Exhibit 10.2
FINANCING AGREEMENT
DATED AS OF JUNE, 11 2002
BY AND AMONG
VALUE CITY DEPARTMENT STORES, INC.,
SHONAC CORPORATION,
DSW SHOE WAREHOUSE, INC.,
GRAMEX RETAIL STORES, INC.,
FILENE'S BASEMENT, INC.,
VALUE CITY LIMITED PARTNERSHIP,
VALUE CITY OF MICHIGAN, INC.,
GB RETAILERS, INC., AND
VCM, LTD.
AS BORROWERS
THE LENDERS FROM TIME TO TIME PARTY HERETO,
AND
CERBERUS PARTNERS, L.P.
AS AGENT
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; CERTAIN TERMS..........................................1
Section 1.01 Definitions....................................1
Section 1.02 Terms Generally...............................24
Section 1.03 Accounting and Other Terms....................24
Section 1.04 Time References...............................24
ARTICLE II THE LOANS.........................................................25
Section 2.01 Commitments...................................25
Section 2.02 Making the Loans..............................25
Section 2.03 Notes; Repayment of Loans.....................26
Section 2.04 Interest......................................26
Section 2.05 Prepayment of Loans...........................27
Section 2.06 Fees..........................................29
Section 2.07 Securitization................................30
Section 2.08 Taxes.........................................30
ARTICLE III FEES, PAYMENTS AND OTHER COMPENSATION............................32
Section 3.01 Audit and Collateral Monitoring Fees..........32
Section 3.02 Payments; Computations and Statements.........32
Section 3.03 Sharing of Payments, Etc......................33
Section 3.04 Apportionment of Payments.....................34
Section 3.05 Increased Costs and Reduced Return............34
Section 3.06 Joint and Several Liability of the Borrowers..36
ARTICLE IV CONDITIONS TO LOANS...............................................37
Section 4.01 Conditions Precedent to Effectiveness.........37
ARTICLE V REPRESENTATIONS AND WARRANTIES.....................................42
Section 5.01 Representations and Warranties................42
ARTICLE VI COVENANTS OF THE LOAN PARTIES.....................................53
Section 6.01 Affirmative Covenants.........................53
Section 6.02 Negative Covenants............................58
ARTICLE VII Reporting Requirements...........................................67
Section 7.01 Maintain Records..............................67
Section 7.02 Access to Records.............................67
Section 7.03 Prompt Notice to Administrative Agent.........68
Section 7.04 Weekly Reports................................69
Section 7.05 Monthly Reports...............................69
Section 7.06 Quarterly Reports.............................69
Section 7.07 Annual Reports................................70
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Section 7.08 Officer's Certificates........................70
Section 7.09 Inventories, Appraisals and Audits............71
Section 7.10 Additional Financial Information..............71
Section 7.11 Format of Information.........................72
ARTICLE VIII USE OF COLLATERAL...............................................72
Section 8.01 Use of Inventory Control......................72
Section 8.02 Inventory Quality.............................72
Section 8.03 Adjustments and Allowances....................73
Section 8.04 Validity of Accounts..........................73
Section 8.05 Notification to Account Debtors...............73
Section 8.06 Appointment as Attorney-In-Fact...............73
Section 8.07 No Obligation To Act..........................74
ARTICLE IX EVENTS OF DEFAULT.................................................74
Section 9.01 Events of Default.............................74
ARTICLE X AGENT..............................................................78
Section 10.01 Appointment...................................78
Section 10.02 Nature of Duties..............................79
Section 10.03 Rights; Exculpation, Etc......................79
Section 10.04 Reliance......................................80
Section 10.05 Indemnification...............................80
Section 10.06 Agent Individually............................80
Section 10.07 Successor Agent...............................81
Section 10.08 Collateral Matters............................81
Section 10.09 Agency for Perfection.........................82
ARTICLE XI GUARANTY..........................................................83
Section 11.01 Guaranty......................................83
Section 11.02 Guaranty Absolute.............................83
Section 11.03 Waiver........................................84
Section 11.04 Continuing Guaranty; Assignments..............84
Section 11.05 Subrogation...................................84
ARTICLE XII MISCELLANEOUS....................................................85
Section 12.01 Notices, Etc..................................85
Section 12.02 Amendments, Etc...............................86
Section 12.03 No Waiver; Remedies, Etc......................87
Section 12.04 Expenses; Taxes; Attorneys' Fees..............87
Section 12.05 Right of Set-off..............................88
Section 12.06 Severability..................................88
Section 12.07 Assignments and Participations................88
Section 12.08 Counterparts..................................91
Section 12.09 Governing Law.................................92
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Section 12.10 Consent to Jurisdiction; Service of Process
and Venue.....................................92
Section 12.11 Waiver of Jury Trial, Etc.....................92
Section 12.12 Consent by the Agent and Lenders..............93
Section 12.13 No Party Deemed Drafter.......................93
Section 12.14 Reinstatement; Certain Payments...............93
Section 12.15 Indemnification...............................93
Section 12.16 Parent, as Agent for Borrowers................94
Section 12.17 Records.......................................95
Section 12.18 Binding Effect................................95
Section 12.19 Maximum Interest..............................95
Section 12.20 Confidentiality...............................96
Section 12.21 Integration...................................97
ARTICLE XIII ISSUANCE OF EQUITY INTERESTS TO LENDERS.........................97
Section 13.01 Authorization and Issuance of Warrants........97
Section 13.02 Securities Act Matters........................98
Section 13.03 Certain Taxes.................................99
Section 13.04 Cancellation and Issuance.....................99
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SCHEDULES AND EXHIBITS:
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Schedule 1.01(A) Lenders and Lenders' Commitments
Schedule 5.01(e)(i) Capitalization
Schedule 5.01(e)(ii) Subsidiaries
Schedule 5.01(f) Litigation; Commercial Tort Claims
Schedule 5.01(i) ERISA
Schedule 5.01(j) Taxes
Schedule 5.01(o)(i) Consignment Property
Schedule 5.01(o)(ii) Real Property
Schedule 5.01(q) Capital Leases
Schedule 5.01(r) Environmental Matters
Schedule 5.01(s) Insurance
Schedule 5.01(v) Bank Accounts
Schedule 5.01(w) Intellectual Property
Schedule 5.01(x) Material Contracts
Schedule 5.01(z) Labor Contracts
Schedule 5.01(cc) Locations of Inventory; Place of Business; Chief
Executive Office; State of Incorporation; FEIN;
Organizational ID Number
Schedule 5.01(dd) Tradenames
Schedule 5.01(ee) Collateral Locations
Schedule 5.01(kk) Unrestricted Subsidiaries
Schedule 6.02(a) Permitted Liens
Schedule 6.02(b) Permitted Indebtedness
Schedule 6.02(c) Permitted Dispositions
Schedule 6.02(e) Existing and Permitted Investments
Schedule 6.02(e)(vi)(F) Intercompany Loans
Schedule 6.02(e)(vi)(H) Existing Loans
Schedule 6.02(j) Limitations on Dividends and Other Payment
Restrictions
Schedule 7.05 Monthly Financial Reporting Requirements
Exhibit A Form of Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Notice of Election
Exhibit D Form of Guaranty
Exhibit E Form of Security Agreement
Exhibit F Form of Pledge Agreement
Exhibit G Form of Borrowing Base Certificate
Exhibit H Form of Opinion of Counsel
Exhibit I Form of Assignment and Acceptance
Exhibit J Form of Warrant
Exhibit K Form of Registered Note Language
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FINANCING AGREEMENT
Financing Agreement, dated as of June 11, 2002, by and among
Value City Department Stores, Inc., an Ohio corporation (the "PARENT"), Shonac
Corporation, an Ohio corporation ("SHONAC"), DSW Shoe Warehouse, Inc., a
Missouri corporation ("DSW"), Gramex Retail Stores, Inc., a Delaware corporation
("GRAMEX"), VCM, Ltd., an Ohio limited liability company ("VCM"), Filene's
Basement, Inc., a Delaware corporation ("FILENE'S"), GB Retailers, Inc., a
Delaware corporation ("GB"), Value City Limited Partnership, an Ohio limited
partnership ("VCLP"), Value City of Michigan, Inc., a Michigan corporation ("VC
MICHIGAN", and together with the Parent, Shonac, DSW, Gramex, VCM, Filene's, GB
and VCLP, each a "BORROWER" and collectively, the "BORROWERS"), certain
subsidiaries of the Parent (other than a Borrower) whose names appear on the
signature pages hereof (each a "GUARANTOR" and collectively, the "Guarantors"),
the lenders from time to time party hereto (each a "LENDER" and collectively,
the "LENDERS"), and Cerberus Partners, L.P., a limited partnership formed under
the laws of the State of Delaware ("CP"), as agent for the Lenders (in such
capacity together with its successors and assigns, the "AGENT").
RECITALS
The Borrowers have asked the Lenders to extend credit to the
Borrowers consisting of two term loans, each in an aggregate principal amount of
$50,000,000. The proceeds of the term loans shall be used (i) to repay certain
existing obligations of the Parent under the Existing Credit Facilities (as
hereinafter defined), and (ii) to pay certain costs and expenses in connection
with the transactions contemplated hereby. The Lenders are severally, and not
jointly, willing to extend such credit to the Borrowers subject to the terms and
conditions hereinafter set forth.
In consideration of the premises and the covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
Section 1.01 DEFINITIONS. As used in this Agreement, the
following terms shall have the respective meanings indicated below, such
meanings to be applicable equally to both the singular and plural forms of such
terms:
"ACCOUNT DEBTOR" means each debtor, customer or obligor in any
way obligated on or in connection with any Accounts Receivable.
"ACCOUNTS RECEIVABLE" means, with respect to any Person, any
and all rights of such Person to payment for goods sold and/or services
rendered, including accounts, general intangibles and any and all such rights
evidenced by chattel paper, instruments or documents, whether due or to become
due and whether or not earned by performance, and whether now or hereafter
acquired or arising in the future, and any proceeds arising therefrom or
relating thereto.
"ACTION" has the meaning specified therefor in Section 12.12.
"ACQUISITION" means the purchase or acquisition of all or
substantially all of the assets of any Person, the purchase of a controlling
equity interest in any Person, or the merger or consolidation of any Person with
any other Person, in any transaction or group of transactions which are part of
a common plan.
"ADMINISTRATIVE BORROWER" has the meaning specified therefor
in Section 12.16.
"AFFILIATE" means (i) with respect to any Person, any other
Person that directly or, alone or with a group of related Persons whose
interests taken as a whole, indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, such Person; (ii)
any Person which is a parent, brother-sister or subsidiary of a Borrower, whose
enterprise's tax returns or financial statements are consolidated with those of
a Borrower, which is a member of the same controlled group of corporations
(within the meaning of Section 1563(a)(1), (2) and (3) of the Internal Revenue
Code or 1986, as amended from time to time) of which any Borrower is a member,
or Controls or is Controlled by any Borrower; and (iii) with respect to the Loan
Parties, without limiting the provisions of clauses (i) and (ii) hereof,
"Affiliate" includes SSC. Notwithstanding anything to the contrary contained
herein, in no event shall the Agent or any Lender be considered an "Affiliate"
of a Loan Party as a result of being party to this Agreement or the transactions
contemplated hereby
"AGENT" has the meaning specified therefor in the preamble
hereto.
"AGENT ADVANCES" has the meaning specified therefor in Section
10.08(a).
"AGENT'S ACCOUNT" means an account at a bank designated by the
Agent from time to time as the account into which the Loan Parties shall make
certain payments to the Agent for the benefit of the Agent and the Lenders under
this Agreement and the other Loan Documents.
"AGREEMENT" means this Financing Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative.
"ANNIVERSARY FEE" has the meaning specified therefor in
Section 2.06(b).
"APPLICABLE LAW" means, as to any Person, (i) all statutes,
rules, regulations, orders or other requirements having the force of law, and
(ii) all court orders and injunctions, arbitrator's decisions and/or similar
rulings, in each instance ((i) and (ii)) of or by any Federal, state, municipal
or other governmental authority, or court, tribunal, panel or other body which
has or claims jurisdiction over such Person, or any property of such Person, or
of any other Person for whose conduct such Person would be responsible.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by an assigning Lender and an assignee, and accepted by the Agent,
in accordance with Section 12.07 hereof and substantially in the form of Exhibit
I hereto or such other form acceptable to the Agent.
"AUTHORIZED OFFICER" means, with respect to any Person, the
chief executive officer, chief financial officer, president, executive vice
president, controller or treasurer of such Person.
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"BANKRUPTCY CODE" means the United States Bankruptcy Code (11
U.S.C. ss. 101, ET SEQ.), as amended from time to time, and any successor
statute.
"BOARD" means the Board of Governors of the Federal Reserve
System of the United States.
"BOARD OF DIRECTORS" means the board of directors of the
Parent as of the Effective Date.
"BORROWER" has the meaning specified therefor in the preamble
hereto.
"BORROWING BASE CERTIFICATE" has the meaning set forth in the
Revolving Credit Facility as in effect from time to time.
"BUSINESS DAY" means any day other than (i) a Saturday or
Sunday, (ii) any day on which banks in New York City generally are not open to
the general public for the purpose of conducting commercial banking business, or
(iii) a day on which the principal office of the Agent is not open to the
general public to conduct business.
"BUSINESS PLAN" means the business plan for the Loan Parties
for the fiscal years 2002 through and including 2004 dated March 19, 2002, as
set forth in that certain confidential side letter from the Parent to the Agent.
"CAPITAL EXPENDITURES" means, with respect to any Person for
any period, the sum of (i) the aggregate of all expenditures by such Person and
its Subsidiaries during such period that in accordance with GAAP are or should
be included in "property, plant and equipment" or in a similar fixed asset
account on its balance sheet, whether such expenditures are paid in cash or
financed and including all Capitalized Lease Obligations paid or payable during
such period; and (ii) to the extent not covered by clause (i) above, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period to acquire by purchase or otherwise the business or fixed assets of, or
the Capital Stock of, any other Person.
"CAPITAL GUIDELINE" means any law, rule, regulation, policy,
guideline or directive (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) of any central bank or
Governmental Authority (i) regarding capital adequacy, capital ratios, capital
requirements, the calculation of a bank's capital or similar matters, or (ii)
affecting the amount of capital required to be obtained or maintained by any
Lender, any Person controlling any Lender or the manner in which any Lender, any
Person controlling any Lender, allocates capital to any of its contingent
liabilities (including letters of credit), advances, acceptances, commitments,
assets or liabilities.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock; and (ii) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"CAPITALIZED LEASE" means, with respect to any Person, any
lease of real or personal property by such Person as lessee which is (i)
required under GAAP to be capitalized on
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the balance sheet of such Person; or (ii) a transaction of a type commonly known
as a "synthetic lease" (i.e. a lease transaction that is treated as an operating
lease for accounting purposes but with respect to which payments of rent are
intended to be treated as payments of principal and interest on a loan for
Federal income tax purposes).
"CAPITALIZED LEASE OBLIGATIONS" means, with respect to any
Person, obligations of such Person and its Subsidiaries under Capitalized
Leases, and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"CHANGE IN CONTROL" means the occurrence of any of the
following: (i) the acquisition, by any person or group (within the meaning of
Section 13(d)(3) of the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of 25% or more of the issued and
outstanding capital stock of the Parent having the right, under ordinary
circumstances, to vote for the election of directors of the Parent, excluding
from the foregoing any acquisition pursuant to the issuance of the Warrants or
the exercise of conversion rights under the Convertible Loan Agreement; (ii)
other than as a result of the exercise by CP of Board representation rights
under the Convertible Loan Agreement, more than half of the Persons who were
directors of the Parent on the first day of any period consisting of twelve (12)
consecutive calendar months (the first of which twelve (12) month periods
commencing with the first day of the month during which this Agreement was
executed), cease, for any reason other than death, disability, or replacement by
other Persons nominated by a nominating committee controlled by SSC to be
directors of the Parent; (iii) the failure of the Parent to own, directly or
indirectly, 95% of the capital stock of each of the other Loan Parties; or (iv)
the failure of SSC to possess, directly or indirectly, the power to cause the
direction of the management and policies of the Borrowers.
"CLOSING FEE" has the meaning specified therefor in Section
2.06(a).
"COLLATERAL" means all of the property and assets and all
interests therein and proceeds thereof now owned or hereafter acquired by any
Person upon which a Lien is granted or purported to be granted by such Person as
security for all or any part of the Obligations.
"COMMITMENT" means, with respect to each Lender, the sum of
such Lender's Term Loan B Commitment and Term Loan C Commitment.
"COMMON STOCK" means the common stock, no par value, of the
Parent.
"COMPETITIVE BUSINESS" means any business or enterprise
consisting of (i) operation of off-price discount department stores; (ii)
operation of retail furniture stores and related accessories; (iii) operation of
designer and name-brand shoe stores; (iv) operation of licensed shoe
departments; (v) furniture manufacturing; or (vi) bedding manufacturing.
"CONTINGENT OBLIGATION" means, with respect to any Person, any
obligation of such Person guaranteeing or intended to guarantee any Indebtedness
("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, including, without limitation, (i) the
direct or indirect guaranty, endorsement (other than for collection or deposit
in the ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of a primary obligor; (ii)
the obligation to make take-
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or-pay or similar payments, if required, regardless of nonperformance by any
other party or parties to an agreement (other than such agreements to purchase
goods in the ordinary course of business); (iii) any obligation of such Person,
whether or not contingent, (A) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (B) (other than such
agreements to purchase goods in the ordinary course of business) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (C) to
purchase property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (D) otherwise to assure or
hold harmless the holder of such primary obligation against loss in respect
thereof (other than such agreements to purchase goods in the ordinary course of
business); PROVIDED, HOWEVER, that the term "Contingent Obligation" shall not
include (1) any product warranties or (2) obligations, warranties and
indemnities not relating to Indebtedness which have been made or undertaken, in
each case, extended in the ordinary course of business.
"CONTROL", "CONTROLS", "CONTROLLED BY", or "UNDER COMMON
CONTROL WITH" means the possession, direct or indirect of the power to cause the
direction of the management and policies of a Person whether through the
ownership of voting securities, by contract or otherwise. A Person shall be
deemed to have control of another Person if it is a "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13-d-5 under the Exchange Act) or a
member of a "group" that is the beneficial owner, directly or indirectly, of 20%
or more of the voting stock of or equity interest in such Person.
"CONTROL AGREEMENT" means the Collection Account Agreements
(as defined in the Revolving Credit Facility) made by a Loan Party and the
financial institutions maintaining Collection Accounts (as defined in the
Revolving Credit Facility) in favor of the Revolving Credit Facility Agent for
the benefit of the Lenders (among others) securing the Obligations (and the
obligations owing to certain other lenders).
"CONVERTIBLE LENDERS" means the lenders party to the
Convertible Loan Agreement.
"CONVERTIBLE LOAN AGENT" means Cerberus Partners, L.P., as
agent to the Convertible Lenders.
"CONVERTIBLE LOAN AGREEMENT" means the Senior Subordinated
Convertible Loan Agreement, dated as of March 15, 2000, as amended from time to
time and as amended and restated by the Senior Convertible Loan Agreement, dated
as of June 11, 2002, by and among the Parent, the Guarantors (as defined
therein), the Convertible Loan Agent and the Convertible Lenders.
"CONVERTIBLE LOAN DOCUMENTS" means any agreement, instrument,
or other document executed and delivered pursuant to the Convertible Loan
Agreement or otherwise securing or evidencing any loan or obligation thereunder.
"CP" has the meaning specified therefor in the preamble
hereto.
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"DEFAULT" means an event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"DISPOSITION" means any transaction, or series of related
transactions, pursuant to which any Person or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of any property or assets (whether now
owned or hereafter acquired) to any other Person, in each case, whether or not
the consideration therefor consists of cash, securities or other assets owned by
the acquiring Person, EXCLUDING any sales of Inventory in the ordinary course of
business on ordinary business terms.
"DIVISION(S)" means the various business segments of the
Borrowers, being the DSW/Shonac Business, the Filene's Business and the Value
City Business.
"DOLLAR," "DOLLARS" and the symbol "$" each means lawful money
of the United States of America.
"DSW/SHONAC BUSINESS" means, collectively, the businesses
operated by DSW and Shonac.
"EFFECTIVE DATE" means the date, on or before June 11, 2002,
on which all of the conditions precedent set forth in Section 4.01 are satisfied
or waived and the Loans are made.
"ELIGIBLE ASSIGNEE" means any Federal, state or foreign
banking institution, or any private entity or commercial institution primarily
engaged in the business of making commercial loans, and shall in no event
include a Person that is engaged in a Competitive Business with any Loan Party,
and as long as SSC remains in Control of the Borrowers, an "Eligible Assignee"
shall in no event include a Person which is engaged in a Competitive Business or
a Related Business with SSC.
"EMPLOYEE BENEFIT PLAN" means an employee benefit pension
benefit plan that is covered by Title IV of ERISA or is subject to the minimum
funding standards under Section 412 of the Internal Revenue Code of 1986, as
amended from time to time, and as to which a Borrower or any ERISA Affiliate may
have any liability.
"ENVIRONMENTAL ACTIONS" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Person or Governmental Authority involving violations of Environmental Laws or
Releases of Hazardous Materials (i) from any assets, properties or businesses
owned or operated by any Loan Party or any of its Subsidiaries or any
predecessor in interest; or (ii) onto any facilities which received Hazardous
Materials generated by any Loan Party or any of its Subsidiaries or any
predecessor in interest.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ss. 9601, ET SEQ.), the
Hazardous Materials Transportation Act (49 U.S.C. ss. 1801, ET SEQ.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901, ET SEQ.), the
Federal Clean Water Act (33 U.S.C. ss. 1251 ET SEQ.), the Clean Air Act (42
U.S.C. ss. 7401 ET SEQ.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
ET SEQ.) and the Occupational Safety and Health Act (29 U.S.C. ss. 651 ET SEQ.),
as such laws may be
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amended or otherwise modified from time to time, and any other present or future
Federal, state, local or foreign statute, ordinance, rule, regulation, order,
judgment, decree, permit, license or other binding determination of any
Governmental Authority imposing liability or establishing standards of conduct
for protection of the environment or other government restrictions relating to
the protection of the environment or the Release, deposit, or migration of any
Hazardous Materials into the environment.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, reasonable costs, and expenses (including
all reasonable fees, disbursements and expenses of counsel, experts, and
consultants and costs of investigations and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any Governmental Authority or any third party, and which relate to any
environmental condition or a Release of Hazardous Materials from or onto (i) any
property presently or formerly owned by any Loan Party or any of its
Subsidiaries; or (ii) any facility which received Hazardous Materials generated
by any Loan Party or any of its Subsidiaries.
"ENVIRONMENTAL LIEN" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"EQUIPMENT" means, without limitation, "equipment" as defined
in the UCC, and also all furniture, store fixtures, motor vehicles, rolling
stock, machinery, office equipment, plant equipment, tools, dies, molds, and
other goods, property, and assets which are used and/or were purchased for use
in the operation or furtherance of a Borrower's business, and any and all
accessions or additions thereto, and substitutions therefor.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" means any Person which is under common
control with a Borrower within the meaning of Section 4001 of ERISA or is part
of a group which includes any Borrower and which would be treated as a single
employer under Section 414 of the Internal Revenue Code of 1986, as amended from
time to time.
"EVENT OF DEFAULT" means any of the events set forth in
Section 9.01. An "Event of Default" shall be deemed to have occurred and to be
continuing unless and until that Event of Default has been duly waived by the
Agent in writing or cured to the satisfaction of the Agent.
"EXCESS AVAILABILITY" has the meaning specified in the
Revolving Credit Facility.
"EXCESS AVAILABILITY RESERVE" has the meaning specified in the
Revolving Credit Facility.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as amended,
modified, succeeded or replaced from time to time.
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"EXISTING CREDIT FACILITIES" means the National Credit
Facility and the SSC Credit Facility.
"EXISTING LENDERS" means the lenders party to the Existing
Credit Facilities.
"EXTRAORDINARY RECEIPTS" means any cash received by the Parent
or any of its Subsidiaries not in the ordinary course of business (and not
consisting of proceeds described in Section 2.05(b)(i), (ii) or (iii) hereof),
including, without limitation, (i) foreign, United States, state or local tax
refunds; (ii) pension plan reversions; (iii) proceeds of insurance; (iv)
judgments, proceeds of settlements or other consideration of any kind in
connection with any cause of action; and (v) condemnation awards (and payments
in lieu thereof).
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal to, for each day during such period, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by it.
"FILENE'S BUSINESS" means the businesses operated by Filene's.
"FINAL MATURITY DATE" means June 11, 2005, or such earlier
date on which any Loan shall become due and payable in accordance with the terms
of this Agreement and the other Loan Documents.
"FINANCIAL STATEMENTS" means (i) the audited consolidated
balance sheet of the Parent and its Subsidiaries for the Fiscal Year ended
February 2, 2002, and the related consolidated statement of operations,
shareholders' equity and cash flows for the Fiscal Year then ended; and (ii) the
unaudited consolidated balance sheet of the Parent and its Subsidiaries for the
three months ended May 2, 2002, and the related consolidated statement of
operations, shareholder's equity and cash flows for the three months then ended.
"FISCAL YEAR" means the fiscal year of the Parent and its
Subsidiaries ending on the Saturday nearest January 31st of each year.
"FIXTURE FILINGS" means UCC-1 financing statements perfecting
the Agent's security interests in the fixtures and fittings in the real property
covered by the Mortgages.
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States, applied on a consistent basis,
PROVIDED that for the purpose of Article VII hereof and the definitions used
therein, "GAAP" shall mean generally accepted accounting principles in effect on
the date hereof and consistent with those used in the preparation of the
Financial Statements, PROVIDED, FURTHER, that if there occurs after the date of
this Agreement any change in GAAP that affects in any respect the calculation of
any covenant contained in Article VII hereof, the Agent and the Administrative
Borrower shall negotiate in good faith amendments to the provisions of this
Agreement that relate to the calculation of such covenant with the intent
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of having the respective positions of the Lenders and the Borrowers after such
change in GAAP conform as nearly as possible to their respective positions as of
the date of this Agreement.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
Federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"GUARANTEED OBLIGATIONS" has the meaning specified therefor in
Section 11.01.
"GUARANTOR" means (i) each Subsidiary of the Parent (other
than a Borrower) that is signatory hereto, and (ii) each other Person which
guarantees, pursuant to Section 6.01(a) or otherwise, all or any part of the
Obligations.
"GUARANTY" means (i) the Guaranty of each Guarantor party
hereto contained in Article XI hereof; and (ii) each Guaranty substantially in
the form of Exhibit D, made by any other Guarantor in favor of the Agent for the
benefit of the Lenders, pursuant to Section 6.01(a) or otherwise.
"HAZARDOUS MATERIAL" means (i) any element, compound or
chemical that is defined, listed or otherwise classified as a contaminant,
pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous
substance or chemical, hazardous waste, special waste, or solid waste under
Environmental Laws or that is reasonably likely to cause immediately, or at some
reasonably foreseeable future time, harm to or have an adverse effect on, the
environment or risk to human health or safety, including, without limitation,
any pollutant, contaminant, waste, hazardous waste, toxic substance or dangerous
good which is defined or identified in any Environmental Law and which is
present in the environment in such quantity or state that it contravenes any
Environmental Law; (ii) petroleum and its refined products; (iii)
polychlorinated biphenyls; (iv) any substance exhibiting a hazardous waste
characteristic, including, without limitation, corrosivity, ignitability,
toxicity or reactivity as well as any radioactive or explosive materials; and
(v) any raw materials, building components (including, without limitation,
asbestos-containing materials) and manufactured products containing hazardous
substances listed or classified as such under Environmental Laws.
"HEDGING AGREEMENT" means any interest rate, foreign currency,
commodity or equity swap, collar, cap, floor or forward rate agreement, or other
agreement or arrangement designed to protect against fluctuations in interest
rates or currency, commodity or equity values (including, without limitation,
any option with respect to any of the foregoing and any combination of the
foregoing agreements or arrangements), and any confirmation executed in
connection with any such agreement or arrangement, including, without
limitation, the NCB Hedging Agreement.
"HIGHEST LAWFUL RATE" means, with respect to the Agent or any
Lender, the maximum non-usurious interest rate, if any, that at any time or from
time to time may be contracted for, taken, reserved, charged or received on the
Obligations under laws applicable to the Agent or such Lender which are
currently in effect or, to the extent allowed by law, under
-9-
such Applicable Laws which may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than Applicable Laws now allow.
"INDEBTEDNESS" means, without duplication, all obligations,
including Contingent Obligations, that in accordance with GAAP should be
classified upon the balance sheet of any Borrower and/or the consolidated
balance sheet of the Borrowers as liabilities, other than trade payables,
deferred rent, or accrued expenses incurred in the ordinary course of business
or to which reference should be made by footnotes thereto, including, in any
event and whether or not so classified, (i) all obligations in respect of money
borrowed (including any indebtedness which is non-recourse to the credit of such
Person but which is secured by a Lien on any asset of such Person) whether or
not evidenced by a promissory note, bond, debenture or other written obligation
to pay money; (ii) all obligations evidenced by bonds, notes, debentures or
other similar instruments; (iii) all obligations in connection with Hedging
Agreements; (iv) all obligations in connection with any letter of credit or
acceptance transaction (including, without limitation, the face amount of all
letters of credit and acceptances issued for the account of such Person or
reimbursement on account of which such Person would be obligated); (v) all
obligations in connection with the sale or discount of accounts receivable or
chattel paper of such Person; (vi) all obligations on account of deposits or
advances other than deferred rent incurred in the ordinary course of business;
(vii) all obligations as lessee under Capitalized Leases; and (viii) all
obligations in connection with any sale and leaseback transaction.
"Indebtedness" also includes: (x) Indebtedness of others secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; (y) any guaranty, endorsement, suretyship or other undertaking in
respect of Indebtedness pursuant to which that Person may be liable on account
of any obligation of any third party; and (z) the Indebtedness of a partnership
or joint venture for which such Person is liable as a general partner or joint
venturer.
"INDEMNIFIED MATTERS" has the meaning specified therefor in
Section 12.15.
"INDEMNITEES" has the meaning specified therefor in Section
12.15.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, or extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.
"INTERCREDITOR AGREEMENT" means the Intercreditor and Lien
Subordination Agreement, by and among the Agent, on behalf of itself and the
Lenders, the Revolving Credit Facility Agent, on behalf of itself and the
Revolving Facility Lenders, the Convertible Agent, on behalf of itself and the
Convertible Lenders and acknowledged and agreed by the Borrowers and the
Guarantors.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended from time to time, (or any successor statute thereto) and the
regulations thereunder.
"INVENTORY" means, with respect to any Person, all goods and
merchandise of such Person, including, without limitation, all raw materials,
work-in-process, packaging, supplies,
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materials and finished goods of every nature used or usable in connection with
the shipping, storing, advertising or sale of such goods and merchandise,
whether now owned or hereafter acquired, and all such other property the sale or
other disposition of which would give rise to Accounts Receivable or cash.
"LANDLORD'S AGREEMENT" means a landlord's agreement consenting
to the recording of the Mortgages, in form and substance satisfactory to the
Agent, made by the fee owner (or ground or prime lessee with the consent of the
fee owner) of the real property secured by a Mortgage in favor of the Agent for
the benefit of the Lenders (among others) and delivered to the Agent pursuant to
Sections 4.01(d) and 6.01(a) and (i).
"LEASE" means any lease of real property to which any Loan
Party or any of its Subsidiaries is a party as lessor or lessee.
"LEASEHOLD MORTGAGE STATUS REPORT" means a monthly report that
reflects the Loan Parties' efforts to obtain leasehold Mortgages on
substantially all Leases of the Loan Parties, such report to contain sufficient
detail to enable the Agent to evaluate the status of the Loan Parties' efforts
on a property-by-property basis.
"LENDER" has the meaning specified therefor in the preamble
hereto.
"LENDER'S ACCOUNT" means an account at a bank designated by
each Lender from time to time into which the Loan Parties shall make certain
payments to such Lender under this Agreement.
"LIABILITIES" has the meaning specified therefor in Section
2.07.
"LIEN" means any mortgage, deed of trust, pledge, lien
(statutory or otherwise), security interest, charge or other encumbrance or
security or preferential arrangement of any nature, including, without
limitation, any conditional sale or title retention arrangement, any Capitalized
Lease and any assignment, deposit arrangement or financing lease intended as, or
having the effect of, security.
"LOAN" means any Term B Loan or Term C Loan made by the Agent
or a Lender to the Borrowers pursuant to Article II hereof.
