provision in or obligation under this Credit Agreement
or the Revolving Notes or the other Credit Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way
be affected or impaired thereby.
11.14 Maximum Rate.
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrower, the Agent
and the Lenders hereby agree that all agreements among them under this
Credit Agreement and the other Credit Documents, whether now existing or
hereafter arising and whether written or oral, are expressly limited so
that in no contingency or event whatsoever shall the amount paid, or
agreed to be paid, to the Agent or any Lender for the use, forbearance,
or detention of the money loaned to the Borrower and evidenced hereby or
thereby or for the performance or payment of any covenant or obligation
contained herein or therein, exceed the Highest Lawful Rate. If due to
any circumstance whatsoever, fulfillment of any provisions of this Credit
Agreement or any of the other Credit Documents at the time performance of
such provision shall be due shall exceed the Highest Lawful Rate, then,
automatically, the obligation to be fulfilled shall be modified or
reduced to the extent necessary to limit such interest to the Highest
Lawful Rate, and if from any such circumstance any Lender should ever
receive anything of value deemed interest by applicable law which would
exceed the Highest Lawful Rate, such excessive interest shall be applied
to the reduction of the principal amount then outstanding hereunder or on
account of any other then outstanding Obligations and not to the payment
of interest, or if such excessive interest exceeds the principal unpaid
balance then outstanding hereunder and such other then outstanding
Obligations, such excess shall be refunded to the Borrower. All sums
paid or agreed to be paid to the Agent or any Lender for the use,
forbearance, or detention of the Obligations and other Indebtedness of
the Borrower to the Agent or any Lender, to the extent permitted by
applicable law, shall be amortized, prorated, allocated and spread
throughout the full term of such Indebtedness, until payment in full
thereof, so that the actual rate of interest on account of all such
Indebtedness does not exceed the Highest Lawful Rate throughout the
entire term of such Indebtedness. The terms and provisions of this
Section shall control over every other provision of this Credit
Agreement, the other Credit Documents, and all agreements among the
Borrower, the Agent and the Lenders.
11.15 Entire Agreement; Successors and Assigns.
This Credit Agreement and the other Credit Documents constitute the
entire agreement among the Borrower, the Agent and the Lenders, supersede
any prior agreements among them, and shall bind and benefit each of such
Persons and their respective successors and permitted assigns.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed and delivered in Chicago, Illinois by their
proper and duly authorized officers as of the date first set forth above.
BORROWER:
VENTURE STORES, INC.
By: /s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
Executive Vice President/
Finance and Administration
AGENT:
BT COMMERCIAL CORPORATION, as Agent
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Senior Vice President
LENDERS:
BT COMMERCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Senior Vice President
ANNEX I
TO
CREDIT AGREEMENT
DATED AS OF APRIL 8, 1997
LIST OF LENDERS; COMMITMENT AMOUNTS;
AND APPLICABLE LENDING OFFICES
1. BT COMMERCIAL CORPORATION
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Commitment Amount: $250,000,000
Domestic Lending Office: 000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
LIBOR Lending Office: 000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
