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EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
BY AND AMONG
IRON AGE CORPORATION
AND
FALCON SHOE MFG. CO.,
AS BORROWERS,
IRON AGE HOLDINGS CORPORATION,
AS PARENT,
THE LENDERS THAT ARE SIGNATORIES HERETO,
AS LENDERS,
AND
FOOTHILL CAPITAL CORPORATION,
AS ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF SEPTEMBER 23, 2002
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND CONSTRUCTION.........................................1
1.1 Definitions..........................................................1
1.2 Accounting Terms....................................................33
1.3 Code................................................................33
1.4 Construction........................................................33
1.5 Schedules and Exhibits..............................................34
2. LOAN AND TERMS OF PAYMENT...........................................34
2.1 Revolver Advances...................................................34
2.2 Term Loans..........................................................37
2.3 Borrowing Procedures and Settlements................................38
2.4 Payments............................................................44
2.5 Overadvances........................................................49
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments,
and Calculations..................................................50
2.7 Cash Management.....................................................51
2.8 Crediting Payments; Float Charge....................................53
2.9 Designated Account..................................................53
2.10 Maintenance of Loan Account; Statements of Obligations..............54
2.11 Fees................................................................54
2.12 Letters of Credit...................................................55
2.13 LIBOR Option........................................................58
2.14 Capital Requirements................................................61
2.15 Joint and Several Liability of Borrowers............................61
3. CONDITIONS; TERM OF AGREEMENT.......................................64
3.1 Conditions Precedent to the Initial Extension of Credit.............64
3.2 Conditions Subsequent to the Initial Extension of Credit............68
3.3 Conditions Precedent to all Extensions of Credit....................69
3.4 Term................................................................69
3.5 Effect of Termination...............................................69
3.6 Early Termination by Borrowers......................................70
4. CREATION OF SECURITY INTEREST.......................................70
4.1 Grant of Security Interest..........................................70
4.2 Negotiable Collateral...............................................71
4.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral.............................................71
4.4 Filing of Financing Statements; Commercial Tort Claims;
Delivery of Additional Documentation Required.....................71
4.5 Power of Attorney...................................................72
4.6 Right to Inspect....................................................72
4.7 Control Agreements..................................................73
PAGE
5. REPRESENTATIONS AND WARRANTIES......................................73
5.1 No Encumbrances.....................................................73
5.2 Eligible Accounts...................................................73
5.3 Eligible Inventory and Eligible Raw Inventory.......................73
5.4 Eligible Equipment..................................................74
5.5 Location of Inventory and Equipment.................................74
5.6 Inventory Records...................................................74
5.7 State of Incorporation; Location of Chief Executive Office;
FEIN; Organizational ID Number; Commercial Tort Claims............74
5.8 Due Organization and Qualification; Subsidiaries....................74
5.9 Due Authorization; No Conflict......................................75
5.10 Litigation..........................................................76
5.11 No Material Adverse Change..........................................76
5.12 Fraudulent Transfer.................................................77
5.13 Employee Benefits...................................................77
5.14 Environmental Condition.............................................77
5.15 Brokerage Fees......................................................77
5.16 Intellectual Property...............................................77
5.17 Leases..............................................................77
5.18 DDAs................................................................78
5.19 Complete Disclosure.................................................78
5.20 Indebtedness........................................................78
5.21 Regulation U........................................................78
5.22 Permits, Etc........................................................78
5.23 Material Contracts..................................................78
5.24 Employee and Labor Matters..........................................79
5.25 Customers and Suppliers.............................................79
5.26 Properties..........................................................79
5.27 Indenture Documents.................................................80
6. AFFIRMATIVE COVENANTS...............................................80
6.1 Accounting System...................................................80
6.2 Collateral Reporting................................................80
6.3 Financial Statements, Reports, Certificates.........................81
6.4 Guarantor Reports...................................................85
6.5 Return..............................................................85
6.6 Maintenance of Properties...........................................86
6.7 Taxes...............................................................86
6.8 Insurance...........................................................86
6.9 Location of Inventory and Equipment.................................87
6.10 Compliance with Laws................................................87
6.11 Leases..............................................................87
6.12 Customs Brokers.....................................................88
6.13 Brokerage Commissions...............................................88
6.14 Existence...........................................................88
6.15 Environmental.......................................................88
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PAGE
6.16 Commercial Tort Claims; Organizational ID Number....................88
6.17 Other Disclosure Updates............................................88
7. NEGATIVE COVENANTS..................................................89
7.1 Indebtedness........................................................89
7.2 Liens...............................................................90
7.3 Restrictions on Fundamental Changes.................................90
7.4 Disposal of Assets..................................................90
7.5 Change Name.........................................................90
7.6 Guarantee...........................................................91
7.7 Nature of Business..................................................91
7.8 Payments, Prepayments and Amendments................................91
7.9 Change of Control...................................................91
7.10 Consignments........................................................91
7.11 Distributions.......................................................92
7.12 Accounting Methods..................................................93
7.13 Investments.........................................................93
7.14 Transactions with Affiliates........................................93
7.15 Suspension..........................................................93
7.16 Compensation........................................................93
7.17 Use of Proceeds.....................................................93
7.18 Change in Location of Chief Executive Office; Inventory
and Equipment with Bailees........................................94
7.19 Securities Accounts.................................................94
7.20 Financial Covenants.................................................94
8. EVENTS OF DEFAULT...................................................96
9. THE LENDER GROUP'S RIGHTS AND REMEDIES..............................98
9.1 Rights and Remedies.................................................98
9.2 Remedies Cumulative................................................100
10. TAXES AND EXPENSES.................................................101
11. WAIVERS; INDEMNIFICATION...........................................101
11.1 Demand; Protest; etc...............................................101
11.2 The Lender Group's Liability for Collateral........................101
11.3 Indemnification....................................................101
12. NOTICES............................................................102
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.........................103
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.........................104
14.1 Assignments and Participations.....................................104
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PAGE
14.2 Successors.........................................................106
15. AMENDMENTS; WAIVERS................................................107
15.1 Amendments and Waivers.............................................107
15.2 Replacement of Holdout Lender......................................108
15.3 No Waivers; Cumulative Remedies....................................108
16. AGENT; THE LENDER GROUP............................................109
16.1 Appointment and Authorization of Agent.............................109
16.2 Delegation of Duties...............................................110
16.3 Liability of Agent.................................................110
16.4 Reliance by Agent..................................................110
16.5 Notice of Default or Event of Default..............................110
16.6 Credit Decision....................................................111
16.7 Costs and Expenses; Indemnification................................111
16.8 Agent in Individual Capacity.......................................112
16.9 Successor Agent....................................................112
16.10 Lender in Individual Capacity......................................113
16.11 Withholding Taxes..................................................113
16.12 Collateral Matters.................................................115
16.13 Restrictions on Actions by Lenders; Sharing of Payments............116
16.14 Agency for Perfection..............................................117
16.15 Payments by Agent to the Lenders...................................117
16.16 Concerning the Collateral and Related Loan Documents...............117
16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information............117
16.18 Several Obligations; No Liability..................................118
17. GENERAL PROVISIONS.................................................119
17.1 Effectiveness......................................................119
17.2 Section Headings...................................................119
17.3 Interpretation.....................................................119
17.4 Severability of Provisions.........................................119
17.5 Amendments in Writing..............................................119
17.6 Counterparts; Telefacsimile Execution..............................119
17.7 Revival and Reinstatement of Obligations...........................119
17.8 Integration........................................................120
17.9 Iron Age as Agent for Borrowers....................................120
18. GUARANTY...........................................................121
18.1 Guaranty; Limitation of Liability..................................121
18.2 Guaranty Absolute..................................................121
18.3 Waiver.............................................................122
18.4 Continuing Guaranty; Assignments...................................122
18.5 Subrogation........................................................122
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule E-2 Eligible Equipment Locations
Schedule E-3 EBITDA Adjustments
Schedule M-1 Fiscal Month
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 3.1(w) Appraised Real Property
Schedule 3.2(b) Rolling Stock
Schedule 3.2(e) Collateral Access Locations
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) State of Incorporation
Schedule 5.7(b) Chief Executive Office
Schedule 5.7(c) FEIN; Organizational ID Number
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Loan Parties
Schedule 5.8(c) Capitalization of Loan Parties' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.13 Benefit Plans
Schedule 5.14 Environmental Matters
Schedule 5.15 Brokers
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.23 Material Contracts
Schedule 5.24 Employee Matters
Schedule 5.26 Real Property
Schedule 7.14 Affiliate Transactions
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into
as of September 23, 2002, by and among, on the one hand, the lenders identified
on the signature pages hereof (such lenders, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), and FOOTHILL CAPITAL CORPORATION, a
California corporation, as the arranger and administrative agent for the Lenders
("Agent"), and, on the other hand, IRON AGE CORPORATION, a Delaware corporation
("Iron Age"), FALCON SHOE MFG. CO., a Maine corporation ("Falcon" and together
with Iron Age, each individually a "Borrower" and collectively, jointly and
severally, as "Borrowers"), and IRON AGE HOLDINGS CORPORATION, a Delaware
corporation ("Parent").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.