"LOAN DOCUMENT" means this Agreement, any Guaranty, any
Security Agreement, any Pledge Agreement, any Mortgage, any Landlord's
Agreement, any Control Agreement, any UCC Filing Authorization Letter, the
Intercreditor Agreement, the Warrants, the Registration Rights Agreement and any
other agreement, instrument or other document executed and delivered pursuant
hereto or thereto or otherwise evidencing or securing any Loan or any other
Obligation.
"LOAN PARTY" means any Borrower or any Guarantor.
"MATERIAL ACCOUNTING CHANGE" means any change in GAAP
applicable to accounting periods subsequent to the Borrowers' fiscal year most
recently completed prior to the execution of this Agreement, which change has a
material effect on the Borrowers' Consolidated
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financial condition or operating results, as reflected on financial statements
and reports prepared by or for the Borrowers, when compared with such condition
or results as if such change had not taken place.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(i) the business, operations, property, assets or financial condition of (x) the
Loan Parties taken as a whole or (y) the Value City Business taken as a whole
(including those portions of Shonac that operate as part of the Value City
Business) or (ii) the validity or enforceability of this Agreement or any of the
other Loan Documents or any of the material rights or remedies of the Agent or
the Lenders hereunder or thereunder.
"MATERIAL CONTRACT" means, with respect to any Person, (i)
each contract or agreement (other than Leases, intercompany agreements, benefit
and pension plans, stock option plans and labor and employment contracts) to
which such Person or any of its Subsidiaries is a party involving aggregate
consideration payable to or by such Person or such Subsidiary of $1,000,000 or
more annually (other than purchase orders in the ordinary course of the business
of such Person or such Subsidiary and other than contracts that by their terms
may be terminated by such Person or Subsidiary in the ordinary course of its
business upon less than 60 days' notice without penalty or premium) and (ii) all
other contracts or agreements material to the business, operations, condition
(financial or otherwise), performance, prospects or properties of such Person or
such Subsidiary.
"MEETING" has the meaning specified therefore in Section
6.01(k).
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. and any
successor thereto.
"MORTGAGE" means a mortgage (including, without limitation, a
leasehold mortgage, deed of trust or deed to secure debt), in form and substance
satisfactory to the Agent, made by a Loan Party in favor of the Agent for the
benefit of the Lenders (among others), securing the Obligations and the
obligations owing to certain other lenders, and delivered to the Agent pursuant
to Section 4.01(d), Section 6.01(a), Section 6.01(i) or otherwise.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which any Loan Party or any of its ERISA
Affiliates has contributed to, or has been obligated to contribute, at any time
during the preceding six (6) years.
"NATIONAL CREDIT FACILITY" means the Amended and Restated
Credit Agreement, dated March 15, 2000, among the Parent, National City Bank and
certain lenders party thereto.
"NCB HEDGING AGREEMENT" means the Hedging Agreement between
the Parent and National City Bank dated as of March 28, 2000.
"NET CASH PROCEEDS" means (i) with respect to any Disposition
by any Person or any of its Subsidiaries, the amount of cash received from time
to time (whether as initial consideration or through the payment or disposition
of deferred consideration) by or on behalf of such Person or such Subsidiary, in
connection therewith after deducting therefrom only (A) the amount of any
Indebtedness secured by any Lien permitted by Section 6.02(a) on any asset
(other than Indebtedness assumed by the purchaser of such asset) which is
required to be, and is,
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repaid in connection with such Disposition (other than Indebtedness under this
Agreement), (B) reasonable costs and expenses related thereto incurred by such
Person or such Subsidiary in connection therewith, (C) transfer taxes paid to
any taxing authorities by such Person or such Subsidiary in connection
therewith, and (D) net income taxes to be paid in connection with such
Disposition; and (ii) with respect to the issuance or incurrence of any
Indebtedness by any Person or any of its Subsidiaries, or the sale or issuance
by any Person or any of its Subsidiaries of any shares of its Capital Stock, the
aggregate amount of cash received from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by or on behalf of such Person or such Subsidiary in connection therewith, after
deducting therefrom only (A) reasonable costs and expenses related thereto
incurred by such Person or such Subsidiary in connection therewith, (B) transfer
taxes paid by such Person or such Subsidiary in connection therewith and (C) net
income taxes to be paid in connection therewith; in each case of clause (i) and
(ii) to the extent, but only to the extent, that the amounts so deducted are
properly attributable to such transaction or to the asset that is the subject
thereof.
"NOTE" means a promissory note of the Borrower, substantially
in the form of Exhibit A hereto, made payable to the order of a Lender and
evidencing the Indebtedness resulting from the making by such Lender of the Pro
Rata Share of its Loans.
"NOTICE OF BORROWING" has the meaning specified therefor in
Section 2.02(a).
"NOTICE OF ELECTION" has the meaning specified therefore in
Section 2.04(c).
"OBLIGATIONS" means all present and future indebtedness,
obligations, and liabilities of each Loan Party to the Agent and the Lenders
under the Loan Documents, whether or not the right of payment in respect of such
claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured, unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any proceeding
referred to in Section 9.01. Without limiting the generality of the foregoing,
the Obligations of each Loan Party under the Loan Documents include (i) the
obligation to pay principal, interest, including any PIK Interest, charges,
expenses, fees, attorneys' fees and disbursements, indemnities and other amounts
payable by such Person under the Loan Documents; and (ii) the obligation of such
Person to reimburse any amount in respect of any of the foregoing that the Agent
may elect to pay or advance on behalf of such Person.
"OPERATING LEASE OBLIGATIONS" means all obligations for the
payment of rent for any real or personal property under leases or agreements to
lease, other than Capitalized Lease Obligations.
"OTHER TAXES" has the meaning specified therefore in Section
2.08.
"PARENT" has the meaning specified therefor in the preamble
hereto.
"PARTICIPANT REGISTER" has the meaning specified therefor in
Section 12.07(b)(v).
"PAYMENT OFFICE" means the Agent's office located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, or at such other office or
offices of the Agent as may be designated in writing from time to time by the
Agent to the Administrative Borrower.
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"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PERMITTED ACQUISITION" means (i) any Acquisition the cash
consideration for which is less than $3,000,000 in the aggregate in any fiscal
year of the Borrowers and which satisfies the conditions set forth in clauses
(f), (g), (h) and (i) below; and (ii) an Acquisition in which each of the
following conditions are satisfied: (a) no Default or Event of Default then
exists or would arise from the consummation of such Acquisition; (b) such
Acquisition shall have been approved by the Board of Directors of the Person (or
similar governing body if such Person is not a corporation) which is the subject
of such Acquisition and such Person shall not have announced that it will oppose
such Acquisition or shall not have commenced any action which alleges that such
Acquisition will violate Applicable Law; (c) the Administrative Borrower shall
have furnished the Agent with ten (10) days' prior notice of such intended
Acquisition and shall have furnished the Agent with a current draft of the
Acquisition agreement and other Acquisition documents, a summary of any due
diligence undertaken by the Borrowers in connection with such Acquisition,
appropriate financial statements of the Person which is the subject of such
Acquisition, pro forma projected financial statements for the twelve (12) month
period following such Acquisition after giving effect to such Acquisition
(including balance sheets, cash flows and income statements by month for the
acquired Person, individually, and on a consolidated basis with all Loan
Parties), and such other information as the Agent may reasonably require, each
of which shall be reasonably satisfactory to the Agent; (d) the structure of the
Acquisition shall be acceptable to the Agent in its reasonable judgment; if an
Acquisition of capital stock or other equity interests, after consummation of
such Acquisition, a Borrower shall own directly or indirectly a majority of the
equity interests in the Person being acquired and shall Control a majority of
any voting interests, and/or shall otherwise Control the governance of the
Person being acquired; (e) the Agent shall have received (i) the results of
appraisals of the assets (or the assets of the Person) to be acquired in such
Acquisition and of a commercial finance examination of the Person that is (or
whose assets are) being acquired, and (ii) such other due diligence as the Agent
may reasonably require, all of the results of the foregoing to be reasonably
satisfactory to the Agent; (f) any assets acquired shall be utilized only in,
and if the Acquisition involves a merger, consolidation or stock acquisition,
the Person which is the subject of such Acquisition shall be engaged only in, a
Permitted Business; (g) if the Person which is the subject of such Acquisition
will be maintained as a Subsidiary of the Borrower, such Subsidiary shall have
executed such documents as may be necessary to be joined as a "Borrower" or
"Guarantor" hereunder, as determined by the Agent, and the Agent shall have
received subject to the terms of the Intercreditor Agreement a first priority
security and mortgage interest (subject to Permitted Liens) in such Subsidiary's
capital stock, inventory, accounts, equipment, real estate, leaseholds, and
other property of the same nature as constitutes Collateral under this Agreement
in order to secure the Obligations; (h) the total consideration paid for all
Acquisitions (whether in cash, tangible property, notes or other property (other
than capital stock of the Parent)) after the Effective Date, shall not exceed in
the aggregate the sum of $15,000,000; and (i) Excess Availability immediately
prior to such Acquisition, immediately after giving effect thereto, and
projected Excess Availability on a pro forma projected basis for the twelve (12)
months immediately following such Acquisition, shall not be less than
$70,000,000.
"PERMITTED BUSINESS" means the business of owning and
operating a chain of retail department stores selling clothing apparel,
housewares, home furnishings, toys, sporting goods,
-14-
jewelry, shoes, health and beauty care items or any of the foregoing, and
engaging in certain related licensing and other retail and wholesale businesses
reasonably related thereto, including, but not limited to, any retail lease
department operation.
"PERMITTED DISPOSITION" means any of the following: (i)
licenses of intellectual property or licensed departments of a Loan Party or any
of its Subsidiaries in the ordinary course of business; (ii) Leases or subleases
of Leases, to the extent at any point in time such Leases or subleases have, in
the aggregate, anticipated minimum fixed annual rental payments of not more than
$3,000,000; (iii) sales, assignments, transfers, conveyances or other
dispositions of any or all of the Property specified in Schedule 6.02(c) hereof;
PROVIDED that in connection with a sale or similar disposition of any such
Property, if a Loan Party receives a note or similar obligation as all or part
of the consideration therefor, such Loan Party shall secure such note or
obligation with a Mortgage or similar Lien on such Property and pledge such note
or other obligation to the Agent as security for the Obligations pursuant to the
terms of the Loan Documents; (iv) sales of Inventory and Equipment in connection
with store closures permitted in accordance with the provisions of Section
6.02(c)(vii) hereof, PROVIDED that all sales of Inventory in connection with
store closings (x) after the occurrence and during the continuance of an Event
of Default or (y) consisting of more than fifteen (15) retail stores at the same
time, shall be in accordance with liquidation agreements and with liquidators
reasonably acceptable to the Agent; and (v) (x) the sale of any property, land
or building (including any related receivables or other intangible assets) to
any Person which is not a Subsidiary of a Borrower, or (y) the sale of the
entire capital stock (or other equity interests) and Indebtedness of any
Subsidiary owned by a Loan Party to any Person which is not a Subsidiary of a
Borrower, or (z) the consummation of any other asset sale with a Person who is
not a Subsidiary of a Borrower, PROVIDED that: (A) the consideration for such
transaction represents fair value, and at least 90% of such consideration
consists of cash, PROVIDED that in connection with a sale or similar disposition
of any such Property, if a Loan Party receives a note or similar obligations as
all or part of the consideration therefor, such Loan Party shall secure such
note or obligation with a Mortgage or similar Lien on such property and pledge
such note or other obligation to the Agent as security for the Obligations
pursuant to the terms of the Loan Documents; (B) the aggregate consideration for
all such transactions completed in any fiscal year does not exceed $500,000; (C)
the aggregate consideration for all such transactions completed after the
Effective Date does not exceed $1,500,000; and (D) other than in connection with
a transaction, the aggregate consideration for which is equal to an amount less
than $500,000, at least five (5) Business Days prior to the date of completion
of such transaction such Loan Party shall have delivered to the Agent an
officer's certificate executed on behalf of such Loan Party by an Authorized
Officer of such Loan Party, which certificate shall contain a description of the
proposed transaction, the date such transaction is scheduled to be consummated,
the estimated purchase price or other consideration for such transaction,
financial information pertaining to compliance with the preceding clause (A),
and which shall (if requested by the Agent) include a certified copy of the
draft or definitive documentation pertaining thereto.
"PERMITTED INDEBTEDNESS" means any of the following: (i)
Indebtedness incurred under this Agreement and the other Loan Documents; (ii)
any Indebtedness incurred under the Revolving Credit Facility and the
Convertible Loan Agreement; (iii) Indebtedness on account of Equipment or
improvements to real property acquired in compliance with the requirements of
subparagraph (xiii) of the definition of Permitted Liens, the incurrence of
which would not
-15-
otherwise be prohibited by this Agreement; PROVIDED, that such Indebtedness
shall not exceed $10,000,000 in the aggregate at any time outstanding; (iv) (a)
Indebtedness consisting of all obligations of a Loan Party or any Subsidiary as
lessee under Capitalized Leases, and (b) Indebtedness consisting of all
obligations of a Loan Party or any Subsidiary under any lease (x) that is
accounted for by the lessee as an operating lease and (y) under which the lessee
is intended to be the "owner" of the leased property for Federal income tax
purposes; PROVIDED, that (A) at the time of any incurrence thereof after the
date hereof, and after giving effect thereto, no Event of Default shall have
occurred and be continuing or would result therefrom, and (B) the aggregate
outstanding principal amount (using the obligations in lieu of principal amount,
in the case of any Capitalized Lease, or present value, based on the implicit
interest rate, in lieu of principal amount, in the case of any lease described
above in part (b)) of Indebtedness permitted by this clause (iv) shall not
exceed $10,000,000 aggregate principal amount outstanding at any time; (v)
Indebtedness of the Loan Parties and any Subsidiary under (a) the NCB Hedging
Agreement, and (b) Hedging Agreements with any Revolving Credit Lender or an
Affiliate of a Revolving Credit Lender PROVIDED that (1) such agreement is
non-speculative in nature, and (2) the Loan Parties have received the written
consent of the Agent (which consent shall not be unreasonably withheld) prior to
entering into such agreement; (vi) the Indebtedness listed on Schedule 6.02(b),
annexed hereto; (vii) Indebtedness to sellers in connection with Permitted
Acquisitions; (viii) intercompany indebtedness between and among the Parent and
the other Loan Parties; (ix) Indebtedness to creditors of the former Filene's
incurred in connection with the acquisition of Filene's, such Indebtedness not
to exceed $6,000,000; (x) Indebtedness with respect to indemnities, warranties,
statutory obligations, and surety, appeal and supersedeas bonds incurred in the
ordinary course of business; (xi) Indebtedness in respect of overdraft
protections and otherwise in connection with deposit accounts; and (xii)
Indebtedness arising out of the refinancing, extension, renewal or refunding of
any Indebtedness permitted under this Agreement, provided that the principal
amount of such Indebtedness is not increased from the amount outstanding at the
time of such refinancing.
"PERMITTED INVESTMENTS" means each of the following: (i)
direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing not more than one year
from the date of acquisition thereof; (ii) investments in commercial paper
maturing not more than one year from the date of acquisition thereof and having,
at such date of acquisition, the highest credit rating obtainable from Standard
& Poor's or from ▇▇▇▇▇'▇ Investment Services, Inc.; (iii) investments in
certificates of deposit, banker's acceptances and time deposits maturing not
more than one year from the date of acquisition thereof issued or guaranteed by
or placed with, and money market deposit accounts issued or offered by, any
domestic office of any financial institution organized under the laws of the
United States of America or any State thereof that has a combined capital and
surplus and undivided profits of not less than $500,000,000; (iv) fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (i) above (without regard to the limitation on
maturity contained in such clause) and entered into with a financial institution
satisfying the criteria described in clause (iii) above; (v) marketable direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's or
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from ▇▇▇▇▇'▇ Investment Services, Inc.; (vi) investments in money market funds,
substantially all the assets of which are comprised of securities of the types
described in clauses (i) through (vi) above; (vii) investments acquired by a
Loan Party or any of its Subsidiaries (x) in exchange for any other investment
held by such Loan Party or any such Subsidiary in connection with or as a result
of a bankruptcy, workout, reorganization or recapitalization of the issuer of
such other investment, or (y) as a result of a foreclosure by such Loan Party or
any of its Subsidiaries with respect to any secured investment or other transfer
of title with respect to any secured investment in default; (viii) investments
by a Loan Party in the capital of any wholly-owned subsidiary of such Loan
Party, including without limitation, any Permitted Acquisitions, provided that
the provisions of Section 6.01(a) hereof have been complied with respect to such
Subsidiary; (ix) to the extent not permitted by the foregoing clauses, existing
investments in any Subsidiaries (and any increases thereof attributable to
increases in retained earnings); (x) to the extent not permitted by the
foregoing clauses, the existing investments described on Schedule 6.02(e)
hereto; (xi) investments of a Loan Party and any Subsidiary in Hedging
Agreements permitted by clause (v) of the definition of Permitted Indebtedness;
(xii) investments of any Person which are outstanding at the time such Person
becomes a Subsidiary of a Loan Party as a result of Permitted Acquisition, but
not any increase in the amount thereof; and (xiii) any other investments
(whether in the form of cash or contribution of property, and if in the form of
a contribution of property, such property shall be valued for purposes of this
clause at the fair value thereof) in any corporation, partnership, limited
liability company, joint venture or other business entity, which is not itself a
Subsidiary of a Borrower or owned or Controlled by any director, officer or
employee of a Borrower or any of its Subsidiaries, not otherwise permitted by
the foregoing clauses, made after the Effective Date, shall be permitted to be
incurred if (a) no Event of Default shall have occurred and be continuing, or
would result therefrom, and (b) the aggregate cumulative amount of such
investments (together with any loans and advances permitted under Sections
6.02(e)(vi)(D) and (E)) does not exceed $6,000,000.
"PERMITTED LIENS" means any of the following: (i) Liens for
taxes not yet delinquent or which are being contested in good faith by
appropriate proceedings, PROVIDED that adequate reserves with respect thereto
are maintained on the books of the Borrowers in accordance with GAAP, and
PROVIDED further that, no notice of tax lien has been filed with respect
thereto; (ii) Liens in respect of property or assets imposed by law in the
ordinary course of business, such as carrier's, warehousemen's, mechanics',
materialmen's, repairmen's, landlord's or similar Liens arising in the ordinary
course of business which (x) are not overdue in accordance with customary
business practices and consistent with the applicable Loan Party's prior
practices, and do not in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of the
business of the Loan Parties, or (y) are being contested in good faith by a Loan
Party, by appropriate proceedings diligently instituted and conducted and
without danger of any material risk to the Collateral and adequate reserves or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor; (iii) Liens, pledges or deposits in
connection with workers' compensation, unemployment insurance and other types of
social security; (iv) deposits to secure the performance of tenders, bids,
sales, trade and government contracts, leases, statutory obligations, surety,
appeal, and supersedeas bonds, warranty, advance payment, customs, performance
and return-of-money bonds and other obligations of a like nature in the ordinary
course of business (exclusive of obligations in respect of the payment of
borrowed money) whether pursuant to statutory requirements, common law or
consensual arrangements; (v)
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easements, rights of way, leases, zoning or deed restrictions, licenses,
covenants, building restrictions, minor defects or irregularities in title and
other similar real estate encumbrances incurred in the ordinary course of
business that in the aggregate do not materially interfere with the conduct of
the business of the Loan Parties; defects and irregularities in titles, survey
exceptions, encumbrances, easements or reservations of others for rights-of-way,
roads, pipelines, railroad crossings, services, utilities or other similar
purposes; outstanding mineral rights or reservations (including rights with
respect to the removal of material resource) which do not materially diminish
the value of the surface estate, assuming usage of such surface estate similar
to that being carried on by any Loan Party as of the Effective Date; (vi) any
interest or title of a lessor under any lease entered into by any Loan Party in
the ordinary course of business not in violation of the Loan Documents; (vii)
any interest or title of any lessee under any leases or subleases of real
property of a Loan Party not in violation of the requirements of the Loan
Documents, provided that all such Liens do not in the aggregate materially
detract from the value of such Loan Party's property or materially impair the
use thereof in the operation of such Loan Party's business; (viii) Liens arising
from financing statements regarding property subject to Capitalized Leases not
in violation of the requirements of the Loan Documents, provided that such Liens
are only in respect of the property subject to, and secure only, the respective
lease; (ix) rights of consignors of goods to a Loan Party as consignee; (x)
Liens arising from judgments, decrees or attachments in existence less than 30
days after the entry thereof, with respect to which execution has been stayed
and with respect to which payment in full above any applicable deductible is
covered by insurance or a bond, or in circumstances not constituting an Event of
Default under Section 9.01(j)(i); (xi) Liens created by this Agreement or the
other Loan Documents; (xii) Liens (x) listed on Schedule 6.02(a), annexed
hereto, or (y) arising out of the refinancing, extension, renewal or refunding
of any Indebtedness secured by any such Lien, provided that the principal amount
of such Indebtedness is not increased and such Indebtedness is not secured by
any additional assets; (xiii) Liens which are placed upon Equipment or
improvements to real property (including the associated real property) used in
the ordinary course of business of a Loan Party or any Subsidiary (x) at the
time of (or within 90 days after) the acquisition of such Equipment or the
completion of such improvements by such Loan Party or any such Subsidiary to
secure Indebtedness incurred to pay or finance all or a portion of the purchase
price or other cost thereof, provided that the Lien on the Equipment so acquired
or the real property so improved does not encumber any other asset of such Loan
Party or any such Subsidiary; or (y) are existing on Equipment or real property
at the time acquired by a Loan Party or any Subsidiary or on assets of a Person
at the time such Person first becomes a Subsidiary of the Borrower; PROVIDED,
that (A) any such Lien was not created at the time of or in contemplation of the
acquisition of such assets or Person by a Loan Party or any Subsidiaries, (B) in
the case of any such acquisition of a Person, any such Lien attaches only to the
Equipment or real estate, as applicable, of such Person, and (C) in the case of
any such acquisition of Equipment or real estate by a Loan Party or any
Subsidiary, any such Lien attaches only to the property and assets so acquired
and not to any other property or assets of such Loan Party or any such
Subsidiary; PROVIDED, that the Liens outstanding from time to time under this
clause (xiii) shall not secure any Indebtedness other than Permitted
Indebtedness described in clause (iii) of such definition; (xiv) Liens securing
Indebtedness assumed in connection with, or continuing to exist after, but not
incurred in connection with, or contemplation of, a Permitted Acquisition, which
Liens were in effect prior to the consummation of the Permitted Acquisition;
PROVIDED, that such Liens may not extend to any Collateral of the Loan Parties,
or the Inventory, Accounts
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Receivable or General Intangibles of the Person so acquired; and (xv) a Lien
granted by any Loan Party in connection with the Revolving Credit Facility or
the Convertible Loan.
"PERSON" shall have the meaning given to such term as defined
in Section 13(d)(3) of the Securities Exchange Act.
"PIK INTEREST" means, as at any date of determination, the
amount of all interest accrued with respect to the Loans that has been
paid-in-kind by being added to the outstanding principal balance thereof in
accordance with Section 2.04.
"PIK OPTION CHANGE DATE" means the second anniversary of the
Effective Date.
"PLEDGE AGREEMENT" means a Pledge and Security Agreement made
by a Loan Party in favor of the Agent for the benefit of the Lenders,
substantially in the form of Exhibit F, securing the Obligations and delivered
to the Agent.
"POST-DEFAULT RATE" means a rate of interest per annum equal
to the rate of interest otherwise in effect from time to time pursuant to the
terms of this Agreement, plus 3%.
"PRO RATA SHARE" means (i) with respect to a Lender's
obligation to make the Term Loan B and receive payments of interest, PIK
Interest, fees, and principal with respect thereto, the percentage obtained by
dividing (x) such Lender's Term Loan B Commitment, by (y) the Total Term Loan B
Commitment, PROVIDED that if the Total Term Loan B Commitment has been reduced
to zero, the numerator shall be the aggregate unpaid principal amount of such
Lender's portion of the Term Loan B and the denominator shall be the aggregate
unpaid principal amount of the Term Loan B; (ii) with respect to a Lender's
obligation to make the Term Loan C and receive payments of interest, PIK
Interest, fees, and principal with respect thereto, the percentage obtained by
dividing (x) such Lender's Term Loan C Commitment, by (y) the Total Term Loan C
Commitment, PROVIDED that if the Total Term Loan C Commitment has been reduced
to zero, the numerator shall be the aggregate unpaid principal amount of such
Lender's portion of the Term Loan C and the denominator shall be the aggregate
unpaid principal amount of the Term Loan C; and (iii) with respect to all other
matters (including, without limitation, the indemnification obligations arising
under Section 10.05), the percentage obtained by dividing (x) the unpaid
principal amount of such Lender's Commitment, by (y) the aggregate unpaid
principal amount of the Total Commitment.
"PROPERTY" means any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PROXY" has the meaning specified therefor in Section
5.01(nn).
"RATING AGENCIES" has the meaning specified therefor in
Section 2.07.
"REFERENCE BANK" means JPMorgan Chase Bank, its successors or
any other commercial bank designated by the Agent to the Administrative Borrower
from time to time.
"REFERENCE RATE" means the rate of interest publicly announced
by the Reference Bank in New York, New York from time to time as its reference
rate, base rate or prime rate.
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The reference rate, base rate or prime rate is determined from time to time by
the Reference Bank as a means of pricing some loans to its borrowers and neither
is tied to any external rate of interest or index nor necessarily reflects the
lowest rate of interest actually charged by the Reference Bank to any particular
class or category of customers. Each change in the Reference Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"REGISTER" has the meaning specified therefor in Section
12.07(b)(ii).
"REGISTERED LOAN" has the meaning specified therefor in
Section 12.07(b)(ii).
"REGISTERED NOTE" has the meaning specified therefor in
Section 2.03(c).
"REGISTRATION RIGHTS AGREEMENT" means the Amended and Restated
Registration Rights Agreement, in form and substance satisfactory to the Agent,
by and between the Parent, the Term Loan C Lenders and the Convertible Lenders,
with respect to the matters covered thereby.
"REGULATION T", "REGULATION U" and "REGULATION X" mean,
respectively, Regulations T, U and X of the Board or any successor, as the same
may be amended or supplemented from time to time.
"RELATED BUSINESS" means any business or enterprise consisting
of asset maximization services or asset valuation services.
"RELEASE" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, seeping,
migrating, dumping or disposing of any Hazardous Material (including the
abandonment or discarding of barrels, containers and other closed receptacles
containing any Hazardous Material) into the indoor or outdoor environment,
including, without limitation, the movement of Hazardous Materials through or in
the ambient air, soil, surface or ground water, or property.
"REMEDIAL ACTION" means all actions taken to (i) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate or in any other way
address Hazardous Materials in the indoor or outdoor environment; (ii) prevent
or minimize a Release or threatened Release of Hazardous Materials so they do
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities; or (iv)
perform any other actions authorized by 42 U.S.C. ss. 9601.
"REPORTABLE EVENT" means an event described in Section 4043 of
ERISA (other than an event not subject to the provision for 30-day notice to the
PBGC under the regulations promulgated under such Section).
"REQUIRED LENDERS" means CP and any of its affiliates to whom
it assigns all or any portion of its rights and obligations under this Agreement
or any of the Loan Documents.
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"REQUISITE APPROVAL" means the affirmative vote of at least a
majority of the shares of Common Stock (voting as one class, with each share of
Common Stock having one vote) voting regarding the issuance of the Warrants with
greater than fifty percent (50%) of the issued and outstanding shares of Common
Stock voting.
"REVOLVING CREDIT FACILITY" means the $350,000,000 working
capital facility, of even date herewith, among the Parent and certain of its
Subsidiaries, as borrowers and as guarantors, the Revolving Credit Facility
Agent and the Revolving Credit Facility Lenders.
"REVOLVING CREDIT FACILITY AGENT" means National City
Commercial Finance, Inc. ("NCCF"), as Administrative Agent and/or NCCF and Fleet
Retail Finance, Inc., as Collateral Agents for the Revolving Credit Facility
Lenders, and each of their respective successors and assigns.
"REVOLVING CREDIT FACILITY DOCUMENTS" means any agreement,
instrument or other document executed and delivered pursuant to the Revolving
Credit Facility or otherwise securing or evidencing any loan or obligation
thereunder.
"REVOLVING CREDIT FACILITY LENDERS" means the financial
institutions party to the Revolving Credit Facility.
"SEC" means the Securities and Exchange Commission or any
other similar or successor agency of the Federal government administering the
Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect from time to time.
"SECURITIZATION" has the meaning specified therefor in Section
2.07.
"SECURITIZATION PARTIES" has the meaning specified therefor in
Section 2.07.
"SECURITY AGREEMENT" means a Security Agreement made by a Loan
Party in favor of the Agent for the benefit of the Lenders, substantially in the
form of Exhibit E, securing the Obligations and delivered to the Agent.
"SOLVENT" means, with respect to any Person on a particular
date, that on such date (i) the fair value of the property of such Person is not
less than the total amount of the liabilities of such Person; (ii) the present
fair saleable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
existing debts as they become absolute and matured; (iii) such Person is able to
realize upon its assets and pay its debts and other liabilities, Contingent
Obligations and other commitments as they mature in the normal course of
business; (iv) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature; and (v) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital. The
determination of whether a Person is Solvent shall take into account all such
Person's properties and liabilities regardless of whether, or the amount at
which, any such
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property or liability is included on a balance sheet of such Person prepared in
accordance with GAAP, including properties such as contingent contribution or
subrogation rights, business prospects, distribution channels and goodwill. The
determination of the sum of a Person's properties at a fair valuation or the
present fair saleable value of a Person's properties shall be made on a going
concern basis unless, at the time of such determination, the liquidation of the
business in which such properties are used or useful is in process or is
demonstrably imminent. In computing the amount of contingent or unrealized
properties or contingent or unliquidated liabilities at any time, such
properties and liabilities will be computed at the amounts which, in light of
all the facts and circumstances existing at such time, represent the amount that
reasonably can be expected to become realized properties or matured liabilities,
as the case may be. In computing the amount that would be required to pay a
person's probable liability on its existing debts as they become absolute and
matured, reasonable valuation techniques, including a present value analysis,
shall be applied using such rates over such periods as are appropriate under the
circumstances, and it is understood that, in appropriate circumstances, the
present value of Contingent Liabilities may be zero.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services,
a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and any successor thereto.
"SSC" means Schottenstein Stores Corporation.
"SSC ASSIGNMENT" means the sale and assignment to the Agent of
a 50% interest in the Parent's obligations under the Convertible Loan Agreement.
"SSC ASSIGNMENT AGREEMENT" means the Assignment Agreement
dated June 11, 2002 by and between CP and SSC in connection with the SSC
Assignment.
"SSC ASSIGNMENT DOCUMENTS" means the SSC Assignment Agreement
and any other agreement, instrument or other document executed and delivered
pursuant to the SSC Assignment.
"SSC CREDIT FACILITY" means the Credit Agreement, dated
December 11, 2000, between the Parent, as borrower and SSC, as lender, in a
maximum principal amount of up to $100,000,000.
"SUBSIDIARY" means, with respect to any Person at any date,
any corporation, limited or general partnership, limited liability company,
trust, estate, association, joint venture or other business entity (i) the
accounts of which would be consolidated with those of such Person in such
Person's consolidated financial statements if such financial statements were
prepared in accordance with GAAP or (ii) of which more than 50% of (A) the
outstanding Capital Stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such Person, (B) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (C) in the case of a trust, estate, association, joint
venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such
Person.
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"TAXES" has the meaning set forth in Section 2.08.
"TERM LOAN B" means a loan made by the Agent or the Term Loan
B Lenders to the Borrowers on the Effective Date pursuant to Section 2.01(a)(i).
"TERM LOAN B COMMITMENT" means, with respect to each Term Loan
B Lender, the commitment of such Term Loan B Lender to make its portion of the
Term Loan B to the Borrowers in the principal amount set forth in Schedule
1.01(A) hereto, as the same may be terminated or reduced from time to time in
accordance with the terms of this Agreement.
"TERM LOAN B LENDER" means any Lender holding a Term Loan B
Commitment greater than zero, as identified on Schedule 1.01(A) hereto, together
with permitted successors and assigns.
"TERM LOAN C" means a loan made by the Agent or Term Loan C
Lenders to the Borrowers on the Effective Date pursuant to Section 2.01(a)(ii).
