AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement") is made and
entered into as of April 16, 1999 between SHOE CARNIVAL, INC., an Indiana
corporation ("Borrower"), and MERCANTILE BANK NATIONAL ASSOCIATION, a national
banking association ("Mercantile"), FIRST UNION NATIONAL BANK, a national bank
("First Union"), and OLD NATIONAL BANK, a national bank ("Old National," and
collectively with Mercantile and First Union referred to herein as "Banks"), and
MERCANTILE BANK NATIONAL ASSOCIATION, a national banking association, as agent
for the Banks (in such capacity "Agent"), and amends and restates a prior Credit
Agreement dated as of November 15, 1994 made by and among Borrower, Mercantile,
▇▇▇▇▇▇ Trust and Savings Bank and Firstar Bank Milwaukee, N. A.
The parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS
SECTION 1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Agent" means Mercantile Bank National Association in its capacity as agent
for the Banks hereunder, and its successors and assigns in such capacity.
"Attorneys' Fees" shall mean the reasonable value of the services (and
costs, charges and expenses related thereto) of the attorneys (and all
paralegals, secretaries, accountants and other staff employed by such attorneys)
employed by Agent or Banks (including, without limitation, attorneys and
paralegals who are employees of Agent or Banks) from time to time (i) in
connection with the negotiation, preparation, execution, delivery,
administration and enforcement of this Agreement and/or any of the other
transaction documents, (ii) to represent Agent or Banks in any litigation,
contest, dispute, suit or proceeding, or to commence, defend or intervene in any
litigation, contest, dispute, suit or proceeding, or to file any petition,
complaint, answer, motion or other pleading or to take any other action in or
with respect to any litigation, contest, dispute, suit or proceeding (whether
instituted by Agent, any Bank, Borrower or any other Person and whether in
bankruptcy or otherwise) in any way or respect relating to this Agreement or any
of the other transaction documents, Borrower or any other Obligor, and (iii) to
enforce any of Banks' rights to collect any of Borrower's Obligations.
"Banks" mean Mercantile Bank National Association and its successors and
assigns, Old National Bank and its successors and assigns, and First Union
National Bank and its successors and assigns.
"Borrower" means Shoe Carnival, Inc., an Indiana corporation, and its
successors and assigns.
"Borrowing" means a borrowing hereunder consisting of Loans made to
Borrower pursuant to the terms hereof or Letters of Credit issued for the
account of Borrower pursuant to the terms hereof.
"Borrower's Obligations" shall mean any and all indebtedness (principal,
interest, fees and other amounts), liabilities and obligations of Borrower to
each of the Banks under the Notes, this Agreement, any of the Reimbursement
Agreements, any of the other transaction documents or any other agreement,
document or instrument heretofore, now or hereafter executed and delivered by
Borrower to any of the Banks, in each case whether now existing or hereafter
arising, absolute or contingent, joint and/or several, secured or unsecured,
direct or indirect, expressed or implied in law, contractual or tortious,
liquidated or unliquidated, at law or in equity, or otherwise, and whether
created directly or acquired by such Bank by assignment or otherwise, and any
and all costs of collection and/or Attorneys' Fees incurred or to be incurred in
connection therewith.
"Borrowing Base" shall have the meaning ascribed thereto in Section 2.1(b).
"Borrowing Base Certificate" shall have the meaning ascribed thereto in
Section 2.1(c).
"Capital Expenditure" shall mean any expenditure which, in accordance with
generally accepted accounting principles consistently applied, is or should be
capitalized on the balance sheet of the Person making the same.
"Capitalized Lease" shall mean any lease which, in accordance with
generally accepted accounting principles consistently applied, is or should be
capitalized on the balance sheet of the lessee.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed to also refer to any successor sections.
"Commitment" means Forty-Five Million Dollars ($45,000,000.00), and with
respect to each Bank, the amount specified as such Bank's Commitment and set
forth opposite the name of such Bank on the signature pages hereof.
"Debt" of any Person means at any date, without duplication, to the extent
obligations and liabilities of such type are required to be disclosed in such
Person's financial statements according to generally accepted accounting
principles, consistently applied, (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or services, (iv) all
obligations of such Person as lessee under leases capitalized or required to be
capitalized in accordance with generally accepted accounting principles,
consistently applied, but excluding any obligations as lessee under any
operating leases, (v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person (provided that for
purposes of this clause (v) the amount of any such Debt shall be deemed not to
exceed the higher of the market value or the net book value of such asset), (vi)
obligations under any standby letters of credit, and (vii) all other obligations
and liabilities required to be disclosed on such Person's financial statements
according to generally accepted accounting principles, consistently applied.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Distribution" in respect of any corporation shall mean:
(i) Dividends or other distributions on capital stock of the
corporation; and
(ii) The redemption, repurchase or other acquisition of such stock or
of warrants, rights or other options to purchase such stock (except when
solely in exchange for such stock).
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"Domestic Business Day" means any day except a Saturday, Sunday or legal
holiday on which banks are authorized to or required to close in St. Louis,
Missouri, Evansville, Indiana or Jacksonville, Florida.
"Effective Date" means the date on which this Agreement shall
become effective in accordance with Section 9.17.
"Eligible Inventory" shall mean that portion of Borrower's inventory which:
(a) consists of finished goods less than one year old; (b) does not violate the
negative covenants and provisions of this Agreement and does satisfy the
positive covenants and provisions of this Agreement; (c) is not obsolete; and
(d) Agent has in good faith determined, in accordance with Agent's customary
business practices, is not unacceptable due to age, type, category and/or
quantity. Borrower represents and warrants to, and covenants and agrees with
Agent and Banks that the value (determined at the lower of cost, excluding any
capitalized overhead cost allocated to any such inventory, or market) of
Eligible Inventory shall at all times hereafter be at least Two Hundred Percent
(200%) of the then principal portion of Borrower's Obligations represented by
Loans made by Banks to Borrower and Letters of Credit issued by Mercantile for
the account of Borrower, pursuant to Section 2.1(a) hereof.
"Environmental Laws" shall mean the Resource Conservation and Recovery Act
of 1987, the Comprehensive Environmental Response, Compensation and Liability
Act, any so-called "Superfund" or "Superlien" law, the Toxic Substances Control
Act and any other Federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing liability or
standards of conduct concerning any Hazardous Materials or any other hazardous,
toxic or dangerous waste, substance or constituent or other substance, whether
solid, liquid or gas, as now or at any time hereafter in effect.
"Environmental Lien" shall have the meaning ascribed thereto in Section
5.1(i)(vii).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that is,
along with Borrower, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b) and
414(c), respectively, of the Code.
"Eurocurrency Business Day" means any Domestic Business Day on which
commercial banks are open for international business in London.
"Eurocurrency Loans" means any loans bearing interest at the rates set
forth in Section 2.5(b).
"Eurocurrency Margin" has the meaning set forth in Section 2.5(b).
"Event of Default" has the meaning set forth in Section 6.1.
"First Union" means First Union National Bank and its successors and
assigns.
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"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing any Debt of any other Person or in any manner providing
for the payment of any Debt of any other Person or otherwise protecting the
holder of such Debt against loss (whether by agreement to keep-well, to purchase
assets, goods, securities or services, or to take-or-pay or otherwise); provided
that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business. The term "Guarantee" used as a verb has a
correlative meaning.
"Hazardous Materials" shall mean any hazardous substance or pollutant or
contaminant defined as such in (or for the purposes of) any Environmental Law
and shall include, without limitation, petroleum, including crude oil or any
fraction thereof which is liquid at standard conditions of temperature or
pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute), any
radioactive material, including, without limitation, any source, special nuclear
or byproduct material as defined in 42 U.S.C. Section 2011 et seq., as amended
or hereafter amended, and asbestos in any form or condition.
"Interest Period" means with respect to each Eurocurrency Loan;
(i) Initially, the period commencing on the date of such Borrowing and
ending 1, 2, 3 or 6 months thereafter, as Borrower may elect in the
applicable Notice of Borrowing; and
(ii) Thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Borrowing and ending 1, 2, 3
or 6 months thereafter, as Borrower may elect pursuant to Section 2.4;
provided that:
(a) Subject to clause (b) below, any Interest Period which would
otherwise end on a day which is not a Eurocurrency Business Day shall be
extended to the next succeeding Eurocurrency Business Day, except that if
the next succeeding Eurocurrency Business Day falls within a different
calendar month, the Interest Period shall end on the next preceding
Eurocurrency Business Day; and
(b) Any Interest Period which includes March 31, 2001 shall end on
such date.
"Letter(s) of Credit" shall mean each standby Letter of Credit or
commercial Letter of Credit issued by Agent pursuant to Section 2.1.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, Borrower shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loan" means a Prime Loan or a Eurocurrency Loan and "Loans" means any or
all of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.5(b).
"Majority Banks" means Banks holding 66-2/3% of the then available
Commitments.
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"Mercantile" means Mercantile Bank National Association and its successors
and assigns.
"Multiemployer Plan" shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of Borrower or any
ERISA Affiliate.
"Net Worth" of any Person means, at any date, the stockholders' equity of
such Person determined in accordance with generally accepted accounting
principles, consistently applied.
"Notes" mean the amended and restated promissory notes of Borrower in the
form of Exhibits A, B and C attached hereto evidencing the obligation of
Borrower to repay the Loans and amounts outstanding under any Reimbursement
Agreements.
"Notice of Borrowing" has the meaning set forth in Section 2.2A.
"Obligor" shall mean Borrower and each other Person who is or shall at any
time hereafter become primarily or secondarily liable on any of Borrower's
Obligations or who grants any Bank a Lien upon any of the Property or assets of
such Person as security for any of Borrower's Obligations.
"Occupational Safety and Health Laws" shall mean the Occupational Safety
and Health Act of 1970, as amended, and any other Federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to or imposing liability or standards of conduct concerning employee
health and/or safety, as now or at any time hereafter in effect.
"Old National" means Old National Bank and its successors and assigns.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" shall mean a "pension plan," as such term is defined in
Section 3(2) of ERISA, which is established or maintained by Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.
"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Prime Loan" means a Loan bearing interest at the Prime Rate minus One-Half
of One Percent (0.50%) per annum pursuant to Section 2.5(a) or Article 7.
"Prime Rate" shall mean the interest rate announced from time to time by
Agent as its "prime rate" on commercial loans, which rate shall fluctuate as and
when said "prime rate" shall change, and which rate may not be Agent's best or
lowest rate or a favored rate, and any statement, representation or warranty in
that regard or to that respect is expressly disclaimed by Agent and Banks.
"Pro Rata Share" shall mean the pro rata share of loans to be made by each
of the Banks hereunder or of other amounts to be shared between Banks, which
shall be 38.89% for Mercantile, 22.22% for Old National, and 38.89% for First
Union.
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"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible. Properties shall
mean the plural of Property. For purposes of this Agreement, Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security purposes.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as amended.
"Reimbursement Agreement(s)" shall mean each of those certain applications
for standby letter of credit and reimbursement agreements and applications for
commercial letters of credit and reimbursement agreements made from time to time
by Borrower as account party, with Agent as issuer, of standby or commercial
Letters of Credit for the account of Borrower, which Reimbursement Agreements,
along with the Notes, shall evidence Borrower's obligation to reimburse Banks
for their respective Pro Rata Shares of any draws made under any of the Letters
of Credit, together with any accrued interest, fees and other amounts which may
from time to time be due thereon.
"Related Party" shall mean any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by or is under
common control with, Borrower, (ii) which beneficially owns or holds twenty-five
percent (25%) or more of the equity interest of Borrower or (iii) twenty-five
percent (25%) or more of the equity interest of which is beneficially owned or
held by Borrower. The term "control" shall mean the possession, directly or
indirectly, of the power to vote twenty-five percent (25%) or more of the
capital stock of any Person or the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Reportable Event" shall have the meaning given to such term in ERISA.
"Reserve Percentage" shall mean for any day, with respect to a Eurocurrency
Loan, the highest percentage (including any supplemental percentage applied on a
marginal basis or any other reserve requirement having a similar effect),
expressed as a decimal, which is applicable to any of the Banks and is in effect
on such day, as prescribed by the Board of Governors of the Federal Reserve
System under Regulation D (or any other then applicable regulation of the Board
of Governors) with respect to "Eurocurrency Liabilities".
"Subsidiary" means with respect to any Person any corporation of which more
than 50% of the issued and outstanding stock entitled to vote for the election
of directors is at the time owned directly or indirectly by such Person.
"Term" means the period from the Effective Date up to and including March
31, 2001; except that (i) all, but not less than all, of the Banks may, in their
sole discretion, extend such Term for additional one-year periods by notifying
Borrower of each such extension at least 12 months prior to the expiration of
the then current Term end of their intention to extend the Term by an additional
year; and (ii) Agent may terminate Banks' obligations hereunder at any time
prior to such stated maturity date or any extension thereof pursuant to Article
6 herein.
"Year 2000 Compliant" shall mean, with respect to any Person, that all
software, embedded microchips and/or other computer and/or processing
capabilities utilized by such Person, and/or included in any software, products,
goods and/or services sold and/or leased by such Person, are able to correctly
and properly recognize, interpret, process, calculate, compare, sequence and
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manipulate data and date-sensitive functions on and involving all calendar dates
(including, without limitation, dates in and after the year 2000).
SECTION 1.2 Accounting Terms and Determinations. Except as otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes approved by Borrower's independent
public accountants) with the most recent audited financial statements of
Borrower delivered to Banks.
ARTICLE 2 - THE CREDITS
SECTION 2.1 Loans and Letters of Credit.
(a) During the Term hereof, Banks agree, on the terms and conditions set
forth in this Agreement, to lend to Borrower from time to time their Pro Rata
Shares of Loans requested by Borrower, and Agent further agrees, subject to the
terms and conditions of this Agreement and of the applicable Reimbursement
Agreement, to issue its Letters of Credit for the account of Borrower upon
Borrower's application therefor, and each Bank agrees to accept a risk
participation in an amount equal to its Pro Rata Share of the from time to time
maximum outstanding amount of each such Letter of Credit issued under this
Section 2.1(a) and in Borrower's reimbursement obligation therefor and any
guaranties or other collateral security therefor. The aggregate principal amount
of all Loans at any one time outstanding under this Section 2.1(a) shall not
exceed the lesser of (i) the amount of the Commitment minus the face amount of
all Letters of Credit then outstanding under this Section 2.1(a), or (ii) the
Borrowing Base; provided, however, that no Bank shall be required to advance any
Loan and Agent shall not issue any Letter of Credit requested by Borrower
hereunder which, when added to the principal amount of such Bank's then
outstanding Loans and its risk participation in the then outstanding Letters of
Credit under this Section 2.1(a), would exceed the amount of such Bank's
Commitment. Borrower may borrow under this Section, prepay under Section 2.8 and
reborrow at any time during the Term hereof under this Section subject to the
terms of this Agreement. The failure of any Bank to advance any requested Loan
under this Agreement shall not release any other Bank from its obligation to
make any such Loan as provided herein.