"Accounts" means, as to any Person, all of such Person's now owned
or hereafter acquired right, title, and interest with respect to "accounts" (as
that term is defined in the Code), and any and all supporting obligations in
respect thereof.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by ▇▇▇▇▇ Fargo or
its Affiliates for the account of Administrative Borrower or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.4(c).
"Administrative Borrower" has the meaning set forth in Section 17.9.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for the purposes of the definition of
Eligible Accounts and Section 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person, (b)
each director (or comparable manager) of a Person shall be deemed
to be an Affiliate of such Person, and (c) each partnership or joint venture in
which a Person is a partner or joint venturer shall be deemed to be an Affiliate
of such Person.
"Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent's Account" means the account identified on Schedule A-1.
"Agent's Liens" means the Liens granted by the Loan Parties to Agent
for the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its Affiliates,
officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the Closing Date up to the date that is the first anniversary of the Closing
Date, 5% times the Maximum Revolver Amount, (b) during the period of time from
and including the date that is the first anniversary of the Closing Date up to
the date that is the second anniversary of the Closing Date, 4% times the
Maximum Revolver Amount, (c) during the period of time from and including the
date that is the second anniversary of the Closing Date up to the date that is
the third anniversary of the Closing Date, 3% times the Maximum Revolver Amount,
(d) during the period of time from and including the date that is the third
anniversary of the Closing Date up to the date that is the fourth anniversary of
the Closing Date, 2% times the Maximum Revolver Amount, and (e) during the
period of time from and including the date that is the fourth anniversary of the
Closing Date up to the date prior to the Maturity Date, 1% times the Maximum
Revolver Amount.
"Appraised Real Property" has the meaning set forth in Section
3.1(w).
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance in
the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of
Administrative Borrower.
"Availability" means, as of any date of determination, if such date
is a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrowers are entitled to borrow as Advances under Section 2.1
(after giving effect to all then outstanding Obligations (other than Bank
Product Obligations) and all sublimits and reserves applicable hereunder).
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"Bank Product" means any service or facility extended to Parent or
its Subsidiaries by ▇▇▇▇▇ Fargo or any Affiliate of ▇▇▇▇▇ Fargo including: (a)
credit cards, (b) credit card processing services, (c) debit cards, (d) purchase
cards, (e) ACH Transactions, (f) cash management, including controlled
disbursement, accounts or services, or (g) Hedge Agreements.
"Bank Product Agreements" means those certain cash management
service agreements entered into from time to time by Parent or its Subsidiaries
in connection with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Parent or its
Subsidiaries to ▇▇▇▇▇ Fargo or its Affiliates pursuant to or evidenced by the
Bank Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that a Borrower is
obligated to reimburse to Agent or any member of the Lender Group as a result of
Agent or such member of the Lender Group purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to Administrative Borrower or its Subsidiaries pursuant to the Bank
Product Agreements.
"Bank Product Reserves" means, as of any date of determination, the
amount of reserves that Agent has established (based upon ▇▇▇▇▇ Fargo's or its
Affiliate's determination of the credit exposure in respect of then extant Bank
Products) for Bank Products then provided or outstanding.
"Bankruptcy Code" means (i) the United States Bankruptcy Code, (ii)
the Bankruptcy and Insolvency Act (Canada), or (iii) the Companies' Creditors
Arrangement Act (Canada), as applicable, or any similar legislation in a
relevant jurisdiction, in each case as in effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing Bloomberg Reporting
Service or, if Bloomberg Reporting Service is unavailable, such other electronic
or other quotation sources as it reasonably considers appropriate (rounded
upwards, if necessary, to the next 1/16%), on the basis of the rates at which
Dollar deposits as are offered to major banks in the London interbank market as
such rates are in effect on or about 11:00 a.m. (California time) 2 Business
Days prior to the commencement of the applicable Interest Period, for a term and
in amounts comparable to the Interest Period and amount of the LIBOR Rate Loan
requested by Administrative Borrower in accordance with this Agreement, which
determination shall be conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced from time to time
within ▇▇▇▇▇ Fargo at its principal office in San Francisco as its "prime rate",
with the understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates
(not necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
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"Base Rate Loan" means each portion of an Advance or the Term Loans
that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 1.50 percentage points.
"Base Rate Term Loan A Margin" means 1.50 percentage points
"Base Rate Term Loan B Margin" means 3.25 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) or a benefit plan under Canadian Employee Benefit Laws for which
any Loan Party or any Subsidiary or ERISA Affiliate of any Loan Party has been
an "employer" (as defined in Section 3(5) of ERISA) or has held equivalent
status under Canadian Employee Benefit Laws within the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf
thereof.
"Books" means, as to any Person, all of such Person's now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of such Person's Records relating to its or their business operations or
financial condition, and all of its or their goods or General Intangibles
related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances (or
term loans, in the case of the Term Loans) made on the same day by the Lenders
(or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or
by Agent in the case of an Agent Advance.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.
"Canadian Employee Benefits Laws" means the Canadian Pension Plan
Act (Canada), the Pension Benefit Act (Ontario), the Health Insurance Act
(Ontario) and the Employment Standard Act (Ontario).
"Canadian Guarantee" means that certain Guarantee executed and
delivered by Iron Age Canada in favor of Agent, for the benefit of the Lender
Group, in form and substance reasonably satisfactory to Agent.
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"Canadian Security Agreement" means that certain General Security
Agreement executed and delivered by Iron Age Canada in favor of Agent, for the
benefit of the Lender Group, in form and substance reasonably satisfactory to
Agent.
"Canadian Security Documents" means, collectively, the Canadian
Guarantee and the Canadian Security Agreement.
"Capital Expenditures" means, with respect to Parent and its
Subsidiaries for any period, the sum of (i) the aggregate of all expenditures by
Parent 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 (excluding capitalized software costs in an amount not to
exceed (x) $750,000 in the aggregate in any Fiscal Year through the Fiscal Year
ended January 31, 2004 and (y) $500,000 in the aggregate in any Fiscal Year
thereafter), and (ii) to the extent not covered by clause (i) above, the
aggregate of all expenditures by Parent 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 (excluding capitalized software costs in an
amount not to exceed (x) $750,000 in the aggregate in any Fiscal Year through
the Fiscal Year ended January 31, 2004 and (y) $500,000 in the aggregate in any
Fiscal Year thereafter).
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Collateral Account" means an account maintained by one or more
Borrowers with a bank reasonably acceptable to Agent pursuant to the terms of a
Control Agreement, the form and substance of which is reasonably satisfactory to
Agent.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest or second highest rating obtainable from either
S&P or ▇▇▇▇▇'▇, (c) commercial paper maturing no more than 270 days from the
date of acquisition thereof and, at the time of acquisition, having a rating of
▇-▇, ▇-▇, P-1 or P-2, or better, from S&P or ▇▇▇▇▇'▇, (d) certificates of
deposit or bankers' acceptances maturing within 1 year from the date of
acquisition thereof either (i) issued by any bank organized under the laws of
the United States or any state thereof which bank has a rating of A or A2, or
better, from S&P or ▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal
to $100,000 in the aggregate issued by any other bank insured by the Federal
Deposit Insurance Corporation, (e) repurchase agreements entered into with banks
described in clause (d) for securities described in clause (a), and (f) mutual
funds owning items described in clauses (a) through (e).
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"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash management
service agreements, in form and substance reasonably satisfactory to Agent, each
of which is among a Loan Party, Agent, and one of the Cash Management Banks.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Change of Control" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holder, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 35%, or more, of the Stock of Parent
having the right to vote for the election of members of the Board of Directors,
or (b) a majority of the members of the Board of Directors do not constitute
Continuing Directors, or (c) Parent ceases to own and control, directly or
indirectly, 100% of the outstanding capital Stock of each of its Subsidiaries
extant as of the Closing Date or (d) a "Change of Control" under any Indenture
Document.
"Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of Parent
and its Subsidiaries for the 3 year period following the Closing Date (on a
quarterly basis, and for the 1 year period following the Closing Date, on a
month by month basis), in form and substance (including as to scope and
underlying assumptions) reasonably satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Collateral" means all assets and property of each Loan Party,
including, without limitation, all of each Loan Party's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property, provided that only 65% of the shares
of capital Stock of each Loan Party's Subsidiaries organized outside of the
United States and Canada shall be included in the Collateral,
(g) Negotiable Collateral,
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(h) Real Property Collateral,
(i) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(j) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance reasonably satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of any Loan Party.
"Commercial Tort Claim Assignment" has the meaning set forth in
Section 4.4(b).