"TERM LOAN C COMMITMENT" means, with respect to each Term Loan
C Lender, the commitment of such Term Loan C Lender to make its portion of the
Term Loan C to the Borrowers in the principal amount set forth in Schedule
1.01(A) hereto, as the same may be terminated or reduced from time to time in
accordance with the terms of this Agreement.
"TERM LOAN C LENDER" means any Lender holding a Term Loan C
Commitment greater than zero, as identified on Schedule 1.01(A) hereto, together
with permitted successors and assigns.
"TOTAL COMMITMENT" means the sum of each Lender's Commitment.
"UCC FILING AUTHORIZATION LETTER" means a letter duly executed
by each Loan Party authorizing the Agent to file appropriate financing
statements on Form UCC-1 without the signature of such Loan Party in such office
or offices as may be necessary or, in the opinion of the Agent, desirable to
perfect the security interests purported to be created by each Security
Agreement, each Pledge Agreement and each Mortgage.
"UNIFORM COMMERCIAL CODE" has the meaning specified therefor
in Section 1.03.
"UNRESTRICTED SUBSIDIARY" has the meaning specified therefor
in Section 5.01(kk).
"VALUE CITY BUSINESS" means the Borrowers' business other than
the DSW/Shonac Business and the Filene's Business.
"WARRANT DEADLINE DATE" means October 31, 2002; provided,
however, that in the event the Meeting is delayed as a result of a unilateral
action by SSC or a shareholder of SSC, the Warrant Deadline Date shall be
December 31, 2002.
"WARRANTS" has the meaning assigned to such term in Section
13.01.
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"WARRANT STOCK" means the shares of Common Stock issuable on
the exercise of the Warrants.
Section 1.02 TERMS GENERALLY. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise, (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights. References in this Agreement to "determination" by the Agent
include good faith estimates by the Agent (in the case of quantitative
determinations) and good faith beliefs by the Agent (in the case of qualitative
determinations).
Section 1.03 ACCOUNTING AND OTHER TERMS. Unless otherwise
expressly provided herein, each accounting term used herein shall have the
meaning given it under GAAP applied on a basis consistent with those used in
preparing the Financial Statements. All terms used in this Agreement which are
defined in Article 8 or Article 9 of the Uniform Commercial Code as in effect
from time to time in the State of New York (the "UNIFORM COMMERCIAL CODE") and
which are not otherwise defined herein shall have the same meanings herein as
set forth therein, provided that terms used herein which are defined in the
Uniform Commercial Code as in effect in the State of New York on the date hereof
shall continue to have the same meaning notwithstanding any replacement or
amendment of such statute.
Section 1.04 TIME REFERENCES. Unless otherwise indicated
herein, all references to time of day refer to Eastern Standard Time or Eastern
daylight saving time, as in effect in New York City on such day. For purposes of
the computation of a period of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding"; PROVIDED, HOWEVER, that with respect to a
computation of fees or interest payable to the Agent or any Lender, such period
shall in any event consist of at least one full day.
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ARTICLE II
THE LOANS
Section 2.01 COMMITMENTS. (a) Subject to the terms and
conditions and relying upon the representations and warranties set forth herein:
(i) each Term Loan B Lender severally agrees to make
a Term Loan B to the Borrowers on the Effective Date, in an aggregate
principal amount not to exceed the amount of such Term Loan B Lender's
Term Loan B Commitment; and
(ii) each Term Loan C Lender severally agrees to make
a Term Loan C to the Borrowers on the Effective Date, in an aggregate
principal amount not to exceed the amount of such Term Loan C Lender's
Term Loan C Commitment.
(b) Any principal amount of the Loans which is
borrowed under this Section 2.01 and prepaid or repaid may not be reborrowed.
Section 2.02 MAKING THE LOANS. (a) The Administrative Borrower
shall give the Agent prior telephonic notice (immediately confirmed in writing,
in substantially the form of Exhibit B hereto (a "NOTICE OF BORROWING")), not
later than 2:00 P.M. (New York City time) on the date which is two (2) Business
Days prior to the Effective Date (or such shorter period as the Agent is willing
to accommodate, but in no event later than 2:00 P.M. (New York City time) on the
Effective Date). Such Notice of Borrowing shall be irrevocable and shall specify
(i) the principal amount of the proposed Loan, (ii) the use of the proceeds of
such proposed Loan, and (iii) the proposed borrowing date, which must be the
Effective Date. The Agent and the Lenders may act without liability upon the
basis of written, telecopied or telephonic notice believed by the Agent in good
faith to be from the Administrative Borrower (or from any Authorized Officer
thereof designated in writing purportedly from the Administrative Borrower to
the Agent). Each Borrower hereby waives the right to dispute the Agent's record
of the terms of any such telephonic Notice of Borrowing. The Agent and each
Lender shall be entitled to rely conclusively on any Authorized Officer's
authority to request a Loan on behalf of the Borrowers until the Agent receives
written notice to the contrary. The Agent and the Lenders shall have no duty to
verify the authenticity of the signature appearing on any written Notice of
Borrowing. The Agent will make the proceeds of such Loans available to the
Borrowers on the Effective Date by causing an amount, in immediately available
funds, to be deposited in an account designated by the Administrative Borrower
to the Agent at a commercial bank reasonably satisfactory to the Agent, and/or
disbursed to such other Persons as the Administrative Borrower shall so direct
the Agent in the Notice of Borrowing.
(b) Each Notice of Borrowing pursuant to this Section
2.02 shall be irrevocable and the Borrowers shall be bound to make a borrowing
in accordance therewith.
(c) Except as otherwise provided in this subsection
2.02(c), all Loans under this Agreement shall be made by the Lenders
simultaneously and in accordance with their respective Commitments, it being
understood that no Lender shall be responsible for any default by any other
Lender in that other Lender's obligations to make a Loan requested hereunder,
nor
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shall the Commitment of any Lender be increased or decreased as a result of the
default by any other Lender in that other Lender's obligation to make a Loan
requested hereunder, and each Lender shall be obligated to make the Loans
required to be made by it by the terms of this Agreement regardless of the
failure by any other Lender to make such Loan.
Section 2.03 NOTES; REPAYMENT OF LOANS.
(a) The obligations of the Borrowers to repay the
Loans and interest thereon shall be evidenced by Notes, duly executed on behalf
of the Borrowers, dated the Effective Date, and delivered to and made payable to
the order of each Lender in a principal amount equal to such Lender's
Commitments.
(b) The Borrowers shall repay the principal amount of
the Loans (including all PIK Interest added thereto) on the Final Maturity Date
together with all such other amounts as may be necessary to pay in full, in
cash, all Obligations to the Lenders in the manner set forth in Section 3.02(b).
(c) Each Loan recorded on the Register may not be
evidenced by promissory notes other than a Note which is a Registered Note. Upon
the registration of the Loans, any promissory note (other than a Registered
Note) evidencing the same shall be null and void and shall be returned to the
Borrowers. The Borrowers agree, at the request of the Agent, to execute and
deliver to each Lender, a promissory note in registered form (a "REGISTERED
NOTE") to evidence such Registered Loan (i.e., containing the registered note
language set forth in Exhibit K hereto) and registered as provided in Section
12.07. Once recorded in the Register, the Loan or Loans evidenced by such Note
may not be removed from the Register so long as it remains outstanding and a
Registered Note may not be exchanged for a promissory note that is not a
Registered Note.
Section 2.04 INTEREST. (a) RATE. Each Loan shall bear interest
on the principal amount thereof from time to time outstanding, from the
Effective Date until such principal amount becomes due, at an interest rate per
annum equal to (i) prior to the PIK Option Change Date, (A) if paid in cash,
14%, and (B) if paid in PIK Interest, 15%, and (ii) on and after the PIK Option
Change Date, (A) as to any portion of the interest on the Loans required to be
paid in cash pursuant to Section 2.04(c), 15%, (B) as to any portion of the
interest on the Loans not required to be paid in cash pursuant to Section
2.04(c) that the Borrowers elect, pursuant to the Notice of Election to pay, and
actually pay, in cash, 15%, and (C) as to any portion of the interest on the
Loans paid in PIK Interest 15.5%; PROVIDED, HOWEVER, that if the Warrants are
not issued on or prior to the Warrant Deadline Date, each Loan shall bear
interest on the principal amount thereof, from the Warrant Deadline Date until
the date such Warrants are issued, at an interest rate per annum equal to the
interest rate otherwise in effect pursuant to the terms of this Agreement plus
four percent (4%). For the avoidance of doubt, each of the parties hereto hereby
agrees that if the Borrowers elect, pursuant to the Notice of Election, to pay
the interest due on the Loan in PIK Interest and such interest payment or
portion thereof is subsequently paid in cash, the rate applicable to PIK
Interest shall nevertheless apply to such payment.
(b) DEFAULT INTEREST. To the extent permitted by law,
upon the occurrence and during the continuance of an Event of Default, the
principal of, and all accrued
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and unpaid interest on, all Loans, fees, indemnities or any other Obligations of
the Loan Parties under this Agreement and the other Loan Documents, shall bear
interest, from the date such Event of Default occurred until the date such Event
of Default is cured or waived in writing in accordance herewith, at a rate per
annum equal at all times to the Post-Default Rate. Notwithstanding anything to
the contrary contained herein, interest at the Post-Default Rate shall be
payable in cash on demand in the manner set forth in Section 3.02(b).
(c) INTEREST PAYMENT. Interest on the Loans shall be
payable monthly in arrears, on the first day of each month, commencing on the
first day of the month following the month in which the Loans are made and at
Final Maturity (whether upon demand, by acceleration or otherwise), (i) prior to
the PIK Option Change Date, at the option of the Borrowers, either (A) in cash,
or (B) in PIK Interest, the amount of which shall be accrued and added to the
outstanding principal amount of the Loans at such time and payable at Final
Maturity, and (ii) on and after the PIK Option Change Date, at the option of the
Borrowers, either (A) entirely in cash, or (B) in a combination of cash and PIK
Interest (the amount of any such PIK Interest shall be accrued and added to the
outstanding principal amount of the Loans at such time and payable at Final
Maturity), PROVIDED, HOWEVER, that at least 50% of the interest payable at any
time is paid in cash. The Administrative Borrower shall give the Agent and each
of the Lenders prior telephonic notice (immediately confirmed in writing in
substantially the form of Exhibit C hereto (a "NOTICE OF ELECTION")) not later
than two (2) Business Days prior to any date on which a payment of interest is
required pursuant to this Section 2.04(c), specifying the amount of interest to
be paid in cash and the amount to be paid in PIK Interest. Such Notice of
Election shall be irrevocable.
(d) GENERAL. All interest shall be computed on the
basis of a year of 360 days for the actual number of days, including the first
day but excluding the last day, elapsed.
Section 2.05 PREPAYMENT OF LOANS.
(a) OPTIONAL PREPAYMENT.
(i) TERM LOAN B. Subject to the terms of the
Intercreditor Agreement, the Borrowers may, upon at least five (5)
Business Days' prior written notice to the Agent, prepay the principal
of the Term Loan B, in whole or in part. Each prepayment made pursuant
to this clause (a)(i), if made within the first twelve (12) months
following the Effective Date shall be in an amount equal to 101.5% of
the principal amount to be prepaid. All prepayments made pursuant to
this clause (a) shall be accompanied by the payment of accrued interest
to the date of such payment and each such prepayment shall be applied,
first to accrued cash interest, then to PIK Interest and then to
principal.
(ii) TERM LOAN C. Subject to the terms of the
Intercreditor Agreement, the Borrowers may, upon at least five (5)
Business Days' prior written notice to the Agent, prepay the principal
of the Term Loan C, in whole or in part. Each prepayment made pursuant
to this clause (a)(ii) shall be in an amount equal to the applicable
percentage set forth below of the principal amount to be prepaid:
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PREPAYMENT DATE PREMIUM
---------------------------------------------------- ----------
Effective Date through June 10, 2003: 103.0%
June 11, 2003 through December 11, 2003: 102.0%
Thereafter: 100.0%
All prepayments made pursuant to this clause (a) shall be accompanied by the
payment of accrued interest to the date of such payment and each such prepayment
shall be applied, first to accrued cash interest, then to PIK Interest and then
to principal.
(b) MANDATORY PREPAYMENT.
(i) Immediately upon any Disposition by any Loan
Party or its Subsidiaries pursuant to Section 6.02(c), and subject to
the terms of the Intercreditor Agreement, the Borrowers shall prepay
the outstanding principal amount of the Loans in an amount equal to
100% of the Net Cash Proceeds received by such Person in connection
with such Disposition to the extent that the aggregate amount of Net
Cash Proceeds received by all Loan Parties and their Subsidiaries (and
not paid to the Agent as a prepayment of the Loans) shall exceed
$1,000,000 for all such Dispositions in any Fiscal Year. Nothing
contained in this subsection (i) shall permit any Loan Party or any of
its Subsidiaries to make a Disposition of any property other than in
accordance with Section 6.02(c).
(ii) Upon the loss, destruction or taking by
condemnation of any Collateral, and subject to the terms of the
Intercreditor Agreement, the Borrowers shall prepay the outstanding
principal of the Loans in an amount equal to 100% of the Net Cash
Proceeds of the insurance or other proceeds received by any Loan Party
in connection therewith, PROVIDED, that, except during the continuance
of an Event of Default, the insurance or other proceeds received by any
Borrower in connection therewith shall not be required to be so prepaid
on such date to the extent such proceeds are used to replace or restore
the properties or assets used in a Permitted Business in respect of
which such proceeds were paid if the Administrative Borrower delivers a
certificate to the Agents within 30 days of such event stating that
such proceeds shall be used to replace or restore any such properties
or assets to be used in a Permitted Business within a period specified
in such certificate not to exceed 365 days after the receipt of such
proceeds (which certificate shall set forth estimates of the proceeds
to be so expended) and if all or any portion of such proceeds not so
applied to the repayment of the Loans are not so used within the period
specified in the relevant certificate furnished pursuant hereto, such
remaining portion shall prepay the outstanding principal of the Loans
on the last day of such specified period.
(iii) Upon the issuance or incurrence by any Loan
Party or any of its Subsidiaries of any Indebtedness (other than
Permitted Indebtedness), or the sale or issuance by any Loan Party or
any of its Subsidiaries of any shares of its Capital Stock (other than
pursuant to stock option plans for employees, officers and directors),
and
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subject to the terms of the Intercreditor Agreement, the Borrowers
shall prepay the outstanding amount of the Loans in an amount equal to
100% of the Net Cash Proceeds received by such Person in connection
therewith. The provisions of this subsection (iii) shall not be deemed
to be implied consent to any such issuance, incurrence or sale
otherwise prohibited by the terms and conditions of this Agreement.
(iv) Except as set forth in Section 2.05(b)(ii), upon
the receipt by any Loan Party or any of its Subsidiaries of any
Extraordinary Receipts in excess of $1,000,000 in any Fiscal Year, and
subject to the terms of the Intercreditor Agreement, the Borrowers
shall prepay the outstanding principal of the Loans in an amount equal
to 100% of such Extraordinary Receipts, net of any reasonable expenses
incurred in collecting such Extraordinary Receipts.
(c) APPLICATION OF PAYMENTS. Each prepayment pursuant
to subsections (b)(i) through (b)(iv) above shall be applied pro rata to the
Term Loan B and the Term Loan C.
(d) INTEREST AND FEES. Any prepayment made pursuant
to this Section 2.05 shall be accompanied by accrued interest on the principal
amount being prepaid to the date of prepayment, and if such prepayment would
reduce the amount of the outstanding Loans to zero, such prepayment shall be
accompanied by the payment of all fees accrued to such date.
(e) CUMULATIVE PREPAYMENTS. Except as otherwise
expressly provided in this Section 2.05, payments with respect to any subsection
of this Section 2.05 are in addition to payments made or required to be made
under any other subsection of this Section 2.05.
(f) REFINANCING. Notwithstanding anything to the
contrary contained in this Section, Borrowers may not prepay the Loans in full
if more than 80% of the proceeds of such proposed prepayment is derived from the
issuance or incurrence of Indebtedness.
(g) PREPAYMENT PRIOR TO ISSUANCE OF WARRANTS.
Notwithstanding anything to the contrary contained herein, in the event that the
Loans are repaid in full or this Agreement is otherwise terminated (whether as a
result of an optional prepayment, by acceleration or otherwise) prior to the
issuance of the Warrants, the Borrowers shall pay to the Agent, for the benefit
of the Lenders, in addition to all other amounts payable in respect of the
Obligations, a fee in an amount equal to five percent (5%) of the principal
amount of the Loans outstanding on the Effective Date. For the avoidance of
doubt, it is hereby agreed that upon payment of the fee set forth in this
Section 2.05(g), the Parent shall have no further obligation to issue the
Warrants.
Section 2.06 FEES.
(a) CLOSING FEE. On or prior to the Effective Date,
the Borrowers shall pay to the Agent for the account of the Lenders, in
accordance with their Pro Rata Shares, a non-refundable closing fee (the
"CLOSING FEE") equal to $2,562,500, which shall be deemed fully earned when
paid.
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(b) ANNIVERSARY FEE. The Borrowers shall pay to the
Agent for the account of the Term Loan B Lenders, in accordance with their Pro
Rata Share of the Term Loan B Commitments, a non-refundable anniversary fee (the
"ANNIVERSARY FEE") equal to a percentage of the Term Loan B principal amount
outstanding, including PIK Interest, which shall be deemed fully earned when
paid and which shall be payable on each anniversary of the Effective Date in the
percentages as set forth below:
PERCENTAGE OF
ANNIVERSARY DATE PRINCIPAL
---------------------- --------------
June 11, 2003 1.0%
June 11, 2004 2.0%
June 11, 2005 3.0%
Section 2.07 SECURITIZATION. The Loan Parties hereby
acknowledge that the Lenders and their Affiliates may sell or securitize the
Loans (a "SECURITIZATION") through the pledge of the Loans as collateral
security for loans to the Lenders or their Affiliates or through the sale of the
Loans or the issuance of direct or indirect interests in the Loans, which loans
to the Lenders or their Affiliates or direct or indirect interests will be rated
by ▇▇▇▇▇'▇, Standard & Poor's or one or more other rating agencies (the "RATING
AGENCIES"). The Loan Parties shall cooperate with the Lenders and their
Affiliates to effect the Securitization including, without limitation, by (a)
subject to Section 2.15 of the Intercreditor Agreement, amending this Agreement
and the other Loan Documents, and executing such additional documents, as
reasonably requested by the Lenders in connection with the Securitization,
PROVIDED that (i) any such amendment or additional documentation does not impose
material additional costs on the Loan Parties and (ii) any such amendment or
additional documentation does not materially adversely affect the rights, or
materially increase the obligations, of the Loan Parties under the Loan
Documents or change or affect in a manner adverse to the Loan Parties the
financial terms of the Loans, (b) providing such information as may be
reasonably requested by the Lenders in connection with the rating of the Loans
or the Securitization, and (c) providing in connection with any rating of the
Loans a certificate (i) agreeing to indemnify the Lenders and their Affiliates,
any of the Rating Agencies, or any party providing credit support or otherwise
participating in the Securitization (collectively, the "SECURITIZATION PARTIES")
for any losses, claims, damages or liabilities (the "LIABILITIES") to which the
Lenders, their Affiliates or such Securitization Parties may become subject
insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Loan Document
or in any writing delivered by or on behalf of any Loan Party to the Lenders in
connection with any Loan Document or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein, or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and such indemnity
shall survive any transfer by the Lenders or their successors or assigns of the
Loans and (ii) agreeing to reimburse the Lenders and their Affiliates for any
legal or other expenses reasonably incurred by such Persons in connection with
defending the Liabilities.
Section 2.08 TAXES. (a) All payments made by any Loan Party
hereunder or under any other Loan Document shall be made without set-off,
counterclaim, deduction or other
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defense. All such payments shall be made free and clear of and without deduction
for any present or future income, franchise, sales, use, excise, stamp or other
taxes, levies, imposts, deductions, charges, fees, withholdings, restrictions or
conditions of any nature now or hereafter imposed, levied, collected, withheld
or assessed by any jurisdiction (whether pursuant to Federal, state, local or
foreign law) or by any political subdivision or taxing authority thereof or
therein, and all interest, penalties or additional amounts, excluding taxes on
the net income of any Lender or the Agent imposed by the jurisdiction in which
such Lender or such Agent is organized or any political subdivision thereof or
taxing authority thereof or any jurisdiction in which such Person's principal
office is located or any political subdivision thereof or taxing authority
thereof (such nonexcluded taxes, levies, imposts, deductions, charges, fees,
withholdings, restrictions, conditions, interest, penalties and additional
amounts being hereinafter collectively referred to as "TAXES"). If any Loan
Party shall be required to deduct or to withhold any Taxes from or in respect of
any amount payable hereunder or under any other Loan Document:
(i) the amount so payable shall be increased so that
after making all required deductions and withholdings (including Taxes
on amounts payable pursuant to this sentence) the Lenders or the Agent,
as the case may be, receive an amount equal to the sum they would have
received had no such deduction or withholding been made;
(ii) such Loan Party shall make such deduction or
withholding;
(iii) such Loan Party shall pay the full amount
deducted or withheld to the relevant taxation authority in accordance
with Applicable Law; and
(iv) whenever any Taxes are payable by any Loan
Party, as promptly as possible thereafter, such Loan Party shall send
the Lenders and the Agent an official receipt (or, if an official
receipt is not available, such other documentation as shall be
satisfactory to the Lenders or the Agent, as the case may be)
evidencing payment of the amount or amounts so deducted or withheld. In
addition, each Loan Party agrees to pay any present or future taxes,
charges or similar levies which arise from any payment made hereunder
or from the execution, delivery, performance, recordation or filing of,
or otherwise with respect to, this Agreement or any other Loan Document
other than the foregoing excluded taxes (hereinafter referred to as
"OTHER TAXES").
(b) The Loan Parties hereby jointly and severally
agree to indemnify and hold the Lenders and the Agent harmless from and against
Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.08) paid by
any Lender or the Agent and any liability (including penalties, interest and
expenses for nonpayment, late payment or otherwise) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Such indemnification shall be paid within 10 days from the
date on which any the Agent, on behalf of the Lenders, makes written demand
therefor, which demand shall identify in reasonable detail the nature and amount
of such Taxes or Other Taxes.
(c) Each Lender that is organized in a jurisdiction
outside the United States hereby agrees that it shall, no later than the
Effective Date or, in the case of a Lender
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which becomes a party hereto pursuant to Section 12.07 hereof after the
Effective Date, the date upon which such Lender becomes a party hereto (and from
time to time thereafter upon the reasonable request of the Administrative
Borrower or the Agent, but only if such Lender is legally able to do so),
deliver to the Administrative Borrower and the Agent either (i) two accurate,
complete and signed copies of either (x) U.S. Internal Revenue Service Form
W-8ECI or successor form, or (y) U.S. Internal Revenue Service Form W-8BEN or
successor form, in each case, indicating that such Lender is on the date of
delivery thereof entitled to receive payments of interest hereunder free from,
or subject to a reduced rate of, withholding of United States Federal income tax
or (ii) in the case of such a Lender that is entitled to claim exemption from
withholding of United States Federal income tax under Section 871(h) or Section
881(c) of the Internal Revenue Code, (x) a certificate to the effect that such
Lender is (A) not a "bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (B) not a "10 percent shareholder" of the Parent within
the meaning of Section 881(c)(3)(B) of the Internal Revenue Code and (C) not a
controller foreign corporation receiving interest from a related person within
the meaning of Section 881(c)(3)(C) of the Internal Revenue Code and (y) two
accurate, complete and signed copies of U.S. Internal Revenue Service Form
W-8BEN or successor form.
(d) If any Loan Party fails to perform any of its
obligations under this Section 2.08, the Loan Parties shall indemnify the
Lenders and the Agent for any taxes, interest or penalties that may become
payable as a result of any such failure. The obligations of the Loan Parties
under this Section 2.08 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
ARTICLE III
FEES, PAYMENTS AND OTHER COMPENSATION
Section 3.01 AUDIT AND COLLATERAL MONITORING FEES. The
Borrowers acknowledge that representatives of the Agent may visit any or all of
the Loan Parties and/or conduct audits, inspections and valuations of any or all
of the Loan Parties in accordance with the terms and conditions set forth in
Sections 7.02 and 7.09. The Borrower agrees to pay the costs and expenses of
such visits, audits, inspections and valuations, whether conducted by the Agent
itself or by third-party representatives of the Agent.
Section 3.02 PAYMENTS; COMPUTATIONS AND STATEMENTS. (a) The
Borrowers will make each payment under this Agreement not later than 12:00 noon
(New York City time) on the day when due, in lawful money of the United States
of America and in immediately available funds, in the manner set forth in clause
(b) below. All payments received after 12:00 noon (New York City time) on any
Business Day will be credited on the next succeeding Business Day. All payments
shall be made by the Borrowers without set-off, counterclaim, deduction or other
defense to the Agent and the Lenders. Whenever any payment to be made under any
such Loan Document shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be. All computations of fees shall be made by the Agent
on the basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
fees are
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payable. Each determination by the Agent of an interest payment amount or fees
hereunder shall be rebuttably presumed to be accurate, in the absence of
manifest error.
(b) (i) Other than during the continuance of an Event
of Default, the Borrowers shall make each payment relating to the payment of
principal and interest in respect of the Loans directly to the Lender's Account
of each Lender to whom payment is required to be made, in like funds and in
accordance with each Lender's Pro Rata Share of such payment. The Borrowers
shall make all other payments under this Agreement to the Agent's Account for
distribution to the Lenders in accordance with clause (iii) below.
(ii) Upon the occurrence and during the continuance
of an Event of Default, the Borrowers shall make all payments under
this Agreement to the Agent's Account for distribution to the Lenders
in accordance with clause (iii) below.
(iii) Upon the receipt of any payment under this
Agreement, the Agent will promptly (and in any case, not later than
five (5) Business Days) thereafter, cause to be distributed to the
Lenders to whom payment is required to be made, (A) in the case of
payments relating to principal and interest, in like funds in
accordance with their Pro Rata Shares, and (B) in the case of the
payment of any other amount payable to any Lender, in like funds;
PROVIDED, HOWEVER, that this clause shall not apply to any payment made
under this Agreement that is solely for the account of the Agent.
(c) The Agent shall provide the Administrative
Borrower, promptly after the end of each calendar month, a summary statement (in
the form from time to time used by the Agent) of the amounts and dates of all
payments on account of the Loans to the Borrowers during such month and the
Loans to which such payments were applied, the amount of interest accrued on the
Loans to the Borrowers during such month, the amount of PIK Interest added to
the principal of the Loans during such month, and the amount and nature of any
other fees, commissions, expenses and other Obligations incurred during such
month. All entries on any such statement shall be presumed to be correct and,
thirty (30) days after the same is sent, shall be rebuttably presumed to be
accurate, absent manifest error. For purposes of such statement, the Agent shall
have the right to conclude, absent evidence to the contrary (i) that no payments
have been made by the Borrowers and no requests for payments have been made to
the Borrowers by any Lender other than in accordance with this Agreement, and
(ii) all payments of principal and interest required to be made directly to any
Lender's Account have been made pursuant to the terms of this Agreement.
Section 3.03 SHARING OF PAYMENTS, ETC. Except as provided in
Sections 2.02 and 3.02(b) hereof, if any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of any Obligation in excess of its ratable share of
payments on account of similar obligations obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
such similar obligations held by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share
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(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender of
any interest or other amount paid by the purchasing Lender in respect of the
total amount so recovered). The Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 3.03 may, to the
fullest extent permitted by law, exercise all of its rights (including the
Lender's right of set-off) with respect to such participation as fully as if
such Lender were the direct creditor of the Borrowers in the amount of such
participation.
Section 3.04 APPORTIONMENT OF PAYMENTS. Subject to Section
2.02 hereof and to any written agreement among the Agent and/or the Lenders:
(a) All payments of principal, interest and PIK
Interest in respect of outstanding Loans, all payments of fees (other than the
fees set forth in Section 2.06 hereof and the audit and collateral monitoring
fee provided for in Section 3.01) and all other payments in respect of any other
Obligations, shall be allocated by the Agent among such of the Lenders as are
entitled thereto, in proportion to their respective Pro Rata Shares or otherwise
as provided herein or, in respect of payments not made on account of Loans, as
designated by the Person making payment when the payment is made.
(b) After the occurrence and during the continuance
of an Event of Default, the Agent may apply all payments in respect of any
Obligations and all proceeds of the Collateral, subject to the provisions of
this Agreement, (i) FIRST, ratably to pay the Obligations in respect of any
fees, expense reimbursements, indemnities and other amounts then due to the
Agent until paid in full; (ii) SECOND, ratably to pay the Obligations in respect
of any fees and indemnities then due to the Lenders until paid in full; (III)
THIRD, ratably to pay interest due in respect of the Loans until paid in full;
(iv) FOURTH, ratably to pay PIK Interest due in respect of the Loans until paid
in full; (v) FIFTH, ratably to pay the principal of the Loans until paid in
full; and (viii) SIXTH, to the ratable payment of all other Obligations then due
and payable.
(c) In each instance, so long as no Event of Default
has occurred and is continuing, Section 3.04(b) shall not be deemed to apply to
any payment by the Borrowers specified by the Administrative Borrower to the
Agent to be for the prepayment of all or part of the principal of the Term Loans
in accordance with the terms and conditions of Section 2.05.
(d) For purposes of Section 3.04(b), "paid in full"
with respect to interest shall include interest accrued after the commencement
of any Insolvency Proceeding irrespective of whether a claim for such interest
is allowable in such Insolvency Proceeding.
(e) In the event of a direct conflict between the
priority provisions of this Section 3.04 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that both such
priority provisions in such documents shall be read together and construed, to
the fullest extent possible, to be in concert with each other. In the event of
any actual, irreconcilable conflict that cannot be resolved as aforesaid, the
terms and provisions of this Section 3.04 shall control and govern.
Section 3.05 INCREASED COSTS AND REDUCED RETURN. (a) If any
Lender or the Agent shall have determined that the adoption or implementation
of, or any change in, any law,
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rule, treaty or regulation, or any policy, guideline or directive of, or any
change in, the interpretation or administration thereof by, any court, central
bank or other administrative or Governmental Authority, or compliance by any
Lender or the Agent or any Person controlling any such Lender or the Agent with
any directive of, or guideline from, any central bank or other Governmental
Authority or the introduction of, or change in, any accounting principles
applicable to any Lender or the Agent or any Person controlling any such Lender
or the Agent (in each case, whether or not having the force of law), shall (i)
subject any Lender or the Agent, or any Person controlling any such Lender or
the Agent to any tax, duty or other charge with respect to this Agreement or any
Loan made by such Lender or the Agent, or change the basis of taxation of
payments to any Lender or the Agent or any Person controlling any such Lender or
the Agent of any amounts payable hereunder (except for taxes on the overall net
income of any Lender or the Agent or any Person controlling any such Lender or
the Agent), (ii) impose, modify or deem applicable any reserve, special deposit
or similar requirement against any Loan, or against assets of or held by, or
deposits with or for the account of, or credit extended by, any Lender or the
Agent or any Person controlling any such Lender or the Agent or (iii) impose on
any Lender or the Agent or any Person controlling any such Lender or the Agent
or any other condition regarding this Agreement or any Loan, and the result of
any event referred to in clauses (i), (ii) or (iii) above shall be to increase
the cost to any Lender or the Agent of making any Loan, or agreeing to make any
Loan, or to reduce any amount received or receivable by any Lender or the Agent
hereunder, then, within ten (10) days after demand and receipt of a detailed
calculation and statement of cause by the Agent, on behalf of the affected
Lenders, the Borrowers shall pay to the Agent, for the benefit of the affected
Lenders, such additional amounts as will compensate such Lenders for such
increased costs or reductions in amount.
(b) If any Lender or the Agent shall have determined
that any Capital Guideline or the adoption or implementation of, or any change
in, any Capital Guideline by the Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender or the
Agent or any Person controlling such Lender or the Agent with any Capital
Guideline or with any request or directive of any such Governmental Authority
with respect to any Capital Guideline, or the implementation of, or any change
in, any applicable accounting principles (in each case, whether or not having
the force of law), either (i) affects or would affect the amount of capital
required or expected to be maintained by any Lender or the Agent or any Person
controlling such Lender or the Agent, and any Lender or the Agent determines
that the amount of such capital is increased as a direct or indirect consequence
of any Loans made or maintained, or any guaranty or participation with respect
thereto, any Lender's or the Agent's or any such other controlling Person's
other obligations hereunder; or (ii) has or would have the effect of reducing
the rate of return on any Lender's or the Agent's any such other controlling
Person's capital to a level below that which such Lender or the Agent or such
controlling Person could have achieved but for such circumstances as a
consequence of any Loans made or maintained, or any guaranty or participation
with respect thereto or any agreement to make Loans, or such Lender's or the
Agent's or such other controlling Person's other obligations hereunder (in each
case, taking into consideration, such Lender's, Agent's or other controlling
Person's policies with respect to capital adequacy), then, within ten (10) days
after demand and receipt of a detailed calculation and statement of cause by the
Agent, on behalf of the affected Lenders, the Borrowers shall pay to the Agent,
for the benefit of such affected Lenders, from time to time such additional
amounts as will compensate such Lenders for such cost of
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maintaining such increased capital or such reduction in the rate of return on
such Lender's or the Agent's or such other controlling Person's capital.