(b) For purposes of computing the amount of availability of Loans under the
Banks' Commitment, the Borrowing Base shall mean an amount equal to Fifty
Percent (50%) of the value of Eligible Inventory of Borrower (the "Borrowing
Base").
(c) Borrower shall deliver to Agent on the date of execution hereof (with
respect to the fiscal month ended February 27, 1999) and on the thirtieth (30th)
day following the end of each fiscal month thereafter commencing with the fiscal
month ending March 31, 1999, a borrowing base certificate in the form of Exhibit
E attached hereto and incorporated herein by reference (a "Borrowing Base
Certificate") setting forth:
(i) The Borrowing Base and its components as of the end of the
immediately preceding month;
(ii) The aggregate principal amount of all outstanding Loans; and
(iii) The difference, if any, between the Borrowing Base and the
aggregate principal amount of all outstanding Loans.
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The Borrowing Base shown in such Borrowing Base Certificate shall be and remain
the Borrowing Base hereunder until the next Borrowing Base Certificate is
delivered to Banks, at which time the Borrowing Base shall be the amount shown
in such subsequent Borrowing Base Certificate. Each Borrowing Base Certificate
shall be certified (subject to normal year-end adjustments) as to truth and
accuracy by the President, principal financial officer or principal accounting
officer of Borrower.
(d) If at any time the Borrowing Base should be less than the aggregate
principal amount of all Loans outstanding under Section 2.1(a), whether as a
result of a reduction in the Borrowing Base or otherwise, Borrower shall be
automatically required (without demand or notice of any kind by Banks, all of
which are hereby expressly waived by Borrower) to immediately repay the Loans in
an amount sufficient to reduce such aggregate principal amount of Loans
outstanding to the amount of the then available Borrowing Base.
SECTION 2.2 Method of Borrowing.
A. Loans.
(a) Borrower shall give notice (a "Notice of Borrowing") to Agent (1) by
12:00 noon (St. Louis time) on the day of each Prime Loan, and (2) by 10:00 a.m.
(St. Louis time) at least two Eurocurrency Business Days before each
Eurocurrency Loan, specifying:
(i) The date of such Loan, which shall be a Domestic Business Day in
the case of a Prime Loan or a Eurocurrency Business Day in the case of a
Eurocurrency Loan,
(ii) The aggregate principal amount of such Loan, provided that if a
Prime Loan is requested that such Loan shall be in a minimum amount of
$100,000.00 or more with any greater amount being in $25,000.00 increments,
and if such Loan is a Eurocurrency Loan, it shall be in a minimum amount of
$1,000,000.00 or more with any such greater amount being in $100,000.00
increments,
(iii) Whether such Loan is to be a Prime Loan or a Eurocurrency Loan,
and
(iv) In the case of a Eurocurrency Loan, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b) A Notice of Borrowing shall not be required in connection with a Prime
Loan pursuant to Section 7.1. A Notice of Borrowing for Eurocurrency Loans must
be given in writing in a form substantially similar to Exhibit F attached
hereto; a Notice of Borrowing for a Prime Loan may be oral or in writing, but if
oral, shall be confirmed in writing to Bank within five (5) days. A Notice of
Borrowing shall not be revocable by Borrower. Upon receipt of a Notice of
Borrowing, Agent shall promptly notify each Bank of the contents thereof and of
such Bank's Pro Rata Share of such Loan.
(c) Not later than 3:00 p.m. (St. Louis time) on the date of each Loan
during the Term hereof, each Bank shall (except as provided in subsections (d)
or (e) of this Section) make available its Pro Rata Share of such Loan, in
federal or other funds immediately available in St. Louis, Missouri, to Agent at
its address specified on the signature pages hereof. Unless any Bank shall
notify Agent prior to 2:00 p.m. (St. Louis time) on the date any Loan is to be
made to Borrower hereunder that such Bank shall not advance its Pro Rata Share
of such Loan, Agent may presume that each such Bank has advanced its Pro Rata
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Share of such Loan as provided hereunder and may rely on such presumption in
advancing the proceeds of such Loan to Borrower. Unless Agent determines that
any applicable condition specified in Article 3 has not been satisfied, Agent
will make available to Borrower such Loan in federal or other funds immediately
available in St. Louis, Missouri, by crediting such funds to a demand deposit
account (or such other account mutually agreed upon in writing between Agent and
Borrower) of Borrower with Mercantile. In the event any Bank shall fail to
deliver its Pro Rata Share of the proceeds of any Loan requested hereunder by
Borrower on or before 3:00 p.m. (St. Louis time) on the date such Loan is to be
made, then such Bank agrees to pay to Agent for its own account interest on such
Bank's Pro Rata Share of such Loan from the date such Loan was made to Borrower
hereunder to the date such Bank actually delivers its Pro Rata Share of the
proceeds of such Loan to Agent at the then applicable federal funds rate as
determined by Agent.
(d) Agent shall give each Bank prompt notice of each payment by Borrower
and each request by Borrower for an advance, and for payments, and Agent shall
transfer to each Bank in immediately available funds such Bank's Pro Rata Share
of such payment, or if an advance, each Bank shall transfer to Agent in
immediately available funds its Pro Rata Share of such advance, which funds
shall be received by such party no later than 3:00 p.m. (St. Louis time) on the
date of such advance or payment or two (2) hours after a Bank receives such
notice from Agent (whichever occurs later). In no event shall a Bank be
obligated to make any such transfer to Agent which, when added to all other
outstanding advances funded by such Bank plus such Bank's Pro Rata Share of the
then undrawn amount of all Letters of Credit issued pursuant to Section 2.1(a),
will exceed such Bank's Commitment.
(e) If Borrower requests a Loan hereunder on a day on which Borrower is
required to or has elected to repay all or any part of an outstanding Loan or
repay a draw under any Letter of Credit, each Bank shall apply the proceeds of
such requested Loan to make such repayment and only an amount equal to the
difference (if any) between the amount being borrowed and the amount being
repaid shall be made available by Banks to Agent for delivery to Borrower as
provided in subsection (c) of this Section.
B. Letters of Credit. Borrower may request Agent to issue either standby or
commercial Letters of Credit for the account of Borrower under Section 2.1(a)
above only pursuant to standby Letter of Credit applications and reimbursement
agreements or commercial Letter of Credit applications and reimbursement
agreements from time to time executed by Borrower in favor of Agent in the form
of Exhibit G or Exhibit H attached hereto. Agent shall from time to time issue
such requested Letters of Credit in accordance with the terms and provisions of
this Agreement and the applicable Reimbursement Agreement. Such Letter of Credit
Reimbursement Agreements, duly executed by an authorized officer of Borrower,
shall be delivered to Agent on the second Business Day prior to the date of
issuance of the requested Letter of Credit. Upon issuance of each such Letter of
Credit, each Bank shall be deemed to have purchased a risk participation in such
Letter of Credit and in Borrower's reimbursement obligations therefor, together
with any guaranties and collateral security therefor, in an amount equal to its
Pro Rata Share of the face amount of such Letter of Credit, and upon payment of
any draw under any such Letter of Credit by Agent, each Bank agrees to pay to
Agent its Pro Rata Share of such draw to the extent such draw is not promptly
reimbursed by the Borrower pursuant to its obligations under this Agreement and
the applicable Reimbursement Agreement. Borrower's obligation to reimburse Banks
for the face amount of such Letters of Credit shall be evidenced by the relevant
Letter of Credit Reimbursement Agreements as well as by the Notes, and shall
bear interest, payable on demand, at the interest rate per annum equal to the
Prime Rate minus One-Half of One Percent (0.50%). Banks shall have the right to
charge Borrower's accounts with the amount of any and all funds actually
advanced by Banks in satisfaction of Borrower's reimbursement obligations. Any
debit which may exist in Borrower's account by virtue of the foregoing shall be
deemed to be a Loan by Banks to Borrower pursuant to the provisions of Section
2.1(a) hereof. No Letter of Credit issued hereunder shall have a final
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expiration date of later than twelve months from its date of issuance, and
Borrower agrees that upon the expiration of the Term of this Agreement, it shall
pledge and deliver to Agent for the benefit of Banks, cash, certificates of
deposit or other cash collateral acceptable to Agent and Banks or a standby
letter of credit in a form acceptable to Agent and Banks and issued by a
domestic bank acceptable to Agent and Banks in an amount equal to the then
undrawn face amount of all outstanding Letters of Credit, as collateral security
for Borrower's reimbursement obligations for such Letters of Credit.
In addition to any other fees provided under any applicable Reimbursement
Agreement, Borrower agrees to pay Agent for the benefit of Banks in respect of
each commercial Letter of Credit issued by Agent at Borrower's request, a
quarterly commercial letter of credit fee equal to seven-eighths of one percent
(7/8%) per annum of the sum of the daily undrawn face amounts of all commercial
Letters of Credit outstanding during such quarter divided by the number of days
in such quarter and multiplied by a fraction with a numerator equal to the
number of days in such quarter and a denominator of 360. Such commercial letter
of credit fee shall be payable quarterly in arrears on the last day of each
calendar quarter during the Term hereof. Agent shall retain one-fifth of each
such quarterly commercial letter of credit fee for its own account as issuer of
the commercial Letters of Credit, and the remainder of each such quarterly
commercial letter of credit fee shall be distributed by Agent to the Banks in
accordance with their Pro Rata Shares of the risk thereunder. Borrower further
agrees to pay Agent upon issuance in respect of each standby Letter of Credit
issued by Agent at Borrower's request, a nonrefundable letter of credit
commission equal to one and one-half percent (1-1/2%) per annum of the face
amount of such standby Letter of Credit based upon a 360 day year. Agent shall
retain one-fifth of each such letter of credit commission for its own account as
issuer of the standby Letter of Credit, and the remainder of such Letter of
Credit commission shall be distributed by Agent to the Banks in accordance with
their Pro Rata Shares of the risk thereunder. Subject to any contrary provisions
in any applicable Reimbursement Agreement, Borrower agrees to pay Agent, for its
own account, such additional documentary, issuance, amendment and other fees in
respect of each Letter of Credit and any draft presented for payment or
acceptance in respect thereof as Agent customarily charges in its Letter of
Credit business as from time to time amended by Agent.
SECTION 2.3 Notes. The Loans of each Bank to Borrower and advances by each
Bank with respect to its participation in the draws under any Letters of Credit
issued by Agent hereunder shall be evidenced, respectively, by a Note payable to
the order of such Bank, which shall be in the form of Exhibit A, B or C hereto.
Each Bank may record, and prior to any transfer of its Note shall endorse on the
schedules forming a part thereof, appropriate notations to evidence the date and
amount of each Loan or its advance of any unreimbursed Letter of Credit draw and
the date and amount of each payment of principal made by Borrower with respect
thereto. Each Bank is hereby irrevocably authorized by Borrower so to endorse
its Note and to attach to and make a part of any such Note a continuation of any
such schedule as and when required; provided, however that the obligation of
Borrower to repay each Loan and to reimburse Banks for draws under the Letters
of Credit shall be absolute and unconditional, notwithstanding any failure of
any Bank to endorse or any mistake by any Bank in connection with endorsement on
the schedules attached to its Note. The books and records of the Banks
(including without limitation the schedules attached to the Notes) showing the
account between Banks and Borrower shall be admissible in evidence in any action
or proceeding and shall constitute prima facie proof of the items therein set
forth.
SECTION 2.4 Duration of Interest Periods and Selection of Interest Rates.
(a) The duration of the initial Interest Period for each Eurocurrency Loan
shall be as specified in the applicable Notice of Borrowing. Borrower shall
elect the duration of each subsequent Interest Period applicable to such
Eurocurrency Loan and the interest rate and currency to be applicable during
such subsequent Interest Period (and Borrower shall have the option, in the case
10
of any Prime Loan, to elect that such Loan become a Eurocurrency Loan specifying
the Interest Period and currency to be applicable thereto), by giving written
notice of such election to Agent (i) by 12:00 noon (St. Louis time) on the day
of, in the case of the election of a Prime Loan, or (ii) by 10:00 a.m. (St.
Louis time) at least two Eurocurrency Business Days before, in the case of the
election of a Eurocurrency Loan, the end of the immediately preceding Interest
Period applicable thereto, if any.
(b) If in respect of any Eurocurrency Loan or part thereof, Borrower fails
to give a notice in accordance with Section 2.4(a) prior to the end of any
Interest Period relating thereto, such Loan shall be converted to a Prime Loan
at the end of such Interest Period.
(c) Notwithstanding the foregoing, the duration of each Interest Period
shall be subject to the provisions of the definition of Interest Period.
SECTION 2.5 Interest Rates.
(a) Each Prime Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made until it becomes due or is
repaid, at a rate per annum equal to the Prime Rate (which rate shall fluctuate
as and when the Prime Rate shall change) minus One-Half of One Percent (0.50%).
Such interest shall be payable quarterly in arrears on the last day of each
calendar quarter, commencing with the quarter ending on June 30, 1999, and at
maturity. Any overdue principal of and, to the extent permitted by law, overdue
interest on, any Prime Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of Two and One-Half Percent
(2.50%) plus the otherwise applicable rate for such day.
(b) Each Eurocurrency Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period applicable thereto at a rate per annum
equal to the sum of the Eurocurrency Margin plus the applicable London Interbank
Offered Rate. Except in the case of an acceleration of payment by Agent under
Section 6.1 (when interest shall be paid with the principal amount repaid),
interest shall be payable for each Interest Period on the last day thereof,
unless the duration of the applicable Interest Period exceeds three months, in
which case such interest shall be payable on the last day of the third month of
such Interest Period and on the last day of such Interest Period.