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan A Commitment, its Term Loan B Commitment, its Term
Loan C Commitment or its Total Commitment, as the context requires, and, with
respect to all Lenders, their Revolver Commitments, their Term Loan A
Commitments, their Term Loan B Commitments, their Term Loan C Commitments or
their Total Commitments, as the context requires, in each case as such Dollar
amounts are set forth beside such Lender's name under the applicable heading on
Schedule C-1 or on the signature page of the Assignment and Acceptance pursuant
to which such Lender became a Lender hereunder in accordance with the provisions
of Section 14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
"Consolidated Net Income" means, for any period, net income (or
loss) for the applicable period of measurement of Parent and its Subsidiaries on
a consolidated basis determined in accordance with GAAP, but excluding: (a)
non-cash gains and losses from the sale, exchange, transfer or other disposition
of property or assets not in the ordinary course of business of Parent and its
Subsidiaries, and related tax effects in accordance with GAAP; and (b) any other
extraordinary or non-recurring non-cash gains and losses of Parent or its
Subsidiaries, and related tax effects in accordance with GAAP.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the
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Board of Directors in office at the Closing Date in an actual or threatened
election contest relating to the election of the directors (or comparable
managers) of Parent (as such terms are used in Rule 14a-11 under the Exchange
Act) and whose initial assumption of office resulted from such contest or the
settlement thereof.
"Contribution Agreement" means a contribution agreement executed and
delivered by each Loan Party, the form and substance of which is reasonably
satisfactory to Agent.
"Control Agreement" means a control agreement, in form and substance
reasonably satisfactory to Agent, executed and delivered by a Loan Party, Agent,
and the applicable securities intermediary with respect to a Securities Account
or a bank with respect to a DDA or Cash Collateral Account.
"Daily Balance" means, for any Obligation, with respect to each day
during the term of this Agreement, the amount of such Obligation owed at the end
of such day.
"DDA" means any checking or other demand deposit account maintained
by any Loan Party.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3
days from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Designated Account" means that certain DDA of Administrative
Borrower identified on Schedule D-1.
"Designated Account Bank" has the meaning set forth on Schedule D-1.
"Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior 12 months, that is the result
of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to
Borrowers' and Iron Age Canada's Accounts during such period, by (b) Borrowers'
and Iron Age Canada's ▇▇▇▇▇▇▇▇ with respect to Accounts during such period
(excluding extraordinary items) plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
- 8 -
"Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which is reasonably
satisfactory to Agent.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be reasonably satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries' consolidated net earnings (or loss) (including, the one-time
adjustments set forth on Schedule E-3), minus non-cash extraordinary gains, plus
non-cash extraordinary losses, interest expense, income taxes, depreciation,
amortization, other non-cash charges and Fenway Fund management fees and
expenses (to the extent permitted by Section 7.11), plus or minus non-cash LIFO
adjustments to cost of goods sold, in each case for such period, as determined
in accordance with GAAP.
"EBITDA Deficit" has the meaning set forth in Section 2.1(c).
"Eligible Accounts" means those Accounts created by any Borrower or
Iron Age Canada in the ordinary course of its business, that arise out of its
sale of goods and/or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be fixed
and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit performed by Agent from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall
be calculated net of customer deposits and unapplied cash remitted to Borrowers
and Iron Age Canada. Eligible Accounts shall not include the following:
(a) Accounts that are (i) more than 60 days past due or (ii)
Accounts with selling terms of more than 60 days (or, with respect to specific
Accounts from time to time approved by Agent in its Permitted Discretion, not in
excess of 120 days, provided that, the maximum aggregate amount of Availability
supported by such Accounts shall not exceed $250,000),
(b) Accounts owed by an Account Debtor (or its Affiliates)
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a)(i) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of Parent or any of its Subsidiaries,
(d) Accounts arising in a transaction wherein goods are placed
on consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a ▇▇▇▇
- 9 -
and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional,
(e) Accounts that are not payable in Dollars or Canadian
dollars,
(f) Accounts with respect to which the Account Debtor either
(i) does not maintain its chief executive office in the United States, Canada or
Puerto Rico, or (ii) is not organized under the laws of the United States or any
state thereof, Canada or any province thereof or Puerto Rico, or (iii) is the
government of any foreign country or foreign sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit reasonably
satisfactory to Agent (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Agent and is directly drawable by Agent, or (z)
the Account is covered by credit insurance in form, substance, and amount, and
by an insurer, reasonably satisfactory to Agent; provided, that the maximum
aggregate amount of Availability supported by Accounts with respect to which the
Account Debtor maintains its chief executive office in, or is organized under
the laws of, Puerto Rico, and are not supported by letters of credit or credit
insurance, shall not exceed $500,000,
(g) Accounts with respect to which the Account Debtor is
either (i) the United States or Canada or any department, agency, or
instrumentality of the United States or Canada (exclusive, however, of (A)
Accounts with respect to which the applicable Borrower or Iron Age Canada has
complied, to the reasonable satisfaction of Agent, with the Assignment of Claims
Act, 31 USC Section 3727, or the Financial Administration Act (Canada) and (B)
so long as no Default or Event of Default shall have occurred and be continuing,
Accounts with respect to which the Account Debtor is any such Governmental
Authority to the extent that the aggregate amount of all Accounts owed by such
Governmental Authority do not exceed $1,000,000), or (ii) any state of the
United States or any province of Canada (exclusive, however, of (A) Accounts
owed by any state that does not have a statutory counterpart to the Assignment
of Claims Act or the Financial Administration Act (Canada), (B) Accounts owed by
any state that does have a statutory counterpart to the Assignment of Claims Act
or the Financial Administration Act (Canada) as to which the applicable Borrower
or Iron Age Canada has complied to Agent's satisfaction and (C) so long as no
Default or Event of Default shall have occurred and be continuing, Accounts with
respect to which the Account Debtor is any such Governmental Authority to the
extent that the aggregate amount of all Accounts owed by such Governmental
Authority do not exceed $1,000,000); provided, however, that the aggregate
amount of all Accounts created by sales to all Governmental Authorities under
clauses (i)(B) and (ii)(C) do not exceed $1,000,000,
(h) Accounts with respect to which the Account Debtor is a
creditor of Parent or any of its Subsidiaries, has or has asserted a right of
setoff, has disputed its liability, or has made any claim with respect to its
obligation to pay the Account, to the extent of such claim, right of setoff, or
dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrowers and Iron Age Canada exceed 10% (or, subject to
Agent's reasonably satisfactory credit and financial review of MTA, 15% in the
case of MTA) (such
- 10 -
percentage as applied to a particular Account Debtor being subject to reduction
by Agent in its Permitted Discretion if the creditworthiness of such Account
Debtor deteriorates) of all Eligible Accounts, to the extent of the obligations
owing by such Account Debtor in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, has gone out of business,
or as to which a Borrower or Iron Age Canada has received credible information
regarding an imminent Insolvency Proceeding or a material impairment of the
financial condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, or West Virginia (or any other
state that requires a creditor to file a business activity report or similar
document in order to bring suit or otherwise enforce its remedies against such
Account Debtor in the courts or through any judicial process of such state),
unless the applicable Borrower or Iron Age Canada has qualified to do business
in New Jersey, Minnesota, West Virginia, or such other states, or has filed a
business activities report with the applicable division of taxation, the
department of revenue, or with such other state offices, as appropriate, for the
then-current year, or is exempt from such filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected
first priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise
to such Account have not been shipped and billed to the Account Debtor, or (ii)
the services giving rise to such Account have not been performed and billed to
the Account Debtor, or
(o) Accounts that represent the right to receive progress
payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of
performance by the applicable Borrower or Iron Age Canada of the subject
contract for goods or services.
"Eligible Equipment" means Equipment of each Borrower located at one
of the business locations of such Persons set forth on Schedule E-2, that
complies with each of the representations and warranties respecting Eligible
Equipment made by such Persons in the Loan Documents, and that is not excluded
as ineligible by virtue of the one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised from time to time
by Agent in Agent's Permitted Discretion to address the results of any audit or
appraisal performed by Agent from time to time after the Closing Date. In
determining the amount to be included, Equipment shall be valued based upon the
Net Liquidation Percentage times the most recent appraised value of such
Equipment, which appraisal shall be based upon the net orderly liquidation value
of such Equipment. An item of Equipment shall not be included in Eligible
Equipment if:
(a) a Borrower does not have good, valid, and marketable title
thereto,
- 11 -
(b) it is not located at one of the locations in the United
States set forth on Schedule E-2,
(c) it is located on real property leased by a Borrower (i)
that is listed on Part 1 of Schedule 3.2(e), unless (A) it is subject to a
Collateral Access Agreement executed by the lessor, or other third party, as the
case may be, or (B) during the 45 day period following the Closing Date, the
Agent has instituted a reserve equal to the rental costs under the applicable
lease with respect to such location for a 3 month period, or (ii) that is
located in a state listed on Part 2 of Schedule 3.2(e), unless (A) it is subject
to a Collateral Access Agreement executed by the lessor, or other third party,
as the case may be, or (B) the Agent has instituted a reserve equal to the
rental costs under the applicable lease with respect to such location for a 2
month period,
(d) it is not subject to a valid and perfected first priority
Agent's Lien,
(e) it is substantially worn, damaged, defective or obsolete,
or it constitutes furnishings, parts, fixtures or is affixed to real property,
unless such Equipment is affixed to Real Property that comprises Real Property
Collateral,
(f) the Agent has not received evidence of the property
insurance required by this Agreement with respect to such Equipment, or
(g) it is subject to a lease with any Person.