(c) All amounts payable under this Section 3.05 shall
bear interest from the date that is ten (10) days after the date of demand by
any Lender or the Agent until payment in full to such Lender or the Agent at the
Reference Rate. A certificate of the Agent, on behalf of the affected Lenders,
claiming compensation under this Section 3.05, specifying the event herein above
described and the nature of such event shall be submitted by the Agent, on
behalf of the affected Lenders, to the Administrative Borrower, setting forth
the additional amount due and an explanation of the calculation thereof, and the
Agent's reasons for invoking the provisions of this Section 3.05, and shall be
rebuttably presumed to be correct, absent manifest error.
(d) If any Lender incurs increased costs and requests
compensation under this Section 3.05, then the Administrative Borrower may (i)
request such Lender use reasonable efforts to designate a different lending
office for booking its loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches, or Affiliates, if in the judgment
of such Lender, such designation or assignment (A) would eliminate or reduce
amounts payable pursuant to Section 3.05 hereof, and (B) would not subject such
Lender to any unreimbursed cost or expense, and would not otherwise be
disadvantageous to such Lender. The Administrative Borrower shall pay all
reasonable costs and expenses incurred by such Lender in connection with any
such designation of assignment; and (ii) at its sole expense and effort, upon
notice to such Lender and the Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 12.07), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that (A) if
such assignee is not an existing Lender, the Administrative Borrower shall have
received the prior written consent of the Agent, which consent shall not
unreasonably be withheld, (B) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Administrative Borrower (in the case of all other amounts, which
shall be paid to the Agent for distribution to such Lender) and (C) such
assignment will result in a reduction in such compensation, payments or costs. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Administrative Borrower to require such assignment
and delegation cease to apply.
Section 3.06 JOINT AND SEVERAL LIABILITY OF THE BORROWERS. (a)
Notwithstanding anything in this Agreement or any other Loan Document to the
contrary, each of the Borrowers hereby accepts joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement
and the other Loan Documents, for the mutual benefit, directly and indirectly,
of each of the Borrowers and in consideration of the undertakings of the other
Borrowers to accept joint and several liability for the Obligations. Each of the
Borrowers, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Borrowers, with respect to the payment and
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performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 3.06), it being the intention of the
parties hereto that all of the Obligations shall be the joint and several
obligations of each of the Borrowers without preferences or distinction among
them. If and to the extent that any of the Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such
event, the other Borrowers will make such payment with respect to, or perform,
such Obligation. Subject to the terms and conditions hereof, the Obligations of
each of the Borrowers under the provisions of this Section 3.06 constitute the
absolute and unconditional, full recourse Obligations of each of the Borrowers,
enforceable against each such Borrower to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Agreement, the other Loan Documents or any other circumstances whatsoever.
(b) The provisions of this Section 3.06 are made for
the benefit of the Agent, the Lenders and their successors and assigns, and may
be enforced by them from time to time against any or all of the Borrowers as
often as occasion therefor may arise and without requirement on the part of the
Agent, the Lenders or such successors or assigns first to marshal any of its or
their claims or to exercise any of its or their rights against any of the other
Borrowers or to exhaust any remedies available to it or them against any of the
other Borrowers or to resort to any other source or means of obtaining payment
of any of the Obligations hereunder or to elect any other remedy. The provisions
of this Section 3.06 shall remain in effect until all of the Obligations shall
have been paid in full or otherwise fully satisfied.
(c) Each of the Borrowers hereby agrees that it will
not enforce any of its rights of contribution or subrogation against the other
Borrowers with respect to any liability incurred by it hereunder or under any of
the other Loan Documents, any payments made by it to the Agent or the Lenders
with respect to any of the Obligations or any Collateral, until such time as all
of the Obligations have been paid in full in cash. Any claim which any Borrower
may have against any other Borrower with respect to any payments to the Agent or
the Lenders hereunder or under any other Loan Documents are hereby expressly
made subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations.
ARTICLE IV
CONDITIONS TO LOANS
Section 4.01 CONDITIONS PRECEDENT TO EFFECTIVENESS. This
Agreement shall become effective as of the Business Day (the "EFFECTIVE DATE")
when each of the following conditions precedent shall have been satisfied in a
manner satisfactory to the Agent:
(a) PAYMENT OF FEES, ETC. The Borrowers shall have
paid on or before the date of this Agreement all fees, costs, expenses and taxes
then payable pursuant to Sections 2.06 and 12.04.
(b) REPRESENTATIONS AND WARRANTIES; NO EVENT OF
DEFAULT. The following statements shall be true and correct: (i) the
representations and warranties contained in
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Article V and in each other Loan Document, certificate or other writing
delivered to the Agent or any Lender pursuant hereto or thereto on or prior to
the Effective Date are true and correct on and as of the Effective Date as
though made on and as of such date; and (ii) no Default or Event of Default
shall have occurred and be continuing on the Effective Date or would result from
this Agreement or the other Loan Documents becoming effective in accordance with
its or their respective terms.
(c) LEGALITY. The making of the Loans shall not
contravene any law, rule or regulation applicable to the Agent or any Lender.
(d) DELIVERY OF DOCUMENTS. The Agent shall have
received on or before the Effective Date the following, each in form and
substance satisfactory to the Agent and, unless indicated otherwise, dated the
Effective Date, and all conditions precedent to the effectiveness of such
documents (where applicable) shall have been satisfied:
(i) the Notes, payable to the order of each Lender
and duly executed by the Borrowers;
(ii) a Security Agreement, duly executed by each Loan
Party;
(iii) an Assignment for Security (as defined in the
Security Agreement) with respect to trademarks and trademark licenses,
duly executed by each Loan Party;
(iv) an Assignment for Security (as defined in the
Security Agreement) with respect to copyrights and copyright licenses,
duly executed by each Loan Party;
(v) a Pledge Agreement, duly executed by each Loan
Party (as applicable) together with the original stock certificates or
other certificated securities or instruments representing all of the
Capital Stock of such Loan Party's subsidiaries accompanied by undated
stock powers executed in blank and other proper instruments of
transfer;
(vi) Mortgages, Fixture Filings and Landlord's
Agreements with respect to all Leases set forth on Schedule 4.01(d)
hereto;
(vii) the Control Agreements and such other
depository account, notices and other similar documents entered into in
connection with the Revolving Credit Facility Documents with respect to
the accounts controlled under such agreements subject to the priority
set forth in the Intercreditor Agreement, each in form and substance
satisfactory to the Agent, with respect to the Borrowers' cash
management system;
(viii) certified copies of request for copies of
information on Form UCC-11, listing all effective financing statements
which name as debtor any Loan Party and which are filed in the offices
referred to in paragraph (x) below, together with copies of such
financing statements, none of which, except for Permitted Liens and as
otherwise agreed in writing by the Agent, shall cover any of the
Collateral and the results
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of searches for any tax Lien and judgment Lien filed against such
Person or its property, which results, except for Permitted Liens and
as otherwise agreed to in writing by the Agent, shall not show any such
Liens;
(ix) payoff letters and termination and release
agreements with respect to the Existing Credit Facilities and all
related documents, duly executed by the Loan Parties and the Existing
Lenders thereto, together with a satisfaction of mortgage for each
mortgage filed by the Existing Lender and UCC-3 termination statements
for all UCC-1 financing statements filed by the Existing Lenders and
covering any portion of the Collateral;
(x) a UCC Filing Authorization Letter, duly executed
by each Loan Party, together with appropriate financing statements on
Form UCC-1, duly executed by each Loan Party and duly filed in such
office or offices as may be necessary or, in the opinion of the Agent,
desirable to perfect the security interests purported to be created by
each Security Agreement, each Pledge Agreement and each Mortgage;
(xi) evidence of the recording of the leasehold
Mortgages in such office or offices as may be necessary or, in the
opinion of the Agent, desirable to perfect the Lien purported to be
created thereby or to otherwise protect the rights of the Agent and the
Lenders thereunder;
(xii) the Intercreditor Agreement, in form and
substance satisfactory to the Agent, duly executed by the Borrowers,
the Agent, the Lenders, the Revolving Credit Facility Agent and the
Revolving Credit Facility Lenders;
(xiii) copies of the Proxies in favor of the Parent,
duly executed by SSC and certified as true and correct copies thereof
by an Authorized Officer of the Parent, which Proxies shall be in form
and substance satisfactory to the Agent;
(xiv) the Registration Rights Agreement;
(xv) an opinion of Porter, Wright, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, counsel to the Loan Parties, substantially in the form of Exhibit
H and as to such other matters as the Agent may reasonably request
(including, without limitation, the Warrants) as well as opinions of
local counsel with respect to Borrowers or Guarantors formed in
Michigan and Missouri;
(xvi) a certificate of the appropriate official(s) of
the state of organization and each state of foreign qualification of
each Loan Party certifying as to the subsistence in good standing of,
and the payment of taxes by, such Loan Party in such states;
(xvii) a true and complete copy of the charter,
certificate of formation, certificate of limited partnership or other
publicly filed organizational document of each Loan Party certified as
of a recent date not more than thirty (30) days prior to the Effective
Date (except as otherwise agreed by the Agent) by an appropriate
official of the state of organization of such Loan Party, which shall
set forth the same
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complete name of such Loan Party as is set forth herein and the
organizational number, if an organizational number is issued in such
jurisdiction, and Federal employee identification number as of the
Effective Date of such Loan Party;
(xviii) a copy of the by-laws, limited liability
company agreement, operating agreement, agreement of limited
partnership or other organizational document of each Loan Party,
together with all amendments thereto, certified as of the Effective
Date by an Authorized Officer of such Loan Party;
(xix) a copy of the resolutions of each Loan Party,
certified as of the Effective Date by an Authorized Officer thereof,
authorizing (A) the borrowings hereunder and the transactions
contemplated by the Loan Documents to which such Loan Party is or will
be a party, and (B) the execution, delivery and performance by such
Loan Party of each Loan Document to which such Loan Party is or will be
a party and the execution and delivery of the other documents to be
delivered by such Person in connection herewith and therewith,
including, without limitation, in the case of the Parent, the Warrants;
(xx) a certificate of an Authorized Officer of each
Loan Party, certifying the names and true signatures of the
representatives of such Loan Party authorized to sign each Loan
Document to which such Loan Party is or will be a party and the other
documents to be executed and delivered by such Loan Party in connection
herewith and therewith, together with evidence of the incumbency of
such authorized officers;
(xxi) a certificate of an Authorized Officer of the
Administrative Borrower, certifying the names and true signatures of
the persons that are authorized to provide the Notice of Borrowing and
all other notices under this Agreement and the other Loan Documents;
(xxii) certificate of the chief financial officer of
the Parent, certifying as to the Solvency the Loan Parties taken as a
whole, which certificate shall be satisfactory in form and substance to
the Agent;
(xxiii) a certificate of an Authorized Officer of
each Loan Party, certifying as to the matters set forth in subsection
(b) of this Section 4.01;
(xxiv) evidence of the insurance coverage required by
Section 6.01 and the terms of each Security Agreement and each Mortgage
and such other insurance coverage with respect to the business and
operations of the Loan Parties as the Agent may reasonably request, in
each case, where requested by the Agent, with such endorsements as to
the named insureds or loss payees thereunder as the Agent may request
and providing that such policy may be terminated or canceled (by the
insurer or the insured thereunder) only upon thirty (30) days' prior
written notice to the Agent and each such named insured or loss payee,
together with evidence of the payment of all premiums due in respect
thereof for such period as the Agent may request;
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(xxv) a copy of the Financial Statements and other
such financial information regarding the Loan Parties, as the Agent or
the Lenders may request, including, but not limited to interim
Financial Statements;
(xxvi) a copy of the Business Plan, certified as true
and correct by an Authorized Officer of the Administrative Borrower;
(xxvii) copies of the Material Contracts as in effect
on the Effective Date, certified as true and correct copies thereof by
an Authorized Officer of the Administrative Borrower, together with a
certificate of an Authorized Officer of the Administrative Borrower
stating that such agreements remain in full force and effect and that
none of the Loan Parties has breached or defaulted on any of its
obligations under such agreements in any material respect;
(xxviii) copies of the Revolving Credit Facility
Documents and copies of the SSC Assignment Documents, in each case,
duly executed by the parties thereto and certified as true and correct
copies thereof by an Authorized Officer of the Parent, which Revolving
Credit Facility Documents shall be in form and substance satisfactory
to the Agent;
(xxix) evidence of completion of certain
documentation as requested by the Agent in connection with Collateral
consisting of intellectual property; and
(xxx) such other agreements, instruments, approvals,
opinions and other documents, each satisfactory to the Agent in form
and substance, as the Agent may reasonably request.
(e) MATERIAL ADVERSE EFFECT. The Agent shall have
determined, in its sole judgment, that no event or development shall have
occurred since February 2, 2002 which could have a Material Adverse Effect.
(f) APPROVALS. All consents, authorizations and
approvals of, and filings and registrations with, and all other actions in
respect of, any Governmental Authority or other Person required in connection
with the making of the Loans or the conduct of the Loan Parties' business shall
have been obtained and shall be in full force and effect.
(g) PROCEEDINGS; RECEIPT OF DOCUMENTS. All
proceedings in connection with the making of the Loans and the other
transactions contemplated by this Agreement and the other Loan Documents, and
all documents incidental hereto and thereto, shall be satisfactory to the Agent
and its counsel, and the Agent and such counsel shall have received all such
information and such counterpart originals or certified copies or other copies
of such documents as the Agent or such counsel may reasonably request,
including, without limitation, interim financial statements and monthly
availability projections.
(h) MANAGEMENT. The Lenders shall be satisfied with
the ongoing management of each Loan Party and the Agent shall have received
satisfactory reference checks for key management of each Loan Party.
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(i) DUE DILIGENCE. The Agent shall have completed its
business and legal due diligence with respect to each Loan Party and the results
thereof shall be acceptable to the Agent, in its sole and absolute discretion.
(j) WARRANT STOCK. The Parent shall have reserved out
of its authorized and unissued Common Stock, solely for the purpose of effecting
the exercise of the Warrants, 2,954,793 shares of Common Stock issuable upon the
exercise of the Warrants to provide for the issuance of the Warrant Stock in
accordance with the terms of the Warrants. The Warrant Stock shall have been
authorized for listing on the New York Stock Exchange upon the official notice
of its issuance.
(k) CASH MANAGEMENT. The Lenders shall be satisfied
with the cash management systems and procedures of each of the Loan Parties.
(l) FUNDING. Each of CP and SSC (and/or its
shareholders) shall have agreed to fund its Term B Loan Commitment and its Term
C Loan Commitment.
(m) EXCESS AVAILABILITY. After giving effect to all
the transactions contemplated hereby (including transaction costs), the
Borrowers shall have Excess Availability (calculated without regard to the
Excess Availability Reserve) of not less than $115,000,000.
(n) TRANSACTION COSTS. The Lenders shall be satisfied
with the costs in connection with the transactions contemplated hereby.
(o) REVOLVING CREDIT FACILITY. All conditions
precedent to the Revolving Credit Facility shall have been met to the
satisfaction of the Lenders and Agents thereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 REPRESENTATIONS AND WARRANTIES. Each Loan Party
hereby represents and warrants to the Agent and the Lenders as follows:
(a) ORGANIZATION; GOOD STANDING, ETC. Each Loan Party
(i) is a corporation, limited liability company or limited partnership duly
organized, validly existing and in good standing under the laws of the state or
jurisdiction of its organization; (ii) has all requisite power and authority to
conduct its business as now conducted and as presently contemplated and, in the
case of the Borrowers, to make the borrowings hereunder, and to execute and
deliver each Loan Document to which it is a party, and to consummate the
transactions contemplated thereby; and (iii) is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to so qualify is
not reasonably likely to have a Material Adverse Effect.
(b) AUTHORIZATION, ETC. The execution, delivery and
performance by each Loan Party of each Loan Document to which it is or will be a
party (i) have been duly
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authorized by all necessary action, other than the receipt of the Requisite
Approval in connection with the issuance of the Warrants; (ii) do not and will
not contravene in any material respect its charter or by-laws, its limited
liability company or operating agreement or its certificate of partnership or
partnership agreement, as applicable, or any Applicable Law or any contractual
restriction binding on or otherwise affecting it or any of its properties; (iii)
do not and will not result in or require the creation of any Lien (other than
pursuant to any Loan Document) upon or with respect to any of its properties;
and (iv) do not and will not result in any default, noncompliance, suspension,
revocation, impairment, forfeiture or nonrenewal of any material permit,
license, authorization or approval applicable to its operations or any of its
properties.
(c) GOVERNMENTAL APPROVALS. No authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority is required in connection with the due execution, delivery and
performance by any Loan Party of any Loan Document to which it is or will be a
party.
(d) ENFORCEABILITY OF LOAN DOCUMENTS. This Agreement
is, and each other Loan Document to which any Loan Party is or will be a party,
when delivered hereunder, will be, a legal, valid and binding obligation of such
Person, enforceable against such Person in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
(e) CAPITALIZATION; SUBSIDIARIES.
(i) On the Effective Date, after giving effect to the
transactions contemplated hereby to occur on the Effective Date, the
authorized Capital Stock of the Parent and the issued and outstanding
Capital Stock of the Parent are as set forth on Schedule 5.01(e)(i).
All of the issued and outstanding shares of Capital Stock of the Parent
have been validly issued and are fully paid and nonassessable, and the
holders thereof are not entitled to any preemptive, first refusal or
other similar rights. There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the
issuance of the Warrants or, upon exercise of any Warrant, the issuance
of Warrant Shares, except for anti-dilution provisions which have been
validly waived on or prior to the date hereof in respect of the
issuance of the Warrants and, upon exercise of any Warrant, the
issuance of Warrant Shares. The Warrants will be duly authorized upon
receipt of the Requisite Approval, and, upon issuance in accordance
with the terms hereof, will be validly issued, fully paid and
non-assessable, free from all taxes, liens and charges with respect to
the issue thereof, and shall not be subject to preemptive rights or
other similar rights of stockholders of the Parent. The Warrant Shares
have been duly authorized and reserved for issuance upon exercise of
the Warrants, and upon such exercise, will be validly issued, fully
paid and non-assessable, free from all taxes, liens and charges with
respect to the issue thereof, and will not be subject to preemptive
rights or other similar rights of stockholders of the Parent.
(ii) Schedule 5.01(e)(ii) is a complete and correct
description of the name, jurisdiction of incorporation and ownership of
the outstanding Capital Stock of each of the Subsidiaries of the Parent
in existence on the date hereof. All of the issued
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and outstanding shares of Capital Stock of such Subsidiaries have been
validly issued and are fully paid and nonassessable, and the holders
thereof are not entitled to any preemptive, first refusal or other
similar rights. Except as indicated on such Schedule, all such Capital
Stock is owned by the Parent or one or more of its wholly-owned
Subsidiaries, free and clear of all Liens. Except as indicated on such
Schedules there are no outstanding debt or equity securities of the
Parent or any of its Subsidiaries and no outstanding obligations of the
Parent or any of its Subsidiaries convertible into or exchangeable for,
or warrants, options or other rights for the purchase or acquisition
from the Parent or any of its Subsidiaries, or other obligations of any
Subsidiary to issue, directly or indirectly, any shares of Capital
Stock of any Subsidiary of the Parent.
(f) LITIGATION; COMMERCIAL TORT CLAIMS. Except as set
forth in Schedule 5.01(f), (i) there is no pending or, to the best knowledge of
any Loan Party, threatened action, suit or proceeding affecting any Loan Party
before any court or other Governmental Authority or any arbitrator that (A) if
adversely determined, could have a Material Adverse Effect or (B) relates to
this Agreement or any other Loan Document or any transaction contemplated hereby
or thereby and (ii) as of the Effective Date, none of the Loan Parties holds any
commercial tort claims in respect of which a claim has been filed in a court of
law or a written notice by an attorney has been given to a potential defendant.
(g) FINANCIAL CONDITION.
(i) All financial statements furnished to the Agent
and to each Lender by the Loan Parties on a consolidated basis have
been prepared in accordance with GAAP consistently applied (PROVIDED,
HOWEVER, that unaudited financial statements are subject to normal
year-end adjustments and to the absence of footnotes). All financial
statements furnished to the Agent and to each Lender by the Loan
Parties present fairly the condition of the Loan Parties at the date(s)
thereof and the results of operations and cash flows (to the extent
cash flows are required to be prepared) for the period(s) covered
(PROVIDED, HOWEVER, that unaudited financial statements are subject to
normal year end adjustments and to the absence of footnotes). There has
been no change in the consolidated financial condition, results of
operations, or cash flows of the Loan Parties since the date(s) of such
financial statements, other than changes in the ordinary course of
business, which changes have not been materially adverse, either
singularly or in the aggregate.
(ii) No Loan Party has any material Contingent
Obligations or material obligation under any Lease or Capitalized Lease
which is not noted in the Loan Parties' Consolidated financial
statements furnished to the Agent and to each Lender prior to the
execution of this Agreement.
(h) COMPLIANCE WITH LAW, ETC. No Loan Party is in
violation or has received notice of any violation of its organizational
documents, any law, rule, regulation, judgment or order of any Governmental
Authority applicable to it or any of its property or assets, or any material
term of any agreement or instrument (including, without limitation, any Material
Contract) binding on or otherwise affecting it or any of its properties, except
where such
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violation is not reasonably likely to have a Material Adverse Effect and no
default or event of default has occurred and is continuing.
(i) ERISA. Except to the extent that such action is
not reasonably likely to have a Material Adverse Effect, neither any Loan Party
nor any ERISA Affiliate has within the past three (3) years:
(i) violated or failed to be in full compliance with
any Loan Party's Employee Benefit Plan;
(ii) failed timely to file all reports and filings
required by ERISA to be filed by any Loan Party;
(iii) engaged in any nonexempt "prohibited
transactions" or "reportable events" (respectively as described in
ERISA);
(iv) engaged in, or committed, any act such that a
tax or penalty reasonably could be imposed upon any Loan Party on
account thereof pursuant to ERISA;
(v) incurred any material accumulated funding
deficiency within the meaning of ERISA;
(vi) terminated any Employee Benefit Plan such that a
Lien could be asserted against any assets of any Loan Party on account
thereof pursuant to ERISA; or
(vii) failed to make any required contribution or
payment to, or made a complete or partial withdrawal from, any Employee
Benefit Plan which is a multiemployer plan within the meaning of
Section 4001(a) of ERISA.
(j) TAXES, ETC.
(i) To the best knowledge of the Parent, all Federal
and all material state and local tax returns and other reports required
by Applicable Law to be filed by any Loan Party have been filed, or
extensions have been obtained, and all taxes, assessments and other
governmental charges imposed upon any Loan Party or any property of any
Loan Party and which have become due and payable on or prior to the
date hereof have been paid, except to the extent contested in good
faith by proper proceedings which stay the imposition of any penalty,
fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves have been set aside for the payment thereof on
the Financial Statements in accordance with GAAP.
(ii) Except as described on Schedule 5.01(j):
(A) currently no Loan Party has received
from any taxing authority any request to perform any
examination of or with respect to any Loan Party nor any other
written or verbal notice in any way relating to any
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claimed failure by any Loan Party to comply with all
Applicable Law concerning payment of any taxes or other
amounts in the nature of taxes in excess of $500,000 in any
one instance;
(B) no agreement exists which waives or
extends any statute of limitations applicable to the right of
any taxing authority to assert a deficiency or make any other
claim for or in respect to Federal income taxes; and
(C) no issue has been raised in any tax
examination of any Loan Party which reasonably could be
expected to result in the assertion of a deficiency for any
fiscal year open for examination, assessment, or claim by any
taxing authority in excess of $500,000 in the aggregate for
all Loan Parties.
(k) REGULATIONS T, U AND X. No Loan Party is or will
be engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation T, U or X), and no
proceeds of any Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.
(l) NATURE OF BUSINESS. No Loan Party is engaged in
any business other than a Permitted Business.
(m) ADVERSE AGREEMENTS, ETC. To the best of such Loan
Party's knowledge, no Loan Party is a party to any agreement or instrument, or
subject to any charter, limited liability company agreement, partnership
agreement or other corporate, partnership or limited liability company
restriction or any judgment, order, regulation, ruling or other requirement of a
court or other Governmental Authority, which is reasonably likely to have a
Material Adverse Effect.
(n) PERMITS, ETC. Each Loan Party has, and is in
compliance with, all permits, licenses, authorizations, approvals, entitlements
and accreditations required for such Person lawfully to own, lease, manage or
operate, or to acquire, each business currently owned, leased, managed or
operated, or to be acquired, by such Person except where failure to so have or
to so comply is not reasonably likely to have a Material Adverse Effect. No
condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license,
authorization, approval, entitlement or accreditation, and there is no claim
that any of the foregoing are not in full force and effect.
(o) PROPERTIES. (i) Each Loan Party has good and
marketable title to, valid leasehold interests in, or valid licenses to use, all
property and assets material to its business, free and clear of all Liens,
except Permitted Liens. All such properties and assets are in good working order
and condition, ordinary wear and tear excepted. No Loan Party has possession of
any property on consignment to that Loan Party, except as listed on Schedule
5.01(o)(i), and those as to which the Loan Parties notify the Agent in
accordance with the provisions of Section 7.03.
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(ii) Schedule 5.01(o)(ii) sets forth a complete and
accurate list, as of the Effective Date, of the location, by state and
street address, of all real property owned or leased by each Loan Party
and the name and address of the landlord with respect thereto. As of
the Effective Date, each Loan Party has valid leasehold interests in
the Leases described on Schedule 5.01(o)(ii) to which it is a party.
Except as otherwise indicated on Schedule 5.01(o)(ii), there are no
Leases for which any Affiliate of any Loan Party is the lessor. Each
such Lease is valid and enforceable in accordance with its terms in all
material respects and is in full force and effect. No consent or
approval of any landlord or other third party in connection with any
such Lease is necessary for any Loan Party to enter into and execute
the Loan Documents to which it is a party, except as set forth on
Schedule 5.01(o)(ii). No Loan Party and to the best knowledge of any
Loan Party, no other party to any such Lease is in material default of
its obligations thereunder, and no Loan Party (or any other party to
any such Lease) has at any time delivered or received any notice of
default which remains uncured under any such Lease and, as of the
Effective Date, no event has occurred which, with the giving of notice
or the passage of time or both, would constitute a material default
under any such Lease.
(p) FULL DISCLOSURE. Each Loan Party has disclosed to
the Agent all agreements, instruments and corporate or other restrictions to
which it is subject, and all other matters known to it, that, individually or in
the aggregate, is reasonably likely to result in a Material Adverse Effect. None
of the documents, instruments, agreements, other reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party to
the Agent in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which it was made, not misleading; PROVIDED, that, with respect to
projected financial information, each Loan Party represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time. There is no contingent liability or fact that is
reasonably likely to have a Material Adverse Effect which has not been set forth
in a footnote included in the Financial Statements or a Schedule hereto.
(q) LEASES. Schedule 5.01(q), annexed hereto, sets
forth as of the Effective Date a schedule of all presently effective Capitalized
Leases. (Schedule 5.01(o)(ii) includes a list of all other presently effective
Leases). Each of such Leases and Capitalized Leases is in full force and effect.
No Loan Party, to the best of its knowledge, is in default or violation of any
such Leases or Capitalized Leases, except where such violation is not reasonably
likely to have a Material Adverse Effect. No Loan Party has received any notice
or threat of cancellation of any such Lease or Capitalized Lease, which
cancellation (together with all other similar cancellations) is reasonably
likely to have a Material Adverse Effect.
(r) ENVIRONMENTAL MATTERS. Except as set forth on
Schedule 5.01(r), (i) the operations of each Loan Party are in material
compliance with all Environmental Laws; (ii) to the best of each Loan Party's
knowledge, there has been no Release at any of the properties owned or operated
by any Loan Party or a predecessor in interest, or at any disposal or treatment
facility which received Hazardous Materials generated by any Loan Party or any
predecessor in interest which is reasonably likely to have a Material Adverse
Effect; (iii) no Environmental Action has been asserted against any Loan Party
or any predecessor in interest nor does any Loan
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Party have knowledge or notice of any threatened or pending Environmental Action
against any Loan Party or any predecessor in interest which is reasonably likely
to have a Material Adverse Effect; (iv) no Loan Party has knowledge of any
Environmental Actions that have been asserted against any facilities that may
have received Hazardous Materials generated by any Loan Party or any predecessor
in interest which are reasonably likely to have a Material Adverse Effect; (v)
to the best of each Loan Party's knowledge, no property now or formerly owned or
operated by a Loan Party has been used as a treatment or disposal site for any
Hazardous Material; (vi) no Loan Party has failed to report to the proper
Governmental Authority any Release which is required to be so reported by any
Environmental Laws which is reasonably likely to have a Material Adverse Effect;
(vii) each Loan Party holds all licenses, permits and approvals required under
any Environmental Laws in connection with the operation of the business carried
on by it, except for such licenses, permits and approvals as to which a Loan
Party's failure to maintain or comply with is not reasonably likely to have a
Material Adverse Effect; and (viii) no Loan Party has received any notification
pursuant to any Environmental Laws that (A) any work, repairs, construction or
Capital Expenditures are required to be made as a condition of continued
compliance with any Environmental Laws, or any license, permit or approval
issued pursuant thereto or (B) any license, permit or approval referred to above
is about to be reviewed, made, subject to limitations or conditions, revoked,
withdrawn or terminated, in each case, except as is not reasonably likely to
have a Material Adverse Effect.
(s) INSURANCE. Schedule 5.01(s) sets forth a list of
all insurance maintained by each Loan Party or under which any Loan Party is the
named insured on the Effective Date. Each of such policies is in full force and
effect and meets each of the requirements set forth in Section 6.01(e). To the
best of such Loan Party's knowledge, neither the issuer of any such policy nor
any Loan Party is in default or violation of such policy.
(t) USE OF PROCEEDS. The proceeds of the Loans shall
be used to (i) refinance the Existing Credit Facilities of the Borrowers; and
(ii) pay fees and expenses in connection therewith.
(u) SOLVENCY. After giving effect to the transactions
contemplated by this Agreement and before and after giving effect to each Loan,
each Loan Party is, and the Loan Parties on a consolidated basis are, Solvent.
(v) LOCATION OF BANK ACCOUNTS. Schedule 5.01(v) sets
forth a complete and accurate list as of the Effective Date of all deposit,
checking and other bank accounts, all securities and other accounts maintained
with any broker dealer and all other similar accounts maintained by each Loan
Party, together with a description thereof (I.E., the bank or broker dealer at
which such deposit or other account is maintained, the account number and a
contact person at such bank or broker dealer).
(w) INTELLECTUAL PROPERTY. Except as set forth on
Schedule 5.01(w), each Loan Party owns or licenses or otherwise has the right to
use all material licenses, permits, patents, patent applications, trademarks,
trademark applications, service marks, tradenames, copyrights, copyright
applications, franchises, authorizations, non-governmental licenses and permits
and other intellectual property rights that are necessary for the operation of
its business, without infringement upon or conflict with the rights of any other
Person with respect thereto,
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except for such infringements and conflicts which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect. Set
forth on Schedule 5.01(w) is a complete and accurate list as of the Effective
Date of all such material licenses, permits, patents, patent applications,
trademarks, trademark applications, service marks, tradenames, copyrights,
copyright applications, franchises, authorizations, non-governmental licenses
and permits and other intellectual property rights of each Loan Party. To the
best knowledge of each Loan Party, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by any Loan Party infringes upon or conflicts with
any rights owned by any other Person, and no claim or litigation regarding any
of the foregoing is pending or threatened, except for such infringements and
conflicts which are not reasonably likely to have a Material Adverse Effect. To
the best knowledge of each Loan Party, no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or proposed, which is reasonably likely to have a Material Adverse
Effect.