"Eurocurrency Margin" applicable to any Interest Period means Three-Fourths
of One Percent (0.75%) for any Interest Period commencing prior to the date upon
which Borrower delivers to Agent its fiscal quarter-end financial statements as
required under Section 5.1(a)(iii) for the fiscal quarter ending May 1, 1999,
and for any Interest Period commencing after delivery of Borrower's May 1, 1999
quarter-end financial statements, and each subsequent quarter-end and year-end
financial statements, shall be determined as follows: (i) One and One-Half
Percent (1.50%) for any Interest Period commencing after delivery of Borrower's
then most recent quarter-end or fiscal year-end financial statements delivered
to Banks pursuant to Sections 5.1(a)(i) or (iii), which financial statements
disclose the Borrower's ratio of Funded Debt to EBITDA (as defined below) as of
the end of the immediately preceding fiscal quarter was greater than or equal to
1.50 to 1.0; (ii) One and One-Fourth Percent (1.25%) for any Interest Period
commencing after delivery of Borrower's then most recent quarter-end or fiscal
year-end financial statements delivered to Banks pursuant to Sections 5.1(a)(i)
or (iii), which financial statements disclose that Borrower's ratio of Funded
Debt to EBITDA as of the end of the immediately preceding fiscal quarter was
less than 1.50 to 1.0 but greater than or equal to 1.25 to 1.0; (iii) One
Percent (1.00%) for any Interest Period commencing after delivery of Borrower's
then most recent quarter-end or fiscal year-end financial statements delivered
to Banks pursuant to Sections 5.1(a)(i) or (iii), which financial statements
disclose that Borrower's ratio of Funded Debt to EBITDA as of the end of the
immediately preceding fiscal quarter was less than 1.25 to 1.0 but greater than
or equal to 1.00 to 1.0; and (iv) Three-Fourths of One Percent (0.75%) for any
11
Interest Period commencing after delivery of Borrower's then most recent
quarter-end or fiscal year-end financial statements delivered to Banks pursuant
to Section 5.1(a)(i) or (iii), which financial statements disclose that
Borrower's ratio of Funded Debt to EBITDA as of the end of the immediately
preceding fiscal quarter was less than 1.00 to 1.0.
As used herein, the term "Funded Debt" at any date shall mean all Indebtedness
of Borrower for borrowed money as of such date, including, but not limited to,
all liabilities of Borrower under any Capitalized Leases. As used herein, the
term "EBITDA" as of any date shall mean Borrower's net income before taxes, plus
interest expense, plus depreciation, plus amortization, as determined in
accordance with generally accepted accounting principles consistently applied,
for that portion of Borrower's fiscal year to date as the date of such
calculation, annualized for a full fiscal year (i.e. multiplied by 365 and
divided by the number of days in the fiscal year to date period for which such
actual EBITDA amount has been calculated).
The "London Interbank Offered Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ LIBOR-BR ]*
LIBOR = [---------- ]
[ 1.00 - RP ]
LIBOR = London Interbank Offered Rate
LIBOR-BR = LIBOR Base Rate
RP = Reserve Percentage
The term "LIBOR Base Rate" shall mean, with respect to the applicable
Interest Period, the rate per annum of interest determined by Agent to be the
arithmetic average of the respective average rates per annum at which deposits
in U.S. dollars are offered to Agent in the London interbank market for
Eurocurrency deposits by two (2) Eurocurrency dealers of recognized standing,
selected by Agent in its sole discretion, at approximately 10:00 a.m. St. Louis
time (or as soon thereafter as practicable), two (2) Eurocurrency Business Days
before the first day of such Interest Period for a number of days comparable to
the number of days in such Interest Period and in an amount comparable to the
amount of the applicable Eurocurrency Loan. Any overdue principal of and, to the
extent permitted by law, overdue interest on, any Eurocurrency Loan shall bear
interest, payable on demand, for each day until paid, at a rate per annum equal
to the sum of Two and One-Half Percent (2.50%) plus the rate applicable to Prime
Loans for such day.
(c) Agent shall determine each interest rate applicable to the Loans as
provided above. Agent shall give prompt notice to Borrower by telephone,
telecopy, telex or cable of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
SECTION 2.6 Commitment Fee. Borrower shall pay to Agent for the benefit of
Banks a nonrefundable commitment fee equal to either of the following as elected
by Borrower in a written notice to Agent delivered on or before July 1 and
January 1 of each year for determination of the commitment fee to be paid during
the following six months:
(a) Three-Tenths of One Percent (.30%) per annum times the average daily
difference between (i) the Commitment, and (ii) the principal amount of all
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Loans plus the undrawn face amount of all Letters of Credit outstanding as of
each such day under Section 2.1(a) during such period, or
(b) Fifteen-Hundredths of One Percent (0.15%) per annum times the amount of
the Commitment on each such day during such period.
Said fee, whether calculated under either clause (a) or clause (b) above, shall
be payable quarterly in arrears, on each March 31, June 30, September 30 and
December 31 during the Term hereof, and on the last day of the Term hereof. Said
fee shall be calculated under clause (b) for the period ending June 30, 1999.
Upon Agent's receipt of the Commitment Fee payable under this Section 2.6, Agent
shall promptly deliver to each Bank its Pro Rata Share of such Commitment Fee
actually received by Agent.
SECTION 2.7 Termination or Reduction of Commitment. Borrower may, by thirty
(30) days' prior written notice to Agent, which notice Agent shall promptly
deliver to Banks, terminate entirely or proportionately reduce from time to time
by an aggregate amount of $1,000,000.00 or any larger multiple of $1,000,000.00,
the unused portion of the Commitment; provided, however, that (i) at no time
shall the Commitment be reduced to a figure less than the total of the
outstanding principal amount of all Loans plus the face amount of all Letters of
Credit, (ii) at no time shall the Commitment be reduced to a figure less than
the total of the outstanding principal amount of all Loans plus the face amount
of all Letters of Credit outstanding under Section 2.1(a), and (iii) at no time
shall the Commitment be reduced to a figure greater than zero but less than
$1,000,000.00. The respective Commitments of each of the Banks shall be reduced
by such Bank's Pro Rata Share of the aggregate reduction made by Borrower. Any
reduction of any Commitment by Borrower under this Section 2.7 shall be
irrevocable, and in the event any such Commitment reduction requires the
repayment of any Eurocurrency Loan prior to the end of its then current Interest
Period, Borrower agrees to pay with respect to such Loan any amounts required
under Section 2.10 hereunder in addition to the principal and interest being
repaid on such Eurocurrency Loan.
SECTION 2.8 Payments Prior to Maturity.
(a) Borrower may, upon notice to Agent specifying that it is paying its
Prime Loans, pay without penalty or premium its Prime Loans in whole or in part
at any time, or from time to time.
(b) Borrower may, upon at least two Eurocurrency Business Days' notice to
Agent, in the case of Eurocurrency Loans, pay without penalty or premium on the
last day of any Interest Period its Eurocurrency Loans to which such Interest
Period applies, in whole, or in part, by paying the principal amount to be paid
together with accrued interest thereon to the date of payment. A notice of
payment given to Agent pursuant to this subsection (b) shall not thereafter be
revocable by Borrower. Borrower shall not be permitted to prepay any
Eurocurrency Loan on any day other than the last day of an Interest Period,
provided, however, that in the event any payment of principal on any
Eurocurrency Loan is made on a day prior to the last day in the applicable
Interest Period, Borrower agrees to pay such breakage amount or funding loss
incurred by any Bank as required under Section 2.10 herein.
(c) Agent shall promptly notify each of the Banks of its receipt of any
notice of prepayment under Section 2.8(a) or 2.8(b) above.
SECTION 2.9 General Provisions as to Payments.
(a) All payments to be made by Borrower under this Agreement shall be made
to Agent for value on the due date and in immediately available funds to the
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account of Agent at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or to the
account of Agent at such other bank as Agent may from time to time designate.
All payments of interest and principal, whether voluntary or involuntary, from
whatever source, including payments by reason of liquidation or collateral,
setoff, bankruptcy proceedings or otherwise, and whether received by Agent or
any of the Banks, shall be shared between the Banks in accordance with their
respective Pro Rata Shares.
(b) Whenever any payment of principal of, or interest on, Prime Loans or of
fees shall be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of, or interest on, Eurocurrency Loans shall
be due on a day which is not a Eurocurrency Business Day, the date for payment
thereof shall be extended to the next succeeding Eurocurrency Business Day,
except that if the next succeeding Eurocurrency Business Day falls within a
different calendar month, such payment shall be made on the next preceding
Eurocurrency Business Day. If the date for any payment of principal is extended
by operation of law or otherwise, interest thereon, at the then applicable rate,
shall be payable for such extended time.
(c) All payments to be made by Borrower under this Agreement shall be made
without setoff or counterclaim and without deduction for or on account of any
present or future taxes or other charges unless Borrower is compelled by law to
make payment subject to such tax or other charge. All such taxes or other
charges shall be paid by Borrower for its own account prior to the date on which
penalties attach thereto. Borrower will indemnify Agent and each of the Banks in
respect of all such taxes and other charges. Should any such payment be subject
to any tax or other charge, and the above provisions either cannot be effected
or do not result in Agent or the Banks actually receiving and remaining
beneficially entitled to and in possession of an amount equal to the full amount
provided for hereunder, Borrower shall pay to Agent, for itself or for the
benefit of the Banks, as the case may be, such additional amounts as may be
necessary to ensure that Agent and each of the Banks receive and remain in
possession of and beneficially entitled to (free from any liability in respect
of any deduction, withholding or payment other than in respect of any tax on the
overall net income of Agent or the Banks) a net amount equal to the full amount
which it would have received and retained had payment not been subject to such
tax or other charge. Borrower shall send to Agent or the Banks such certificates
or certified copy receipts as Agent or Banks shall reasonably require as proof
of the payment by Borrower of any taxes or other charges payable by Borrower as
a result of the provisions of this Section 2.9(c).
SECTION 2.10 Funding Losses. If Borrower makes any payment of principal
with respect to any Eurocurrency Loan (pursuant to Article 6 or 7 or otherwise)
on any day other than the last day of an Interest Period applicable thereto, or
if Borrower fails to borrow or pay any Eurocurrency Loans after notice has been
given to Agent in accordance with Section 2.2, 2.4, or 2.8(b), Borrower shall
reimburse Agent and each of the Banks on demand for any resulting loss or
expense incurred by them, including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties, and including
loss of margin for the period after any such payment, provided that Agent or
such Bank, as the case may be, shall have delivered to Borrower a certificate as
to the amount and particulars of such loss or expense, which certificate shall
be conclusive in the absence of manifest error.
SECTION 2.11 Computation of Interest and Fees. Interest on all Loans and
any fees payable hereunder, except as otherwise set forth herein, shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed.
14
ARTICLE 3 - CONDITIONS TO BORROWINGS
The obligations of each of the Banks to make Loans and Agent's agreement to
issue Letters of Credit are subject to the performance by Borrower of all of its
obligations under this Agreement and to the satisfaction of the following
further conditions:
SECTION 3.1 All Borrowings. In the case of each Borrowing hereunder:
(a) With respect to each Loan, Agent shall have received a Notice of
Borrowing as required by Section 2.2A;
(b) With respect to each Letter of Credit, Agent shall have received the
applicable Reimbursement Agreement as required by Section 2.2B;
(c) On the date of, and as a result of such Borrowing, no Default or Event
of Default shall have occurred and be continuing;
(d) On the date of, and as a result of such Borrowing, no material adverse
change in the business, financial position or results of operation, of Borrower
has occurred since the Effective Date and is continuing, and no legal or
administrative proceedings or other regulatory proceedings have been commenced
or threatened against the Borrower which, in the sole judgment of the Agent,
would be likely to materially or adversely affect the business, assets,
liabilities (contingent or actual), operations or prospects of the Borrower; and
(e) The representations and warranties of Borrower contained in this
Agreement shall be true on and as of the date of such Borrowing.
Each Borrowing by Borrower hereunder shall be deemed to be a representation and
warranty by Borrower on the date of such Borrowing as to the facts specified in
clauses (c), (d) and (e) of this Section.
SECTION 3.2 First Borrowing. In the case of the first Borrowing the
following additional conditions must be met:
(a) Each Bank shall have received the duly executed Note of Borrower
payable to the order of such Bank in the amount of such Bank's Commitment, dated
on or before the date of the first Borrowing;
(b) With respect to each Loan, Agent shall have received a Notice of
Borrowing as required by Section 2.2A;
(c) With respect to each Letter of Credit, Agent shall have received an
application for Letter of Credit and reimbursement agreement as required by
Section 2.2B;
(d) Agent shall have received payment of the agent's fee required by
Section 8.9 herein; and
(e) Agent shall have received all documents it may reasonably request
relating to the existence of Borrower (including without limitation certified
copies of the Articles of Incorporation and Bylaws, and any amendments thereto),
the corporate authority for and the validity of this Agreement and the Notes
(including without limitation certified copies of corporate resolutions of the
15
Board of Directors of Borrower and incumbency certificates), and any other
matters relevant hereto, all in form and substance satisfactory to Agent and
each of the Banks.
The documents and opinions referred to in this Section shall be delivered
to Agent or the Banks, as applicable, on the date hereof.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties. Borrower represents and
warrants that:
(a) Corporate Existence and Power. Borrower: (a) is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation; (b) has all requisite corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on its business, financial condition or operations.
(b) Corporate and Governmental Authorization; Contravention. The execution,
delivery and performance by Borrower of this Agreement, the Notes and the other
documents contemplated hereby are within the corporate powers of Borrower, have
been duly authorized by all necessary corporate action and require no action by
or in respect of, or filing with, any governmental body, agency or official. The
execution, delivery, and performance by Borrower of this Agreement, the Notes
and the other documents contemplated hereby do not conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default under
or result in any violation of, and Borrower is not now in default under or in
violation of, the terms of the Articles of Incorporation or Bylaws of Borrower,
any applicable law, any rule, regulation, order, writ, judgment or decree of any
court or government agency or instrumentality, or any agreement or instrument to
which Borrower is a party or by which it is bound or to which it is subject.
(c) Binding Effect. This Agreement has been duly executed and delivered and
constitutes a legal, valid and binding agreement of Borrower enforceable in
accordance with its terms, and the Notes and the other documents contemplated
hereby, when executed and delivered in accordance with this Agreement, will
constitute legal, valid and binding obligations of Borrower, enforceable in
accordance with their terms, except as may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditors' rights in general.
(d) Financial Information.
(i) The balance sheet of Borrower as of January 29, 1998, and the
related statements of income, retained earnings and changes in financial
position for the fiscal year then ended, audited by Deloitte & Touche,
copies of which have been provided to Banks, fairly present, in conformity
with generally accepted accounting principles, consistently applied, the
financial position of Borrower as of such date and the results of
operations and changes in financial position for such fiscal year.
(ii) The unaudited balance sheet of Borrower as of February 27, 1999,
and the related unaudited internal statements of income for the period then
ended, copies of which have been provided to Banks, present, substantially
in conformity with generally accepted accounting principles applied on a
basis consistent with the financial statements referred to in paragraph
16
(d)(i) of this Section, the financial position of Borrower as of such date
and the results of operations for such period (subject to normal year end
adjustments).
(iii) Since February 27, 1999, there has been no material adverse
change in the business, financial position or results of operations of
Borrower on a cumulative basis.