The Administrative Borrower may amend Schedule E-2, provided that (i) such
amendment occurs by written notice to Agent not less than 20 days prior to the
date on which the Eligible Equipment is moved to such new location, (ii) such
new location is within the continental United States, and (iii) at the time of
such written notification, the applicable Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Agent's Liens on such assets and, to the extent required by Agent in its
Permitted Discretion, provides to Agent a Collateral Access Agreement.
"Eligible In-Plant Inventory" means inventory that would qualify as
Eligible Inventory but for the fact that it is located at one of a Borrower's
"In-Plant" Stores.
"Eligible Inventory" means Inventory of each Borrower consisting of
finished goods held for sale in the ordinary course of such Person's business
located at one of the business locations of such Person set forth on Schedule
E-1 (or (x) in-transit between any such locations, (y) located in a shoemobile
that returns to any such location at least weekly or (z) in-transit from a
location in the continental United States where Inventory arrives in the
continental United States to a location set forth on Schedule E-1), that
complies with each of the representations and warranties respecting Eligible
Inventory made by such Person in the Loan Documents, and that is not excluded as
ineligible by virtue of the one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised from time to time
by Agent in Agent's Permitted Discretion to address the results of any audit or
appraisal performed by Agent from time to time after the Closing Date. In
determining the amount to be so included, Inventory shall be valued at the lower
of cost or market on a basis consistent with Borrowers' historical accounting
practices. An item of Inventory shall not be included in Eligible Inventory if:
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(a) a Borrower does not have good, valid, and marketable title
thereto,
(b) it is not (w) located at one of the locations in the
United States set forth on Schedule E-1, (x) in-transit from one such location
to another such location, (y) located in a shoemobile that returns to any such
location at least weekly or (z) in-transit to a location set forth on Schedule
E-1, provided that the maximum value of Inventory described in clause (z) above
that is permitted to be Eligible Inventory shall not exceed $1,000,000,
(c) it is located on real property leased by a Borrower (i)
that is listed on Part 1 of Schedule 3.2(e), unless (A) it is subject to a
Collateral Access Agreement executed by the lessor, or other third party, as the
case may be, or (B) during the 45 day period following the Closing Date, the
Agent has instituted a reserve equal to the rental costs under the applicable
lease with respect to such location for a 3 month period, or (ii) that is
located in a state listed on Part 2 of Schedule 3.2(e), or that is in a contract
warehouse, in each case, unless (A) it is subject to a Collateral Access
Agreement executed by the lessor, warehouseman, or other third party, as the
case may be, or (B) the Agent has instituted a reserve equal to the rental costs
under the applicable lease or warehouse costs under the applicable warehouse
agreement, as the case may be, with respect to such location for a 2 month
period,
(d) it is not subject to a valid and perfected first priority
Agent's Lien,
(e) it consists of goods returned or rejected by a Borrower's
customers that cannot be resold by such Borrower as finished goods "as is" in
the condition that they are returned or rejected, or
(f) it consists of goods that are obsolete or slow moving (as
compared to Borrowers' past practices), restrictive or custom items,
work-in-process, raw materials, or goods that constitute spare parts, packaging
and shipping materials, supplies used or consumed in a Borrower's business, ▇▇▇▇
and hold goods, defective goods, "seconds," or Inventory acquired on
consignment.
The Administrative Borrower may amend Schedule E-1, provided that (i) such
amendment occurs by written notice to Agent not less than 20 days prior to the
date on which the Eligible Inventory is moved to such new location, (ii) such
new location is within the continental United States, and (iii) at the time of
such written notification, the applicable Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Agent's Liens on such assets and, to the extent required by Agent in its
Permitted Discretion, provides to Agent a Collateral Access Agreement.
"Eligible Raw Materials Inventory" means Inventory that would
qualify as Eligible Inventory but for the fact that it consists of goods that
are raw materials used or consumed in a Borrower's business.
"Eligible Real Property Collateral" means the Appraised Real
Property.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the
- 13 -
Organization for Economic Cooperation and Development or a political subdivision
of any such country and which has total assets in excess of $250,000,000,
provided that such bank is acting through a branch or agency located in the
United States, (c) a finance company, insurance company, or other financial
institution or fund that is engaged in making, purchasing, or otherwise
investing in commercial loans in the ordinary course of its business and having
(together with its Affiliates) total assets in excess of $250,000,000, (d) any
Affiliate (other than individuals) of a Lender that was party hereto as of the
Closing Date, (e) so long as no Event of Default has occurred and is continuing,
any other Person approved by Agent and Administrative Borrower, and (f) during
the continuation of an Event of Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other written communication from
any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials (a) from any assets,
properties, or businesses of any Loan Party or any predecessor in interest, (b)
from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by any Loan Party or any
predecessor in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on any Loan Party,
relating to the environment, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC Section 1251 et seq; the Toxic Substances Control Act, 15 USC, Section 2601
et seq; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water
Act, 42 USC. Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC.
Section 2701 et seq.; the Emergency Planning and the Community Right-to-Know
Act of 1986, 42 USC. Section 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC Section 1801 et seq.; and the Occupational Safety
and Health Act, 29 USC. Section 651 et seq. (to the extent it regulates
occupational exposure to Hazardous Materials); any federal, state, provincial,
local or foreign counterparts or equivalents, in each case as amended from
time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation 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
Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means, with respect to any Person, all of such Person's
now owned or hereafter acquired right, title, and interest with respect to
equipment, machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), tools, parts,
- 14 -
goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Loan Party under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Loan Party under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Loan Party is a member under
IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Loan Party and whose employees are aggregated with the
employees of a Loan Party under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan, (b) the withdrawal of a Loan Party, any of
its Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in
which it was a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in a
distress termination (as described in Section 4041(c) of ERISA), (d) the
institution by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan, (e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of a Loan Party, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, (g) providing any
security to any Plan under Section 401(a)(29) of the IRC by a Loan Party or its
Subsidiaries or any of their ERISA Affiliates or (h) any equivalent event,
action, condition, proceeding or otherwise under Canadian Employee Benefit Laws.
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Parent and its Subsidiaries aged in
excess of their historical levels with respect thereto in any material respect
and all book overdrafts in excess of their historical practices with respect
thereto in any material respect , in each case as determined by Agent in its
Permitted Discretion.
"Excess Cash Flow" means, for any fiscal period of Parent, without
duplication (i) Consolidated Net Income for such period, plus (ii) all non-cash
charges of Parent and its Subsidiaries deducted in arriving at such Consolidated
Net Income for such period, less (iii) all non-cash credits of Parent and its
Subsidiaries included in arriving at such Consolidated Net Income for such
period, less (iv) all scheduled and mandatory and all voluntary cash principal
payments on the Advances and Term Loans made during such period (but, in the
case of the
- 15 -
Advances, only to the extent that the Revolver Commitment is permanently reduced
by the amount of such payments), excluding excess cash flow mandatory
prepayments pursuant to Section 2.4(f), and all scheduled cash principal
payments on other Indebtedness of Parent or any of its Subsidiaries during such
period to the extent such other Indebtedness is permitted to be incurred, and
such payments are permitted to be made, under this Agreement, less (v) the cash
portion of Capital Expenditures made by Parent and its Subsidiaries during such
period to the extent permitted to be made under this Agreement, less (vi)
Capitalized Lease Obligations, less (vii) all cash payments made during such
period on account of non-cash charges from a prior fiscal period.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Lender" means Banque Nationale de Paris, as agent for
certain lenders.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, among Borrowers and Agent, in form and substance reasonably
satisfactory to Agent.
"FEIN" means Federal Employer Identification Number.
"Fenway Fund" means Fenway Partners Capital Fund, L.P., Fenway
Partners Capital Fund II, L.P. and other funds managed by the same management
company.
"Fenway Management Agreement" means the Management Agreement dated
February 26, 1997 between Borrower and Fenway Partners, Inc., a Delaware
corporation.
"Fiscal Month" means each fiscal month of Parent and its
Subsidiaries ending on the dates set forth on Schedule M-1.
"Fiscal Year" means the fiscal year of Parent and its Subsidiaries
ending on the last Saturday in January of each calendar year.