(x) MATERIAL CONTRACTS AND LICENSES. Schedule 5.01(x)
sets forth a complete and accurate list as of the Effective Date of all Material
Contracts and all material licenses of each Loan Party, showing the parties and
subject matter thereof. Each such Material Contract and license (i) is in full
force and effect and is binding upon and enforceable against each Loan Party
that is a party thereto and, to the best knowledge of such Loan Party, all other
parties thereto in accordance with its terms, and (ii) is not in default due to
or has not been violated by, the action of any Loan Party or, to the best
knowledge of any Loan Party, any other party thereto, except where such default
is not reasonably likely to have a Material Adverse Effect. No Loan Party has
received any notice or threat of cancellation of any such Material Contract or
license which cancellation (together with all similar cancellations) is
reasonably likely to have a Material Adverse Effect.
(y) HOLDING COMPANY AND INVESTMENT COMPANY ACTS. None
of the Loan Parties is (i) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended; or (ii)
an "investment company" or an "affiliated person" or "promoter" of, or
"principal underwriter" of or for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
(z) LABOR RELATIONS.
(i) As of the Effective Date, no Loan Party has been,
and none is presently a party to any collective bargaining or other
labor contract except as listed on Schedule 5.01(z), annexed hereto.
(ii) There is not presently pending and, to any Loan
Party's knowledge, there is not threatened any of the following, except
to the extent any of the following is not reasonably likely to have a
Material Adverse Effect:
(A) any strike, slowdown, picketing, work
stoppage, or employee grievance process;
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]
(B) any proceeding against or affecting any
Loan Party relating to the alleged violation of any Applicable
Law pertaining to labor relations or before the National Labor
Relations Board, the Equal Employment Opportunity Commission,
or any comparable governmental body, organizational activity,
or other labor or employment dispute against or affecting any
Loan Party, which, if determined adversely to that Loan Party,
is reasonably likely to have a Material Adverse Effect on that
Loan Party;
(C) any lockout of any employees by any Loan
Party (and no such action is contemplated by any Loan Party);
or
(D) any application for the certification of
a collective bargaining agent.
(iii) No event has occurred or circumstance exists
which could provide the basis for any work stoppage or other labor
dispute that would be reasonably likely to have a Material Adverse
Effect.
(iv) Each Loan Party:
(A) has complied with all Applicable Law
relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant
closing, except where such non-compliance is not reasonably
likely to have a Material Adverse Effect; and
(B) is not liable for the payment of
compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for that Loan Party's failure to
comply with any Applicable Law referenced in Section
5.01(z)(iv)(A) which is reasonably likely to have a Material
Adverse Effect.
(aa) NO BANKRUPTCY FILING. No Loan Party is
contemplating either an Insolvency Proceeding or the liquidation of all or a
major portion of such Loan Party's assets or property, and no Loan Party has any
knowledge of any Person contemplating an Insolvency Proceeding against it.
(bb) SEPARATE EXISTENCE. Except where the failure to
observe, maintain or perform the following is not reasonably likely to have a
Material Adverse Effect, all customary formalities regarding the corporate
existence of each Loan Party will be observed.
(cc) NAME; JURISDICTION OF ORGANIZATION;
ORGANIZATIONAL ID NUMBER; CHIEF PLACE OF BUSINESS; CHIEF EXECUTIVE OFFICE; FEIN.
Schedule 5.01(cc) sets forth a complete and accurate list as of the date hereof
of (i) the exact legal name of each Loan Party; (ii) the jurisdiction of
organization of each Loan Party; (iii) the organizational identification number
of each Loan Party as of the Effective Date (or indicates that such Loan Party
has no organizational identification number); (iv) each place of business of
each Loan Party; (v) the chief executive
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office of each Loan Party; and (vi) the Federal employer identification number
of each Loan Party as of the Effective Date.
(dd) TRADENAMES. Schedule 5.01(dd) hereto sets forth
a complete and accurate list as of the Effective Date of (i) all names under
which, to the knowledge of the Parent, any Loan Party has conducted its business
in the past five (5) years; and (ii) all Persons with whom any Loan Party has
consolidated or merged, or from whom any Loan Party has acquired in a single
transaction or in a series of related transactions substantially all of such
Person's assets in the past five (5) years.
(ee) LOCATIONS OF COLLATERAL. Except as permitted by
Section 6.02(r), there is no location at which any Loan Party has any Collateral
or the books, records and papers of the Loan Parties pertaining thereto other
than (i) those locations listed on Schedule 5.01(ee) and (ii) at such other
locations as to which the Parent has provided ten (10) days prior written notice
to the Agent of the intended location of the Collateral, books, records and
papers thereat. Schedule 5.01(ee) hereto contains a true, correct and complete
list, as of the Effective Date, of the legal names and addresses of each
warehouse at which Collateral of each Loan Party is stored and/or the name and
address of the landlord on the Lease which covers such location and of all
service bureaus with which such records are maintained. None of the receipts
received by any Loan Party from any warehouse states that the goods covered
thereby are to be delivered to bearer or to the order of a named Person or to a
named Person and such named Person's assigns. No tangible personal property of
any Loan Party is in the care or custody of any third party or stored or
entrusted with a bailee or other third party, except (x) as otherwise disclosed
pursuant to, or permitted by this Section, or (y) for Inventory in an amount not
to exceed $1,000,000 at Cost (as defined in the Revolving Credit Facility) in
the aggregate at any time in the ordinary course of business.
(ff) SECURITY INTERESTS. Each Security Agreement
creates in favor of the Agent, for the benefit of the Lenders, a legal, valid
and enforceable security interest in the Collateral secured thereby. Upon the
filing of the UCC-1 financing statements described in Section 4.01(d) and the
recording of the Collateral Assignments for Security referred to in each
Security Agreement in the United States Patent and Trademark Office and the
United States Copyright Office, as applicable, such security interests in and
Liens on the Collateral granted thereby shall be perfected security interests to
the extent such security interests may be perfected by such filings, and no
further recordings or filings are or will be required in connection with the
creation, perfection or enforcement of such security interests and Liens, other
than (i) the filing of continuation statements in accordance with Applicable
Law, (ii) the recording of the Collateral Assignments for Security pursuant to
each Security Agreement in the United States Patent and Trademark Office and the
United States Copyright Office, as applicable, with respect to after-acquired
U.S. patent and trademark applications and registrations and U.S. copyrights,
(iii) the recordation of appropriate evidence of the security interest in the
appropriate foreign registry with respect to all foreign intellectual property,
and (iv) control agreements for deposit accounts, liens on titles and similar
items. Subject to Permitted Liens, such security interests in, and Liens on the
Collateral shall be first-priority security interests; PROVIDED, HOWEVER, that
any security interest in and Lien on Collateral that is Revolving Lender Primary
Collateral (as defined in the Intercreditor Agreement) shall be a perfected,
second-priority Lien on and security
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interest (subject only to Permitted Liens and the prior Lien on and security
interest in favor of the Revolving Credit Facility Agent for the benefit of the
Revolving Credit Facility Lenders).
(gg) SCHEDULES. All of the information which is
required to be scheduled to this Agreement is set forth on the Schedules
attached hereto, is correct and accurate in all material respects and does not
omit to state any information material thereto.
(hh) REPRESENTATIONS AND WARRANTIES IN DOCUMENTS; NO
DEFAULT. All representations and warranties set forth in this Agreement and the
other Loan Documents are true and correct in all material respects at the time
as of which such representations were made and on the Effective Date. No Event
of Default has occurred and is continuing and no condition exists which
constitutes a Default or an Event of Default.
(ii) INDEBTEDNESS. The Loan Parties do not have any
Indebtedness other than (i) Permitted Indebtedness, and (ii) a Loan Party's
guaranties of Permitted Indebtedness.
(jj) LIENS IN FAVOR OF AGENT. Other than the Excluded
Property (as defined in the Security Agreement), no Loan Party is the owner of,
nor has any interest in, any property or asset which is not subject to a Lien in
favor of the Agent (subject only to Permitted Liens) to secure the Obligations.
(kk) UNRESTRICTED SUBSIDIARIES. Each Subsidiary of
the Parent that is not a party to this Agreement is set forth on Schedule
5.01(kk) (the "UNRESTRICTED SUBSIDIARY"). Each Unrestricted Subsidiary is
inactive or in the process of being liquidated or dissolved and the Unrestricted
Subsidiaries do not, in the aggregate, have assets in excess of $500,000.
(ll) PROXY STATEMENT. The proxy statement described
in Section 6.01(l), including any amendments or supplements thereto, shall not,
at the time filed with the SEC, as of the date mailed to the Parent's
shareholders or at the time of the Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, the Parent makes no representation or warranty with respect to any
information provided by a Lender in writing specifically for use in the proxy
statement. The proxy statement will comply as to form in all material respects
with the provisions of the Exchange Act.
(mm) VOTING REQUIREMENTS. The Requisite Approval is
the only vote of the holders of any class or series of the Parent's Capital
Stock or other securities of the Parent necessary under Applicable Law or stock
exchange (or similar self-regulatory organization) regulations to approve the
issuance of the Warrants and the issuance of shares of Common Stock upon
exercise thereof.
(nn) PROXY. The Parent has received irrevocable
proxies from SSC (the "PROXIES") to vote 17,946,766 shares of Common Stock held
by SSC in favor of the approval of the issuance of the Warrants. The shares of
Common Stock that are subject to the Proxies constitute all Capital Stock of the
Parent held by SSC.
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ARTICLE VI
COVENANTS OF THE LOAN PARTIES
Section 6.01 AFFIRMATIVE COVENANTS. So long as any principal
or interest on any Loan or any other Obligation (whether or not due) shall
remain unpaid each Loan Party shall:
(a) ADDITIONAL GUARANTIES AND COLLATERAL SECURITY.
Cause (i) each Subsidiary of any Loan Party not in existence on the Effective
Date, or any Unrestricted Subsidiary that at any time fails to meet the
requirements for an Unrestricted Subsidiary, to execute and deliver to the Agent
promptly and in any event within three (3) Business Days after the formation,
acquisition or change in status thereof (A) a Guaranty guaranteeing the
Obligations, (B) a Security Agreement, (C) if such Subsidiary has any
Subsidiaries, a Pledge Agreement together with (x) certificates evidencing all
of the Capital Stock of any Person owned by such Subsidiary, (y) undated stock
powers executed in blank with signature guaranteed, and (z) such opinion of
counsel and such approving certificate of such Subsidiary as the Agent may
reasonably request in respect of complying with any legend on any such
certificate or any other matter relating to such shares, (D) one or more
Mortgages creating on any real property having a book value in excess of
$1,000,000, or leased property having an annual minimum fixed rent in excess of
$750,000 (if the lease term (including extensions) is less than five years) or
$250,000 (if the lease term (including extensions) is equal to or greater than
five years) of such Subsidiary a perfected, Lien on such real property subject
only to Permitted Liens, a Title Insurance Policy covering such owned real
property, a current ALTA survey thereof and a surveyor's certificate, each in
form and substance satisfactory to the Agent, together with such other
agreements, instruments and documents as the Agent may reasonably require
whether comparable to the documents required under Section 6.01(i) or otherwise
(it being understood that the Loan Parties shall use their reasonable best
efforts (which shall not include the payment of additional sums (other than
incidental expenses) or the commencement of any legal action) to obtain such
Mortgage and other documents), and (E) such other agreements, instruments,
approvals, legal opinions or other documents reasonably requested by the Agent
in order to create, perfect, establish the first priority of or otherwise
protect any Lien purported to be covered by any such Security Agreement, Pledge
Agreement or Mortgage or otherwise to effect the intent that such Subsidiary
shall become bound by all of the terms, covenants and agreements contained in
the Loan Documents and that all property and assets of such Subsidiary shall
become Collateral for the Obligations; and (ii) each owner of the Capital Stock
of any such Subsidiary to execute and deliver promptly and in any event within
three (3) Business Days after the formation or acquisition of such Subsidiary a
Pledge Agreement, together with (A) certificates evidencing all of the Capital
Stock of such Subsidiary, (B) undated stock powers or other appropriate
instruments of assignment executed in blank with signature guaranteed, (C) such
opinion of counsel and such approving certificate of such Subsidiary as the
Agent may reasonably request in respect of complying with any legend on any such
certificate or any other matter relating to such shares and (D) such other
agreements, instruments, approvals, legal opinions or other documents requested
by the Agent; PROVIDED, HOWEVER, that nothing contained herein shall be deemed a
modification of any other provisions of this Agreement restricting the formation
or Acquisition of Subsidiaries by the Loan Parties, or the requirements
applicable to Unrestricted Subsidiaries.
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(b) COMPLIANCE WITH LAWS, ETC. Comply, and cause each
of its Subsidiaries to comply, and use its assets in compliance with all
Applicable Laws, rules, regulations and orders (including, without limitation,
all Environmental Laws) except where the failure of such compliance will not
have a Material Adverse Effect. Without limiting the foregoing such compliance
shall include (i) paying before the same become delinquent all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any of its properties, and (ii) paying all lawful
claims, making all required withholdings, and filing all required reports and
returns with Governmental Authorities which if unpaid, not withheld or unfiled
might become a Lien or charge upon any of its properties, except (x) to the
extent contested in good faith by proper proceedings which stay the imposition
of any penalty, fine or Lien resulting from the non-payment thereof and with
respect to which adequate reserves have been set aside for the payment thereof
in accordance with GAAP, or (y) for the inadvertent failure of a Loan Party to
pay such lawful claims, make such withholdings or file such returns or reports
so long as (A) the aggregate amount thereof does not exceed $500,000, (B) no
Lien has been filed on account thereof and (C) promptly upon the date an
Authorized Officer obtains knowledge or should have obtained knowledge thereof,
the Loan Parties pay such claims, make such withholdings or file such returns or
reports.
(c) PRESERVATION OF EXISTENCE, ETC. Maintain and
preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain, and cause each of its
Subsidiaries to become or remain, duly qualified and in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary
except where the failure to so qualify would not have a Material Adverse Effect.
(d) MAINTENANCE OF PROPERTIES AND LEASES, ETC. (i)
Maintain and preserve, and cause each of its Subsidiaries to maintain and
preserve the Collateral in good working order and condition (ordinary wear and
tear and insured casualty excepted); and
(ii) comply, and cause each of its Subsidiaries to
comply, in all material respects, at all times with the provisions of
all Leases to which it is a party as lessee or under which it occupies
property, so as to prevent any loss or forfeiture thereof or
thereunder.
(e) MAINTENANCE OF INSURANCE. Maintain, and cause
each of its Subsidiaries to maintain, insurance (including, without limitation,
comprehensive general liability, hazard, rent and business interruption
insurance) with responsible and reputable insurance companies or associations
(which shall include the companies presently providing such insurance, or such
other companies as may be selected by the Administrative Borrower with the
consent of the Agent, whose consent shall not be unreasonably withheld) with
respect to its properties (including all real properties leased or owned by it)
and business, in such amounts, in such form, for such periods and covering such
risks as is required by any Governmental Authority having jurisdiction with
respect thereto or as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated and in any event
in amount, adequacy and scope reasonably satisfactory to the Agent. All policies
covering the Collateral are to be made payable to the Agent for the benefit of
the Lenders, as its interests may appear, in case of loss, under a standard
non-contributory "lender" or "secured party" clause and
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shall provide that the insurance, to the extent of the Agent's interest therein,
shall not be impaired or invalidated, in whole or in part, by reason of any act
or neglect of any Loan Party or by the failure of any Loan Party to comply with
any warranty or condition of the policy and are to contain such other provisions
as the Agent may reasonably require to fully protect the Lenders' interest in
the Collateral and to obtain any payments to be made under such policies. Such
policy shall not include an endorsement in favor of any other Person (other than
the Revolving Credit Agent, the Convertible Loan Agent, the holder of any
Permitted Liens and those Persons intended as beneficiaries of any builder's
risk insurance). All certificates of insurance are to be delivered to the Agent
and the policies are to be premium prepaid or with customary payment terms
(which shall be complied with in a timely fashion by such Loan Parties), with
the loss payable and additional insured endorsement in favor of the Agent and
such other Persons as the Agent may designate from time to time, and shall
provide for not less than thirty (30) days' prior written notice to the Agent of
the exercise of any right of cancellation. The Borrowers shall furnish the Agent
with certificates or other evidence satisfactory to the Agent regarding
compliance by the Loan Parties with the foregoing requirements. If any Loan
Party or any of its Subsidiaries fails to maintain such insurance, the Agent may
arrange for such insurance, but at the Borrowers' expense and without any
responsibility on the Agent's part for obtaining the insurance, the solvency of
the insurance companies, the adequacy of the coverage, or the collection of
claims; PROVIDED, HOWEVER, that the Agent's obtaining such insurance shall not
constitute a waiver of any Event of Default occasioned by the Loan Parties'
failure to have maintained such insurance. Upon the occurrence and during the
continuance of an Event of Default and subject to the terms of the Intercreditor
Agreement, the Agent shall have the sole right, in the name of the Lenders, any
Loan Party and its Subsidiaries, to file claims under any insurance policies, to
receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies. The Administrative Borrower shall provide the Agent with prompt
written notice of any change in the insurance policies owned by the Loan
Parties, or under which any Loan Party is the named insured, from those in
effect as of the Effective Date.
(f) OBTAINING OF PERMITS, ETC. Obtain, maintain and
preserve, and cause each of its Subsidiaries to obtain, maintain and preserve,
and take, and cause each of its Subsidiaries to take, all necessary action to
timely renew, all permits, licenses, authorizations, approvals, entitlements and
accreditations which are necessary or useful in the proper conduct of its
business, except where the failure to do so is not reasonably likely to have a
Material Adverse Effect.
(g) ENVIRONMENTAL. Except where a violation or
failure is not reasonably likely to have a Material Adverse Effect, (i) keep any
material property either owned or operated by it or any of its Subsidiaries free
of any Environmental Liens; (ii) comply, and cause each of its Subsidiaries to
comply, in all material respects with Environmental Laws and provide to the
Agent any documentation of such compliance which the Agent may reasonably
request; (iii) provide the Agent with written notice within five (5) days of any
Release of a Hazardous Material in excess of any reportable quantity from or
onto property at any time owned or operated by it or any of its Subsidiaries and
take any Remedial Actions required to ▇▇▇▇▇ said Release; (iv) provide the Agent
with written notice within ten (10) days of the receipt of any of
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the following: (A) notice that a material Environmental Lien has been filed
against any property of any Loan Party or any of its Subsidiaries; (B)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Loan Party or any of its Subsidiaries which is
reasonably likely to have a Material Adverse Effect; and (C) notice of a
violation, citation or other administrative order to the extent that any of the
foregoing are reasonably likely to have a Material Adverse Effect; and (v)
defend, indemnify and hold harmless the Agent and the Lenders and their
transferees, and their respective employees, agents, officers and directors,
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs or expenses (including, without limitation, attorney
and consultant fees, investigation and laboratory fees, court costs and
litigation expenses) arising out of (A) the generation, presence, disposal,
Release or threatened Release of any Hazardous Materials on, under, in,
originating or emanating from any property at any time owned or operated by any
Loan Party or any of its Subsidiaries (or its predecessors in interest or
title), (B) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to the presence or Release of such
Hazardous Materials, (C) any request for information, investigation, lawsuit
brought or threatened, settlement reached or order by a Governmental Authority
relating to the presence or Release of such Hazardous Materials, (D) any
violation of any Environmental Law and/or (E) any Environmental Action filed
against the Agent or any Lender to the extent that any of the foregoing is
reasonably likely to have a Material Adverse Effect.
(h) FURTHER ASSURANCES. Take such action and execute,
acknowledge and deliver, and cause each of its Subsidiaries to take such action
and execute, acknowledge and deliver, at its sole cost and expense, such
agreements, instruments or other documents as the Agent may reasonably require
from time to time in order (i) to carry out more effectively the purposes of
this Agreement and the other Loan Documents, (ii) to subject to valid and
perfected first priority Liens (subject to Permitted Liens) any of the
Collateral of any Loan Party and its Subsidiaries, (iii) to establish and
maintain the validity and effectiveness of any of the Loan Documents and the
validity, perfection and priority of the Liens intended to be created thereby,
and (iv) to better assure, convey, grant, assign, transfer and confirm unto the
Agent and each Lender the rights now or hereafter intended to be granted to it
under this Agreement or any other Loan Document. In furtherance of the
foregoing, to the maximum extent permitted by Applicable Law, each Loan Party
(x) authorizes the Agent to execute any such agreements, instruments or other
documents deemed reasonably necessary by the Agent in connection with this
Agreement in such Loan Party's name and to file such agreements, instruments or
other documents in any appropriate filing office, (y) authorizes the Agent to
file any financing statement required hereunder or under any other Loan
Document, and any continuation statement or amendment with respect thereto, in
any appropriate filing office without the signature of such Loan Party, and (z)
ratifies the filing of any financing statement, and any continuation statement
or amendment with respect thereto, filed without the signature of such Loan
Party prior to the date hereof.
(i) AFTER ACQUIRED REAL PROPERTY. Upon the
acquisition by it or any of its Subsidiaries after the date hereof of any
interest (whether fee or leasehold) in any real property (wherever located)
(each such interest being an "AFTER ACQUIRED PROPERTY") (x) with a Current Value
(as defined below) in excess of $1,000,000 in the case of a fee interest, or (y)
in the case of a leasehold interest, requiring the payment of annual minimum
fixed rent exceeding
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in the aggregate $750,000 (if the lease term (including extensions) is less than
five years) or $250,000 (if the lease term (including extensions) is equal to or
greater than five years), immediately so notify the Agent, setting forth with
specificity a description of the interest acquired, the location of the real
property, any structures or improvements thereon and either an appraisal or such
Loan Party's good-faith estimate of the current value of such real property (for
purposes of this Section, the "CURRENT VALUE"). The Agent shall notify such Loan
Party whether it intends to require the Loan Party to use its reasonable best
efforts (which shall not include the payment of any additional sums (other than
incidental expenses) or the commencement of any legal action) to obtain a
Mortgage and the other documents referred to below or in the case of leasehold,
a leasehold Mortgage or Landlord's Agreement (pursuant to Section 6.01(i)
hereof). Upon receipt of such notice requesting a Mortgage, the Person which has
acquired such After Acquired Property shall promptly furnish to the Agent the
following, each in form and substance satisfactory to the Agent: (i) a Mortgage
with respect to such real property and related assets located at the After
Acquired Property, each duly executed by such Person and in recordable form;
(ii) evidence of the recording of the Mortgage referred to in clause (i) above
in such office or offices as may be necessary or, in the reasonable good faith
opinion of the Agent, desirable to create and perfect a valid and enforceable
first priority lien on the property purported to be covered thereby or to
otherwise protect the rights of the Agent and the Lenders thereunder; (iii) in
the case of a fee interest, a title insurance policy, a survey of such real
property, certified to the Agent and to the issuer of the Title Insurance Policy
by a licensed professional surveyor reasonably satisfactory to the Agent and a
Phase I Environmental Site Assessment with respect to such real property,
certified to the Agent by a company reasonably satisfactory to the Agent; (iv)
in the case of a leasehold interest, a certified copy of the lease between the
landlord and such Person with respect to such real property in which such Person
has a leasehold interest, and the certificate of occupancy with respect thereto;
(v) in the case of a leasehold interest, an attornment and nondisturbance
agreement between the landlord (and any fee mortgagee) with respect to such real
property and the Agent; and (vi) such other documents or instruments (including,
without limitation, guarantees and opinions of counsel) as the Agent may
reasonably require, PROVIDED, HOWEVER, that nothing contained herein shall be
deemed a modification of any other provisions of this Agreement restricting
Acquisitions or investments by the Loan Parties. The Borrowers shall pay all
reasonable fees and expenses, including reasonable attorneys' fees and expenses,
and all title insurance charges and premiums, in connection with each Loan
Party's obligations under this Section 6.01(i). Notwithstanding anything herein
to the contrary, no Loan Party shall be restricted from acquiring After Acquired
Property.
(j) CONDUCT OF BUSINESS. Conduct their business
substantially in accordance with the Business Plan, or as otherwise approved by
the Agent pursuant to Section 7.10 hereof. The foregoing shall not obligate the
Borrower to achieve any specific financial performance and no financial
covenants are intended to be imposed thereby.
(k) SHAREHOLDER MEETING. At the next annual meeting
of shareholders of the Parent, which meeting shall occur on or before October
31, 2002, (the "MEETING"), the issuance of the Warrants shall be submitted to
the shareholders for approval; PROVIDED, however, that in the event that a
unilateral action by SSC or its shareholders results in the delay of the
Meeting, then the Meeting shall occur on or before December 31, 2002. The Parent
shall provide each shareholder entitled to vote at the Meeting with a proxy
statement, which has been previously reviewed by the Agent and counsel of
Agent's choice, soliciting each such
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shareholder's affirmative vote at the Meeting in favor of the issuance of the
Warrants. The Parent shall use its reasonable best efforts to solicit and obtain
proxies from its shareholders and shall take all other action necessary and
advisable to secure the vote of shareholders required by applicable law and the
rules and regulations of the New York Stock Exchange to obtain their approval of
the issuance of the Warrants. The Board of Directors of the Parent has
unanimously approved the issuance of the Warrants and shall recommend that the
shareholders of the Parent vote in favor of the approval of the issuance of the
Warrants at the Meeting, and the Parent agrees that it shall include in the
proxy statement such recommendation of the Board of Directors of the Parent that
the shareholders of the Parent approve the issuance of the Warrants;
(l) PROXY. The Parent agrees to vote all shares of
Common Stock subject to the Proxies in favor of the approval of the issuance of
the Warrants; and
(m) WARRANT ISSUANCE. The Parent shall issue and
deliver the Warrants promptly upon receipt of the Requisite Approval.
(n) LEASEHOLD MORTGAGES. Each of the Loan Parties
shall use their reasonable best efforts to obtain leasehold Mortgages on
substantially all Leases of the Loan Parties it being understood that reasonable
best efforts shall require a bona fide request be made in writing to the
appropriate parties with a copy to the Agent (or in lieu thereof, a short
memorandum describing a telephone request made in respect thereof, which
memorandum shall include the date of the conversation and the name of the person
with whom the Loan Party spoke) with appropriate follow-up as reasonably
required by the Agent, which in each case shall be included in the Leasehold
Mortgage Status Report; PROVIDED, that no Loan Parties shall be required to pay
any money (other than incidental expenses), agree to amended Lease terms (unless
such amendments are immaterial in the reasonable judgment of the Borrowers), or
commence any legal action.
Section 6.02 NEGATIVE COVENANTS. So long as any principal of
or interest on any Loan, or any other Obligation (whether or not due) shall
remain unpaid, each Loan Party shall not:
(a) LIENS, ETC. (i) Create, incur, assume or suffer
to exist, or permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any Lien upon or with respect to any of its properties, whether now
owned or hereafter acquired; file or suffer to exist under the Uniform
Commercial Code or any similar law or statute of any jurisdiction, a financing
statement (or the equivalent thereof) that names it or any of its Subsidiaries
as debtor; sign or suffer to exist any security agreement authorizing any
secured party thereunder to file such financing statement (or the equivalent
thereof); sell any of its property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable) with recourse to it or any of its
Subsidiaries or assign or otherwise transfer, or permit any of its Subsidiaries
to assign or otherwise transfer, any account or other right to receive income;
other than, as to all of the above, Permitted Liens, or (ii) have possession of
any property or consignment to that Loan Party, except as of the Effective Date
as set forth on Schedule 5.01(o)(i), and after the Effective Date, those as to
which the Loan Parties have notified the Agent, in accordance with Section 7.03.
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(b) INDEBTEDNESS. Create, incur, assume, guarantee or
suffer to exist, or otherwise become or remain liable with respect to, or permit
any of its Subsidiaries to create, incur, assume, guarantee or suffer to exist
or otherwise become or remain liable with respect to, any Indebtedness other
than (i) Permitted Indebtedness and (ii) guaranties of Permitted Indebtedness of
another Loan Party.
(c) FUNDAMENTAL CHANGES; DISPOSITIONS. (i) Wind-up,
liquidate or dissolve, or permit any of its Subsidiaries to wind-up, liquidate
or dissolve; (ii) merge, consolidate or amalgamate with any Person, or permit
any of its Subsidiaries to merge, consolidate or amalgamate with any Person;
(iii) purchase or otherwise acquire, whether in one transaction or a series of
related transactions, all or substantially all of the assets of any Person (or
any division thereof), or permit any of its Subsidiaries to do any of the
foregoing; (iv) suffer or cause, or permit any of its Subsidiaries to suffer or
cause the waste or destruction of any material part of the Collateral; (v) use
or permit any of its Subsidiaries to use, any of the Collateral in violation of
any policy of insurance thereon; (vi) sell, lease, sublease, convey, transfer or
otherwise dispose of, or permit any of its Subsidiaries to sell, lease,
sublease, convey, transfer or otherwise dispose of any of the Collateral; and
(vii) other than leased departments and similar arrangements with third parties,
commit to open or close any location at which any Loan Party maintains, offers
for sale, or stores any of the Collateral, in any fiscal year such that the
actual number of stores of all Borrowers in the aggregate (x) exceeds by ten
(10) the number of stores reflected on the Business Plan for such fiscal year,
or (y) is more than ten (10) fewer than the number of stores reflected on the
Business Plan for such fiscal year (without giving effect to any new stores
which the Business Plan projected to be opened or closed, but which have not in
fact been opened or closed); PROVIDED, HOWEVER, that each of the following shall
be permitted:
(A) if not Default or Event of Default shall
have occurred and be continuing or would result thereform with
the prior written consent of the Agent (which consent shall
not be unreasonably withheld) any wholly-owned Subsidiary may
merge, consolidate or amalgamate with or into a Borrower or
with or into another wholly-owned Subsidiary of a Borrower, so
long as in any merger, consolidation or amalgamation involving
a Borrower, the Borrower is the surviving, continuing or
resulting corporation, and no Default or Event of Default
shall have occurred and be continuing or would result
therefrom;
(B) if not Default or Event of Default shall
have occurred and be continuing or would result thereform any
Loan Party may liquidate or dissolve any Unrestricted
Subsidiary so long as no Default or Event of Default shall
have occurred and be continuing or would result therefrom;
(C) if not Default or Event of Default shall
have occurred and be continuing or would result thereform any
Loan Party may engage in any Acquisition which is a Permitted
Acquisition, provided that all of the conditions contained in
the definition of the term Permitted Acquisition are satisfied
and no Default or Event of Default shall have occurred and be
continuing or would result therefrom; and
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(D) any Loan Party may engage in (1) the
sale of Inventory in compliance with this Agreement; (2) the
disposal of Equipment which is obsolete, worn out, or damaged
beyond repair, or no longer useful in the Loan Parties'
businesses; (3) Permitted Dispositions; (4) the turning over
to the Agent of certain Collateral as provided herein, or to
the Revolving Credit Agent of all Receipts (as defined in the
Revolving Credit Facility) as provided in the Revolving Credit
Facility; and (5) the use of the Collateral to pay obligations
arising in the ordinary course.
(d) LINE OF BUSINESS. Engage in any business other
than the business in which it is currently engaged or a business reasonably
related thereto, or any retail lease department operation.