(e) Litigation. Except as disclosed in Schedule 4.1(e), there are no
actions, suits or proceedings pending or threatened against or affecting
Borrower or any of its Subsidiaries, at law or in equity, or before or by any
Federal, State or municipal court or arbitrator or any other governmental
department, commission, board, bureau, agency, official or instrumentality,
domestic or foreign, which are reasonably likely to result, either individually
or collectively, in any material adverse change in the business, properties,
operations or condition, financial or other, of Borrower and its Subsidiaries
taken as a whole, or in which there is a reasonable likelihood of recovery of an
amount that exceeds $500,000.00.
(f) Pension and Welfare Plans. Each Pension Plan complies with all
applicable statutes and governmental rules and regulations; no Reportable Event
has occurred and is continuing with respect to any Pension Plan; neither
Borrower nor any ERISA Affiliate of Borrower has withdrawn from any
Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 or 4205 of ERISA, respectively; no condition exists or
event or transaction has occurred in connection with any Pension Plan or
Multiemployer Plan which could result in the incurrence by Borrower or any ERISA
Affiliate of any material liability, fine or penalty; and neither Borrower nor
any ERISA Affiliate is a "contributing sponsor" as defined in Section
4001(a)(13) of ERISA of a "single-employer plan" as defined in Section
4001(a)(15) of ERISA which has two or more contributing sponsors at least two of
whom are not under common control. Except as disclosed on Schedule 4.1(f)
attached hereto, Borrower does not have any contingent liability with respect to
any "employee welfare benefit plan", as such term is defined in Section 3(a) of
ERISA, which covers retired employees and their beneficiaries.
(g) Tax Returns and Payment. Borrower has filed all federal and state
income tax returns and all other material tax returns which are required to be
filed and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by Borrower, except for the filing of such returns, if any,
in respect of which an extension of time for filing is in effect and except for
such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and reserves on the
books of Borrower in respect of any taxes or other governmental charges are, in
the opinion of Borrower, adequate.
(h) Investment Company Act of 1940; Public Utility Holding Company Act of
1935. Borrower is not an "investment company" as that term is defined in, and is
not otherwise subject to regulation under, the Investment Company Act of 1940,
as amended. Borrower is not a "holding company" as that term is defined in, and
is not otherwise subject to regulation under, the Public Utility Holding Company
Act of 1935, as amended.
(i) Liens. At the date of this Agreement no Liens exist on any property of
Borrower other than those described on Schedule 4.1(i).
(j) Subsidiaries. Borrower has the Subsidiaries described on Schedule
4.1(j) attached hereto.
(k) Compliance With Other Instruments; None Burdensome. Borrower is not a
party to any contract or agreement or subject to any charter or other corporate
17
restriction which materially and adversely affects its business, Property or
financial condition and which is not disclosed on Borrower's financial
statements heretofore submitted to Bank; none of the execution and delivery by
Borrower of this Agreement, the Notes, the Reimbursement Agreements or the other
transaction documents, the consummation of the transactions therein contemplated
or the compliance with the provisions thereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on
Borrower, or any of the provisions of Borrower's Certificate or Articles of
Incorporation or Bylaws or any of the provisions of any indenture, agreement,
document, instrument or undertaking to which Borrower is a party or subject, or
by which it or its Property is bound, or conflict with or constitute a default
thereunder or result in the creation or imposition of any Lien pursuant to the
terms of any such indenture, agreement, document, instrument or undertaking. No
order, consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by, any governmental, regulatory,
administrative or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, the execution,
delivery or performance of, or the legality, validity, binding effect or
enforceability of, any of the transaction documents.
(l) Other Loans and Guarantees. Except as disclosed on Schedule 4.1(l)
attached hereto, Borrower is not a party to any loan transaction or Guarantee.
(m) Labor Matters. Except as disclosed on Schedule 4.1(m) attached hereto,
(a) no labor contract to which Borrower is subject is scheduled to expire during
the Term of this Agreement and (b) on the date of this Agreement, (i) Borrower
is not a party to any labor dispute and (ii) there are no strikes or walkouts
relating to any labor contract to which Borrower is subject.
(n) Title to Property. Borrower is the sole and absolute owner of, or has
the legal right to use and occupy, all Property it claims to own or which is
necessary for Borrower to conduct its business. Borrower has not signed any
financing statements, security agreements or chattel mortgages with respect to
any of its Property, has not granted or permitted any Liens with respect to any
of its Property or has any knowledge of any Liens with respect to any of its
Property, except as disclosed on Schedule 4.1(n) attached hereto.
(o) Regulation U. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of The
Board of Governors of the Federal Reserve System, as amended) and no part of the
proceeds of any Loan will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately (i) to purchase or carry margin stock
(except for Borrower's repurchase of its own capital stock pursuant to Section
5.2(e)(ii) below) or to extend credit to others for the purpose of purchasing or
carrying margin stock, or to refund or repay indebtedness originally incurred
for such purpose or (ii) for any purpose which entails a violation of, or which
is inconsistent with, the provisions of any of the Regulations of The Board of
Governors of the Federal Reserve System, including, without limitation,
Regulations U, T or X thereof, as amended. If requested by the Agent or any
Bank, Borrower shall furnish to Banks a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U.
(p) Multi-Employer Pension Plan Amendments Act of 1980. Borrower is in
compliance with the Multi-Employer Pension Plan Amendments Act of 1980, as
amended ("MEPPAA"), and has no liability for pension contributions pursuant to
MEPPAA.
(q) Patents, Licenses, Trademarks, Etc. Borrower possesses all necessary
patents, licenses, trademarks, trademark rights, trade names, trade name rights
and copyrights to conduct its business without conflict with any patent,
license, trademark, trade name or copyright of any other Person.
18
(r) Environmental and Safety and Health Matters. Except as disclosed on
Schedule 4.1(r) attached hereto: (i) the operations of Borrower comply with (A)
all applicable Environmental Laws and (B) all applicable Occupational Safety and
Health Laws; (ii) none of the operations of Borrower are subject to any
judicial, governmental, regulatory or administrative proceeding alleging the
violation of any Environmental Law or Occupational Safety and Health Law; (iii)
none of the operations of Borrower is the subject of any Federal or state
investigation evaluating whether any remedial action is needed to respond to (A)
any spillage, disposal or release into the environment of any Hazardous Material
or any other hazardous, toxic or dangerous waste, substance or constituent or
other substance, or (B) any unsafe or unhealthful condition at any premises of
Borrower; (iv) Borrower has not filed any notice under any Environmental Law or
Occupational Safety and Health Law indicating or reporting (A) any past or
present spillage, disposal or release into the environment of, or treatment,
storage or disposal of, any Hazardous Material or any other hazardous, toxic or
dangerous waste, substance or constituent or other substance or (B) any unsafe
or unhealthful condition at any premises of Borrower; and (v) Borrower does not
have any known contingent liability in connection with (A) any spillage,
disposal or release into the environment of, or otherwise with respect to, any
Hazardous Material or any other hazardous, toxic or dangerous waste, substance
or constituent or other substance or (B) any unsafe or unhealthful condition at
any premises of Borrower.
(s) Year 2000 Compliance Borrower and each of its Subsidiaries has (a)
undertaken a detailed inventory, review and assessment of all areas within its
business and operations that could be adversely affected by the failure of
Borrower or such Subsidiary, as the case may be, to be Year 2000 Compliant on a
timely basis, (b) developed a detailed plan and timeline for becoming Year 2000
Compliant on a timely basis and (c) to date, implemented such plan in accordance
with such timetable in all material respects. Borrower reasonably anticipates
that it and each of its Subsidiaries will be Year 2000 Compliant on a timely
basis, except to the extent such noncompliance could not reasonably be expected
to have a material adverse effect on the Properties, assets, liabilities,
business, operations, prospects, income or condition (financial or otherwise) of
Borrower or any such Subsidiary. Neither Borrower nor any Subsidiary of Borrower
is aware that any of its key suppliers, vendors or customers will not, on a
timely basis, be Year 2000 Compliant, except to the extent such noncompliance
could not reasonably be expected to have a material adverse effect on the
Properties, assets, liabilities, business, operations, prospects, income or
condition (financial or otherwise) of such Person. For purposes of this Section
4.1(s), "key suppliers, vendors and customers" refers to those suppliers,
vendors and customers of Borrower or of any such Subsidiary, as the case may be,
whose business failure could reasonably be expected to have a material adverse
effect on the Properties, assets, liabilities, business, operations, prospects,
income or condition (financial or otherwise) of Borrower or any such Subsidiary.
ARTICLE 5 - COVENANTS
SECTION 5.1 Covenants of Borrower. Borrower agrees that, so long as any
Bank has any Commitment hereunder or any amount payable under any Note or
Reimbursement Agreement remains unpaid or any Letter of Credit remains
outstanding, unless the prior written consent of the Majority Banks is obtained:
(a) Information. Borrower will deliver to the Agent:
(i) As soon as available and in any event within 90 days after the end
of each fiscal year of Borrower, a consolidated balance sheet of Borrower
as of the end of such fiscal year and the related consolidated statements
of income, retained earnings and cash flow for such fiscal year, prepared
in accordance with generally accepted accounting principles, consistently
applied, setting
19
forth in each case in comparative form the figures for the previous fiscal
year, all reported on by and accompanied by the unqualified opinion of
Deloitte & Touche or other firm of independent public accountants of
nationally recognized standing acceptable to Banks;
(ii) As soon as available and in any event within 30 days after the
end of each fiscal month, a consolidated balance sheet of Borrower as of
the end of such fiscal month and the related consolidated statements of
income, retained earnings and cash flow for such fiscal month and for the
portion of Borrower's fiscal year ended at the end of such fiscal month,
setting forth in each case in comparative form, the figures for the
corresponding fiscal month and the corresponding portion of Borrower's
previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or principal
accounting officer of Borrower;
(iii) As soon as available and in any event within 30 days after the
end of each fiscal quarter, a Compliance Certificate of the chief financial
officer or principal accounting officer of Borrower, in the form attached
hereto and made a part hereof as Exhibit D, accompanied by supporting
financial work sheets where appropriate, and stating whether there exists
on the date of such certificate any Default or Event of Default and, if any
Default or Event of Default then exists, setting forth the details thereof
and the action which Borrower is taking or proposes to take with respect
thereto;
(iv) As soon as available and in any event within 30 days after the
end of each fiscal month, a Borrowing Base Certificate, dated as of the end
of the preceding fiscal month, in the form of Exhibit E attached hereto,
all certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by
the chief financial officer or principal accounting officer of Borrower;
(v) As soon as available and in any event within 30 days after the end
of each fiscal month, a statement in reasonable detail setting forth
Borrower's profit and loss on a store by store basis, determined in
accordance with generally accepted accounting principles consistently
applied and certified as to fairness of presentation by the chief financial
officer or principal accounting officer of Borrower;
(vi) Within 30 days after the end of each fiscal year of Borrower
during the Term hereof, a financial budget for Borrower's upcoming fiscal
year prepared in reasonable detail;
(vii) Forthwith upon the occurrence of any Default or Event of
Default, and in any event within five days after knowledge of such
occurrence, a certificate of an officer of Borrower setting forth the
details thereof and the action which Borrower is taking or proposes to take
with respect thereto;
(viii) Promptly upon the mailing thereof to the shareholders of
Borrower generally, and in any event within ten days after such mailing,
copies of all financial statements, reports, proxy statements and other
material information so mailed;
(ix) From time to time, with reasonable promptness, upon being
informed by Banks of the purpose of the inquiry, such further information
regarding the business, affairs and financial position of Borrower as Bank
may reasonably request.
20
Agent agrees to promptly furnish to each of the Banks the information
provided to Agent by Borrower under this Section 5.1(a).
(b) Payment of Debt. Borrower will pay any and all Debt payable or
Guaranteed by Borrower, and any interest or premium thereon, when due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise)
in accordance with the agreement or instrument relating to such Debt or
Guarantee, except that Borrower may pay up to twenty-five percent (25%) of its
Debt owed to trade suppliers or trade vendors at any point in time within ninety
(90) days after the date such trade Debt is due and payable.
(c) Consultations and Inspections. Solely for the purpose of permitting
Agent and Banks to determine compliance by Borrower with this Agreement,
Borrower will permit Agent and/or any of the Banks (and any Person appointed by
Agent or any Bank to whom Borrower does not reasonably object) to discuss the
affairs, finances and accounts of Borrower with the executive officers of
Borrower, all at such reasonable times and as often as may reasonably be
requested. Borrower will also permit inspection of its properties, books and
records by Agent and Banks during normal business hours or at other reasonable
times.
(d) Payment of Taxes; Corporate Existence; Maintenance of Properties;
Insurance. Borrower will:
(i) Pay and discharge promptly all taxes, assessments and other
governmental charges imposed upon it or any of its property; provided,
however, that Borrower shall not be required to pay any such tax,
assessment or other governmental charge the payment of which is being
contested in good faith and by appropriate proceedings and for which
adequate reserves have been provided, except that Borrower will pay or
cause to be paid all such taxes, assessments and governmental charges
forthwith upon the commencement of proceedings to foreclose any Lien which
is attached as security therefor, unless such foreclosure is stayed by the
filing of an appropriate bond;
(ii) Do all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchise and to be duly
qualified to do business in all jurisdictions where the nature of its
business requires such qualification;
(iii) Maintain and keep its properties as a whole in good repair,
working order and condition; provided, however, that nothing in this
subsection (iii) shall prevent any abandonment of any of its properties
which is not disadvantageous in any material respect to Banks and which, in
the opinion of the management of Borrower, is in the best interests of
Borrower; and
(iv) Insure with responsible and reputable insurance companies its
assets and business in such manner and to such extent as is customary with
similar business enterprises of comparable size and subject to comparable
hazards.
(e) Financial Covenants. Borrower will:
(i) Have a Net Worth of not less than $82,668,000.00 as of the end of
each fiscal quarter during the Term hereof, less the aggregate amount of
Distributions made by Borrower after the date of this Agreement to
repurchase its capital stock as permitted under Section 5.2(e) herein,
21
provided that any such reduction in the minimum Net Worth requirement of
this Section 5.1(e)(i) for any such aggregate stock repurchases shall not
exceed $10,000,000.00.
(ii) Have a ratio of (A) the sum of Funded Debt plus three times
Borrower's Rental Expense, to (B) the sum of EBITDA plus Borrower's Rental
Expense of not more than 2.5 to 1.0 at each fiscal quarter-end during the
Term hereof. As used herein, the term "EBITDA" shall mean Borrower's net
income before taxes, plus interest expense, plus depreciation, plus
amortization, as determined in accordance with generally accepted
accounting principles consistently applied, for the four fiscal quarter
period ending on the date of such calculation. As used herein, the term
"Funded Debt" shall mean all Indebtedness of Borrower for borrowed money,
including, but not limited to, all liabilities of Borrower under any
Capitalized Leases. As used herein, the term "Rental Expense" shall mean
Borrower's base minimum rental expense under all real property leases for
the four fiscal quarter period ending on the date of such calculation as
determined in accordance with generally accepted accounting principles
consistently applied.