"Fixed Charge Coverage Ratio" means, as at the end of any month for
the period of 12 consecutive months then ended, the ratio of (a) EBITDA for the
period of 12 consecutive months then ended less the sum of (i) Capital
Expenditures of the Parent and its Subsidiaries paid in cash during such period
(excluding Capital Expenditures paid from the Net Cash Proceeds of sales or
dispositions, or from the insurance proceeds, in each case permitted to be
reinvested by Borrowers in accordance with Section 2.4(a)(iii) during such
period) and (ii) income taxes of the Parent and its Subsidiaries that have been
paid in cash during such period (other than taxes paid in respect of the
purchase of Parent Notes and Iron Age Notes at a discount) to (b) the sum of (i)
Interest Expense of the Parent and its Subsidiaries for such period (other than,
during the period from May 1, 2003 through January 31, 2004, cash Interest
Expense in respect of Parent Notes) and (ii) regularly scheduled principal
payments (other than regularly scheduled principal payments made prior to the
Closing Date to the Existing Lender) and prepayments (other than (x) optional
prepayments of the Obligations, (y) prepayments from the proceeds of (1)
Permitted Dispositions not reinvested by Borrowers in accordance with Section
2.4(a)(iii), (2) issuances of Indebtedness or equity, in each case to the extent
permitted by the terms of this Agreement, or (3) insurance proceeds not
reinvested by Borrowers in accordance with Section 2.4(a)(iii), and
- 16 -
(z) repurchases of Parent Notes in accordance with the terms of this Agreement)
of Funded Debt of the Parent and its Subsidiaries to be made during such period.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Funded Debt" of any Person means Indebtedness of such Person that
by its terms matures more than one year after the date of creation or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year after such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year after such date, including,
without limitation, all amounts of Funded Debt of such Person required to be
paid or prepaid within one year after the date of determination.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States, consistently applied, provided that for the
purpose of Section 7.20 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
delivered by Parent and Borrowers pursuant to Section 6.3, 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 Section
7.20, Agent and Parent shall negotiate in good faith amendments to the
provisions of this Agreement that relate to the calculation of such covenant
with the intent of having the respective positions of Lenders and Borrowers
after such change in GAAP conform as nearly as possible to their respective
positions as of the date of this Agreement and, until any such amendments have
been agreed upon, the covenants in Section 7.20 shall be calculated as if no
such change in GAAP has occurred.
"General Intangibles" means, with respect to any Person, all of such
Person's now owned or hereafter acquired right, title, and interest with respect
to general intangibles (including Intellectual Property, payment intangibles,
contract rights, rights to payment, judgments, rights arising under common law,
statutes, or regulations, choses or things in action, goodwill, designs,
inventions, trade secrets, d/b/a's, Internet domain names, logos, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty
or licensing agreements, computer programs, information contained on computer
disks or tapes, software, literature, reports, catalogs, money, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), and
any and all supporting obligations in respect thereof, and any other personal
property other than goods, Accounts, Investment Property, and Negotiable
Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal (including the federal
government of Canada), state, local, provincial or other governmental or
administrative body, instrumentality, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.
- 17 -
"Guaranteed Obligations" has the meaning set forth in Section 18.1.
"Guaranties" means, collectively, (i) the guaranty made by Parent
contained in Section 18 hereof and (ii) those certain general continuing
guaranties executed and delivered by Guarantors (other than Parent and Iron Age
Canada) in favor of Agent, for the benefit of the Lender Group, in form and
substance reasonably satisfactory to Agent.
"Guarantor Security Agreement" means a security agreement made by
Guarantors (other than Parent and Iron Age Canada) in favor of Agent, for the
benefit of the Lender Group, in form and substance reasonably satisfactory to
Agent.
"Guarantors" means, collectively, Parent, Iron Age Canada, Iron Age
Investments and Iron Age Vision.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into between Parent or its
Subsidiaries and ▇▇▇▇▇ Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Administrative Borrower's or its Subsidiaries'
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security or currency valuations or commodity prices.
"Indebtedness" means, without duplication, (a) all indebtedness for
borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations in respect
of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases which
should be recorded as liabilities on a balance sheet in accordance with GAAP,
(d) all obligations or liabilities of others secured by a Lien on any asset of a
Person or its Subsidiaries, irrespective of whether such obligation or liability
is assumed, (e) all obligations to pay the deferred purchase price of assets
(other than trade payables incurred in the ordinary course of business and
repayable in accordance with customary trade practices), and (f) any obligation
guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed,
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endorsed, co-made, discounted, or sold with recourse) any obligation of any
other Person set forth in items (a) through (e).
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Indenture Deficit" has the meaning set forth in Section 2.1(d).
"Indenture Documents" means, collectively, the Parent Note Documents
and the Iron Age Note Documents.
"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 (including, without limitation, the Bankruptcy and
Insolvency Act (Canada) and the Companies Creditors Arrangement Act (Canada)),
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
"Intellectual Property" means all foreign and domestic (i)
trademarks, service marks, brand names, certification marks, collective marks,
d/b/a's, Internet domain names, logos, symbols, trade dress, assumed names,
fictitious names, trade names, and other indicia of origin, all applications and
registrations for all of the foregoing, and all goodwill associated therewith
and symbolized thereby, including without limitation all extensions,
modifications and renewals of same; (ii) inventions, discoveries and ideas,
whether patentable or not, and all patents, registrations, and applications
therefor, including without limitation divisions, continuations,
continuations-in-part and renewal applications, and including without limitation
renewals, extensions and reissues; (iii) confidential and proprietary
information, trade secrets and know-how, including without limitation processes,
schematics, databases, formulae, drawings, prototypes, models, designs and
customer lists; (iv) published and unpublished works of authorship, whether
copyrightable or not, copyrights therein and thereto, and registrations and
applications therefor, and all renewals, extensions, restorations and reversions
thereof; and (v) all other intellectual property or proprietary rights and
claims or causes of action arising out of or related to any infringement,
misappropriation or other violation of any of the foregoing, including without
limitation rights to recover for past, present and future violations thereof.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by the Loan Parties and Agent, the form and
substance of which is reasonably satisfactory to Agent.
"Interest Expense" means, with respect to any Person for any period,
gross interest expense of such Person and its Subsidiaries for such period
determined in conformity with GAAP (including, without limitation, interest
expense paid to Affiliates of such Person other than a Subsidiary of Parent),
less the sum of interest income and non-cash interest expense and non-cash
amortization of debt origination cost for such period, each determined on a
consolidated basis and in accordance with GAAP for such Person and its
Subsidiaries.
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"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2 or 3 months thereafter; provided, however, that (a) if any Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2 or 3 months
after the date on which the Interest Period began, as applicable, and (e)
Borrowers (or Administrative Borrower on behalf thereof) may not elect an
Interest Period which will end after the Maturity Date.
"Inventory" means, with respect to any Person, such Person's now
owned or hereafter acquired right, title, and interest with respect to
inventory, including goods held for sale or lease or to be furnished under a
contract of service, goods that are leased by such Person as lessor, goods that
are furnished by such Person under a contract of service, and raw materials,
work in process, or materials used or consumed in such Person's business.
"Inventory Reserves" means reserves (determined from time to time by
Agent in its Permitted Discretion) for (a) the estimated costs relating to
unpaid warehousing or storage charges of Inventory of Borrowers, plus (b) the
estimated reclamation claims of unpaid sellers of Inventory sold to Borrowers,
plus (c) the estimated rental costs for not more than (i) a 3 month period for
Inventory locations listed on Part 1 of Schedule 3.2(e) and (ii) a 2 month
period for Inventory locations in a state listed on Part 2 of Schedule 3.2(e),
in each case for which landlord waivers or collateral access agreements are
required, but have not been received, by Agent.
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means, with respect to any Person, all of such
Person's now owned or hereafter acquired right, title, and interest with respect
to "investment property" as that term is defined in the Code, and any and all
supporting obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"Iron Age Canada" means Iron Age Canada, Ltd., a corporation
organized under the Canada Business Corporations Act.
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"Iron Age Investments" means Iron Age Investment Company, a Delaware
corporation.
"Iron Age Note Documents" means (i) the Iron Age Note Indenture (ii)
the Iron Age Notes and (iii) any other agreements, indentures, instruments or
other documents delivered in connection with the issuance of the Iron Age Notes.
"Iron Age Note Indenture" means the Indenture dated as of April 24,
1998 among Iron Age, certain of its Subsidiaries signatory thereto and The Chase
Manhattan Bank, as trustee.
"Iron Age Notes" means the Senior Subordinated Notes due 2008 of
Iron Age in an aggregate initial principal amount of $100,000,000 issued
pursuant to the Iron Age Note Indenture.
"Iron Age Vision" means IA Vision Acquisition, Co., a Delaware
corporation.
"Issuing Lender" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent, agrees, in
such Lender's sole discretion, to become an Issuing Lender for the purpose of
issuing L/Cs or L/C Undertakings pursuant to Section 2.12.