(e) LOANS; ADVANCES; INVESTMENTS, ETC. (i) Make or
commit or agree to make any loan, advance guarantee of obligations, other
extension of credit or capital contributions to, or hold or invest in or commit
or agree to hold or invest in, or purchase or otherwise acquire any shares of
the Capital Stock, bonds, notes, debentures or other securities of, or make or
commit or agree to make any other investment in, any other Person; (ii) purchase
or own any futures contract or otherwise become liable for the purchase or sale
of currency or other commodities at a future date in the nature of a futures
contract; (iii) subordinate any debts or obligations owed to that Loan Party by
any third party (but not by another Loan Party) to any other debts owed by such
third party to any other Person; (iv) enter into leases of property or assets
not constituting Permitted Acquisitions, unless such leases are not otherwise in
violation of this Agreement; (v) organize or create any Affiliate other than in
connection with a Permitted Acquisition; or (vi) acquire any assets other than
in the ordinary course and conduct of that Loan Party's business as conducted at
the execution of this Agreement, other than in connection with a Permitted
Acquisition or as otherwise permitted in this Agreement, or permit any of its
Subsidiaries to do any of the foregoing, except for:
(A) Permitted Investments and investments
directly related to Permitted Acquisitions;
(B) advance payments made to that Loan
Party's suppliers in the ordinary course;
(C) advances to that Loan Party's officers,
employees, and salespersons with respect to reasonable
expenses to be incurred by such officers, employees, and
salespersons for the benefit of that Loan Party, which
expenses are properly substantiated by the Person seeking such
advance and properly reimbursable by that Loan Party;
(D) loans and advances to employees for
business-related moving expenses, costs of replacement homes,
business machines or supplies, automobiles and other similar
expenses, in each case incurred in the ordinary course of
business not to exceed (together with loans and advances under
Section 6.02(e)(E) and investments permitted under clause
(xiii) of the definition
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of Permitted Investment) $6,000,000 in the aggregate
outstanding to all employees at any one time;
(E) loans and advances to that Loan Party's
officers, employees, and salespersons in connection with any
employment agreements or arrangements, or any stock options or
option plans not to exceed $6,000,000 (together with loans and
advances under Section 6.02(e)(D) and investments permitted
under clause (xiii) of the definition of Permitted
Investments) in the aggregate outstanding to all employees at
any one time;
(F) intercompany loans (1) existing on the
date hereof and described on Schedule 6.02(e)(vi)(F) hereof,
and (2) hereafter made amongst any Loan Parties pursuant to
the terms of the Revolving Credit Facility;
(G) loans and advances of a Person
outstanding at the time such Person becomes a Subsidiary as a
result of a Permitted Acquisition, PROVIDED, that any such
loans or advances were not made at the time of or in
contemplation of the acquisition of such Person by a Loan
Party or any Subsidiaries;
(H) to the extent not permitted by the
foregoing clauses, the existing loans and advances described
on Schedule 6.02(e)(vi)(H) hereto;
(I) any other loans and advances to or for
the benefit of any Person which (1) is not itself a Loan
Party, (2) are not otherwise permitted by the foregoing
clauses, and (3) are made after the Effective Date, which
loans and advances have been approved in advance by the Agent.
(f) CAPITALIZED LEASE OBLIGATIONS. Create, incur or
suffer to exist, or permit any of its Subsidiaries to create, incur or suffer to
exist, any Capitalized Lease Obligations which would cause the aggregate amount
of all obligations under Capitalized Leases entered into after the Effective
Date owing by all Loan Parties and their Subsidiaries in any Fiscal Year to
exceed the amount set forth in clause (iv) of the definition of Permitted
Indebtedness.
(g) RESTRICTED PAYMENTS.
(i) Pay any cash dividend or other distribution, in
respect of any class of such Loan Party's or any of its Subsidiaries'
Capital Stock, other than dividends payable to another Loan Party or
payable solely in the Capital Stock of such paying Loan Party;
(ii) make any repurchase, redemption, retirement,
defeasance, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Capital Stock of any
Loan Party or any direct or indirect parent of any Loan Party, now or
hereafter outstanding; PROVIDED that the Loan Parties may make cash
payments for any such purposes if:
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(A) no Default or Event of Default shall
have occurred and be continuing at the time of declaration or
payment thereof;
(B) after giving effect to the making of any
such cash payment, the aggregate amount so expended for such
purposes subsequent to the Effective Date does not exceed
$1,500,000; and
(C) after giving effect to the making of any
such cash payment, the aggregate amount so expended for such
purposes in any Fiscal Year of the Borrowers does not exceed
$500,000.
(h) FEDERAL RESERVE REGULATIONS. Permit any Loan or
the proceeds of any Loan under this Agreement to be used for any purpose that
would cause such Loan to be a margin loan under the provisions of Regulation T,
U or X of the Board.
(i) TRANSACTIONS WITH AFFILIATES. (i) Except as set
forth in that certain confidential side letter from the Parent to the AGENT and
for loans which may be made between Loan Parties permitted pursuant to Section
6.02(e) above, make any payment, nor give any value to any Affiliate except for
leases, goods and services with such Affiliate for a price and on terms which
shall be in the ordinary course of business at prices and on terms and
conditions no less favorable to that Loan Party than those which would have been
charged and imposed in an arm's-length transaction from unrelated third parties,
except (A) sales of goods to an Affiliate for use or distribution outside of the
United States of America which complies with the any applicable legal
requirements of the Internal Revenue Code of 1986 and the Treasury Regulations,
each as amended from time to time, PROVIDED, that such sales shall not exceed
$500,000 in the aggregate in any Fiscal Year of the Borrowers, (B) loans,
advances and other payments to officers and directors as part of their
compensation which are entered into in the ordinary course of business and which
are not otherwise prohibited under the Loan Documents, (C) other dividends and
distributions to officers, directors and shareholders otherwise permitted under
this Agreement, or (D) transactions between or among the Loan Parties not
prohibited hereunder and not involving any other Affiliate; (ii) (A) without
prior written consent of the Agent, amend, modify or waive any of the provisions
of the instruments, documents or agreements described in the confidential side
letter referred to in clause (i) above, the effect of which is to increase the
payments or value to be furnished by a Loan Party to any Affiliate (other than
for ordinary increases under such instruments, documents and agreements in the
ordinary course of business, for which the Loan Parties are presently obligated
to make payment in such instrument, document or agreement as in effect on the
Effective Date) or which would cause such instruments, documents or agreements
to be at prices and on terms and conditions no less favorable to that Loan Party
than those which would have been charged and imposed in an arm's-length
transaction from unrelated third parties, or (B) make any payments under such
instruments, documents or agreements in advance of the date when due other than
payments made to Affiliates to fund obligations or anticipated claims under
medical claims, employee benefit plans or agreements, and other similar plans,
all in accordance with current practice; and (iii) fail to use its best efforts
to cause its Affiliates to execute and deliver to the Agent and the Lenders such
documentation as the Agent may reasonably require to evidence the Affiliates'
agreement with the provisions of this Section 6.02(i).
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(j) LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES AND RESTRICTIONS ON OBLIGATIONS. Create or
otherwise cause, incur, assume, suffer or permit to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of (i) any
Loan Party to create or grant liens in favor of the Agent or to incur
Obligations or (ii) any Subsidiary of any Loan Party (A) to pay dividends or to
make any other distribution on any shares of Capital Stock of such Subsidiary
owned by any Loan Party or any of its Subsidiaries, (B) to pay or prepay or to
subordinate any Indebtedness owed to any Loan Party or any of its Subsidiaries,
(C) to make loans or advances to any Loan Party or any of its Subsidiaries or
(D) to transfer any of its property or assets to any Loan Party or any of its
Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing;
PROVIDED, HOWEVER, that nothing in any of clauses (A) through (D) of this
Section 6.02(j) shall prohibit or restrict compliance with:
(1) this Agreement and the other Loan Documents, the
Revolving Credit Facility Documents or the Convertible Loan Documents;
(2) any agreements in effect on the date of this
Agreement and described on Schedule 6.02(j);
(3) any Applicable Law, rule or regulation
(including, without limitation, applicable currency control laws and
applicable state corporate statutes restricting the payment of
dividends in certain circumstances);
(4) in the case of clause (D) any agreement setting
forth customary restrictions on the subletting, assignment or transfer
of any property or asset that is a lease, license, conveyance or
contract of similar property or assets; or
(5) in the case of clause (D), any agreement,
instrument or other document evidencing a Permitted Lien from
restricting on customary terms the transfer of any property or assets
subject thereto.
(k) LIMITATION ON ISSUANCE OF CAPITAL STOCK. Issue or
sell or enter into any agreement or arrangement for the issuance and sale of, or
permit any of its Subsidiaries to issue or sell or enter into any agreement or
arrangement for the issuance and sale of, any shares of its Capital Stock, any
securities convertible into or exchangeable for its Capital Stock or any
warrants, PROVIDED, that Parent may issue (i) the Warrant Stock, (ii) the shares
issuable upon conversion of the Convertible Loan Agreement, (iii) up to
5,000,000 shares of Common Stock (and following the fifth anniversary of the
Effective Date, up to an additional 5,000,000 shares of Common Stock) that are
issued to Persons other than Affiliates of the Parent, including (A) shares of
Common Stock or options exercisable therefor, issued or to be issued under the
Parent's 2000 Stock Option Plan as in effect on the Effective Date or under any
other employee stock option or purchase plan or plans, or pursuant to
compensatory or incentive agreements, for officers, employees or consultants of
the Parent or any of its Subsidiaries, in each case adopted or assumed after
such date by the Parent's Board of Directors; provided in each case that the
exercise or purchase price for any such share shall not be less than 95% of the
fair market value (determined in good faith by the Parent's Board of Directors)
of the Common Stock on the date
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of the grant, and such additional number of shares as may become issuable
pursuant to the terms of any such plans by reason of adjustments required
pursuant to antidilution provisions applicable to such securities in order to
reflect any subdivision or combination of Common Stock, by reclassification or
otherwise, or any dividend on Common Stock payable in Common Stock, (B) shares
of restricted stock issued by the Parent to executive officers of the Parent,
and (C) shares of Common Stock issued by the Parent as charitable gifts.
(l) MODIFICATIONS OF INDEBTEDNESS, ORGANIZATIONAL
DOCUMENTS AND CERTAIN OTHER AGREEMENTS, ETC. (i) Amend, modify or otherwise
change (or permit the amendment, modification or other change) in any manner of
any of the provisions of any of its or its Subsidiaries' Indebtedness or of any
instrument or agreement (including, without limitation, any purchase agreement,
indenture, loan agreement or security agreement) relating to any such
Indebtedness if such amendment, modification or change (A) would shorten the
final maturity or average life to maturity of, or require any payment to be made
earlier than the date originally scheduled on, such Indebtedness or would
increase the interest rate applicable to such Indebtedness, unless (x) Excess
Availability, both immediately prior to, immediately after giving effect thereto
and projected Excess Availability on a pro forma projected basis for the 12
months immediately following, such amendment, modification or change is at least
$100 million, or (y) the total amount of such Indebtedness so amended, modified
or changed since the Effective Date (together with the amounts permitted under
clause (ii) hereof), does not exceed $500,000 in any Fiscal Year of the
Borrowers, (B) would change the subordination provision, if any, of such
Indebtedness, or (C) would otherwise be adverse to the Lenders in any respect;
(ii) except for the Obligations and except as otherwise explicitly permitted
herein, make any voluntary or optional payment, prepayment, redemption,
defeasance, sinking fund payment or other acquisition for value of any of its or
its Subsidiaries' Indebtedness (including, without limitation, by way of
depositing money or securities with the trustee therefor before the date
required for the purpose of paying any portion of such Indebtedness when due),
or refund, refinance, replace or exchange any other Indebtedness for any such
Indebtedness (except to the extent such Indebtedness is otherwise expressly
permitted by the definition of "Permitted Indebtedness"), or make any payment,
prepayment, redemption, defeasance, sinking fund payment or repurchase of any
outstanding Indebtedness as a result of any asset sale, change of control,
issuance and sale of debt or equity securities or similar event, or give any
notice with respect to any of the foregoing, unless (x) Excess Availability,
both immediately prior to, immediately after giving effect thereto and projected
Excess Availability on a pro forma projected basis for the 12 months immediately
following, such payment is at least $100 million, or (y) the total amount of
such Indebtedness so paid since the Effective Date (together with the amounts
permitted under clause (i)(A) hereof), does not exceed $500,000 in any Fiscal
Year of the Borrowers; (iii) except as permitted by Section 6.02(c), amend,
modify or otherwise change its name, jurisdiction of organization,
organizational identification number or FEIN; (iv) amend, modify or otherwise
change its certificate of incorporation or bylaws (or other similar
organizational documents), including, without limitation, by the filing or
modification of any certificate of designation, or any agreement or arrangement
entered into by it, with respect to any of its Capital Stock (including any
shareholders' agreement), or enter into any new agreement with respect to any of
its Capital Stock, except any such amendments, modifications or changes or any
such new agreements or arrangements pursuant to this clause (iv) that either
individually or in the aggregate, could not have a Material Adverse Effect; (v)
amend, modify, waive or otherwise change (or permit the amendment, modification,
waiver or other change in any manner) of any provisions in the
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Revolving Credit Facility Documents relating to (A) Availability, Excess
Availability, Excess Availability Reserve, Gross Availability or the Borrowing
Base (as each is defined in the Revolving Credit Facility) which amendment has
or could have the effect of increasing Availability, Excess Availability, Gross
Availability or the Borrowing Base or decreasing the Availability Reserve, (B)
the Credit Card Advance Rate, the Inventory Advance Rate, the Appraised
Inventory Percentage or the Appraised Inventory Liquidation Value (as each is
defined in the Revolving Credit Facility), in each case, to an amount in excess
of the rates set forth in the Revolving Credit Facility as in effect on the date
hereof, (C) the definition of Cash Control Event and the related provisions
contained in Article VII of the Revolving Credit Agreement, (D) the provisions
of the Revolving Credit Agreement relating to the Term Loan Debt, and (E) any
covenants or Events of Default contained in the Revolving Credit Agreement, if
such amendments imposes any additional or more restrictive representations,
covenants (financial or otherwise) or events of default than is contained in the
Revolving Credit Agreements in effect on the date hereof, and, if,
notwithstanding the foregoing, such amendment is made, the Administrative
Borrower shall promptly notify, and furnish a copy thereof to the Agent; (vi)
agree to any material amendment or other material change to or waiver of any of
its rights under any Material Contract without the consent of the Agent (which
consent shall not be unreasonably withheld); or (vii) alter, modify or amend any
Lease in a manner which is reasonably likely to have a Material Adverse Effect.
(m) INVESTMENT COMPANY ACT OF 1940. Engage in any
business, enter into any transaction, use any securities or take any other
action or permit any of its Subsidiaries to do any of the foregoing, that would
cause it or any of its Subsidiaries to become subject to the registration
requirements of the Investment Company Act of 1940, as amended, by virtue of
being an "investment company" or a company "controlled" by an "investment
company" not entitled to an exemption within the meaning of such Act.
(n) PROPERTIES. Other than in the ordinary course of
business, permit any property to become a fixture with respect to real property
or to become an accession with respect to other personal property with respect
to which real or personal property the Agent does not have a valid and perfected
first priority Lien.
(o) ERISA. Do or permit any ERISA Affiliate to do any
of the following, if as a result thereof, such Loan Party or ERISA Affiliate
will, or could reasonably be expected to, incur liability that is reasonably
likely to have a Material Adverse Effect:
(i) violate or fail to be in full compliance with any
Loan Party's Employee Benefit Plan;
(ii) fail timely to file all reports and filings
required by ERISA to be filed by any Loan Party;
(iii) engage in any nonexempt "prohibited
transactions" or "reportable events" (respectively as described in
ERISA);
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(iv) engage in, or commit any act such that a tax or
penalty reasonably could be imposed upon any Loan Party on account
thereof pursuant to ERISA;
(v) incur any material accumulated funding deficiency
within the meaning of ERISA;
(vi) terminate any Employee Benefit Plan such that a
Lien could be asserted against any assets of any Loan Party on account
thereof pursuant to ERISA; or
(vii) fail to make any required contribution or
payment to, or make a complete or partial withdrawal from, any Employee
Benefit Plan which is a multiemployer plan within the meaning of
Section 4001(a) of ERISA.
(p) ENVIRONMENTAL. Knowingly or negligently permit
the use, handling, generation, storage, treatment, Release or disposal of
Hazardous Materials at any property owned or leased by it or any of its
Subsidiaries, except in compliance with Environmental Laws and so long as such
use, handling, generation, storage, treatment, Release or disposal of Hazardous
Materials is not reasonably likely to result in a Material Adverse Effect.
(q) EXCESS AVAILABILITY RESERVE. Permit the Excess
Availability Reserve at any time to be less than the sum of $35,000,000.
(r) LOCATION OF COLLATERAL. (i) Remove any Collateral
from locations described in Schedule 5.01(ee) except for the following purposes:
(A) to accomplish sales of Inventory in the
ordinary course of business;
(B) to move Inventory or other Collateral
from one such location to another such location; or
(C) to utilize such of the Collateral as is
removed from such locations in the ordinary course of
business.
(ii) place any tangible personal property of any Loan
Party in the care or custody of any third party, or store or entrust
any such personal property with a bailee or other third party, except
(A) as otherwise disclosed to the Agent pursuant to Section 5.01(ee),
or permitted by this Section 6.02(r), or (B) for Inventory in an amount
not to exceed $1,000,000 at Cost (as defined in the Revolving Credit
Facility) in the aggregate at any time in the ordinary course of
business;
(s) UNRESTRICTED SUBSIDIARIES. Permit any
Unrestricted Subsidiary at any time to carry on any business activity or have
any assets in excess of $500,000 in the aggregate;
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(t) INTELLECTUAL PROPERTY. Conduct its business so as
to infringe the patents, industrial designs, trademarks, trade names, trade
styles, brand names, service marks, logos, copyrights, trade secrets, know-how,
confidential information, or other intellectual or proprietary property of any
third Person, except where such infringement is not reasonably likely to have a
Material Adverse Effect.
ARTICLE VII
REPORTING REQUIREMENTS
Section 7.01 MAINTAIN RECORDS. The Loan Parties shall:
(a) At all times, keep proper books of account, in
which full, true, and accurate entries shall be made of all of the Loan Parties'
financial transactions, all in accordance with GAAP applied consistently with
prior periods to fairly reflect the consolidated financial condition of the Loan
Parties at the close of, and its results of operations for, the periods in
question.
(b) Timely provide the Agent with those financial
reports, statements, and schedules required by this Article VII or otherwise,
each of which reports, statements and schedules shall be prepared, to the extent
applicable, in accordance with GAAP applied consistently with prior periods to
fairly reflect the Consolidated financial condition of the Loan Parties at the
close of, and the results of operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of
the Collateral including, without limitation, accurate current stock, cost, and
sales records of its Inventory for each Division, accurately and sufficiently
itemizing and describing the kinds, types, and quantities of Inventory and the
cost and selling prices thereof.
(d) At all times, retain (i) Deloitte and Touche,
LLP, or such other nationally recognized independent certified public
accountants who are reasonably satisfactory to SSC (as long as it remains in
Control of the Borrowers) and the Agent, and instruct such accountants, subject
to the terms of such accountants' internal policies, and subject to the
confidentiality provisions of this Agreement, to fully cooperate with, and be
available to, the Agent to discuss the Loan Parties' financial performance,
financial condition, operating results, controls, and such other matters, within
the scope of the retention of such accountants, as may be raised by the Agent.
(e) Not change any Loan Party's Fiscal Year.
Section 7.02 ACCESS TO RECORDS.
(a) Each Loan Party shall accord the Agent with
reasonable access during normal business hours from time to time as the Agent
may require to all properties owned by or over which any Loan Party has control.
The Agent shall have the right, and each Loan Party will permit the Agent from
time to time as the Agent may request, to examine, inspect, copy, and make
extracts from any and all of the Loan Parties' books, records, electronically
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stored data, papers, and files. Each Loan Party shall make that Loan Party's
copying facilities available to the Agent.
(b) Each Loan Party hereby authorizes the Agent to
(i) inspect, copy, duplicate, review, cause to be reduced to hard copy, run off,
draw off, and otherwise use any and all computer or electronically stored
information or data which relates to any Loan Party. Each Loan Party shall
request full cooperation with the Agent from any service bureau, contractor,
accountant, or other Person; and (ii) verify at any time the Collateral or any
portion thereof, including verification with Account Debtors, and/or with each
Loan Party's computer billing companies, collection agencies, and accountants.
(c) The Agent from time to time may designate one or
more representatives to exercise the Agent's rights under this Section 7.02 as
fully as if the Agent were doing so; PROVIDED, that the Agent shall not
designate a Person which is in a Competitive Business.
Section 7.03 PROMPT NOTICE TO ADMINISTRATIVE AGENT.
(a) The Administrative Borrower shall provide the
Agent with written notice promptly upon the occurrence of any of the following
events, which written notice shall be with reasonable particularity as to the
facts and circumstances in respect of which such notice is being given (i) any
change in any Loan Party's president, chief executive officer, chief operating
officer, and chief financial officer (without regard to the title(s) actually
given to the Persons discharging the duties customarily discharged by officers
with those titles); (ii) any ceasing of any Loan Party's payment of the debts of
that Loan Party generally as they mature, in the ordinary course, to its
creditors (other than its ceasing of making of such payments on account of a
dispute which, if adversely determined to the Loan Parties is not reasonably
likely to have a Material Adverse Effect); (iii) any failure by any Loan Party
to pay rent at any of that Loan Party's locations, which failure continues for
more than three (3) days following the last day on which such rent was payable
unless such failure is not reasonably likely to have a Material Adverse Effect;
(iv) any material adverse change in the business, operations, or financial
affairs of any Borrower; (v) the occurrence of any Default; (vi) any intention
on the part of any Loan Party to discharge that Loan Party's present independent
accountants or any withdrawal or resignation by such independent accountants
from their acting in such capacity (as to which, see Section 7.01(d)); (vii) any
litigation which, if determined adversely to any Loan Party, is reasonably
likely to have a Material Adverse Effect; (viii) any intention of a Borrower to
enter into a consignment arrangement or licensing or other similar agreement
(whether for intellectual property, leased departments in stores or otherwise)
with any other Person; (ix) any additional or amended collective bargaining or
other labor contract entered into after the Effective Date; (x)any Material
Accounting Changes; (xi) any material adverse change relating to the type,
quantity or quality of the Collateral or the Lien granted thereon; (xii) any
event, occurrence or circumstance not specifically described herein that is
reasonably likely to have a Material Adverse Effect; (xiii) any Loan Party's
entering into a license agreement after the Effective Date; (xiv) any Loan
Party's entering into a Capitalized Lease after the Effective Date; and (xv) any
Loan Party's entering into a Lease after the Effective Date.
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(b) The Administrative Borrower shall (i) provide the
Agent, when so distributed, with copies of any materials distributed to the
shareholders of the Parent; (ii) provide the Agent (A) when filed, copies of all
filings with the SEC. Such copies may be provided in electronic format; (B) when
received, copies of all correspondence from the SEC, other than routine general
communications from the SEC; and (C) should any of the information on any of the
Schedules hereto become misleading in any material respect, promptly advise the
Agent in writing with such revisions or updates as may be necessary or
appropriate to update or correct the same; PROVIDED, HOWEVER, that no such
Schedule shall be deemed to have been amended, modified or superseded by any
such correction or update, nor shall any breach of any representation or
warranty resulting from the inaccuracy or incompleteness of such Schedule be
deemed to have been cured or waived, unless and until the Agent, in its
discretion shall have accepted in writing such revisions; (iii) at the request
of Agent, from time to time, provide the Agent with copies of all advertising
(including copies of all print advertising and duplicate tapes of all video and
radio advertising); and (iv)provide the Agent, when received by and Loan Party,
with a copy of any management letter or similar communications from any
independent accountant of any Loan Party.
Section 7.04 WEEKLY REPORTS. Weekly, on Friday of each week
(as of the then immediately preceding Saturday) the Administrative Borrower
shall provide the Agent with Borrowing Base Certificates (in the form of Exhibit
G annexed hereto, as such form may be revised from time to time by the Agent)
prepared separately for each Division and combined for all Borrowers, and sales
audit reports and flash collateral reports (each in such form as may be
specified from time to time by the Collateral Agents) prepared separately for
each Division and combined for all Borrowers. Such reports may be sent to the
Agent by facsimile transmission, provided that the original thereof is forwarded
to the Agent on the date of such transmission.
Section 7.05 MONTHLY REPORTS. Monthly, the Administrative
Borrower shall provide the Agent with those financial statements and reports
described in Schedule 7.05, annexed hereto, at the times set forth in such
Schedule and a Leasehold Mortgage Status Report.
Section 7.06 QUARTERLY REPORTS. Quarterly, within forty-five
(45) days following the end of each of the Loan Parties' fiscal quarters, the
Administrative Borrower shall provide the Agent with the following:
(a) An original counterpart of a management prepared
financial statement (which shall be prepared in the same manner and using the
same assumptions as set forth in the forecasts furnished to, and approved by,
the Agent pursuant to the provisions of Section 7.10(c) hereof) for (A) the Loan
Parties on a consolidated basis, (B) the DSW/Shonac Business, (C) the Filene's
Business, and (D) the Value City Business, in each case for the fiscal quarter
most recently ended, and for the period from the beginning of the Loan Parties'
then current fiscal year through the end of the subject quarter, with
comparative information for the same period of the previous fiscal year, which
statement shall include a balance sheet, statement of operations and cash flows
and comparisons for the corresponding quarter of the then immediately previous
year, as well as to the Loan Party's forecast;
(b) A list of all leases entered into or terminated
during such quarter; and
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(c) The officer's compliance certificate described in
Section 7.08.
Section 7.07 ANNUAL REPORTS.
(a) Annually, within ninety (90) days following the
end of the Loan Parties' fiscal year, the Administrative Borrower shall furnish
the Agent with the following: (i) an original signed counterpart of the Loan
Parties' consolidated annual financial statement, which statement shall have
been prepared by, and bear the unqualified opinion of, the Parent's independent
certified public accountants (i.e. said statement shall be "certified" by such
accountants) and shall include, at a minimum (with comparative information for
the then prior fiscal year) a balance sheet, statement of operations, statement
of changes in shareholders' equity, and cash flows; (ii) a consolidating annual
financial statement for (x) the DSW/Shonac Business, (y) the Filene's Business,
and (z) the Value City Business which shall include (with comparative
information for the then prior fiscal year) a balance sheet, statement of
changes in shareholders' equity, and cash flows; and (iii) the officer's
compliance certificate described in Section 7.08.
(b) No later than fifteen (15) days prior to the end
of each of the Loan Parties' fiscal years, the Administrative Borrower shall
give written notice to such independent certified accountants (with a copy of
such notice, when sent, to the Agent) that such annual financial statement will
be delivered by the Administrative Borrower to the Agent and that the
Administrative Borrower has been advised that the Agent and each Lender will
rely thereon with respect to the administration of, and transactions under, the
credit facilities contemplated by this Agreement.
Section 7.08 OFFICER'S CERTIFICATES. The Administrative
Borrower shall cause either the Administrative Borrower's chief executive
officer, president, executive vice president, chief financial officer,
controller, or treasurer (collectively, an "AUTHORIZED OFFICER"), in each
instance, to provide such Person's Certificate with those monthly financial
statements to be provided within thirty (30) days of the end of each month and
with those to be provided quarterly and annual statements to be furnished
pursuant to this Agreement, which Certificate shall:
(a) Indicate that (i) with respect to the
Consolidated financial statement, the subject statement was prepared in
accordance with GAAP consistently applied, and (ii) with respect to all
financial statements, presents fairly the financial condition of the applicable
Loan Parties at the close of, and the results of the applicable Loan Parties'
operations and cash flows (where such cash flows are required to be provided)
for, the period(s) presented, SUBJECT, HOWEVER, to the following: (x) usual year
end adjustments (this exception shall note be included in the Certificate which
accompanies such annual statement); and (y) Material Accounting Changes, in
which event, such Certificate shall include a schedule (in reasonable detail) of
the effect of each such Material Accounting Change.
(b) Indicate either that (i) no Default has occurred
and is continuing, or (ii) if such an event has occurred, its nature (in
reasonable detail) and the steps (if any) being taken or contemplated by the
Loan Parties to be taken on account thereof.
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Section 7.09 INVENTORIES, APPRAISALS AND AUDITS.
(a) The Agent, at the reasonable expense of the Loan
Parties, may participate in and/or observe each scheduled physical count of
Inventory which is undertaken on behalf of any Loan Party.
(b) The Loan Parties, at their own expense, shall
cause not less than one (1) physical inventory of each of Division to be
undertaken in each twelve (12) month period during which this Agreement is in
effect; (i) the Administrative Borrower, within forty-five (45) days following
the completion of such inventory, shall provide the Agent with a reconciliation
of the results of each such inventory (as well as of any other physical
inventory undertaken by any Loan Party) and shall post such results to the Loan
Parties' stock ledger and, as applicable to the Loan Parties' other financial
books and records; and (ii) the Agent, in its reasonable, good faith discretion,
if any Event of Default has occurred and is continuing, may cause such
additional inventories to be taken as the Agent determines (each, at the expense
of the Loan Parties).
(c) The Agent may require the Collateral Agents (as
defined in the Revolving Credit Facility) to obtain appraisals of the Collateral
(copies of which, subject to the approval of the appraiser, shall be provided to
the Administrative Borrower promptly upon receipt thereof), at any time (i)
after the occurrence and during the continuance of an Event of Default, (ii)
that Excess Availability (as defined in the Revolving Credit Facility) is equal
to or less than $60,000,000, or (iii) after an Inadvertent Overadvance (as
defined in the Intercreditor Agreement) has occurred (in all events, at the Loan
Parties' expenses) conducted by Hilco Appraisal Services, LLC or such appraisers
as are satisfactory to the Agent and the Revolving Credit Agent, in addition to
those appraisals permitted to be obtained by the Collateral Agents (as defined
in the Revolving Credit Facility) pursuant to Section 5.9 of the Revolving
Credit Facility.
(d) If made available to any Loan Party, the Agent
shall receive copies of the results of any commercial finance field examination
of the Loan Parties' books and records conducted during any period in which this
Agreement is in effect.
(e) The Agent from time to time may undertake
"mystery shopping" (so-called) visits to all or any of the Loan Parties'
business premises.
Section 7.10 ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to
be provided pursuant to this Article VII, the Administrative Borrower promptly
shall provide the Agent with such other and additional information concerning
the Loan Parties, the Collateral, the operation of the Loan Parties' business,
and the Loan Parties' financial condition, including original counterparts of
financial reports and statements, as the Agent may from time to time reasonably
request from the Administrative Borrower.
(b) The Administrative Borrower shall, upon the
Agent's request, provide the Agent, from time to time hereafter, with updated
forecasts of the Loan Parties' anticipated performance and operating results for
the current fiscal year. Such forecasts shall be in a format consistent with the
format previously provided to the Agent.
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(c) In all events, the Administrative Borrower, no
sooner than ninety (90) nor later than sixty (60) days prior to the end of each
of the Loan Parties' fiscal years, shall provide the Agent with an updated and
extended forecast which shall go out at least through the end of the then next
fiscal year and shall include a statement of operations, balance sheet, and
statement of cash flow, by month, each consolidated (with consolidating
schedules by Division) and each prepared in conformity with GAAP and consistent
with the Loan Parties' then current accounting practices.
(d) When available the "Annual Budget", as approved
by the Administrative Borrower's Board of Directors, shall be provided to the
Agent. The Annual Budget shall be subject to the approval of the Agent (whose
approval shall not be unreasonably withheld) only if the Annual Budget varies in
a material way from the Business Plan for such fiscal year.
(e) Each Loan Party recognizes that all commercial
finance examinations, inventories, analysis, financial information, and other
materials which the Agent may obtain, develop, or receive with respect to the
Loan Parties (other than appraisals and inventories received from third parties)
are confidential to the Agent and that, except as otherwise provided herein, no
Loan Party is entitled to receipt of any of such commercial finance
examinations, inventories, analysis, financial information, and other materials,
nor copies or extracts thereof or therefrom.
Section 7.11 FORMAT OF INFORMATION. All information required
to be delivered pursuant to this Article VII may be delivered by and in
electronic format.
ARTICLE VIII
USE OF COLLATERAL
Section 8.01 USE OF INVENTORY CONTROL.
(a) No Loan Party shall engage in any of the
following with respect to its Inventory (i) any sale, other than for fair
consideration in the conduct of the Loan Parties' business in the ordinary
course; (ii) sales or other dispositions to creditors, except returns in the
ordinary course of business; (iii) sales or other dispositions in bulk, except
in the ordinary course of business consistent with past practices; (iv) sales in
breach of any provision of this Agreement; and (v) sales in connection with
Permitted Dispositions.
(b) No sale of Inventory shall be on consignment
(other than between Loan Parties), approval, or under any other circumstances
such that, with the exception of the Loan Parties' customary return policy
applicable to the return of inventory purchased by the Loan Parties' retail
customers in the ordinary course, such Inventory may be returned to a Loan Party
without the consent of the Agent.
Section 8.02 INVENTORY QUALITY. All Inventory now owned or
hereafter acquired by each Loan Party is and will be of good and merchantable
quality, consistent with past practices.
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Section 8.03 ADJUSTMENTS AND ALLOWANCES. Each Loan Party may
grant such allowances or other adjustments to that Loan Party's Account Debtors
as that Loan Party may reasonably deem to accord with sound business practice
and which are normal and customary extensions and adjustments in the ordinary
course of business, provided, however, the authority granted the Loan Parties
pursuant to this Section 8.03 may be limited or terminated by the Agent at any
time in the Agent's reasonable, good faith discretion after the occurrence and
during the continuance of an Event of Default.
Section 8.04 VALIDITY OF ACCOUNTS.