(iii) Deliver a certificate of the chief financial officer or
principal accounting officer of Borrower, containing the financial ratio
calculations required in clauses 5.1(e)(i) and (ii) above and of the
Distributions paid under Section 5.2(e), simultaneously with the Compliance
Certificate referred to in Section 5.1(a)(iii).
(f) Maintenance of Books and Records. Borrower will maintain its books and
records in accordance with generally accepted accounting principles,
consistently applied.
(g) Compliance with Law. Borrower will comply with any and all laws,
ordinances and governmental rules and regulations to which it is subject and
obtain any and all licenses, permits, franchises and other governmental
authorizations necessary to the ownership of its properties or to the conduct of
its business, which violation or failure to obtain might materially adversely
affect the condition or operation, financial or otherwise, of Borrower.
(h) ERISA Compliance. If Borrower shall have any Pension Plan, Borrower
shall comply with all requirements of ERISA relating to such plan. Without
limiting the generality of the foregoing, Borrower will not:
(i) permit any Pension Plan maintained by it to engage in any
nonexempt "prohibited transaction," as such term is defined in Section 4975
of the Code;
(ii) permit any Pension Plan maintained by it to incur any
"accumulated funding deficiency", as such term is defined in Section 302 of
ERISA, 29 U.S.C. ss. 1082, whether or not waived;
(iii) terminate any such Pension Plan in a manner which could result
in the imposition of a Lien on any Property of Borrower pursuant to Section
4068 of ERISA, 29 U.S.C. ss.1368; or
(iv) take any action which would constitute a complete or partial
withdrawal from a Multiemployer Plan within the meaning of Sections 4203
and 4205 of Title IV of ERISA.
22
Notwithstanding any provision contained in this Section 5.1(h) to the
contrary, an act by Borrower shall not be deemed to constitute a violation of
subparagraphs (i) through (iv) hereof unless the Majority Banks determine in
good faith that said action, individually or cumulatively with other acts of
Borrower, does have or is likely to cause a significant adverse financial effect
upon Borrower.
Borrower shall have the affirmative obligation hereunder to report to Banks
any of those acts identified in subparagraphs (i) through (iv) hereof,
regardless of whether said act does or is likely to cause a significant adverse
financial effect upon Borrower, and failure by Borrower to report such act
promptly upon Borrower's becoming aware of the existence thereof shall
constitute an Event of Default hereunder.
(i) Notices. Borrower will notify Agent and Banks in writing of any of the
following immediately upon learning of the occurrence thereof, describing the
same and, if applicable, the steps being taken by the Person(s) affected with
respect thereto:
(i) Default. The occurrence of any Default or Event of Default under
this Agreement or any default or event of default by Borrower or any other
Obligor under any note, indenture, loan agreement, mortgage, deed of trust,
security agreement, lease or other similar agreement, document or
instrument to which Borrower or any other Obligor, as the case may be, is a
party or by which it is bound or to which it is subject;
(ii) Litigation. The institution of any litigation, arbitration
proceeding or governmental or regulatory proceeding affecting Borrower or
any other Obligor, whether or not considered to be covered by insurance,
unless the prayer for relief in the complaint or petition concerning such
proceeding is in an aggregate amount of less than $500,000.00;
(iii) Judgment. The entry of any judgment or decree against Borrower
or any other Obligor in an aggregate amount in excess of $500,000.00;
(iv) Pension Plans. The occurrence of a Reportable Event with respect
to any Pension Plan; the filing of a notice of intent to terminate a
Pension Plan by Borrower or any ERISA Affiliate; the institution of
proceedings to terminate a Pension Plan by the PBGC or any other Person;
the withdrawal in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205, respectively, of ERISA by Borrower or
any ERISA Affiliate from any Multiemployer Plan; or the incurrence of any
material increase in the contingent liability of Borrower with respect to
any "employee welfare benefit plan" as defined in Section 3(1) of ERISA
which covers retired employees and their beneficiaries;
(v) Change of Name. Any change in the name of Borrower or any other
Obligor;
(vi) Change in Place(s) of Business. Any opening, closing or other
change of Borrower's corporate headquarters or of any distribution
facility;
(vii) Environmental Matters. Receipt of any notice that the operations
of Borrower or any other Obligor are not in full compliance with any of the
requirements of any applicable Environmental Law or Occupational Safety and
Health Law; receipt of notice that Borrower or any other Obligor is subject
to any Federal, state or local investigation evaluating whether any
remedial action is needed to respond to the release of any Hazardous
23
Materials or any other hazardous or toxic waste, substance or constituent
or other substance into the environment; or receipt of notice that any of
the Properties or assets of Borrower or any other Obligor are subject to an
"Environmental Lien." For purposes of this Section 5.1(i)(vii),
"Environmental Lien" shall mean a Lien in favor of any governmental or
regulatory agency, entity, authority or official for (1) any liability
under Environmental Laws or (2) damages arising from or costs incurred by
any such governmental or regulatory agency, entity, authority or official
in response to a release of any Hazardous Materials or any other hazardous
or toxic waste, substance or constituent or other substance into the
environment;
(viii) Material Adverse Change. The occurrence of any material adverse
change in the business, operations or condition, financial or otherwise, of
Borrower or any other Obligor;
(ix) Change in Line(s) of Business. Any material change in Borrower's
line(s) of business; and
(x) Other Notices. Any notices required to be provided pursuant to
other provisions of this Agreement and notice of the occurrence of such
other events as Bank may from time to time reasonably specify.
(j) Year 2000 Compliance. Borrower will, and it will cause each of its
Subsidiaries to, take any and all actions necessary to assure that Borrower and
each of its Subsidiaries will be Year 2000 Compliant as soon as reasonably
practical. Borrower and each of its Subsidiaries will be Year 2000 Compliant by
October 1, 1999, except to the extent such noncompliance could not reasonably be
expected to have a material adverse effect on the Properties, assets,
liabilities, business operations, prospects, income or condition (financial or
otherwise) of Borrower or such Subsidiary. At the request of Agent, Borrower
will from time to time provide Agent with written reports in form and detail
reasonably satisfactory to Agent on the status of the efforts of Borrower and
its Subsidiaries to be Year 2000 Compliant.
SECTION 5.2 Negative Covenants of Borrower. Borrower covenants and agrees
that, so long as any Bank has any obligation to make any Loan hereunder or to
issue any Letter of Credit or any of Borrower's Obligations remain unpaid,
unless the prior written consent of the Majority Banks is obtained:
(a) Limitation on Indebtedness. Borrower will not incur or be obligated on
any Debt, either directly or indirectly, by way of Guarantee, suretyship or
otherwise, other than:
(i) Debt evidenced by the Notes and the Reimbursement Agreements;
(ii) Unsecured trade accounts payable incurred in the ordinary course
of business;
(iii) Debt representing loans against life insurance policies of
Borrower in an amount not to exceed the aggregate cash surrender value of
such life insurance policies;
(iv) Other unsecured Debt exclusive of capitalized leases in an amount
not to exceed $3,000,000.00 in the aggregate at any one time outstanding;
24
(v) Other purchase money Debt in an amount not to exceed $5,000,000.00
in the aggregate at any one time outstanding; and
(vi) Capitalized leases in an amount not to exceed $3,000,000.00 in
the aggregate at any one time outstanding.
(b) Limitations on Liens. Borrower will not create, incur, assume or suffer
to exist any Lien on any of its Property, assets or revenues other than:
(i) Liens presently in existence which are described on Schedule
4.1(n) attached hereto;
(ii) Pledges or deposits in connection with or to secure workmen's
compensation, unemployment insurance, pension or other employee benefits;
(iii) Subject to Section 5.1(d)(i), Liens for taxes, assessments or
governmental charges or levies on Property of Borrower if the same are
being contested in good faith and by appropriate proceedings diligently
conducted and for which adequate reserves in form and amount satisfactory
to Banks are provided on Borrower's financial statements;
(iv) Liens provided by statute for unpaid rent in favor of any
landlord of the Borrower under real property leases;
(v) Liens filed for purchase money security interests to secure
purchase money indebtedness permitted under Section 5.2(a)(v) above,
provided that the Lien shall secure only the purchase money indebtedness
incurred which shall not exceed the purchase price of the asset being
acquired and shall attach only to the asset purchased with the proceeds of
such purchase money indebtedness; and
(vi) Liens filed for any equipment leases permitted under Section
5.2(a)(vi) above, provided that such Liens shall attach only to the
equipment being leased and shall secure only the obligations under such
leases.
(c) Sale of Property. Borrower will not sell, lease, transfer or otherwise
dispose of any Property or assets of Borrower except for sales of assets in the
ordinary course of business during any fiscal year which have an aggregate book
value of not more than $500,000.00;
(d) Mergers, Consolidations and Acquisitions. Borrower will not, and will
not permit any Subsidiary to, merge or consolidate with any other Person or
acquire any other Person, except that:
(i) Borrower may consolidate with or merge into any Person or permit
any other Person to merge into, provided that immediately after giving
effect thereto: (1) Borrower shall be the successor corporation; (2)
Borrower shall be in compliance with all provisions of this Agreement; and
(3) Borrower and the acquired Person, on a consolidated basis as determined
after giving effect to said acquisition, have a net worth of not less than
100% of Borrower's net worth determined immediately prior to said
acquisition;
25
(ii) Any Subsidiary may (A) merge into Borrower or another
wholly-owned Subsidiary or (B) sell, transfer or lease all or any part of
its assets to Borrower or to another wholly-owned Subsidiary or (iii) merge
into any Person which, as a result of such merger, concurrently become a
wholly-owned Subsidiary; and
(iii) Borrower may make acquisitions of any Persons or their assets
during any 12-month period during the Term of this Agreement which in the
aggregate do not exceed $5,000,000.00, provided that after giving effect to
any such acquisition, Borrower shall be in compliance with all of the
provisions of this Agreement.
(e) Stock Redemptions and Distributions. With respect to its capital stock,
Borrower will not declare or make any dividend or other Distribution to its
shareholders (excluding any stock split or stock dividend) unless, immediately
after giving effect to the proposed Distribution, (i) no Default or Event of
Default is existing or would occur as a result of such dividend or Distribution,
and (ii) such proposed Distribution, if made for the repurchase of Borrower's
common stock after the date of this Agreement, shall not exceed Ten Million
Dollars ($10,000,000.00) in the aggregate.
(f) Transactions with Related Parties. Borrower will not engage in any
material transaction with any affiliated, related or parent company or any
Subsidiary (except any wholly-owned Subsidiary of Borrower) or any shareholder,
director, officer, or beneficiary of a trust that is a shareholder of Borrower
unless such transaction is upon fair market terms and is not disadvantageous in
any material respect to Banks.
(g) Fiscal Year. Borrower will not change its fiscal year without prior
notice to Banks; provided, however, that Borrower, Agent and Banks agree that
prior to the effective date of any such change in Borrower's fiscal year,
Borrower, Agent and Banks shall agree to amend this Agreement to adjust the
financial covenants set forth herein in accordance with such new fiscal year.
(h) Loans and Investments. Borrower will not make any loans or advances or
extensions of credit to (other than extensions of credit in the ordinary course
of business or otherwise permitted under this Agreement), purchase any stocks,
bonds, notes, debentures or other securities of, make any expenditures on behalf
of, or in any manner assume liability (direct, contingent or otherwise) for the
Debt of any Person, except that:
(i) Borrower may acquire and own stock, obligations or securities
received in settlement of debts (created in the ordinary course of
business) owing to Borrower,
(ii) Borrower may make loans, advances or extensions of credit to its
1993 stock option and incentive plan not to exceed $1,000,000.00 in any
fiscal year,
(iii) Borrower may make other loans, advances or extensions of credit
not to exceed $200,000.00 in the aggregate at any one time outstanding,
(iv) Borrower may make investments of its excess cash in repurchase
agreements with maturities not greater than seven days, which repurchase
agreements may be made only with any of the Banks or any other financial
institution satisfying the requirements of subparts (v) or (viii) of this
Section 5.2(h),
26
(v) Borrower may make investments of its excess cash in municipal
bonds or other securities rated "AAA" or better by either Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investor Service, Inc.,
(vi) Borrower may make investments of its excess cash in money market
mutual funds having assets in excess of $1,000,000,000.00,
(vii) Borrower may invest its excess cash in any readily marketable
direct obligations of the United States government or any agency thereof
which are backed by the full faith and credit of the United States,
(viii) Borrower may invest its excess cash in preferred stock or in
any commercial paper of any corporation which at the time of acquisition
has the highest commercial paper rating obtainable from either Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investor Service, Inc.; and
(ix) Borrower may repurchase its own stock up to an aggregate purchase
price of $10,000,000.00 pursuant to Section 5.2(e)(ii).
(i) Dissolution or Liquidation. Borrower will not seek or permit the
dissolution or liquidation of Borrower in whole or in part.
(j) Change in Nature of Business. Borrower will not make any material
change in the nature of its business and Borrower will not make any material
change in or discontinue its present line(s) of business.
(k) Pension Plans. Borrower shall not (a) permit any condition to exist in
connection with any Pension Plan which might constitute grounds for the PBGC to
institute proceedings to have such Pension Plan terminated or a trustee
appointed to administer such Pension Plan or (b) engage in, or permit to exist
or occur, any other condition, event or transaction with respect to any Pension
Plan which could result in the incurrence by Borrower of any material liability,
fine or penalty. Borrower shall not become obligated to contribute to any
Pension Plan or Multiemployer Plan other than any such plan or plans in
existence on the date hereof.
(l) Subsidiaries. Borrower shall not have, obtain, acquire or create any
Subsidiary during the Term of this Agreement to the extent that any such
Subsidiary or Subsidiaries shall in the aggregate own more than 20% of the total
assets of Borrower determined on a consolidated basis.
SECTION 5.3 Use of Proceeds. Borrower agrees that none of such proceeds
will be used in violation of any applicable law or regulation; and except as
permitted in Section 5.2(e)(ii) herein, Borrower will not engage principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as amended
from time to time.