"Leased Real Property" means any leasehold interests in real
property now held or hereafter acquired by a Loan Party and the improvements
thereto.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Borrower under any of
the Loan Documents that are paid or incurred by any one or more members of the
Lender Group, (b) reasonable out-of-pocket fees or charges paid or incurred by
Agent in connection with Agent of the Lender Group's transactions with
Borrowers, including, reasonable fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, judgment, UCC and PPSA searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
Collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement),
real estate
- 21 -
surveys, real estate title policies and endorsements, and environmental audits,
(c) costs and expenses incurred by Agent in the disbursement of funds to or for
the account of Borrowers (by wire transfer or otherwise), (d) charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by any one or more members of the Lender Group in enforcing or
defending the Loan Documents or in connection with the transactions contemplated
by the Loan Documents or any one or more members of the Lender Group's
relationship with any Borrower or any guarantor of the Obligations, (h) Agent's
and each Lender's reasonable fees and expenses (including reasonable attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering, or
amending the Loan Documents, and (i) Agent's and each Lender's reasonable fees
and expenses (including reasonable attorneys fees) incurred in terminating,
enforcing (including reasonable attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance, the Term Loan A
or the Term Loan B that bears interest at a rate determined by reference to the
LIBOR Rate.
"LIBOR Rate Margin" means 3.75 percentage points.
"LIBOR Rate Term Loan A Margin" means 3.75 percentage points.
- 22 -
"LIBOR Rate Term Loan B Margin" means 5.50 percentage points.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product Agreements,
the Canadian Guarantee, the Canadian Security Agreement, the Cash Management
Agreements, the Contribution Agreement, the Control Agreements, the Disbursement
Letter, the Due Diligence Letter, the Fee Letter, the Guaranty, the Guarantor
Security Agreement, the Letters of Credit, the Mortgage, the Officers'
Certificate, the Patent Security Agreement, the Pledge Agreement, the Trademark
Security Agreement, the Intercompany Subordination Agreement, any note or notes
executed by a Borrower in connection with this Agreement and payable to a member
of the Lender Group, and any other agreement entered into, now or in the future,
by a Loan Party and the Lender Group in connection with this Agreement.
"Loan Party" means any Borrower and any Guarantor.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers taken as a whole, or Parent and
its Subsidiaries taken as a whole, (b) a material impairment of a Loan Party's
ability to perform its obligations under the Loan Documents to which it is a
party or of the Lender Group's ability to enforce the Obligations or realize
upon the Collateral, or (c) a material impairment of the enforceability or
priority of the Agent's Liens with respect to the Collateral as a result of an
action or failure to act on the part of a Loan Party.
"Material Contract" means any agreement or contract of any Loan
Party or any Subsidiary of a Loan Party (other than any agreement that by its
terms may be terminated by such Person upon 60 days notice or less) which (a)
involves consideration to such Person of $100,000 or more in any year, (b)
involves consideration by such Person of $100,000 or more in any year, (c)
imposes financial obligations on such Person of $100,000 or more in any year or
(d) is otherwise material (or together with related agreements and contracts, is
material) to the business, prospects, operations, financial condition,
performance or properties of Parent and its Subsidiaries, taken as a whole.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $38,000,000.
- 23 -
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Loan Party in favor of Agent, for the benefit of the Lender Group, in form and
substance reasonably satisfactory to Agent, that encumber the Real Property
Collateral and the related improvements thereto.
"Motor Vehicle Laws" shall mean all Federal (including, the federal
government of Canada), state, provincial and local laws, regulations, rules and
judicial or agency determinations and orders applicable to the ownership and/or
operation of vehicles (including, without limitation, the Rolling Stock), or the
business of the transportation of goods by motor vehicle, including, without
limitation, laws, regulations, rules and judicial or agency determinations and
orders promulgated or administered by the Federal Highway Administration, the
Federal Motor Carrier Safety Administration, the National Highway Traffic Safety
Administration, the Surface Transportation Board and other state, provincial and
local Governmental Authorities with respect to vehicle safety and registration
and motor carrier insurance, financial assurance, credit extension, contract
carriage, tariff and reporting requirements.
"Multiemployer Plan" means a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) or such equivalent plan under Canadian Employee
Benefit Laws to which a Loan Party, any of its Subsidiaries, or any ERISA
Affiliate has contributed, or was obligated to contribute, within the past six
years.
"Negotiable Collateral" means, with respect to any Person, all of
such Person's now owned and hereafter acquired right, title, and interest with
respect to letters of credit, letter of credit rights, instruments, promissory
notes, drafts, documents, and chattel paper (including electronic chattel paper
and tangible chattel paper), and any and all supporting obligations in respect
thereof.
"Net Cash Proceeds" means, with respect to any disposition by any
Person or any Subsidiary thereof, the amount of cash received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of such Person or such
Subsidiary, in connection therewith after deducting therefrom only (i) the
amount of any Indebtedness secured by any Permitted Lien on any asset (other
than (A) Indebtedness owing to Agent or any Lender under this Agreement or the
other Loan Documents and (B) Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such
disposition, (ii) reasonable expenses related thereto incurred by such Person or
such Subsidiary in connection therewith, and (iii) taxes paid or payable to any
taxing authorities by such Person or such Subsidiary in connection therewith, in
each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or payable to a Person
that is not an Affiliate and are properly attributable to such transaction.
"Net Liquidation Percentage" means the percentage of the book value
of Borrowers' Inventory or the appraised value of Loan Parties' Equipment, as
the case may be, that is estimated to be recoverable by Agent in an orderly
liquidation of such Inventory or such Equipment, as the case may be, each such
percentage to be as determined from time to time by a qualified appraisal
company selected by Agent.
- 24 -
"Non-Loan Party" means any Subsidiary of Parent that is not a Loan
Party.
"Obligations" means (a) all loans (including the Term Loans),
Advances, debts, principal, interest (including the Term Loan C PIK Amount)
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to the Loan Account pursuant hereto), obligations, fees (including the
fees provided for in the Fee Letter), charges, costs, Lender Group Expenses
(including any fees or expenses that, but for the provisions of the Bankruptcy
Code, would have accrued), lease payments, guaranties, covenants, and duties of
any kind and description owing by Borrowers to the Lender Group pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Group Expenses that Borrowers are required to pay or reimburse by
the Loan Documents, by law, or otherwise, (b) all Bank Product Obligations and
(c) all Guaranteed Obligations. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to Parent, together with Parent's completed
responses to the inquiries set forth therein, the form and substance of such
responses to be reasonably satisfactory to Agent.
"Operating Lease" means, with respect to any Person, any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) which is not a
Capital Lease other than any such lease in which that Person is the lessor or
sublessor.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Owned Real Property" means any fee interests in real property now
owned or hereafter acquired by any Loan Party and the improvements thereto.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Note Documents" means (i) the Parent Note Indenture, (ii)
the Parent Notes and (iii) any other agreements, indentures, instruments or
other documents delivered in connection with the issuance of the Parent Notes.
"Parent Note Indenture" means the Indenture dated as of April 24,
1998 among Parent and The Chase Manhattan Bank, as trustee.
"Parent Notes" means the Senior Discount Notes due 2009 of the
Parent in an aggregate initial principal amount of $45,000,000 issued pursuant
to the Parent Note Indenture.
- 25 -
"Participant" has the meaning set forth in Section 14.1(e).
"Patent Security Agreement" means a patent security agreement
executed and delivered by certain of the Loan Parties and Agent, the form and
substance of which is reasonably satisfactory to Agent.
"Pay-Off Letter" means a letter, in form and substance reasonably
satisfactory to Agent, from Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of the Loan Parties owing to
Existing Lender and obtain a release of all of the Liens existing in favor of
Existing Lender in and to the assets of the Loan Parties.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in
Title IV of ERISA, or any successor thereto or equivalent entity under Canadian
Employee Benefit Laws.
"Permitted Discretion" means a determination made in good faith and
in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by a
Loan Party or its Subsidiaries of Equipment that is substantially worn, damaged,
obsolete or no longer used or useful in the ordinary course of such Person's
business, (b) sales by a Loan Party or its Subsidiaries of Inventory to buyers
in the ordinary course of business, (c) the use or transfer of money or Cash
Equivalents by a Loan Party or its Subsidiaries in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, (d) the
licensing by a Loan Party or its Subsidiaries, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of such Person's business, (e) the sale of overdue Accounts for
collection purposes with an aggregate invoice amount not to exceed $250,000 in
any Fiscal Year, and (f) other dispositions for consideration in an aggregate
amount not to exceed $250,000 in any Fiscal Year.
"Permitted Holder" means Fenway Fund.