(a) Except for adjustments and disputes in the
ordinary course of business, the amount of each of the Accounts Receivable shown
on the books, records, and invoices of the Loan Parties represented as owing by
each Account Debtor is the correct amount actually owing by such Account Debtor
and shall have been fully earned by performance by the Loan Parties.
(b) No Loan Party has any knowledge of any impairment
of the validity or collectibility of any of the Accounts Receivable, other than
returns, reserves, unauthorized use of credit cards, bad checks, adjustments and
disputes which occur in the ordinary course of business. The Administrative
Borrower shall notify the Agent of any such impairment immediately after any
Loan Party becomes aware of any such impairment.
(c) No Loan Party shall post any bond to secure any
Loan Party's performance under any agreement to which any Loan Party is a party
nor cause any surety, guarantor, or other third party obligee to become liable
to perform any obligation of any Loan Party (other than to the Agent) in the
event of any Loan Party's failure so to perform, if, as a result of the surety,
guarantor or third party obligee's performance, such Person would obtain a Lien
on any Collateral having priority to the Lien of the Agent.
Section 8.05 NOTIFICATION TO ACCOUNT DEBTORS. The Agent shall
have the right (after the occurrence of a Cash Control Event (as defined in the
Revolving Credit Facility)) to notify any of the Loan Parties' Account Debtors
to make payment directly to the Agent and to collect all amounts due on account
of the Collateral, in each case, subject to the terms of the Intercreditor
Agreement.
Section 8.06 APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower
hereby irrevocably constitutes and appoints the Agent (acting through any
officer of the Agent) as that Borrower's true and lawful attorney, with full
power of substitution, following the occurrence and during the continuance of an
Event of Default and subject to the terms of the Intercreditor Agreement, to
convert the Collateral into cash at the sole risk, cost, and expense of that
Borrower, but for the sole benefit of the Agent and the Lenders. The rights and
powers granted the Agent by this appointment include but are not limited to the
right and power to:
(a) Prosecute, defend, compromise, or release any
action relating to the Collateral;
(b) Sign change of address forms to change the
address to which each Borrowers' mail is to be sent to such address as the Agent
shall designate (after which copies of
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all such mail shall be promptly furnished to the Administrative Borrower);
receive and open each Borrowers' mail; remove any Collateral and proceeds of
Collateral therefrom and turn over the balance of such mail either to the
Administrative Borrower or to any trustee in bankruptcy or receiver of the
Administrative Borrower, or other legal representative of a Borrower whom the
Agent determines to be the appropriate Person to whom to so turn over such mail;
(c) Endorse the name of the relevant Borrower in
favor of the Agent upon any and all checks, drafts, notes, acceptances, or other
items or instruments; sign and endorse the name of the relevant Borrower on, and
receive as secured party, any of the Collateral, any invoices, schedules of
Collateral, freight or express receipts, or bills of lading, storage receipts,
warehouse receipts, or other documents of title respectively relating to the
Collateral;
(d) Sign the name of the relevant Borrower on any
notice to that Borrowers' Account Debtors or verification of the Collateral;
sign the relevant Borrowers' name on any proof of claim in bankruptcy against
Account Debtors, and on notices of lien, claims of mechanic's liens, or
assignments or releases of mechanic's liens securing the Accounts Receivable;
(e) Take all such action as may be necessary to
obtain the payment of any letter of credit and/or banker's acceptance of which
any Borrower is a beneficiary;
(f) Repair, manufacture, assemble, complete, package,
deliver, alter or supply goods, if any, necessary to fulfill in whole or in part
the purchase order of any customer of each Borrower; and
(g) Use, license or transfer any or all General
Intangibles of each Borrower.
Section 8.07 NO OBLIGATION TO ACT. The Agent shall not be
obligated to do any of the acts or to exercise any of the powers authorized by
Section 8.06 herein, but if the Agent elects to do any such act or to exercise
any of such powers, it shall not be accountable for more than it actually
receives as a result of such exercise of power, and shall not be responsible to
any Borrower for any act or omission to act except for any act or omission to
act as to which there is a final determination made in a judicial proceeding (in
which proceeding the Agent has had an opportunity to be heard) which
determination includes a specific finding that the subject act or omission to
act had been grossly negligent or in actual bad faith, or willful misconduct.
ARTICLE IX
EVENTS OF DEFAULT
Section 9.01 EVENTS OF DEFAULT. The occurrence of any event
described in this Article IX respectively shall constitute an Event of Default
herein. The occurrence of any Event of Default shall also constitute, without
notice or demand, a default under all other agreements between the Agent or any
Lender and any Loan Party and instruments and papers heretofore, now, or
hereafter given the Agent or any Lender by any Loan Party in connection with any
of the Loan Documents. An Event of Default shall occur upon:
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(a) The failure by any Loan Party to pay when due any
principal of, interest on, or fees in respect of, the Loans;
(b) The failure by any Loan Party to pay when due (or
upon demand, if payable on demand) any payment Obligation other than any payment
Obligation on account of the principal of, or interest on, or fees in respect of
the Loans;
(c) The failure by any Loan Party to promptly,
punctually, faithfully and timely perform, discharge, or comply with any
covenant or Obligation included in any of the following provisions hereof:
SECTION RELATES TO
----------------- ----------------------------------
6.02(b) Indebtedness
6.01(b) Pay Taxes
6.02(g) Dividends. Investments. Other
Corporate Actions
6.02(e) Loans and Advances
6.02(i) Affiliate Transactions
6.02(q) Excess Availability Reserve
Article VII Reporting Requirements (except as
set forth in Section 9.01(d))
5(k) of the Cash Management
Security
Agreement
(d) the failure by the Borrowers to promptly,
punctually, faithfully and timely perform, discharge, or comply with the
financial reporting requirements included in Section 7.04, subject, however, to
the following limited number of grace periods applicable to certain of those
requirements:
NUMBER OF
REPORT/STATEMENT REQUIRED BY SECTION GRACE PERIOD GRACE PERIODS
---------------- ------------------- ------------ -------------
Weekly Report 7.04 2 Business Days Twice any 12 consecutive
months
(e) the failure by any Loan Party, within twenty (20)
days following the earlier of any Authorized Officer's knowledge of a breach of
any covenant or Obligation not described in any of clauses (a) through (d)
above, or of its receipt of written notice from the Agent of the breach of any
of such covenants or Obligations, provided that if such failure cannot be
reasonably cured within such twenty (20) day period and the Loan Parties have
diligently proceeded, and continue to diligently proceed, to effectuate a cure
of such failure, such failure shall not be an Event of Default hereunder unless
(i) such failure is not cured within twenty (20) days after the expiration of
such initial twenty (20) day period, or (b) such failure, in the reasonable
judgment of the Agent, is reasonably likely to have a Material Adverse Effect;
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(f) the determination by the Agent that any
representation or warranty at any time made by any Loan Party to the Agent or
any Lender was not true or complete in all material respects when given;
(g) the occurrence and continuance of any Event of
Default or other event, which with the giving of notice, the passage of time or
both, would be an Event of Default under (i) the Revolving Credit Facility, (ii)
the Convertible Facility, or (iii) any other Indebtedness of any Loan Party
equal to or in excess of One Million Dollars ($1,000,000.00) to any creditor
other than the Agent or any Lender, (whether or not such Indebtedness has been
accelerated), or, Leases aggregating more than five percent (5%) of all Leases
of the Loan Parties existing from time to time could be terminated due to a
default by a Loan Party thereunder (whether or not the subject creditor or
lessor takes any action on account of such occurrence);
(h) the occurrence of any breach of any covenant or
Obligation imposed by, or of any default under, any agreement between the Agent
or any Lender and any Loan Party or instrument given by any Loan Party to any
Agent or any Lender relating to Indebtedness of any Loan Party in excess of
$1,000,000 in the aggregate and the expiration, without cure, of any applicable
grace period (notwithstanding that the Agent or Lender may not have exercised
all or any of its rights on account of such breach or default);
(i) the occurrence of any uninsured loss, theft,
damage, or destruction of or to any material portion of the Collateral;
(j) (i) the entry of any judgment in excess of Two
Million Five Hundred Thousand Dollars ($2,500,000.00) against any Loan Party,
which judgment (A) is not covered by insurance (as to which the insurer has not
notified the applicable Loan Party of the insurer's reservation of rights) or
(B) is not satisfied, stayed (if a money judgment) or appealed from (with
execution or similar process stayed) within thirty (30) days of its entry;
(ii) the entry of any order or the imposition of any
other process having the force of law, the effect of which is to
restrain the conduct by any Borrower of its business in the ordinary
course and which is reasonably likely to have a Material Adverse
Effect;
(k) any act by, against, or relating to any Loan
Party, or its property or assets, which act constitutes the determination, by
any Loan Party, to initiate a program of substantial or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other Person, pursuant to court action or otherwise, over all, or
any part of any Loan Party's property; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of any Loan Party,
or the occurrence of any other voluntary or involuntary liquidation or extension
of debt agreement for any Loan Party; the offering by or entering into by any
Loan Party of any composition, extension, or any other arrangement seeking
relief generally from or extension of the debts of any Loan Party; or the
initiation of any judicial or non-judicial proceeding or agreement by, against,
or including any Loan Party which seeks or intends to accomplish a
reorganization or arrangement with creditors; and/or the initiation by or
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on behalf of any Loan Party of the liquidation or winding up of all or any part
of any Loan Party's business or operations except that any of the foregoing
actions which are commenced against a Loan Party shall not be deemed an Event of
Default hereunder as long as such action is timely contested in good faith by
that Loan Party by appropriate proceedings and is dismissed within 60 days of
the institution of the foregoing;
(l) the failure by any Loan Party to generally pay
the debts of that Loan Party as they mature; adjudication of bankruptcy or
insolvency relative to any Loan Party; the entry of an order for relief or
similar order with respect to any Loan Party in any proceeding pursuant to the
Bankruptcy Code or any other Federal bankruptcy law; the filing of any
complaint, application, or petition by any Loan Party initiating any matter in
which any Loan Party is or may be granted any relief from the debts of that Loan
Party pursuant to the Bankruptcy Code or any other insolvency statute or
procedure; the filing of any complaint, application, or petition against any
Loan Party initiating any matter in which that Loan Party is or may be granted
any relief from the debts of that Loan Party pursuant to the Bankruptcy Code or
any other insolvency statute or procedure, which complaint, application, or
petition is not timely contested in good faith by that Loan Party by appropriate
proceedings or, if so contested, is not dismissed within 60 days of when filed;
(m) the termination or attempted termination of any
Guaranty by any Guarantor;
(n) (i) any challenge by or on behalf of any Loan
Party to the validity of any Loan Document or the applicability or
enforceability of any Loan Document strictly in accordance with the subject Loan
Document's terms or which seeks to void, avoid, limit, or otherwise adversely
affect any security interest created by or in any Loan Document or any payment
made pursuant thereto;
(ii) any determination by any court or any other
judicial or Government Authority that any Loan Document is not
enforceable strictly in accordance with the subject Loan Document's
terms or which voids, avoids, limits, or otherwise adversely affects
any security interest created by any Loan Document or any payment made
pursuant thereto; or
(o) any Change in Control; or
(p) an event or development occurs which, as
determined by the Agent in its discretion, has, or could reasonably be expected
to have, a Material Adverse Effect,
then, and in any such event, the Agent may, with the consent
or at the direction of the Required Lenders, by notice to the Administrative
Borrower, (i) declare all or any portion of the Loans and other Obligations then
outstanding to be due and payable, whereupon all or such portion of the
aggregate principal of all Loans and other Obligations, all accrued and unpaid
interest thereon, all fees and all other amounts payable under this Agreement
and the other Loan Documents shall become due and payable immediately, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by each Loan Party and (ii) exercise any and all of its
other rights and remedies under Applicable Law, hereunder and
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under the other Loan Documents; PROVIDED, HOWEVER, that upon the occurrence and
during the continuance of any Event of Default described in subsection (k) or
(l) of this Section 9.01, without any notice to any Loan Party or any other
Person or any act by the Agent or any Lender, all Commitments shall
automatically terminate and all Loans then outstanding, together with all
accrued and unpaid interest and PIK Interest thereon, all fees and all other
amounts due under this Agreement and the other Loan Documents shall become due
and payable automatically and immediately, without presentment, demand, protest
or notice of any kind, all of which are expressly waived by each Loan Party.
ARTICLE X
AGENT
Section 10.01 APPOINTMENT. Each Lender (and each subsequent
maker of any Loan by its making thereof) hereby irrevocably appoints and
authorizes the Agent to perform the duties of the Agent as set forth in this
Agreement including: (i) to receive on behalf of each Lender any payment of
principal of or interest on the Loans outstanding hereunder and all other
amounts accrued hereunder for the account of the Lenders and paid to the Agent,
and, subject to Sections 2.02 and 3.02 of this Agreement, to distribute promptly
to each Lender its Pro Rata Share of all payments so received; (ii) to
distribute to each Lender copies of all material notices and agreements received
by the Agent and not required to be delivered to each Lender pursuant to the
terms of this Agreement, provided that the Agent shall not have any liability to
the Lenders for the Agent's inadvertent failure to distribute any such notices
or agreements to the Lenders; (iii) to maintain, in accordance with its
customary business practices, ledgers and records reflecting the status of the
Obligations, the Loans, and related matters and to maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Collateral and related matters; (iv) to execute or file any and all
financing or similar statements or notices, amendments, renewals, supplements,
documents, instruments, proofs of claim, notices and other written agreements
with respect to this Agreement or any other Loan Document; (v) to make the Loans
and Agent Advances, for the Agent or on behalf of the applicable Lenders as
provided in this Agreement or any other Loan Document; (vi) to perform,
exercise, and enforce any and all other rights and remedies of the Lenders with
respect to the Loan Parties, the Obligations, or otherwise related to any of
same to the extent reasonably incidental to the exercise by the Agent of the
rights and remedies specifically authorized to be exercised by the Agent by the
terms of this Agreement or any other Loan Document, or as directed by the
Required Lenders; (vii) to incur and pay such fees necessary or appropriate for
the performance and fulfillment of its functions and powers pursuant to this
Agreement or any other Loan Document; and (viii) subject to Section 10.03 of
this Agreement, to take such action as the Agent deems appropriate on its behalf
to administer the Loans and the Loan Documents and to exercise such other powers
delegated to the Agent by the terms hereof or the other Loan Documents
(including, without limitation, the power to give or to refuse to give notices,
waivers, consents, approvals and instructions and the power to make or to refuse
to make determinations and calculations) together with such powers as are
reasonably incidental thereto to carry out the purposes hereof and thereof. As
to any matters not expressly provided for by this Agreement and the other Loan
Documents (including, without limitation, enforcement or collection of the
Loans), the Agent shall not be required to exercise any discretion or take any
action, which, in the reasonable opinion of the Agent, exposes the Agent to
liability or which is contrary to this
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Agreement or any other Loan Document or Applicable Law. The Lenders hereby agree
that the Required Lenders shall make all decisions concerning (A) waivers, (B)
amendments, (C) remedial action, including, without limitation, the right to
call a default, accelerate, take action to realize upon any Collateral, and (D)
performance by the Lenders or enforcement of the rights of the Lenders hereunder
and under the Intercreditor Agreement; PROVIDED, HOWEVER, that the foregoing
shall not limit the rights of all Lenders under Section 12.02 hereof.
Section 10.02 NATURE OF DUTIES. The Agent shall have no duties
or responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. The duties of the Agent shall be mechanical and
administrative in nature. Neither the Agent nor the Lenders shall have by reason
of this Agreement or any other Loan Document a fiduciary relationship in respect
of any other Lender. Nothing in this Agreement or any other Loan Document,
express or implied, is intended to or shall be construed to impose upon the
Agent or the Required Lenders any obligations in respect of this Agreement or
any other Loan Document except as expressly set forth herein or therein. Each
Lender shall make its own independent investigation of the financial condition
and affairs of the Loan Parties in connection with the making and the
continuance of the Loans hereunder and shall make its own appraisal of the
creditworthiness of the Loan Parties and the value of the Collateral, and
neither the Agent nor the Required Lenders shall have any duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the initial Loan hereunder or at any time or times
thereafter, provided that, upon the reasonable request of a Lender, the Agent
shall provide to such Lender any documents or reports delivered to the Agent by
the Loan Parties pursuant to the terms of this Agreement or any other Loan
Document.
Section 10.03 RIGHTS; EXCULPATION, ETC. Neither the Agent nor
the Lenders, nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by them
under or in connection with this Agreement or the other Loan Documents, except
for their own gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction. Without limiting the generality
of the foregoing, the Agent and the Lenders (i) may treat the payee of any Loan
as the owner thereof until the Agent receives written notice of the assignment
or transfer thereof, pursuant to Section 12.07 hereof, signed by such payee and
in form satisfactory to the Agent; (ii) may consult with legal counsel
(including, without limitation, counsel to the Agent or counsel to the Loan
Parties), independent public accountants, and other experts selected by any of
them and shall not be liable for any action taken or omitted to be taken in
reasonable good faith by any of them in accordance with the advice of such
counsel or experts; (iii) make no warranty or representation to any Lender and
shall not be responsible to any Lender for any statements, certificates,
warranties or representations made in or in connection with this Agreement or
the other Loan Documents; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the part of any
Person, the existence or possible existence of any Default or Event of Default,
or to inspect the Collateral or other property (including, without limitation,
the books and records) of any Person; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; and (vi) shall not
be deemed to have made any representation or warranty regarding the existence,
value or
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collectibility of the Collateral, the existence, priority or perfection of the
Agent's Lien thereon, or any certificate prepared by any Loan Party in
connection therewith, nor shall the Agent or the Required Lenders be responsible
or liable to the Lenders for any failure to monitor or maintain any portion of
the Collateral. Neither the Agent nor the Required Lenders shall be liable for
any apportionment or distribution of payments made in good faith pursuant to
Section 3.04. The Agent may at any time (but shall not be required to) request
instructions from the Required Lenders with respect to any actions or approvals
which by the terms of this Agreement or of any of the other Loan Documents the
Agent is permitted or required to take or to grant, and if such instructions are
promptly requested, the Agent shall be absolutely entitled to refrain from
taking any action or to withhold any approval under any of the Loan Documents
until it shall have received such instructions from the Required Lenders.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting under this Agreement or any of the other Loan Documents in accordance
with the instructions of the Required Lenders, or against the Required Lenders
on the same basis for which a right of action could be brought against the Agent
in connection with such acting or refraining from acting, except to the extent
such action or lack of action is determined by a court of competent
jurisdiction, pursuant to a final judgment, to have constituted gross negligence
or willful misconduct.
Section 10.04 RELIANCE. The Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or other documents or
any telephone message believed by it in reasonable good faith to be genuine and
correct and to have been signed, sent or made by the proper Person, and with
respect to all matters pertaining to this Agreement or any of the other Loan
Documents and its duties hereunder or thereunder, upon advice of counsel
selected by it.
Section 10.05 INDEMNIFICATION. To the extent that the Agent is
not reimbursed and indemnified by any Loan Party, the Lenders will reimburse and
indemnify the Agent from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, advances
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising out
of this Agreement or any of the other Loan Documents (it being understood that
the foregoing shall not be deemed to include principal, interest or fees owed by
a Loan Party to the Agent) or any action taken or omitted by the Agent under
this Agreement or any of the other Loan Documents, in proportion to each
Lender's Pro Rata Share, including, without limitation, advances and
disbursements made pursuant to Section 10.08; PROVIDED, HOWEVER, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements for which there has been a final judicial determination that such
liability resulted from the Agent's gross negligence or willful misconduct. The
obligations of the Lenders under this Section 10.05 shall survive the payment in
full of the Loans and the termination of this Agreement.
Section 10.06 AGENT INDIVIDUALLY. With respect to its Pro Rata
Share of the Total Commitment hereunder and the Loans made by it, the Agent
shall have and may exercise the same rights and powers hereunder and is subject
to the same obligations and liabilities as and to the extent set forth herein
for any other Lender or maker of a Loan. The term "Lenders" or "Required
Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity as a Lender. The Agent
and its Affiliates may accept
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deposits from, lend money to, and generally engage in any kind of banking, trust
or other business with any Borrower as if it were not acting as the Agent
pursuant hereto without any duty to account to the other Lenders.
Section 10.07 SUCCESSOR AGENT. (a) The Agent may resign from
the performance of all its functions and duties hereunder and under the other
Loan Documents at any time by giving at least thirty (30) Business Days' prior
written notice to the Administrative Borrower and each Lender. Such resignation
shall take effect upon the acceptance by a successor Agent of appointment
pursuant to clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the
Administrative Borrowers shall appoint a successor Agent acceptable to SSC. 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 Agent, and the Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. After the Agent's resignation hereunder as the Agent, the
provisions of this Article X shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under this Agreement and the
other Loan Documents.
(c) If a successor Agent shall not have been so
appointed within said thirty (30) Business Day period, the Agent shall then
appoint a successor Agent who shall serve as the Agent until such time, if any,
as the Administrative Borrower (with the consent of SSC) appoints a successor
Agent as provided above.
Section 10.08 COLLATERAL MATTERS.
(a) The Agent may from time to time make such
disbursements and advances ("AGENT ADVANCES") which the Agent, in its sole
discretion, deems reasonably necessary or desirable to preserve, protect,
prepare for sale or lease or dispose of the Collateral or any portion thereof,
to enhance the likelihood or maximize the amount of repayment by the Borrowers
of the Loans and other Obligations or to pay any other amount chargeable to the
Borrowers pursuant to the terms of this Agreement, including, without
limitation, costs, fees and expenses as described in Section 12.04. The Agent
Advances shall be repayable on demand and be secured by the Collateral. The
Agent Advances shall constitute Obligations hereunder. The Agent shall notify
each Lender and the Administrative Borrower in writing of each such Agent
Advance, which notice shall include a description of the purpose of such Agent
Advance. Without limitation to its obligations pursuant to Section 10.05, each
Lender agrees that it shall make available to the Agent, upon the Agent's
demand, in Dollars in immediately available funds, the amount equal to such
Lender's Pro Rata Share of each such Agent Advance. If such funds are not made
available to the Agent by such Lender, the Agent shall be entitled to recover
such funds on demand from such Lender, together with interest thereon for each
day from the date such payment was due until the date such amount is paid to the
Agent, at the Federal Funds Rate for three Business Days and thereafter at the
Reference Rate.
(b) The Lenders hereby irrevocably authorize the
Agent, at its option and in its discretion, to release any Lien granted
to or held by the Agent upon any Collateral upon termination of the
Total Commitment and payment and satisfaction of all Loans and all
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other Obligations which have matured and which the Agent has been notified in
writing are then due and payable; or constituting property being sold or
disposed of in the ordinary course of any Loan Party's business and in
compliance with the terms of this Agreement and the other Loan Documents; or
constituting property in which the Loan Parties owned no interest at the time
the Lien was granted or at any time thereafter; or if approved, authorized or
ratified in writing by the Lenders. Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent's authority to release particular
types or items of Collateral pursuant to this Section 10.08(b).
(c) Without in any manner limiting the Agent's
authority to act without any specific or further authorization or consent by the
Lenders (as set forth in Section 10.08(b)), each Lender agrees to confirm in
writing, upon request by the Agent, the authority to release Collateral
conferred upon the Agent under Section 10.08(b). Upon receipt by the Agent of
confirmation from the Lenders of its authority to release any particular item or
types of Collateral, and upon prior written request by any Loan Party, the Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Agent for the benefit of the Lenders upon such Collateral; PROVIDED,
HOWEVER, that (i) the Agent shall not be required to execute any such document
on terms which, in the Agent's opinion, would expose the Agent to liability or
create any obligations or entail any consequence other than the release of such
Liens without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Obligations or any Lien upon (or
obligations of any Loan Party in respect of) all interests in the Collateral
retained by any Loan Party.
(d) The Agent shall have no obligation whatsoever to
any Lender to assure that the Collateral exists or is owned by the Loan Parties
or is cared for, protected or insured or has been encumbered or that the Lien
granted to the Agent pursuant to this Agreement or any other Loan Document has
been properly or sufficiently or lawfully created, perfected, protected or
enforced or is entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Agent in this Section 10.08 or in any other Loan Document, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Agent's own interest in the
Collateral as one of the Lenders and that the Agent shall have no duty or
liability whatsoever to any other Lender, except as otherwise provided herein.
Section 10.09 AGENCY FOR PERFECTION. Each Lender hereby
appoints the Agent and each other Lender as agent and bailee for the purpose of
perfecting the security interests in and liens upon the Collateral in assets
which, in accordance with Article 9 of the Uniform Commercial Code, can be
perfected only by possession or control (or where the security interest of a
secured party with possession or control has priority over the security interest
of another secured party) and each Agent and each Lender hereby acknowledges
that it holds possession of or otherwise controls any such Collateral for the
benefit of the Agent and the Lenders as secured party. Should any Lender obtain
possession or control of any such Collateral, such Lender shall notify the Agent
thereof, and, promptly upon the Agent's request therefor shall deliver such
Collateral to the Agent or in accordance with the Agent's instructions. Each
Loan Party by its execution and delivery of this Agreement hereby consents to
the foregoing.
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ARTICLE XI
GUARANTY
Section 11.01 GUARANTY. Each Guarantor hereby unconditionally
and irrevocably guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations of the Borrowers now
or hereafter existing under any Loan Document, whether for principal, interest
(including, without limitation, all interest that accrues after the commencement
of any Insolvency Proceeding of any Borrower), fees, commissions,
indemnifications or otherwise (such obligations, to the extent not paid by the
Borrowers, being the "GUARANTEED OBLIGATIONS"), and agrees to pay any and all
expenses (including reasonable counsel fees and expenses) incurred by the Agent
and the Lenders in enforcing any rights under the Guaranty set forth in this
Article XI. Without limiting the generality of the foregoing, each Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by the Borrowers to the Agent and the Lenders
under any Loan Document but for the fact that they are unenforceable or not
allowable due to the existence of an Insolvency Proceeding involving any
Borrower.
Section 11.02 GUARANTY ABSOLUTE. Each Guarantor guarantees
that the Guaranteed Obligations will be paid strictly in accordance with the
terms of the Loan Documents, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. The Obligations of each
Guarantor under this Article XI are independent of the Guaranteed Obligations,
and a separate action or actions may be brought and prosecuted against each
Guarantor to enforce such Obligations, irrespective of whether any action is
brought against any Loan Party or whether any Loan Party is joined in any such
action or actions. The liability of each Guarantor under this Article XI shall
be irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any or all of the following:
(a) Any lack of validity or enforceability of any
Loan Document or any agreement or instrument relating thereto;
(b) Any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed Obligations,
or any other amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to any Loan Party
or otherwise;
(c) Any taking, exchange, release or non-perfection
of any Collateral, or any taking, release or amendment or waiver of or consent
to departure from any other Guaranty, for all or any of the Guaranteed
Obligations;
(d) Any change, restructuring or termination of the
corporate, limited liability company or partnership structure or existence of
any Loan Party; or
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(e) Any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by the Agent or the Lenders that might otherwise constitute a
defense available to, or a discharge of, any Loan Party or any other Guarantor
or surety.
This Article XI shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent, the Lenders or any other person upon
the insolvency, bankruptcy or reorganization of any Borrower or otherwise, all
as though such payment had not been made.
Section 11.03 WAIVER. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Article XI and any requirement that the Agent or
the Lenders exhaust any right or take any action against any Loan Party or any
other Person or any Collateral. Each Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated herein
and that the waiver set forth in this Section 11.03 is knowingly made in
contemplation of such benefits. Each Guarantor hereby waives any right to revoke
this Article XI, and acknowledges that this Article XI is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future.
Section 11.04 CONTINUING GUARANTY; ASSIGNMENTS. This Article
XI is a continuing guaranty and shall (a) remain in full force and effect until
the later of the cash payment in full of the Guaranteed Obligations (other than
indemnification obligations as to which no claim has been made) and all other
amounts payable under this Article XI and the Final Maturity Date, (b) be
binding upon each Guarantor, its successors and assigns and (c) inure to the
benefit of and be enforceable by the Agent and the Lenders and their successors,
pledgees, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may pledge, assign or otherwise transfer all or
any portion of its rights and obligations under this Agreement (including,
without limitation, all or any portion of its Commitments and its Loans owing to
it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted such Lender herein or
otherwise, in each case as provided in Section 12.07.
Section 11.05 SUBROGATION. No Guarantor will exercise any
rights that it may now or hereafter acquire against any Loan Party or any other
Guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's obligations under this Article XI, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of the
Agent and the Lenders against any Loan Party or any other Guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any Loan Party or any other Guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until all of the Guaranteed Obligations and all other amounts payable under this
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Article XI shall have been paid in full in cash and the Final Maturity Date
shall have occurred. If any amount shall be paid to any Guarantor in violation
of the immediately preceding sentence at any time prior to the later of the
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Article XI and the Final Maturity Date, such amount shall be
held in trust for the benefit of the Agent and the Lenders and shall forthwith
be paid to the Agent and the Lenders to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Article XI,
whether matured or unmatured, in accordance with the terms of this Agreement, or
to be held as Collateral for any Guaranteed Obligations or other amounts payable
under this Article XI thereafter arising. If (i) any Guarantor shall make
payment to the Agent and the Lenders of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other amounts
payable under this Article XI shall be paid in full in cash and (iii) the Final
Maturity Date shall have occurred, the Agent and the Lenders will, at such
Guarantor's request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by such
Guarantor.
ARTICLE XII
MISCELLANEOUS
Section 12.01 NOTICES, ETC. All notices and other
communications provided for hereunder shall be in writing and shall be mailed
(by certified mail, postage prepaid and return receipt requested), telecopied or
delivered, if to any Loan Party, at the following address:
Value City Department Stores, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Schottenstein Stores Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
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if to the Agent, to it at the following address:
Cerberus Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be
designated by such party in a written notice to the other parties complying as
to delivery with the terms of this Section 12.01. All such notices and other
communications shall be effective, (i) if sent by certified mail, return receipt
requested, the date when actually received, (ii) if sent by recognized overnight
express delivery, the Business Day following the day when sent, (iii) if
delivered by hand on a Business Day after 9:00 AM and no later than three (3)
hours prior to the close of customary business hours of the recipient, when
delivered (otherwise, at the opening of the then next Business Day), and (iv) by
telecopier and sent on a Business Day after 9:00 AM and no later than three (3)
hours prior to the close of customary business hours of the recipient, one (1)
hour after being sent (otherwise, at the opening of the then next Business Day).
Section 12.02 AMENDMENTS, ETC. Subject to Section 6.02(l), no
amendment or waiver of any provision of any Loan Document, including this
Agreement, and no consent to any departure by any Loan Party therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Agent, the Required Lenders and the Borrowers, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given, PROVIDED, HOWEVER, that no amendment, waiver or consent shall
(i) increase the Commitment of any Lender, reduce the principal of, or interest
on, the Loans payable to any Lender, reduce the amount of any fee payable for
the account of any Lender, or postpone or extend any date fixed for any payment
of principal of, or interest or fees on the Loans payable to any Lender, in each
case without the written consent of any Lender affected thereby, (ii) increase
the Total Commitment without the written consent of each Lender, (iii) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Loans that is required for the Lenders or any of them to take any action
hereunder, (iv) amend the definition of "Pro Rata Share", (v) release all or a
substantial portion of the Collateral (except as otherwise provided in this
Agreement and the other Loan Documents), subordinate any Lien granted in favor
of the Agent for the benefit of the Lenders, or release any Borrower or any
Guarantor or (vi) amend, modify or waive Section 3.04 or this Section 12.02 of
this Agreement, in each case, without the written consent of each Lender.
Notwithstanding the foregoing, no amendment, waiver or
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consent shall, unless in writing and signed by the Agent, affect the rights or
duties of the Agent (but not in its capacity as a Lender) under this Agreement
or the other Loan Documents.
Section 12.03 NO WAIVER; REMEDIES, ETC. No failure on the part
of the Agent or any Lender to exercise, and no delay in exercising, any right
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any right under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agent and the Lenders provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the Agent
and the Lenders under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Agent and the Lenders to
exercise any of their rights under any other Loan Document against such party or
against any other Person.