ARTICLE 6 - DEFAULTS
SECTION 6.1 Events of Default. If:
(a) Borrower shall fail to pay any principal of or interest on the Notes or
any other amount payable by Borrower hereunder, under any Reimbursement
Agreement or under the Notes when due;
27
(b) Borrower shall violate or fail to perform any of its covenants or
agreements contained in Sections 5.1(b) through (j) or Section 5.2;
(c) Borrower shall fail to deliver to the Agent any of the information or
financial statements required under Section 5.1(a) herein and such failure shall
continue for 15 days after the date such information or financial statements
were required to be delivered under the terms of such Section;
(d) Borrower shall fail to perform any term, covenant or agreement herein
contained (other than those specified in clause (a) or (b)) for 30 days after
the earlier of (i) written notice of Default is given to Borrower by Agent or
any Bank, or (ii) the date the chief executive officer or chief financial
officer of Borrower has knowledge of such Default;
(e) Borrower shall have made any representation or warranty in or pursuant
to this Agreement, or in any certificate or document delivered pursuant hereto,
which shall have been materially incorrect, false or misleading when made;
(f) Borrower shall fail (and such failure shall not have been cured or
waived) to: (i) make any payment of principal of or premium, if any, or interest
on any Debt owed to a trade supplier or trade creditor which causes more than
twenty-five percent (25%) of Borrower's aggregate trade Debt then outstanding to
be more than 90 days past due, or to make any payment of principal of or
premium, if any, or interest on any other Debt when due (whether at schedule
maturity or by required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt, or (ii) perform or observe
any other provision, term or condition of, or any other default shall occur
under, any agreement or instrument relating to any Debt outstanding; in either
case if the effect of such failure or default is to cause or permit such Debt to
be declared to be due and payable or otherwise accelerated, or to be required to
be prepaid (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof;
(g) Borrower shall have entered against it by a court having jurisdiction
in the premises a judgment in excess of $500,000.00, and Borrower (or an insurer
on behalf of Borrower) shall not appeal or satisfy such judgment within the time
permitted by law for an appeal of such judgment;
(h) Borrower shall have filed against it an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Borrower, or for any substantial
part of its property, or for the winding-up or liquidation of its affairs and
such involuntary case or proceeding shall remain unstayed and in effect for a
period of 60 consecutive days, or if any order for relief is entered in any such
case;
(i) Borrower shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case under any
such law, or consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or similar official) of
Borrower, or for any substantial part of its property, or make any general
assignment for the benefit of any of the foregoing;
28
(j) The occurrence of a Reportable Event with respect to any Pension Plan;
the institution of proceedings to terminate a Pension Plan by the PBGC or any
other Person; the withdrawal in a "complete withdrawal" or a "partial
withdrawal" as defined in Sections 4203 and 4205, respectively, of ERISA by
Borrower or any ERISA Affiliate from any Multiemployer Plan; or the incurrence
of any material increase in the contingent liability of Borrower with respect to
any "employee welfare benefit plan" as defined in Section 3(1) of ERISA which
covers retired employees and their beneficiaries;
(k) The institution by Borrower or any ERISA Affiliate of steps to
terminate any Pension Plan if, in order to effectuate such termination, Borrower
or such ERISA Affiliate, as the case may be, would be required to make a
contribution to such Pension Plan, or would incur a liability or obligation to
such Pension Plan, in excess of Five Hundred Thousand Dollars ($500,000.00); or
the institution by the PBGC of steps to terminate any Pension Plan;
Then, and in every such event (an "Event of Default") if such Event of Default
still exists, Agent may, or upon direction of the Majority Banks shall, by
notice in writing to Borrower terminate the Commitments of each of the Banks and
declare each of the Notes to be and they shall thereupon forthwith become due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived; provided, however, that in the case of
the occurrence of any Event of Default described in the foregoing clause (h) or
(i) the Notes shall become due and payable forthwith without the requirement of
any such notice, and without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived.
ARTICLE 7 - CHANGE IN CIRCUMSTANCES AFFECTING EUROCURRENCY LOANS
SECTION 7.1 Basis for Determining Interest Rate Inadequate or Unfair. If
with respect to any Interest Period:
(a) By reason of circumstances affecting the London interbank Eurocurrency
market, adequate and fair means do not exist for ascertaining the rate of
interest payable pursuant to Section 2.5(b) in respect of such Eurocurrency Loan
for such Interest Period; or
(b) Agent determines that deposits in Dollars (in the applicable amounts)
are not being offered to any Bank in the relevant London interbank Eurocurrency
market for such Interest Period, or
(c) Agent determines that the London Interbank Offered Rate will not
adequately and fairly reflect the cost to any Bank of maintaining or funding the
Eurocurrency Loans for such Interest Period,
Agent shall forthwith give notice thereof to Borrower, whereupon until Agent
notifies Borrower that the circumstances giving rise to such suspension no
longer exist, (a) the obligations of Banks to make Eurocurrency Loans shall be
suspended, and (b) Borrower shall repay in full then outstanding principal
amount of each of its Eurocurrency Loans, together with accrued interest
thereon, on the last day of then current Interest Period applicable to such
Loan. Concurrently with repaying each such Eurocurrency Loan pursuant to this
Section, Borrower shall borrow a Prime Loan in an equal principal amount from
Banks, and Banks shall make such a Prime Loan, unless Borrower notifies Agent at
least one Domestic Business Day before the date of such repayment that it elects
not to borrow any Prime Loans on such date.
29
SECTION 7.2 Illegality. If the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank to make, maintain or fund its Eurocurrency
Loans to Borrower, such Bank shall forthwith give notice thereof to Agent and
Agent shall give notice thereof to Borrower. Upon receipt of such notice,
Borrower shall repay in full then outstanding principal amount of each of its
Eurocurrency Loans, together with accrued interest thereon, on either (a) the
last day of then current Interest Period applicable to such Eurocurrency Loan if
such Bank may lawfully continue to maintain and fund such Eurocurrency Loan to
such day or (b) immediately if such Bank may not lawfully continue to fund and
maintain such Eurocurrency Loan to such day. Concurrently with repaying each
Eurocurrency Loan of Bank, Borrower shall borrow a Prime Loan in an equal
principal amount from Banks, and Banks shall make such a Prime Loan.
SECTION 7.3 Increased Cost.
(a) If (i) Regulation D or (ii) after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency (a "Regulatory Change"):
(A) shall subject any Bank to any tax, duty or other charge with
respect to its Eurocurrency Loans, its Note or its obligation to make
Eurocurrency Loans or shall change the basis of taxation of payments to any
Bank of the principal of or interest on its Eurocurrency Loans or any other
amounts due under this Agreement in respect of its Eurocurrency Loans or
its obligation to make Eurocurrency Loans (except for changes in the rate
of tax on the overall net income of any such Bank imposed by the
jurisdiction in which such Bank's principal executive office is located);
or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit, capital or similar requirement against
assets of, deposits with or for the account of, or credit extended or
committed to be extended by, any Bank or shall impose on any Bank or on the
United States market for certificates of deposit or the interbank market
for Eurocurrency deposits any other condition affecting any Bank's Loans,
its Note or its obligation to make Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D, to impose a cost on) any Bank of making or maintaining any
Eurocurrency Loan or to reduce the amount of any sum received or receivable by
any Bank under this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, and if such Bank is not otherwise
fully compensated for such cost or reduction by virtue of the inclusion of the
reference to "Reserve Percentage" in the calculation of the interest rate
applicable to Eurocurrency Loans, then, within 15 days after demand by such
Bank, Borrower shall pay for the account of such Bank as additional interest,
such additional amount or amounts as will compensate such Bank for such
increased cost or reduction. Any Bank will promptly notify Agent, who in turn
shall promptly notify Borrower of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Bank to compensation pursuant to
this Section. A certificate of such Bank claiming compensation under this
30
Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. Upon reasonable
request of Borrower, each Bank claiming additional compensation under this
Section shall provide to Borrower additional information with respect to the
determination of such additional amount or amounts. In determining such amount
or amounts, Bank may use any reasonable averaging and attribution methods.
(b) If any Bank demands compensation under this Section, Borrower may at
any time, upon at least two Eurocurrency Business Days' prior notice to Agent,
repay in full its then outstanding Eurocurrency Loans from such Bank, together
with accrued interest thereon to the date of prepayment and any other amounts
due under Section 2.10. Concurrently with repaying such Eurocurrency Loans,
Borrower may borrow a Prime Loan in an amount equal to the aggregate principal
amount of such Eurocurrency Loans, and such Bank shall make such a Prime Loan.
SECTION 7.4 Prime Loans Substituted for Affected Eurocurrency Loans. If
notice has been given by any Bank pursuant to Section 7.2 or by Borrower
pursuant to Section 7.3 requiring Eurocurrency Loans to be repaid, then, unless
and until such Bank or Agent notifies Borrower that the circumstances giving
rise to such repayment no longer apply:
(a) All Loans which would otherwise be made as Eurocurrency Loans shall be
made instead as Prime Loans, and
(b) After each of the Eurocurrency Loans to Borrower has been so repaid,
all payments and prepayments of principal which would otherwise be applied to
repay such Eurocurrency Loans shall be applied to repay its Prime Loans instead.
Agent shall notify Borrower if and when the circumstances giving rise to such
repayment no longer apply.
ARTICLE 8 - THE AGENT
SECTION 8.1 Appointment and Authorization. Each Bank irrevocably appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement, the Notes, the Reimbursement
Agreements and the other transaction documents as are delegated to the Agent by
the terms hereof or thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 8.2 Agent and Affiliates. Mercantile shall have the same rights and
powers under this Agreement as any other Bank and may exercise or refrain from
exercising the same as though it were not the Agent, and Mercantile and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with Borrower or any of its Subsidiaries or affiliates as if it
were not the Agent hereunder.
SECTION 8.3 Action by Agent. The obligations of the Agent hereunder are
only those expressly set forth herein. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with respect to
any Default or Event of Default, except as expressly provided in Article 6.
SECTION 8.4 Consultation with Experts. The Agent may consult with legal
counsel, 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.
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SECTION 8.5 Liability of Agent. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or not taken
by it in connection herewith (i) with the consent or at the request of each of
the Banks, or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of Borrower; (iii) the satisfaction of any
condition specified in Article 3, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes, the Reimbursement Agreements or any other transaction
document. The Agent shall not incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telecopy or similar writing) believed by it to be genuine or to be signed
by the proper party or parties.
SECTION 8.6 Indemnification. Each Bank shall, ratably in accordance with
its Commitment, indemnify the Agent (to the extent not reimbursed by Borrower)
against any cost, expense (including counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from the Agent's gross
negligence or willful misconduct) that the Agent may suffer or incur in
connection with this Agreement or any action taken or omitted by the Agent
hereunder.
SECTION 8.7 Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 8.8 Resignation of Agent. The Agent may resign at any time by
giving written notice thereof to the Banks and Borrower. Upon any such
resignation, Borrower, with the consent of the Banks, shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
Borrower, and shall have accepted such appointment, within thirty (30) days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$200,000,000.00. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges, and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation as
Agent, the provisions of this Article 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
SECTION 8.9 Agent's Fee. In consideration of the services of the Agent
hereunder, Borrower shall pay to the Agent, solely for its account, an annual
fee in an amount to be agreed upon between Borrower and the Agent, which fee
shall be due and payable on the date hereof and on the first (1st) day of each
March hereafter during the Term hereof commencing with March 1, 2000.
ARTICLE 9 - MISCELLANEOUS
SECTION 9.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telecopy or similar
writing) and shall be given to such party at its address or telecopy number set
forth on the signature pages hereof or such other address or telecopy number as
such party may hereafter specify for the purpose by notice to Agent or Borrower
32
as the case may be. Each such notice, request or other communication shall be
effective (a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section, (b) if given by mail, 72 hours after
such communication is deposited in the mails with appropriate first class,
certified or registered postage prepaid, addressed as aforesaid, or (c) if given
by any other means, when delivered at the address specified in this Section;
provided that notices to the Agent and/or the Banks under Section 2.2, 2.4, 2.7,
2.8 or Article 7 shall not be effective until received.
SECTION 9.2 No Waivers. No failure or delay by the Agent or any of the
Banks in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other right, power or privilege. The rights and remedies
provided herein and in the other documents contemplated hereby shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.3 Expenses; Documentary Taxes. Borrower agrees, whether or not
any Loan is made or Letter of Credit issued hereunder, to pay Banks upon demand:
(i) all out-of-pocket costs and expenses and all Attorneys' Fees of Banks in
connection with the preparation, negotiation, execution and administration of
this Agreement, the Notes, any Reimbursement Agreements and the other
transaction documents, (ii) all out-of-pocket costs and expenses and all
Attorneys' Fees of Banks in connection with the preparation of any waiver or
consent hereunder or any amendment hereof or any Event of Default or alleged
Event of Default hereunder, (iii) if an Event of Default occurs, all
out-of-pocket costs and expenses and all Attorneys' Fees incurred by any Bank in
connection with such Event of Default and collection and other enforcement
proceedings resulting therefrom and (iv) all other Attorneys' Fees incurred by
Bank relating to or arising out of or in connection with this Agreement or any
of the other transaction documents. Borrower further agrees to pay or reimburse
Banks for any stamp or other taxes which may be payable with respect to the
execution, delivery, recording and/or filing of this Agreement, the Notes, the
Reimbursement Agreements or any of the other transaction documents. All of the
obligations of Borrower under this Section 9.3 shall survive the satisfaction
and payment of Borrower's Obligations and the termination of this Agreement.
SECTION 9.4 Environmental Indemnity. Borrower hereby agrees to indemnify
Agent and Banks and hold Agent and Banks harmless from and against any and all
losses, liabilities, damages, injuries, costs, expenses and claims of any and
every kind whatsoever (including, without limitation, court costs and Attorneys'
Fees) which at any time or from time to time may be paid, incurred or suffered
by, or asserted against, Agent or any Bank for, with respect to or as a direct
or indirect result of the violation by Borrower of any Environmental Laws; or
with respect to, or as a direct or indirect result of the presence on or under,
or the escape, seepage, leakage, spillage, discharge, emission or release from,
properties utilized by Borrower in the conduct of its respective business into
or upon any land, the atmosphere or any watercourse, body of water or wetland,
of any Hazardous Materials or any other hazardous or toxic waste, substance or
constituent or other substance (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under the Environmental Laws); and the provisions of and undertakings and
indemnification set out in this Section 9.4 shall survive the satisfaction and
payment of Borrower's Obligations and the termination of this Agreement.
SECTION 9.5 General Indemnity. In addition to the payment of expenses
pursuant to Section 9.3, whether or not the transactions contemplated hereby
shall be consummated, Borrower hereby agrees to indemnify, pay and hold Agent
and Banks and any holder(s) of the Notes, and the officers, directors,
employees, agents and affiliates of Agent, Banks and such holder(s)
(collectively, the "Indemnitees") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitees
33
shall be designated a party thereto), that may be imposed on, incurred by or
asserted against the Indemnitees, in any manner relating to or arising out of
this Agreement or any other agreement, document or instrument executed and
delivered by Borrower or any other Obligor in connection herewith, the
statements contained in any commitment letters delivered by Agent or any Bank,
Banks' agreements to make the Loans and issue Letters of Credit hereunder or the
use or intended use of any Letter of Credit or of the proceeds of any Loan
hereunder (collectively, the "indemnified liabilities"); provided that Borrower
shall have no obligation to an Indemnitee hereunder with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of that
Indemnitee as determined by a court of competent jurisdiction. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Borrower shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them. The provisions of the undertakings and indemnification set out in this
Section 9.5 shall survive satisfaction and payment of Borrower's Obligations and
the termination of this Agreement.