"Permitted Investments" means (a) Investments in Cash Equivalents,
(b) Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Investments by (i) any Loan Party in any other Loan Party and (ii)
any Loan Party in any Non-Loan Party in an amount that would not cause the
aggregate amount of all such Investments by the Loan Parties to exceed $250,000,
provided that if any such Investment is in the form of Indebtedness, such
Indebtedness shall be (A) subject to the terms and conditions of the
Intercompany Subordination Agreement and (B) evidenced by an intercompany
promissory note that is pledged to the Agent under the Pledge Agreement, (e)
Investments by any Non-Loan Party in any Loan Party or any Non-Loan Party, (f)
to the extent expressly permitted by the terms of this Agreement, Investments in
Parent Notes and Iron Age Notes, (g) loans to officers, employees and directors
(i) for purposes of financing the purchase by such Persons of the Parent's
capital Stock, provided that such loans are non-cash transactions and (ii) for
any other purpose in an aggregate amount not to exceed $250,000 outstanding at
any time, and (h) Hedge Agreements entered into for non-speculative purposes.
- 26 -
"Permitted Liens" means (a) Liens held by Agent for the benefit of
Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under Operating Leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business, which Liens described in this clause (f) either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits made in connection with obtaining worker's compensation or
other unemployment insurance, (h) Liens or deposits to secure performance of
bids, tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder so long as (i) the enforcement of such judgment or award
has been stayed by reason of a pending appeal or otherwise and (ii) the
aggregate amount of the claims payable in accordance with such judgments and
awards shall not exceed $100,000, (k) with respect to the Real Property
Collateral, Liens, easements, rights of way, and zoning restrictions that are
exceptions to the commitments for title insurance issued in connection with the
Mortgages, as accepted by Agent, and (l) with respect to any Real Property that
is not part of the Real Property Collateral, title defects, title exceptions,
easements, rights of way, and zoning restrictions that do not result in a
Material Adverse Change.
"Permitted Protest" means the right of Parent or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in an
amount no less than the amount required under GAAP to be so reserved, (b) any
such protest is instituted promptly and prosecuted diligently by Parent or any
of its Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied
that, while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred from and after the Closing
Date in an aggregate amount not in excess of $3,000,000.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
Property.
"Plan" means any employee benefit plan, program, or arrangement
maintained or contributed to by a Loan Party or with respect to which it may
incur liability subject to ERISA.
- 27 -
"Pledge Agreement" means a pledge and security agreement, in form
and substance reasonably satisfactory to Agent, executed and delivered by each
Loan Party that owns Stock of a Subsidiary of Parent and that is the holder of
any intercompany promissory notes described in the proviso of clause (d) of the
definition of Permitted Investments.
"Projections" means Parent's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (x) prior to the Revolver Commitment being reduced to zero, the
percentage obtained by dividing (i) such Lender's Revolver Commitment, by (ii)
the aggregate Revolver Commitments of all Lenders, and (y) from and after the
time that the Revolver Commitment has been terminated or reduced to zero, the
percentage obtained by dividing (i) the aggregate principal amount of such
Lender's Advances by (ii) the aggregate principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments of
fees with respect thereto, (x) prior to the Revolver Commitment being reduced to
zero, the percentage obtained by dividing (i) such Lender's Revolver Commitment,
by (ii) the aggregate Revolver Commitments of all Lenders, and (y) from and
after the time that the Revolver Commitment has been terminated or reduced to
zero, the percentage obtained by dividing (i) the aggregate principal amount of
such Lender's Advances by (ii) the aggregate principal amount of all Advances,
(c) with respect to a Lender's obligation to make the Term
Loan A and receive payments of interest, fees, and principal with respect
thereto, (x) prior to the making of the Term Loan A, the percentage obtained by
dividing (i) such Lender's Term Loan A Commitment, by (ii) the aggregate amount
of all Lenders' Term Loan A Commitments, and (y) from and after the making of
the Term Loan A, the percentage obtained by dividing (i) the principal amount of
such Lender's Term Loan A by (ii) the principal amount of the Term Loan A,
(d) with respect to a Lender's obligation to make the Term
Loan B and receive payments of interest, fees, and principal with respect
thereto, (x) prior to the making of the Term Loan B, the percentage obtained by
dividing (i) such Lender's Term Loan B Commitment, by (ii) the aggregate amount
of all Lenders' Term Loan B Commitments, and (y) from and after the making of
the Term Loan B, the percentage obtained by dividing (i) the principal amount of
such Lender's Term Loan B by (ii) the principal amount of the Term Loan B,
(e) with respect to a Lender's obligation to make the Term
Loan C and receive payments of interest, fees, and principal with respect
thereto, (x) prior to the making of the Term Loan C, the percentage obtained by
dividing (i) such Lender's Term Loan C Commitment, by (ii) the aggregate amount
of all Lenders' Term Loan C Commitments, and
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(y) from and after the making of the Term Loan C, the percentage obtained by
dividing (i) the principal amount of such Lender's Term Loan C by (ii) the
principal amount of the Term Loan C, and
(f) with respect to all other matters as to a particular
Lender (including the indemnification obligations arising under Section 16.7),
the percentage obtained by dividing (i) such Lender's Revolver Commitment plus
the unpaid principal amount of such Lender's portion of the Term Loan A plus the
unpaid principal amount of such Lender's portion of the Term Loan B plus the
unpaid principal amount of such Lender's portion of the Term Loan C, by (ii) the
aggregate amount of Revolver Commitments of all Lenders plus the unpaid
principal amount of the Term Loan A plus the unpaid principal amount of Term
Loan B plus the unpaid principal amount of Term Loan C; provided, however, that,
if such Lender's Revolver Commitment shall have been reduced to zero, such
Lender's Revolver Commitment shall be deemed to be the aggregate unpaid
principal amount of such Lender's Advances and if all Revolver Commitments shall
have been reduced to zero, the aggregate Revolver Commitments shall be deemed to
be the principal amount of all outstanding Advances.
"Purchase Money Indebtedness" means purchase money Indebtedness
(excluding the Obligations) and Capitalized Lease Obligations incurred at the
time of, or within 90 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Real Property" means Owned Real Property and Leased Real Property.
"Real Property Collateral" means the parcel or parcels of Owned Real
Property identified on Schedule R-1 and any Owned Real Property with a fair
market value in excess of $500,000 hereafter acquired by a Loan Party.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) 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, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Report" has the meaning set forth in Section 16.17.
"Reportable Event" means any of the events described in Section
4043(c) of ERISA or the regulations thereunder other than a Reportable Event as
to which the provision of 30 days notice to the PBGC is waived under applicable
regulations.
"Required Availability" means Excess Availability in an amount of
not less than $2,000,000.
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"Required Lenders" means, at any time, (a) Agent and (b) Lenders
whose Pro Rata Shares aggregate 51% or more as determined pursuant to clause (e)
of the definition of "Pro Rata Share".
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrowers to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"Rolling Stock" means all shoemobiles, trucks, trailers, tractors,
and other registered mobile equipment.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Senior Debt" shall mean the total principal amount of Indebtedness
of Parent and its Subsidiaries, determined on a consolidated basis, excluding
(a) the Indebtedness under the Indenture Documents, (b) the intercompany notes
of Parent and its Subsidiaries, (c) all Hedge Agreements, and (d) all
Indebtedness to the extent of any cash collateral deposited to secure such
Indebtedness.
"Senior Debt Ratio" shall mean, at any date, the ratio of (i) the
outstanding principal amount of Senior Debt at such date to (ii) EBITDA for the
trailing 12 month period most recently ended on or prior to such date.
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"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Solvent" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act, the Uniform Fraudulent Conveyance Act and the
Bankruptcy Code) or an insolvent person (as such term is defined in the
Bankruptcy and Insolvency Act (Canada)), as applicable.
"Special Term Advance" has the meaning set forth in Section 2.1(g).
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Swing Lender" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Term Loan A" has the meaning set forth in Section 2.2(a).
"Term Loan A Amount" means the lesser of (a) $1,000,000, and (b) the
sum of:
(i) the lesser of (x) 80% times the Net Liquidation Percentage
times the appraised value of Eligible Equipment and (y)
$500,000, and
(ii) the lesser of (x) 80% of the gross auction value of Eligible
Real Property Collateral, less the amount, if any, of reserves
established by Agent, for potential environmental remediation
costs relating to such Eligible Real Property Collateral and
(y) $500,000.
"Term Loan A Commitment" means, with respect to each Lender, its
Term Loan A Commitment, and, with respect to all Lenders, their Term Loan A
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
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"Term Loan B" has the meaning set forth in Section 2.2(b).
"Term Loan B Amount" means the lesser of (a) $3,000,000, and (b) the
difference between:
(i) 100% times the Net Liquidation Percentage times the book value
of Eligible Inventory, Eligible In-Plant Inventory and
Eligible Raw Materials Inventory, less
(ii) 85% times the Net Liquidation Percentage times the book value
of Eligible Inventory, Eligible In-Plant Inventory and
Eligible Raw Materials Inventory.
"Term Loan B Commitment" means, with respect to each Lender, its
Term Loan B Commitment, and, with respect to all Lenders, their Term Loan B
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Term Loan C" has the meaning set forth in Section 2.2(c).
"Term Loan C Amount" means $12,000,000.