Section 12.04 EXPENSES; TAXES; ATTORNEYS' FEES. The Borrowers
will pay within ten (10) days after demand therefor (which demand shall include
a statement of the nature thereof), all costs and expenses incurred by or on
behalf of the Agent (and, in the case of clauses (b) through (m) below, each
Lender), regardless of whether the transactions contemplated hereby are
consummated, including, without limitation, reasonable fees, costs, client
charges and expenses of counsel for the Agent (and, in the case of clauses (b)
through (m) below, each Lender), accounting, due diligence, periodic field
audits, physical counts, valuations, investigations, searches and filings,
monitoring of assets, appraisals of Collateral, title searches and reviewing
environmental assessments, miscellaneous disbursements, examination, travel,
lodging and meals, arising from or relating to the following: (a) the
negotiation, preparation, execution, delivery, performance and administration of
this Agreement and the other Loan Documents (including, without limitation, the
preparation of any additional Loan Documents pursuant to Section 6.01(b) or the
review of any of the agreements, instruments and documents referred to in
Section 6.01(f)); (b) any requested amendments, waivers or consents to this
Agreement or the other Loan Documents whether or not such documents become
effective or are given; (c) the preservation and protection of any of the
Lenders' rights under this Agreement or the other Loan Documents; (d) the
defense of any claim or action asserted or brought against the Agent or any
Lender by any Person that arises from or relates to this Agreement, any other
Loan Document, the Agent's or the Lenders' claims against any Loan Party, or any
and all matters in connection therewith; (e) the commencement or defense of, or
intervention in, any court proceeding arising from or related to this Agreement
or any other Loan Document; (f) the filing of any petition, complaint, answer,
motion or other pleading by the Agent or any Lender, or the taking of any action
in respect of the Collateral or other security, in connection with this
Agreement or any other Loan Document; (g) the protection, collection, lease,
sale, taking possession of or liquidation of, any Collateral or other security
in connection with this Agreement or any other Loan Document; (h) any attempt to
enforce any Lien or security interest in any Collateral or other security in
connection with this Agreement or any other Loan Document; (i) any attempt to
collect from any Loan Party; (j) all liabilities and costs arising from or in
connection with the past, present or future operations of any Loan Party
involving any damage to real or personal property or natural resources or harm
or injury alleged to have resulted from any Release of Hazardous Materials on,
upon or into such property; (k) any Environmental Liabilities and Costs incurred
in connection with the investigation, removal, cleanup and/or remediation of any
Hazardous Materials present or arising out of the operations
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of any facility of any Loan Party; (l) any Environmental Liabilities and Costs
incurred in connection with any Environmental Lien; or (m) the receipt by the
Agent or any Lender of any advice from professionals with respect to any of the
foregoing; PROVIDED THAT with respect to clauses (d), (e) and (f) above, such
costs and expenses shall not include those costs and expenses that have been
determined by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Lender or Agent, as the case may be.
Without limitation of the foregoing or any other provision of any Loan Document:
(x) the Borrowers agree to pay all stamp, document, transfer, recording or
filing taxes or fees and similar impositions now or hereafter determined by the
Agent or any Lender to be payable in connection with this Agreement or any other
Loan Document, and the Borrowers agree to save the Agent and each Lender
harmless from and against any and all present or future claims, liabilities or
losses with respect to or resulting from any omission to pay or delay in paying
any such taxes, fees or impositions unless such omission is the result of the
gross negligence or willful misconduct of any Lender; (y) the Borrowers agree to
pay all broker and investment banking fees that may become due in connection
with the transactions contemplated by this Agreement and the other Loan
Documents (the Agent and the Lenders represent and warrant that no brokers have
been engaged or retained by any of them in connection with the transactions
evidenced by the Loan Documents); and (z) if the Borrowers fail to perform any
covenant or agreement contained herein or in any other Loan Document, the Agent
may itself perform or cause performance of such covenant or agreement, and the
expenses of the Agent incurred in connection therewith shall be reimbursed on
demand by the Borrowers.
Section 12.05 RIGHT OF SET-OFF. Upon the occurrence and during
the continuance of any Event of Default, the Agent or any Lender may, and is
hereby authorized to, at any time and from time to time, without notice to any
Loan Party (any such notice being expressly waived by the Loan Parties) and to
the fullest extent permitted by law, set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other Indebtedness at any time owing by the Agent or such Lender to or for the
credit or the account of any Loan Party against any and all obligations of the
Loan Parties either now or hereafter existing under any Loan Document,
irrespective of whether or not the Agent or such Lender shall have made any
demand hereunder or thereunder and although such obligations may be contingent
or unmatured. The Agent and each Lender agree to notify such Loan Party promptly
after any such set-off and application made by the Agent or such Lender provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Agent and the Lenders under this
Section 12.05 are in addition to the other rights and remedies (including other
rights of set-off) which the Agent and the Lenders may have under this Agreement
or any other Loan Documents of law or otherwise.
Section 12.06 SEVERABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.
Section 12.07 ASSIGNMENTS AND PARTICIPATIONS. (a) This
Agreement and the other Loan Documents shall be binding upon and inure to the
benefit of each Loan Party and the Agent and each Lender and their respective
successors and assigns; PROVIDED, HOWEVER, that none of the Loan Parties may
assign or transfer any of its rights hereunder without the prior written
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consent of each Lender and any such assignment without the Lenders' prior
written consent shall be null and void.
(b) Each Lender may, with the written consent of the
Agent (and, other than during the continuance of an Event of Default, with the
written consent of the Administrative Borrower if such Lender is assigning its
rights and obligations to a Person that is not an Eligible Assignee, which
consent shall not be unreasonably withheld), assign to one or more other lenders
or other entities all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments
and the Loans made by it); PROVIDED, HOWEVER, that (i) such assignment is in an
amount which is at least $5,000,000 or a multiple of $1,000,000 in excess
thereof (or the remainder of such Lender's Commitment) (except such minimum
amount shall not apply to an assignment by a Lender to an Affiliate of such
Lender or a fund or account managed by such Lender or an Affiliate of such
Lender or, in the case of SSC, a shareholder of such Lender), (ii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance, an Assignment and Acceptance, together with any promissory note
subject to such assignment and such parties shall deliver to the Agent a
processing and recordation fee of $5,000 (except the payment of such fee shall
not be required in connection with an assignment by a Lender to an Affiliate of
such Lender or a fund or account managed by such Lender or an Affiliate of such
Lender, or, in the case of SSC, a shareholder of such Lender) and (iii) no
written consent of the Agent shall be required in connection with any assignment
by a Lender to an Affiliate of such Lender or a fund or account managed by such
Lender or an Affiliate of such Lender, or in the case of SSC, a shareholder of
such Lender. Upon such execution, delivery and acceptance, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least three (3) Business Days after the delivery thereof to the
Agent (or such shorter period as shall be agreed to by the Agent and the parties
to such assignment), (A) the assignee thereunder shall become a "Lender"
hereunder and, in addition to the rights and obligations hereunder held by it
immediately prior to such effective date, have the rights and obligations
hereunder that have been assigned to it pursuant to such Assignment and
Acceptance and (B) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(i) By executing and delivering an Assignment and
Acceptance, the assigning Lender and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (A)
other than as provided in such Assignment and Acceptance, the assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any
other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or
any other Loan Document furnished pursuant hereto; PROVIDED, that such
assigning Lender's obligations and responsibilities under the
confidentiality provisions of this Agreement shall continue despite any
assignment by such assigning Lender; (B) the assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to the financial condition of any Loan Party or any
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of its Subsidiaries or the performance or observance by any Loan Party
of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (C) such assignee confirms that it
has received a copy of this Agreement and the other Loan Documents,
together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (D) such assignee will, independently
and without reliance upon the assigning Lender, the Agent or any Lender
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan
Documents; (E) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are delegated to the
Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental hereto and thereto; and (F) such assignee agrees
that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Loan
Documents are required to be performed by it as a Lender.
(ii) The Borrowers authorize the Agent, and the Agent
agrees, to maintain, or cause to be maintained at the Payment Office, a
copy of each Assignment and Acceptance delivered to and accepted by it
and a register (the "REGISTER") for the recordation of the names and
addresses of the Lenders and the Commitments of, and principal amount
of the Loans (the "REGISTERED Loans") owing to each Lender from time to
time. The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrowers, the Agent and
the Lenders shall treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Administrative
Borrower and any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(iii) Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee, together
with any promissory notes subject to such assignment, the Agent shall,
if the Agent consents to such assignment and if such Assignment and
Acceptance has been completed (A) accept such Assignment and Acceptance
and (B) record the information contained therein in the Register.
(iv) In addition to the other requirements contained
in this Section 12.07, a Registered Loan (and the registered note, if
any, evidencing the same) may be assigned or sold in whole or in part
only by registration of such assignment or sale on the Register (and
each registered note shall expressly so provide). Any assignment or
sale of all or part of such Registered Loan (and the registered note,
if any, evidencing the same) may be effected only by registration of
such assignment or sale on the Register, together with the surrender of
the registered note, if any, evidencing the same duly endorsed by (or
accompanied by a written instrument of assignment or sale duly executed
by) the holder of such registered note, whereupon, at the request of
the designated assignee(s) or transferee(s), one or more new registered
notes in the same aggregate principal amount shall be issued to the
designated assignee(s) or transferee(s). Prior to the registration of
assignment or sale of any Registered Loan (and the registered note, if
any, evidencing the same), the Agent shall treat the Person in whose
name such
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Registered Loan (and the registered note, if any, evidencing the same)
is registered as the owner thereof for the purpose of receiving all
payments thereon and for all other purposes, notwithstanding notice to
the contrary.
(v) In the event that any Lender sells participations
in a Registered Loan, such Lender shall maintain a register on which it
enters the name of all participants in the Registered Loans held by it
(the "PARTICIPANT REGISTER"). A Registered Loan (and the registered
note, if any, evidencing the same) may be participated in whole or in
part only by registration of such participation on the Participant
Register (and each registered note shall expressly so provide). Any
participation of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
(vi) Any foreign Person who purchases or is assigned
or participates in any portion of such Registered Loan shall provide
the Agent and the assigning or selling Lender with a completed Internal
Revenue Service Form W-8BEN (Certificate of Foreign Status) or a
substantially similar form for such purchaser, participant or any other
affiliate who is a holder of beneficial interests in the Registered
Loan.
(c) Subject to the requirements of Applicable Law,
each Lender may sell participations to one or more banks or other entities in or
to all or a portion of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion of its
Commitments and the Loans made by it); PROVIDED, that (i) such Lender's
obligations under this Agreement (including without limitation, its Commitments
hereunder) and the other Loan Documents shall remain unchanged; (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, and the Borrowers, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents; and (iii) a participant shall not be entitled to require such Lender
to take or omit to take any action hereunder except (A) action directly
effecting an extension of the maturity dates or decrease in the principal amount
of the Loans, (B) action directly effecting an extension of the due dates or a
decrease in the rate of interest payable on the Loans or the fees payable under
this Agreement, or (C) actions directly effecting a release of all or a
substantial portion of the Collateral or any Loan Party (except as set forth in
Section 10.08 of this Agreement or any other Loan Document). The Loan Parties
agree that each participant shall be entitled to the benefits of Section 2.08
and Section 3.05 of this Agreement with respect to its participation in any
portion of the Commitments and the Loans as if it was a Lender.
Section 12.08 COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Agreement by telecopier shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telecopier also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart
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shall not affect the validity, enforceability, and binding effect of this
Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
SECTION 12.09 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK.
SECTION 12.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND
VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ IN THE
COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE AGENT AND THE LENDERS TO SERVICE OF PROCESS IN ANY
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 12.11 WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY, THE
AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT,
DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN
CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH LOAN
PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT
OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY
LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR
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COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN PARTY HEREBY
ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE
LENDERS ENTERING INTO THIS AGREEMENT.
SECTION 12.12 CONSENT BY THE AGENT AND LENDERS. EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH HEREIN TO THE CONTRARY, IF THE CONSENT, APPROVAL,
SATISFACTION, DETERMINATION, JUDGMENT, ACCEPTANCE OR SIMILAR ACTION (AN
"ACTION") OF THE AGENT SHALL BE PERMITTED OR REQUIRED PURSUANT TO ANY PROVISION
HEREOF OR ANY PROVISION OF ANY OTHER AGREEMENT TO WHICH ANY LOAN PARTY IS A
PARTY AND TO WHICH THE AGENT OR ANY LENDER HAS SUCCEEDED THERETO, SUCH ACTION
SHALL BE REQUIRED TO BE IN WRITING AND MAY BE WITHHELD OR DENIED BY THE AGENT,
IN ITS SOLE GOOD FAITH DISCRETION.
Section 12.13 NO PARTY DEEMED DRAFTER. Each of the parties
hereto agrees that no party hereto shall be deemed to be the drafter of this
Agreement.
Section 12.14 REINSTATEMENT; CERTAIN PAYMENTS. If any claim is
ever made upon the Agent or any Lender for repayment or recovery of any amount
or amounts received by the Agent or such Lender in payment or on account of any
of the Obligations, the Agent or such Lender shall give prompt notice of such
claim to each other Lender and the Administrative Borrower, and if the Agent or
such Lender repays all or part of such amount by reason of (i) any judgment,
decree or order of any court or administrative body having jurisdiction over the
Agent or such Lender or any of its property, or (ii) any good faith settlement
or compromise of any such claim effected by the Agent or such Lender with any
such claimant, then and in such event each Loan Party agrees that (A) any such
judgment, decree, order, settlement or compromise shall be binding upon it
notwithstanding the cancellation of any Indebtedness hereunder or under the
other Loan Documents or the termination of this Agreement or the other Loan
Documents, and (B) it shall be and remain liable to the Agent or such Lender
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by the Agent or such Lender.
Section 12.15 INDEMNIFICATION.
(a) GENERAL INDEMNITY. In addition to each Loan
Party's other Obligations under this Agreement, each Loan Party agrees to,
jointly and severally, defend, protect, indemnify and hold harmless the Agent
and each Lender and all of their respective officers, directors, employees,
attorneys, consultants and agents (collectively called the "INDEMNITEES") from
and against any and all losses, damages, liabilities, obligations, penalties,
reasonable fees, costs and expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses) incurred by such Indemnitees, whether prior
to or from and after the Effective Date, whether direct, indirect or
consequential, as a result of or arising from or relating to or in connection
with any of the following: (i) the negotiation, preparation, execution or
performance or enforcement of this Agreement, any other Loan Document or of any
other document executed in connection with the transactions contemplated by this
Agreement; (ii) the Agent's or any Lender's furnishing of funds to the Borrowers
for the account of the Borrowers under this Agreement or the other Loan
Documents, including, without limitation, the management of any such Loans;
(iii) any matter relating to the financing transactions contemplated by this
Agreement or the other Loan Documents or by any document executed in
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connection with the transactions contemplated by this Agreement or the other
Loan Documents; or (iv) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto (collectively, the "INDEMNIFIED MATTERS"); PROVIDED, HOWEVER, that the
Loan Parties shall not have any obligation to any Indemnitee under this
subsection (a) for any Indemnified Matter caused by the gross negligence or
willful misconduct of such Indemnitee, as determined by a final judgment of a
court of competent jurisdiction.
(b) ENVIRONMENTAL INDEMNITY. Without limiting Section
12.15(a) hereof, each Loan Party agrees to, jointly and severally, defend,
indemnify, and hold harmless the Indemnitees against any and all Environmental
Liabilities and Costs and all other claims, demands, penalties, fines, liability
(including strict liability), losses, damages, costs and expenses (including
without limitation, reasonable legal fees and expenses, consultant fees and
laboratory fees), arising out of (i) any Releases or threatened Releases (A) at
any property presently or formerly owned or operated by any Loan Party or any
Subsidiary of any Loan Party, or any predecessor in interest, or (B) of any
Hazardous Materials generated and disposed of by any Loan Party or any
Subsidiary of any Loan Party, or any predecessor in interest; (ii) any
violations of Environmental Laws; (iii) any Environmental Action relating to any
Loan Party or any Subsidiary of any Loan Party, or any predecessor in interest;
(iv) any personal injury (including wrongful death) or property damage (real or
personal) arising out of exposure to Hazardous Materials used, handled,
generated, transported or disposed by any Loan Party or any Subsidiary of any
Loan Party, or any predecessor in interest; and (v) any breach of any warranty
or representation regarding environmental matters made by the Loan Parties in
Section 6.01(g) or the breach of any covenant made by the Loan Parties in
Section 5.01(r). Notwithstanding the foregoing, the Loan Parties shall not have
any obligation to any Indemnitee under this subsection (b) regarding any
potential environmental matter covered hereunder which is caused by the gross
negligence or willful misconduct of such Indemnitee, as determined by a final
judgment of a court of competent jurisdiction.
(c) To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section 12.15 may be unenforceable
because it is violative of any law or public policy, each Loan Party shall,
jointly and severally, contribute the maximum portion which it is permitted to
pay and satisfy under Applicable Law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees. The indemnities set forth in
this Section 12.15 shall survive the repayment of the Obligations and discharge
of any Liens granted under the Loan Documents.
Section 12.16 PARENT, AS AGENT FOR BORROWERS. Each Borrower
hereby irrevocably appoints the Parent as the borrowing agent and
attorney-in-fact for the Borrowers (the "ADMINISTRATIVE BORROWER") which
appointment shall remain in full force and effect unless and until the Agent
shall have received prior written notice signed by all of the Borrowers that
such appointment has been revoked and that another Borrower has been appointed
Administrative Borrower. Each Borrower hereby irrevocably appoints and
authorizes the Administrative Borrower (i) to provide to the Agent and receive
from the Agent all notices with respect to Loans obtained for the benefit of any
Borrower and all other notices and instructions under this Agreement and (ii) to
take such action as the Administrative Borrower deems appropriate on its behalf
to obtain Loans and to exercise such other powers as are reasonably incidental
thereto to carry out the purposes of this Agreement. It is understood that the
handling
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of the Loans and Collateral of the Borrowers in a combined fashion, as more
fully set forth herein, is done solely as an accommodation to the Borrowers in
order to utilize the collective borrowing powers of the Borrowers in the most
efficient and economical manner and at their request, and that neither the Agent
nor the Lenders shall incur liability to the Borrowers as a result hereof. Each
of the Borrowers expects to derive benefit, directly or indirectly, from the
handling of the Loans and the Collateral in a combined fashion since the
successful operation of each Borrower is dependent on the continued successful
performance of the integrated group. To induce the Agent and the Lenders to do
so, and in consideration thereof, each of the Borrowers hereby jointly and
severally agrees to indemnify the Indemnitees and hold the Indemnitees harmless
against any and all liability, expense, loss or claim of damage or injury, made
against such Indemnitee by any of the Borrowers or by any third party whosoever,
arising from or incurred by reason of (a) the handling of the Loans and
Collateral of the Borrowers as herein provided, (b) the Agent and the Lenders
relying on any instructions of the Administrative Borrower, or (c) any other
action taken by the Agent or any Lender hereunder or under the other Loan
Documents; PROVIDED, HOWEVER, that the Loan Parties shall not have any
obligation to any Indemnitee under this Section for any Indemnified Matter
caused by the gross negligence or willful misconduct of such Indemnitee, as
determined by a final judgment of a court of competent jurisdiction.
Section 12.17 RECORDS. The unpaid principal of and interest on
the Loans, the interest rate or rates applicable to such unpaid principal and
interest, the duration of such applicability, the Commitments, and the accrued
and unpaid fees payable pursuant to Section 2.06 hereof, including, without
limitation, the Closing Fee and the Anniversary Fee shall at all times be
ascertained from the records of the Agent, which shall be rebuttably presumed to
be correct, absent manifest error.
Section 12.18 BINDING EFFECT. This Agreement shall become
effective when it shall have been executed by each Loan Party, the Agent and
each Lender and when the conditions precedent set forth in Section 4.01 hereof
have been satisfied or waived in writing by the Agent, and thereafter shall be
binding upon and inure to the benefit of each Loan Party, the Agent and each
Lender, and their respective successors and assigns, except that the Loan
Parties shall not have the right to assign their rights hereunder or any
interest herein without the prior written consent of each Lender, and any
assignment by any Lender shall be governed by Section 12.07 hereof.
Section 12.19 MAXIMUM INTEREST. It is the intention of the
parties hereto that the Agent and each Lender shall conform strictly to usury
laws applicable to it. Accordingly, if the transactions contemplated hereby or
by any other Loan Document would be usurious as to the Agent or any Lender under
laws applicable to it (including the laws of the United States of America and
the State of New York or any other jurisdiction whose laws may be mandatorily
applicable to the Agent or such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in this Agreement or any other Loan Document or any agreement entered into in
connection with or as security for the Obligations, it is agreed as follows: (i)
the aggregate of all consideration which constitutes interest under law
applicable to the Agent or any Lender that is contracted for, taken, reserved,
charged or received by the Agent or such Lender under this Agreement or any
other Loan Document or agreements or otherwise in connection with the
Obligations shall under no circumstances exceed the
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maximum amount allowed by such applicable law, any excess shall be canceled
automatically and if theretofore paid shall be credited by the Agent or such
Lender on the principal amount of the Obligations (or, to the extent that the
principal amount of the Obligations shall have been or would thereby be paid in
full, refunded by the Agent or such Lender, as applicable, to the Borrowers);
and (ii) in the event that the maturity of the Obligations is accelerated by
reason of any Event of Default under this Agreement or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest under law applicable to the Agent or any Lender may never
include more than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically by the Agent or such Lender, as applicable, as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by the
Agent or such Lender, as applicable, on the principal amount of the Obligations
(or, to the extent that the principal amount of the Obligations shall have been
or would thereby be paid in full, refunded by the Agent or such Lender to the
Borrowers). All sums paid or agreed to be paid to the Agent or any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to the Agent or such Lender, be amortized, prorated,
allocated and spread throughout the full term of the Loans until payment in full
so that the rate or amount of interest on account of any Loans hereunder does
not exceed the maximum amount allowed by such applicable law. If at an time and
from time to time (x) the amount of interest payable to the Agent or any Lender
on any date shall be computed at the Highest Lawful Rate applicable to the Agent
or such Lender pursuant to this Section 12.19 and (y) in respect of any
subsequent interest computation period the amount of interest otherwise payable
to the Agent or such Lender would be less than the amount of interest payable to
the Agent or such Lender computed at the Highest Lawful Rate applicable to the
Agent or such Lender, then the amount of interest payable to the Agent or such
Lender in respect of such subsequent interest computation period shall continue
to be computed at the Highest Lawful Rate applicable to the Agent or such Lender
until the total amount of interest payable to the Agent or such Lender shall
equal the total amount of interest which would have been payable to the Agent or
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.19.
For purposes of this Section 12.19, the term "applicable law"
shall mean that law in effect from time to time and applicable to the loan
transaction between the Borrowers, on the one hand, and the Agent and the
Lenders, on the other, that lawfully permits the charging and collection of the
highest permissible, lawful non-usurious rate of interest on such loan
transaction and this Agreement, including laws of the State of New York and, to
the extent controlling, laws of the United States of America.
The right to accelerate the maturity of the Obligations does
not include the right to accelerate any interest that has not accrued as of the
date of acceleration.
Section 12.20 CONFIDENTIALITY. The Agent and each Lender
agrees (on behalf of itself and each of its directors, officers and employees)
to use reasonable precautions to keep confidential, in accordance with its
customary procedures for handling confidential information of this nature and in
accordance with safe and sound practices of comparable commercial finance
companies, any non-public information supplied to it by the Loan Parties
pursuant to this Agreement or the other Loan Documents which is identified in
writing by the Loan Parties as being confidential at the time the same is
delivered to such Person (or consists of information
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(such as business plans and financial information) which is customarily
confidential information) (and which at the time is not, and does not thereafter
become, publicly available or legally available to such Person from another
source (other than the Loan Parties) on a nonconfidential basis), PROVIDED that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for the Agent or any Lender, (iii) to examiners, auditors, accountants
or Securitization Parties, so long as such Person first agrees, in writing, to
be bound by confidentiality provisions similar in substance to this Section
12.20, (iv) in connection with any litigation to which the Agent or any Lender
is a party or (v) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee or
participant) first agrees, in writing, to be bound by confidentiality provisions
similar in substance to this Section 12.20. The Agent and each Lender agrees
that, upon receipt of a request or identification of the requirement for
disclosure pursuant to clause (iv) hereof, it will make reasonable efforts to
keep the Loan Parties informed of such request or identification; PROVIDED, that
the each Loan Party acknowledges that the Agent and each Lender may make
disclosure as required or requested by any Governmental Authority or
representative thereof and that the Agent and each Lender may be subject to
review by Securitization Parties or other regulatory agencies and may be
required to provide to, or otherwise make available for review by, the
representatives of such parties or agencies any such non-public information.
Section 12.21 INTEGRATION. This Agreement, together with the
other Loan Documents, reflects the entire understanding of the parties with
respect to the transactions contemplated hereby and shall not be contradicted or
qualified by any other agreement, oral or written, before the date hereof.
ARTICLE XIII
ISSUANCE OF EQUITY INTERESTS TO LENDERS
Section 13.01 AUTHORIZATION AND ISSUANCE OF WARRANTS. (a)
Immediately following the receipt of the Requisite Approval, the Parent shall
issue to the Term Loan C Lenders one or more warrant certificates covering the
purchase of shares of Common Stock substantially in the form of Exhibit I hereto
(such certificates, together with the rights to purchase Common Stock provided
thereby and all warrant certificates covering such stock issued upon transfer,
division or combination of, or in substitution for, any thereof, being herein
called the "WARRANTS") in an aggregate amount equal to 8.75% of the issued and
outstanding shares of Common Stock outstanding as of such date, excluding all
outstanding convertible securities, warrant, options or other equity
equivalents. It is understood and agreed that the Warrants contain provisions
affecting the number of shares of Common Stock that may be acquired and the
exercise price of the Warrants, and that such provisions are set forth in the
Warrants
(b) The Warrants will cease to be exercisable on the
date that is the tenth anniversary of the Effective Date.
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Section 13.02 SECURITIES ACT MATTERS.
(a) Each of the Term Loan C Lenders severally
represents and warrants to the Parent as of the date hereof and as of the date
of the issuance of the Warrants that:
(i) Such Lender is acquiring the Warrants hereunder
for its own account, without a view to the distribution thereof, all
without prejudice, however, to the right of such Lender at any time, in
accordance with this Agreement, lawfully to sell or otherwise to
dispose of all or any part of the Warrants or Warrant Stock held by it.
(ii) Such Lender is an "accredited investor" within
the meaning of Regulation D under the Securities Act.
(iii) Such Lender acknowledges that, subject to the
Registration Rights Agreement (A) the Warrants and the Warrant Stock
have not been registered under the Securities Act, in reliance on the
non-public offering exemption contained in Section 4(2) of the
Securities Act and Regulation D thereunder; (B) because the Warrants
and the Warrant Stock are not so registered, such Lender must bear the
economic risk of holding the Warrants and the Warrant Stock for an
indefinite period of time unless the Warrants and the Warrant Stock are
subsequently registered under the Securities Act or an exemption from
such registration is available with respect thereto; (C) Rule 144 under
the Securities Act may or may not be available for resales of the
Warrants or the Warrant Stock in the future; (D) there is presently no
trading market for the Warrants and there is no assurance that such
market will exist in the future; and (E) while there is presently a
trading market for the Warrant Stock, there is no assurance that such
market will be in existence in the future.
(iv) If such Lender decides to dispose of the
Warrants or the Warrant Stock, which it does not now contemplate, that
such Lender can do so only in accordance and in compliance with the
Securities Act and Rule 144 or another exemption from the registration
requirements of the Securities Act, as then in effect or through an
effective registration statement under the Securities Act.
(v) Such Lender acknowledges that (A) it has had
ready access to any and all documents which he deems relevant to the
acquisition of the Warrants and the Warrant Stock; (B) to such Lender's
knowledge, no requested information, oral or written, has been withheld
from such Lender by Parent; (C) Parent has made available to such
Lender, during the course of the transaction and prior to the issuance
of Warrant Stock the opportunity to ask questions of, and receive
answers from, Parent and its officers concerning Parent, and to obtain
any additional information, to the extent Parent possessed such
information or could acquire it without unreasonable effort or expense,
necessary to verify the accuracy of information contained in the
written materials delivered to such Lender by Parent and concerning
Parent; and (D) it has reviewed or had the opportunity to review all
documents filed publicly of record by Parent with the Securities and
Exchange Commission.
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(vi) Such Lender will not sell or otherwise transfer
the shares of the Warrant Stock in a public market transaction until
the holding period for restricted securities set forth in Rule
144(d)(1), as it may be amended from time to time, has been satisfied
or pursuant to an effective registration statement under the Securities
Act or an exemption from the registration requirements of the
Securities Act.
(b) The Parent represents and warrants to each of the
Term Loan C Lenders as of the date hereof and as of the date of the issuance of
the Warrants that:
(i) Assuming the truth and accuracy of such Lender's
representations and warranties contained in Section 13.02(a), the
issuance of the Warrants to hereunder and the issuance of shares of
Common Stock to such Lender pursuant to the Warrants are exempt from
the registration and prospectus delivery requirements of the Securities
Act.
(ii) All stock and securities of the Parent
heretofore issued and sold by the Parent were, and all securities of
the Parent issued and sold by the Parent on and after the date hereof
are or will be issued and sold in accordance with, or are or will be
exempt from, the registration and prospectus delivery requirements of
the Securities Act.
(c) The Parent agrees that neither it nor any Person
acting on its behalf has offered or will offer the Warrants or Warrant Stock or
any part thereof or any similar securities for issue or sale to, or has
solicited or will solicit any offer to acquire any of the same from, any Person
so as to bring the issuance and sale of the Warrants or Warrant Stock hereunder
within the provisions of the registration and prospectus delivery requirements
of the Securities Act.
Section 13.03 CERTAIN TAXES. The Parent shall pay all taxes
(other than Federal, state or local income taxes (or other similar taxes based
on income)) which may be payable in connection with the execution and delivery
of this Agreement or the issuance of the Warrants or Warrant Stock hereunder or
in connection with any modification of this Agreement or the Warrants and shall
hold the Lenders harmless without limitation as to time against any and all
liabilities with respect to all such taxes. The obligations of the Parent under
this Section 13.03 shall survive any redemption, repurchase or acquisition of
Warrants or Warrant Stock by the Parent, any termination of this Agreement, and
any cancellation or termination of the Warrants. The parties hereto agree that
for income tax purposes, the purchase price to be attributed to the Warrants
issued to the Lenders hereunder on the date hereof is $1,000,000.
Section 13.04 CANCELLATION AND ISSUANCE. If any Term Loan C
Lender assigns or otherwise transfers all or any of its Term Loan C (including
by selling participations therein) to any Person, such Lender may request (upon
10 days' prior notice to the Parent) that (a) a number of Warrants held by such
Lender be canceled on the date of such assignment and transfer and (b) a like
number of Warrants be issued by the Parent to the Person to whom such Term Loan
C is being assigned or otherwise transferred. Upon the date specified in such
request:
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(i) the Parent shall issue, and such Lender shall
surrender (or cause to be surrendered) for cancellation, such number of
Warrants as aforesaid, provided that such issuance shall not violate
the Securities Act or any applicable state securities laws;
(ii) the Parent will deliver to each Person that
receives a certificate for Warrants a favorable legal opinion from
counsel to the Parent acceptable to such Person, covering the matters
set forth in the opinion of counsel to the Parent and its Subsidiaries
attached as Exhibit F hereto (to the extent relating to the Warrants);
(iii) each Person that receives Warrants will deliver
a certificate to the Parent affirming the representations and
warranties contained in Section 13.02(a) hereof as of such date; and
(iv) the Parent will deliver a certificate to each
Person that receives Warrants affirming the representations and
warranties contained in Section 13.02(b) hereof as of such date.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWERS:
---------
VALUE CITY DEPARTMENT STORES, INC.,
an Ohio corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SHONAC CORPORATION,
an Ohio corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
DSW SHOE WAREHOUSE, INC.,
a Missouri corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
GRAMEX RETAIL STORES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
FILENE'S BASEMENT, INC.,
a Delaware corporation
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By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Value City Limited Partnership,
an Ohio limited partnership
By: Westerville Road GP, Inc., its General
Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
VALUE CITY OF MICHIGAN, INC.,
a Michigan corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
GB RETAILERS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
VCM, LTD.,
an Ohio limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
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SUBSIDIARY GUARANTORS:
---------------------
▇.▇. ▇▇▇▇▇▇▇▇ DELIVERY, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
VALUE CITY DEPARTMENT STORES SERVICES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
WESTERVILLE ROAD GP, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
WESTERVILLE ROAD LP, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--- --------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
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AGENT AND LENDER:
----------------
CERBERUS PARTNERS, L.P.,
a Delaware limited partnership
By:
-------------------------------------
Name:
Title:
LENDERS:
-------
SCHOTTENSTEIN STORES CORPORATION,
a Delaware corporation
By:
-------------------------------------
Name:
Title:
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