SECTION 9.6 Participations. Each Bank may sell to one or more other Persons
a participation in all or any part of its Commitment and any Loan and Letter of
Credit risk held by it, in which event each such participant shall be entitled
to the rights and benefits of this Agreement to the extent of its participation
in such Loan and Letter of Credit risk or such Bank's Commitment, as the case
may be, as if (and Borrower shall be directly obligated to such participant
under such provision as if) such participant were a "Bank" except only to the
extent provided under the Participation Agreement between such selling Bank and
such participant(s), but such participant shall not have any other rights or
benefits under this Agreement or the Notes. The Banks agree to notify Borrower
of any participations sold by delivering a copy of such Participation Agreement
to Borrower. In the event any Bank sells a participation, it shall not be
obligated to the participant under the Participation Agreement to take or
refrain from taking any action hereunder or under the Notes, except that such
Bank may agree in the Participation Agreement, that it will not, without the
consent of the participant, agree to (i) the increase or extension of the Term,
or the extension of the time or waiver of any requirement for the reduction or
termination, of such Bank's Commitment, (ii) the extension of any date fixed for
the payment of principal of or interest on the related Loan or Loans, any Letter
of Credit reimbursement obligation or fee, or of the commitment fee, (iii) the
reduction of any payment of principal thereof, or (iv) the reduction of the rate
at which either interest is payable thereon or (if the participant is entitled
to any part thereof) the commitment fee is payable hereunder to a level below
the rate at which the participant is entitled to receive interest or such fee
(as the case may be) in respect of such participation.
SECTION 9.7 Assignment Agreements. Each Bank may, upon prior notice to and
consent of Borrower and the Agent, which consent shall not be unreasonably
withheld or delayed and which consent of Borrower shall not be required after
the occurrence of a Default or an Event of Default hereunder, from time to time
sell and assign a pro rata part of all of the indebtedness evidenced by the Note
then owned by it together with an equivalent proportion of its obligation to
make Loans hereunder and the credit risk incidental to the Letters of Credit
pursuant to an Assignment Agreement substantially in the form of Exhibit I
attached hereto, executed by the assignor, the assignee, the Agent and the
Borrower (each an "Assignment Agreement"); provided that no assignment under
this Section 9.7 shall be made by any Bank to the Borrower or to any Subsidiary,
Related Party or other affiliate of the Borrower. The Assignment Agreement shall
specify in each instance the portion of the indebtedness evidenced by the
assignor's Note which is to be assigned to each such assignee and the portion of
the Commitment of the assignor and the credit risk incidental to the Letters of
Credit (which portions shall be equivalent) to be assumed by the assignee,
provided that nothing herein contained shall restrict, or be deemed to require
any consent as a condition to, or require payment of any fee in connection with,
any sale, discount or pledge by any Bank of any Note or other obligation
34
hereunder to a federal reserve bank. Any such portion of the indebtedness
assigned by any Bank pursuant to this Section 9.7 shall not be less than
$5,000,000.00. Upon the execution of each Assignment Agreement by the assignor,
the assignee and the Borrower and consent thereto by the Agent (i) such assignee
shall thereupon become a "Bank" for all purposes of this Agreement with a
Commitment in the amount set forth in such Assignment Agreement and with all the
rights, powers and obligations afforded a Bank hereunder, (ii) the assignor
shall have no further liability for funding the portion of its Commitment
assumed by such other Bank, (iii) the address for notices to such new Bank shall
be as specified in the Assignment Agreement, and (iv) the Borrowers shall, in
exchange for the cancellation of the Note held by the assignor Bank, execute and
deliver a Note to the assignee Bank in the amount of its Commitment and new Note
to the assignor Bank in the amount of its Commitment after giving effect to the
reduction occasioned by such assignment, all such Notes to constitute "Notes"
for all purposes of this Agreement. There shall be paid to the Agent, as a
condition to such assignment, an administration fee of $3,500.00 plus any
out-of-pocket costs and expenses incurred by it in effecting such assignment,
such fee to be paid by the assignor or the assignee as they may mutually agree,
but under no circumstances shall any portion of such fee be payable by or
charged to the Borrower. The Agent and each of the Banks are hereby authorized
to deliver a copy of any financial statement or other information made available
by the Borrower to any proposed assignee or participant in any portion of any
Bank's Loans and Commitment hereunder.
SECTION 9.8 Right of Setoff. Upon the occurrence and during the continuance
of any Event of Default, each Bank is hereby authorized at any time and from
time to time, without notice to Borrower (any such notice being expressly waived
by Borrower) and to the fullest extent permitted by law, to setoff and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by such Bank and any and all other indebtedness at any time owing
by such Bank to or for the credit or account of Borrower against any and all of
Borrower's Obligations irrespective of whether or not such Bank shall have made
any demand hereunder or under any of the other transaction documents and
although such obligations may be contingent or unmatured. Each offsetting Bank
agrees to promptly notify Borrower after any such setoff and application made by
such Bank, provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of Banks under
this Section 9.8 are in addition to any other rights and remedies (including,
without limitation, other rights of setoff) which Banks may have. As among
themselves, each of the Banks hereby agrees that in the event any Bank shall at
any time receive payments against Borrower's Obligations from any source,
whether by setoff or otherwise, and the effect of such payments is to cause such
Bank to receive more than its Pro Rata Share of the total principal payments
made to all Banks in the aggregate, then such Bank agrees to purchase from the
other Bank or Banks participating in Borrower's Obligations hereunder a
participating interest in such Bank's loans to the extent necessary to restore
each Bank to its Pro Rata Share of Borrower's Obligations hereunder.
SECTION 9.9 Amendments and Waivers. Any provision of this Agreement, the
Notes or any of the other Transaction Documents may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by Borrower and
Agent, which amendment or waiver Agent shall sign only upon the direction of the
Majority Banks; provided that no such amendment or waiver shall, unless signed
by all of the Banks, (i) increase the Commitment of any Bank, (ii) change the
Pro Rata Share of any of the Banks as to the Commitments or of the aggregate
unpaid principal amount of any Loan, (iii) reduce the principal of or rate of
interest on any Loan hereunder or any other amount payable hereunder, (iv)
postpone the date fixed for any payment of principal or interest on any Loan
hereunder, (v) amend Section 9.8 or this Section 9.9, (vi) make any change in
the Borrowing Base or its calculation, (vii) waive compliance with or otherwise
amend the financial covenants contained in Sections 5.1(e)(i) and (ii), or
(viii) amend the definition of Majority Banks.
NOTICE: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR
35
RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT BORROWER, THE AGENT AND THE
BANKS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS BORROWER, THE
AGENT AND THE BANKS REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING,
WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN
BORROWER, THE AGENT AND THE BANKS, EXCEPT AS BORROWER, THE AGENT AND THE BANKS
MAY LATER AGREE IN WRITING TO MODIFY SUCH AGREEMENT.
SECTION 9.10 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Borrower may not assign or
otherwise transfer any of its rights or obligations under this Agreement or the
Notes.
SECTION 9.11 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
SECTION 9.12 Missouri Law. This Agreement and the Notes are submitted for
acceptance at Agent's principal place of business in St. Louis, Missouri and
shall not be binding upon the Agent or the Banks or become effective until
executed by the Agent and/or the Banks, as applicable, at said place of
business. When so executed, this Agreement and the Notes shall be deemed to have
been made at said place of business. This Agreement, the Notes and any other
document delivered hereunder shall be construed in accordance with and governed
by the internal laws of the State of Missouri.
SECTION 9.13 Authority to Act. The Agent and the Banks shall be entitled to
act on any notices and instructions (telephonic or written) believed by Agent or
such Bank to have been delivered by any person authorized to act on behalf of
Borrower pursuant hereto, regardless of whether such notice or instruction was
in fact delivered by a person authorized to act on behalf of Borrower, and
Borrower hereby agrees to indemnify Agent and each Bank and hold Agent and each
Bank harmless from and against any and all losses and expenses, if any, ensuing
from any such action.
SECTION 9.14 Banks' Books and Records. Each Bank's books and records
showing the account between Borrower and such Bank shall be admissible in
evidence in any action or proceeding and shall constitute prima facie proof
thereof.
SECTION 9.15 CHOICE OF FORUM; WAIVER OF JURY TRIAL. TO INDUCE THE AGENT AND
THE BANKS TO ACCEPT THIS AGREEMENT, BORROWER, IRREVOCABLY, AGREES THAT ANY
ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR
RELATED TO THIS AGREEMENT AND THE NOTE MAY BE LITIGATED IN COURTS HAVING SITUS
WITHIN THE CITY OF ST. LOUIS, STATE OF MISSOURI. BORROWER HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN
SAID CITY AND STATE. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT IN ACCORDANCE WITH THIS SECTION.
BORROWER AND BANK IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY ACTION IN WHICH BORROWER, THE AGENT OR ANY OF THE BANKS ARE PARTIES.
SECTION 9.16 Resurrection of Obligations. To the extent that any Bank
receives any payment on account of Borrower's liabilities, and any such
payment(s) or any part thereof are subsequently invalidated, declared to be
36
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other party under any bankruptcy act, state or
federal law, common law or equitable cause, then, to the extent of such
payment(s) received, Borrower's liabilities, or part thereof intended to be
satisfied, shall be revived and continue in full force and effect, as if such
payment(s) had not been received by such Bank and applied on account of
Borrower's liabilities.
SECTION 9.17 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when the Agent shall have received
counterparts hereof signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SHOE CARNIVAL, INC.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President,
Chief Financial Officer and Treasurer
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment: MERCANTILE BANK
NATIONAL ASSOCIATION
$17,500,000.00 (38.89%)
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, Assistant Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment: OLD NATIONAL BANK
$10,000,000.00 (22.22%)
By: /s/ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, Vice President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
37
Commitment: FIRST UNION NATIONAL BANK
$17,500,000.00 (38.89%)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
MERCANTILE BANK
NATIONAL ASSOCIATION, AS AGENT
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, Assistant Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
38
Promissory Note
$17,500,000.00 St. Louis, Missouri
April 16, 1999
FOR VALUE RECEIVED, SHOE CARNIVAL, INC., an Indiana corporation
("Borrower"), hereby promises to pay to the order of Mercantile Bank National
Association, a national banking association ("Bank") on March 31, 2001, the
lesser of (a) Seventeen Million Five Hundred Thousand Dollars ($17,500,000.00),
or (b) the aggregate unpaid principal amount of all Loans made by Bank to
Borrower in accordance with the terms and conditions hereof and of that certain
Amended and Restated Credit Agreement dated as of April 16, 1999, made by and
between Borrower, Mercantile Bank National Association, as Agent (the "Agent")
and the Banks named therein, as from time to time amended (as amended, the
"Credit Agreement") and the unreimbursed amount of any draws under any Letters
of Credit issued for the account of Borrower in accordance with the terms and
conditions of the Credit Agreement and the Reimbursement Agreements (as defined
in the Credit Agreement). The aggregate principal amount which Bank may have
outstanding hereunder at any one time for all Loans shall not exceed the lesser
of (i) Seventeen Million Five Hundred Thousand Dollars ($17,500,000.00) minus
the face amount of all Letters of Credit then outstanding under Section 2.1(a)
of the Credit Agreement, or (ii) Thirty-Eight and Eighty-Nine Hundredths of One
Percent (38.89%) of the then current Borrowing Base, which amounts may be
borrowed, paid, reborrowed and repaid, in full or in part, prior to March 31,
2001 subject to the terms and conditions hereof and of the Credit Agreement. If
at any time the aggregate principal amount of all Loans outstanding under this
Note should exceed the amount set forth in the preceding sentence, whether as a
result of a reduction in the Borrowing Base or otherwise, Borrower shall be
automatically required (without demand or notice of any kind by Bank, all of
which are hereby expressly waived by Borrower), to immediately repay the Loans
in an amount sufficient to reduce such aggregate principal amount of Loans
outstanding under this Note to the amount set forth in the preceding sentence.
Additionally, Borrower promises to pay to the order of Bank all accrued
interest owing on the principal amount of all Loan advances and Letter of Credit
reimbursement obligations outstanding hereunder. Advances hereunder shall bear
interest at the rate per annum equal to such of the following as Borrower, at
its option, shall select:
(a) the interest rate equal to the interest rate announced from time to
time by Agent as its "Prime Rate" on commercial loans minus One-Half of One
Percent (0.50%), which rate shall fluctuate as and when said Prime Rate shall
change, or
(b) the London Interbank Offered Rate plus Eurocurrency Margin (as defined
in the Credit Agreement) for the applicable Interest Period,
determined in each case as of the date of a Prime Rate Loan made hereunder, or
the commencement of a Interest Period for Eurocurrency Loans, as the case may
be. Said interest shall be payable on the dates provided in the Credit
Agreement. After maturity, the unpaid principal hereof shall bear interest at a
rate per annum equal to two and one-half percent (2.50%) in excess of the
interest rate announced from time to time by Agent as its "Prime Rate" on
commercial loans, which rate shall fluctuate as and when said Prime Rate shall
change.
39
Interest shall be computed on the basis of a 360-day year for the actual
number of days elapsed for all Loans made hereunder. Payments of principal,
interest and fees shall be made in lawful money of the United States of America
in immediately available funds at the office of Agent situated at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as the holder of this
Note may designate, and such payments shall be applied to the payment of
interest or principal (or any combination of the foregoing) owing on this Note
in such order as Bank (or such holder) shall determine.
All advances and all principal payments made hereunder and all Interest
Periods and interest rates applicable to Eurocurrency Loans may be endorsed by
the Bank on its records or the sheet attached to this Note, which information so
endorsed or recorded shall constitute prima facie evidence thereof; provided,
however that the obligation of Borrower to repay each advance made hereunder
shall be absolute and unconditional, notwithstanding any failure of Bank to
endorse or record or any mistake by Bank in connection with any recordation or
with any endorsement on the sheet attached to this Note or to give to Borrower
or receive from Borrower any notice or confirmation of each advance.
Borrower shall be privileged to prepay in whole or in part the principal
outstanding hereunder; provided, however, that (subject to the right of Bank to
accelerate payment hereunder) any Eurocurrency Loan may be prepaid only at the
expiration of the applicable Interest Period; and provided further, however,
that on any such prepayment, Borrower shall also pay all interest accrued on the
principal amount being prepaid to and including the date of such prepayment. Any
payment of a Eurocurrency Loan other than on the last day of the applicable
Interest Period in contravention of this paragraph shall obligate Borrower to
pay to Bank the amount of any funding losses or other breakage costs which may
be incurred by Bank as set forth in Section 2.10 of the Credit Agreement.
Consistent with the terms of this Note, the Agent shall determine each
interest rate applicable to the advances hereunder, which determination shall be
conclusive in the absence of manifest error.
This Note is one of the Notes referred to in the Credit Agreement, which
Credit Agreement, among other things, contains provisions for acceleration of
the maturity hereof upon the occurrence of certain stated events and also for
prepayments on account of principal hereof and interest hereon prior to the
maturity hereof upon the terms and conditions specified therein. Terms defined
in the Credit Agreement are used herein with the same meanings.
In the event that any payment due hereunder shall not be paid when due,
whether by reason of demand or otherwise, and this Note shall be placed in the
hands of an attorney for collection hereof, Borrower agrees to pay in addition
to all other amounts due hereon the costs and expenses of collection, including
reasonable attorneys' fees and expenses, whether or not litigation is commenced
in aid thereof. Borrower hereby waives presentment, demand, protest, notice of
protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Missouri.
40
This Note is a renewal, restatement and continuation of the obligations due
Bank as evidenced by a prior Amended and Restated Promissory Note dated March
31, 1998 from Borrower to Bank, and is not a novation thereof. All interest
evidenced by the prior Note being renewed by this instrument shall continue to
be due and payable until paid.
SHOE CARNIVAL, INC.
By:/s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President,
Chief Financial Officer and Treasurer
STATE OF INDIANA )
) SS.
COUNTY OF VANDERBURGH )
On this 16th day of April, 1999, before me appeared W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, to me
personally known, who being by me duly sworn, did say that he is the Vice
President, Chief Financial Officer and Treasurer of Shoe Carnival, Inc., an
Indiana corporation, and that said instrument was signed in behalf of said
corporation by authority of its Board of Directors; and said W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
acknowledged said instrument to be the free act and deed of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year first above written.
(Seal)
Notary Public /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
My Commission Expires: 6/23/01
41
Promissory Note
$10,000,000.00 St. Louis, Missouri
April 16, 1999
FOR VALUE RECEIVED, SHOE CARNIVAL, INC., an Indiana corporation
("Borrower"), hereby promises to pay to the order of Old National Bank, a
national bank ("Bank") on March 31, 2001, the lesser of (a) Ten Million Dollars
($10,000,000.00), or (b) the aggregate unpaid principal amount of all Loans made
by Bank to Borrower in accordance with the terms and conditions hereof and of
that certain Amended and Restated Credit Agreement dated as of April 16, 1999
made by and between Borrower, Mercantile Bank National Association, as Agent
(the "Agent") and the Banks named therein, as from time to time amended (as
amended, the "Credit Agreement") and the unreimbursed amount of any draws under
any Letters of Credit issued for the account of Borrower in accordance with the
terms and conditions of the Credit Agreement and the Reimbursement Agreements
(as defined in the Credit Agreement). The aggregate principal amount which Bank
may have outstanding hereunder at any one time for all Loans shall not exceed
the lesser of (i) Ten Million Dollars ($10,000,000.00) minus the face amount of
all Letters of Credit then outstanding under Section 2.1(a) of the Credit
Agreement, or (ii) Twenty-Two and Twenty-Two Hundredths of One Percent (22.22%)
of the then current Borrowing Base, which amounts may be borrowed, paid,
reborrowed and repaid, in whole or in part, prior to March 31, 2001 subject to
the terms and conditions hereof and of the Credit Agreement. If at any time the
aggregate principal amount of all Loans outstanding under this Note should
exceed the amount set forth in the preceding sentence, whether as a result of a
reduction in the Borrowing Base or otherwise, Borrower shall be automatically
required (without demand or notice of any kind by Bank, all of which are hereby
expressly waived by Borrower), to immediately repay the Loans in an amount
sufficient to reduce such aggregate principal amount of Loans outstanding under
this Note to the amount set forth in the preceding sentence.
Additionally, Borrower promises to pay to the order of Bank
all accrued interest owing on the principal amount of all Loan advances and
Letter of Credit reimbursement obligations outstanding hereunder. Advances
hereunder shall bear interest at the rate per annum equal to such of the
following as Borrower, at its option, shall select:
(a) the interest rate equal to the interest rate announced from time to
time by Agent as its "Prime Rate" on commercial loans minus One-Half of One
Percent (0.50%), which rate shall fluctuate as and when said Prime Rate shall
change, or
(b) the London Interbank Offered Rate plus Eurocurrency Margin (as defined
in the Credit Agreement) for the applicable Interest Period,
determined in each case as of the date of a Prime Rate Loan made hereunder, or
the commencement of a Interest Period for Eurocurrency Loans, as the case may
be. Said interest shall be payable on the dates provided in the Credit
Agreement. After maturity, the unpaid principal hereof shall bear interest at a
rate per annum equal to two and one-half percent (2.50%) in excess of the
interest rate announced from time to time by Agent as its "Prime Rate" on
commercial loans, which rate shall fluctuate as and when said Prime Rate shall
change.
42
Interest shall be computed on the basis of a 360-day year for the actual
number of days elapsed for all Loans made hereunder. Payments of principal,
interest and fees shall be made in lawful money of the United States of America
in immediately available funds at the office of Agent situated at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as the holder of this
Note may designate, and such payments shall be applied to the payment of
interest or principal (or any combination of the foregoing) owing on this Note
in such order as Bank (or such holder) shall determine.
All advances and all principal payments made hereunder and all Interest
Periods and interest rates applicable to Eurocurrency Loans may be endorsed by
the Bank on its records or the sheet attached to this Note, which information so
endorsed or recorded shall constitute prima facie evidence thereof; provided,
however that the obligation of Borrower to repay each advance made hereunder
shall be absolute and unconditional, notwithstanding any failure of Bank to
endorse or record or any mistake by Bank in connection with any recordation or
with any endorsement on the sheet attached to this Note or to give to Borrower
or receive from Borrower any notice or confirmation of each advance.
Borrower shall be privileged to prepay in whole or in part the principal
outstanding hereunder; provided, however, that (subject to the right of Bank to
accelerate payment hereunder) any Eurocurrency Loan may be prepaid only at the
expiration of the applicable Interest Period; and provided further, however,
that on any such prepayment, Borrower shall also pay all interest accrued on the
principal amount being prepaid to and including the date of such prepayment. Any
payment of a Eurocurrency Loan other than on the last day of the applicable
Interest Period in contravention of this paragraph shall obligate Borrower to
pay to Bank the amount of any funding losses or other breakage costs which may
be incurred by Bank as set forth in Section 2.10 of the Credit Agreement.
Consistent with the terms of this Note, the Agent shall determine each
interest rate applicable to the advances hereunder, which determination shall be
conclusive in the absence of manifest error.
This Note is one of the Notes referred to in the Credit Agreement, which
Credit Agreement, among other things, contains provisions for acceleration of
the maturity hereof upon the occurrence of certain stated events and also for
prepayments on account of principal hereof and interest hereon prior to the
maturity hereof upon the terms and conditions specified therein. Terms defined
in the Credit Agreement are used herein with the same meanings.
In the event that any payment due hereunder shall not be paid when due,
whether by reason of demand or otherwise, and this Note shall be placed in the
hands of an attorney for collection hereof, Borrower agrees to pay in addition
to all other amounts due hereon the costs and expenses of collection, including
reasonable attorneys' fees and expenses, whether or not litigation is commenced
in aid thereof. Borrower hereby waives presentment, demand, protest, notice of
protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Missouri.
SHOE CARNIVAL, INC.
By:/s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President,
Chief Financial Officer and Treasurer
43
STATE OF INDIANA )
) SS.
COUNTY OF VANDERBURGH )
On this 16th day of April, 1999, before me appeared W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, to me
personally known, who being by me duly sworn, did say that he is the Vice
President, Chief Financial Officer and Treasurer of Shoe Carnival, Inc., an
Indiana corporation, and that said instrument was signed in behalf of said
corporation by authority of its Board of Directors; and said W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
acknowledged said instrument to be the free act and deed of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year first above written.
(Seal)
Notary Public /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
My Commission Expires: 6/23/01
44
Promissory Note
$17,500,000.00 St. Louis, Missouri
April 16, 1999
FOR VALUE RECEIVED, SHOE CARNIVAL, INC., an Indiana corporation
("Borrower"), hereby promises to pay to the order of First Union National Bank,
a national bank ("Bank") on March 31, 2001, the lesser of (a) Seventeen Million
Five Hundred Thousand Dollars ($17,500,000.00), or (b) the aggregate unpaid
principal amount of all Loans made by Bank to Borrower in accordance with the
terms and conditions hereof and of that certain Amended and Restated Credit
Agreement dated as of April 16, 1999 made by and between Borrower, Mercantile
Bank National Association, as Agent (the "Agent") and the Banks named therein,
as amended from time to time (as amended, the "Credit Agreement") and the
unreimbursed amount of any draws under any Letters of Credit issued for the
account of Borrower in accordance with the terms and conditions of the Credit
Agreement and the Reimbursement Agreements (as defined in the Credit Agreement).
The aggregate principal amount which Bank may have outstanding hereunder at any
one time for all Loans shall not exceed the lesser of (i) Seventeen Million Five
Hundred Thousand Dollars ($17,500,000.00) minus the face amount of all Letters
of Credit then outstanding under Section 2.1(a) of the Credit Agreement, or (ii)
Thirty-Eight and Eighty-Nine Hundredths of One Percent (38.89%) of the then
current Borrowing Base, which amounts may be borrowed, paid, reborrowed and
repaid, in whole or in part, prior to March 31, 2001 subject to the terms and
conditions hereof and of the Credit Agreement. If at any time the aggregate
principal amount of all Loans outstanding under this Note should exceed the
amount set forth in the preceding sentence, whether as a result of a reduction
in the Borrowing Base or otherwise, Borrower shall be automatically required
(without demand or notice of any kind by Bank, all of which are hereby expressly
waived by Borrower), to immediately repay the Loans in an amount sufficient to
reduce such aggregate principal amount of Loans outstanding under this Note to
the amount set forth in the preceding sentence.
Additionally, Borrower promises to pay to the order of Bank all accrued
interest owing on the principal amount of all Loan advances and Letter of Credit
reimbursement obligations outstanding hereunder. Advances hereunder shall bear
interest at the rate per annum equal to such of the following as Borrower, at
its option, shall select:
(a) the interest rate equal to the interest rate announced from time to
time by Agent as its "Prime Rate" on commercial loans minus One-Half of One
Percent (0.50%), which rate shall fluctuate as and when said Prime Rate shall
change, or
(b) the London Interbank Offered Rate plus Eurocurrency Margin (as defined
in the Credit Agreement) for the applicable Interest Period,
determined in each case as of the date of a Prime Rate Loan made hereunder, or
the commencement of a Interest Period for Eurocurrency Loans, as the case may
be. Said interest shall be payable on the dates provided in the Credit
Agreement. After maturity, the unpaid principal hereof shall bear interest at a
rate per annum equal to two and one-half percent (2.50%) in excess of the
interest rate announced from time to time by Agent as its "Prime Rate" on
commercial loans, which rate shall fluctuate as and when said Prime Rate shall
change.
45
Interest shall be computed on the basis of a 360-day year for the actual
number of days elapsed for all Loans made hereunder. Payments of principal,
interest and fees shall be made in lawful money of the United States of America
in immediately available funds at the office of Agent situated at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as the holder of this
Note may designate, and such payments shall be applied to the payment of
interest or principal (or any combination of the foregoing) owing on this Note
in such order as Bank (or such holder) shall determine.
All advances and all principal payments made hereunder and all Interest
Periods and interest rates applicable to Eurocurrency Loans may be endorsed by
the Bank on its records or the sheet attached to this Note, which information so
endorsed or recorded shall constitute prima facie evidence thereof; provided,
however that the obligation of Borrower to repay each advance made hereunder
shall be absolute and unconditional, notwithstanding any failure of Bank to
endorse or record or any mistake by Bank in connection with any recordation or
with any endorsement on the sheet attached to this Note or to give to Borrower
or receive from Borrower any notice or confirmation of each advance.
Borrower shall be privileged to prepay in whole or in part the principal
outstanding hereunder; provided, however, that (subject to the right of Bank to
accelerate payment hereunder) any Eurocurrency Loan may be prepaid only at the
expiration of the applicable Interest Period; and provided further, however,
that on any such prepayment, Borrower shall also pay all interest accrued on the
principal amount being prepaid to and including the date of such prepayment. Any
payment of a Eurocurrency Loan other than on the last day of the applicable
Interest Period in contravention of this paragraph shall obligate Borrower to
pay to Bank the amount of any funding losses or other breakage costs which may
be incurred by Bank as set forth in Section 2.10 of the Credit Agreement.
Consistent with the terms of this Note, the Agent shall determine each
interest rate applicable to the advances hereunder, which determination shall be
conclusive in the absence of manifest error.
This Note is one of the Notes referred to in the Credit Agreement, which
Credit Agreement, among other things, contains provisions for acceleration of
the maturity hereof upon the occurrence of certain stated events and also for
prepayments on account of principal hereof and interest hereon prior to the
maturity hereof upon the terms and conditions specified therein. Terms defined
in the Credit Agreement are used herein with the same meanings.
In the event that any payment due hereunder shall not be paid when due,
whether by reason of demand or otherwise, and this Note shall be placed in the
hands of an attorney for collection hereof, Borrower agrees to pay in addition
to all other amounts due hereon the costs and expenses of collection, including
reasonable attorneys' fees and expenses, whether or not litigation is commenced
in aid thereof. Borrower hereby waives presentment, demand, protest, notice of
protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Missouri.
46
This Note is a renewal, restatement and continuation of the obligations due
Bank as evidenced by a prior Amended and Restated Promissory Note dated March
31, 1998 from Borrower to Bank, and is not a novation thereof. All interest
evidenced by the prior Note being renewed by this instrument shall continue to
be due and payable until paid.
SHOE CARNIVAL, INC.
By:/s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President,
Chief Financial Officer and Treasurer
STATE OF INDIANA )
) SS.
COUNTY OF VANDERBURGH )
On this 16th day of April, 1999, before me appeared W. ▇▇▇▇▇ ▇▇▇▇▇▇▇, to me
personally known, who being by me duly sworn, did say that he is the Vice
President, Chief Financial Officer and Treasurer of Shoe Carnival, Inc., an
Indiana corporation, and that said instrument was signed in behalf of said
corporation by authority of its Board of Directors; and said W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
acknowledged said instrument to be the free act and deed of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year first above written.
(Seal)
Notary Public /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
My Commission Expires: 06/23/01
47