"Term Loan C Commitment" means, with respect to each Lender, its
Term Loan C Commitment, and, with respect to all Lenders, their Term Loan C
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Term Loan C PIK Amount" means, as of any date of determination, the
amount of all interest accrued with respect to the Term Loan C that has been
paid in kind by being added to the balance thereof in accordance with Section
2.6(a).
"Term Loans" means, collectively, the Term Loan A, the Term Loan B
and the Term Loan C.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan, (ii) any event that causes any Loan Party or any of its ERISA
Affiliates to incur liability under Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the
IRC, (iii) the filing of a notice of intent to terminate a Benefit Plan or the
treatment of a Benefit Plan amendment as a termination under Section 4041 of
ERISA, (iv) the institution of proceedings by the PBGC to terminate a Benefit
Plan, (v) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or
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the appointment of a trustee to administer, any Benefit Plan, or (vi) any
equivalent event, action, condition, proceeding or otherwise under Canadian
Employee Benefit Laws.
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by certain of the Loan Parties and Agent, the form and
substance of which is reasonably satisfactory to Agent.
"UCC/PPSA Filing Authorization Letter" means a letter executed by
each Loan Party authorizing Agent to file appropriate financing statements on
Form UCC-1 and PPSA registration statements in such office or offices as may be
necessary or, in the reasonable opinion of Agent, desirable to perfect the Liens
to be created by each applicable Loan Document.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Parent" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Parent and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan
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Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the sum of (A) the Letter of Credit Usage, plus (B) the
aggregate principal amount of the Term Loan A outstanding from time to time plus
(C) the aggregate principal amount of the Term Loan B outstanding from time to
time, and (ii) the Borrowing Base less the sum of (A) the Letter of Credit Usage
plus (B) the aggregate amount of the Inventory Reserves. For purposes of this
Agreement, "Borrowing Base," as of any date of determination, shall mean the
result of:
(i) an amount equal to the lesser of:
(y) 85% of the amount of Eligible Accounts, less
the amount, if any, of the Dilution Reserve, and
(z) an amount equal to Borrowers' Collections with
respect to Accounts (1) during the months of
January, July and December, for the immediately
preceding 90 day period, and (2) during all other
months, for the immediately preceding 60 day
period,
plus
(ii) an amount equal to the least of:
(w) $25,000,000,
(x) the sum of:
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(1) 65% of the value of Eligible
Inventory, provided that the maximum
amount of credit availability created
by Eligible Inventory described in
clause (b)(z) of the definition
thereof shall be $500,000, plus,
(2) the lesser of (A) 65% of the value of
Eligible In-Plant Inventory and (B)
$1,000,000, plus,
(3) the lesser of (A) 65% of the value of
Eligible Raw Materials Inventory and
(B) $2,000,000,
(y) 85% times the Net Liquidation Percentage
times the book value of Borrowers'
Inventory, and
(z) 275% of the amount of credit availability
created by clause (i) above,
less
(iii) the sum of (x) the Bank Products Reserves and (y)
the aggregate amount of reserves (other than the
Inventory Reserves), if any, established by Agent
under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) the Parent Notes in the amount of $3,000,000, which
reserve shall be released by Agent at such time and to the extent on a
dollar-for-dollar basis that Parent repurchases its Parent Notes in accordance
with the terms of this Agreement, (ii) sums that Loan Parties are required to
pay (such as taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and has failed to pay
under any Section of this Agreement or any other Loan Document, (iii) amounts
owing by Loan Parties to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than any existing Permitted Lien set forth on
Schedule P-1 which is specifically identified thereon as entitled to have
priority over the Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent, likely would have a priority superior to the Agent's Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral, (iv) Rolling Stock for which the
Agent has not received duly executed and completed title or ownership
applications in accordance with Section 6.2(j)(ii), and (v) the Appraised Real
Property in the amount of $500,000, which reserve shall be released by Agent at
such time and to the extent that the title insurance company removes from the
Mortgage Policy on the Appraised Real Property any and
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all exceptions arising out of the survey to be delivered pursuant to Section
3.2(f). In addition to the foregoing, Agent shall have the right to have the
Inventory reappraised by a qualified appraisal company or a field auditor
selected by Agent from time to time after the Closing Date for the purpose of
redetermining the Net Liquidation Percentage of the Eligible Inventory, Eligible
In-Plant Inventory and Eligible Raw Materials Inventory portion of the
Collateral and, as a result, redetermining the Borrowing Base, provided, that,
so long as no Default or Event of Default has occurred and is continuing,
Borrowers shall only be obligated to pay for fees and charges incurred for such
appraisals conducted no more frequently than 3 times per calendar year and field
audits conducted no more frequently than 3 times per calendar year.
(c) Notwithstanding the foregoing, the Lenders with Revolver
Commitments shall have no obligation to make additional Advances if, either
immediately before or after giving effect to such Advances, the sum of the
Revolver Usage plus the aggregate principal amount of the Term Loans (including
the Term Loan C PIK Amount) then outstanding exceeds 3.25 times the trailing 12
months EBITDA of Parent and its Subsidiaries (or such other ratio agreed to in
writing between Agent and Administrative Borrower if, during such period, Parent
repurchased Parent Notes as permitted by the terms of this Agreement or Agent,
in its sole discretion, elects to accommodate the Borrowers' seasonal borrowing
needs) (the amount of such excess is hereafter referred to as the "EBITDA
Deficit").
(d) Notwithstanding the foregoing, the Lenders with Revolver
Commitments shall have no obligation to make additional Advances if, either
immediately before or after giving effect to such Advances, the Revolver Usage
exceeds the sum of (i) the greater of (A) $30,000,000 and (B) the sum of (1) 50%
of the value of Eligible Inventory, Eligible In-Plant Inventory and Eligible Raw
Materials Inventory of Parent and its Restricted Subsidiaries (as defined in the
Indenture Documents) and (2) 80% of the value of the Eligible Accounts of Parent
and its Restricted Subsidiaries (as defined in the Indenture Documents), in each
case determined in accordance with GAAP and (ii) the lesser of (A) $8,000,000
and (B) the amount of Indebtedness (as defined in the Indenture Documents) that
at any time remains available to be incurred by the Loan Parties under Section
4.03(b)(16) of the Parent Note Indenture and the Iron Age Note Indenture (the
amount of such excess is hereafter referred to as the "Indenture Deficit").
(e) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage plus the aggregate principal amount of
the Term Loan A then outstanding plus the aggregate principal amount of the Term
Loan B then outstanding to exceed the Maximum Revolver Amount.
(f) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
(g) A portion of the Advances in a principal amount equal to
$2,000,000 (the "Special Term Advance") shall be the first Advance made to the
Borrowers on the Closing Date and shall not be repaid if any other Advances are
outstanding. Once the Special Term Advance is repaid, the Special Term Advance
may not be reborrowed and the Revolver
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Commitment shall be promptly reduced by an amount equal to $2,000,000.
Notwithstanding anything to the contrary contained in this Section 2.1(g), if
the Real Property Collateral located in Penn Yan, New York is sold with the
prior written consent of Agent, the Borrowers shall, in connection with such
sale, immediately pay to the Agent the Net Cash Proceeds of such sale, to be
applied first, to the principal installments of the Term Loan B in the inverse
order of maturity, second, to the principal installments of the Term Loan A in
the inverse order of maturity, third, to the unpaid principal amount of the
Special Term Advance and, fourth, to the unpaid principal amount of the Term
Loan C, in each case until such Obligations are paid in full (it being
understood that the Revolver Commitment shall not be reduced as a result of any
such repayment of the Special Term Advance).
2.2 TERM LOANS. (a) Subject to the terms and conditions of this
Agreement, on the Closing Date each Lender with a Term Loan A Commitment agrees
(severally, not jointly or jointly and severally) to make term loans
(collectively, the "Term Loan A") to Borrowers in an amount equal to such
Lender's Pro Rata Share of the Term Loan A Amount. The Term Loan A shall be
repaid in consecutive monthly installments each in a principal amount equal to
$16,667, on the first day of each month, commencing on October 1, 2002.
Borrowers may at any time prepay all or a portion of the Term Loan A without
penalty or premium. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan A shall be due and payable on the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan A shall constitute
Obligations. Any principal amount of the Term Loan A repaid or prepaid may not
be reborrowed.
(b) Subject to the terms and conditions of this Agreement, on
the Closing Date each Lender with a Term Loan B Commitment agrees (severally,
not jointly or jointly and severally) to make term loans (collectively, the
"Term Loan B") to Borrowers in an amount equal to such Lender's Pro Rata Share
of the Term Loan B Amount. The Term Loan B shall be repaid on the first day of
each month, commencing October 1, 2002, in consecutive monthly installments each
in a principal amount equal to (i) $58,333 per month, from the Closing Date
through the third anniversary of the Closing Date, and (ii) $37,500 per month,
from the third anniversary of the Closing Date through the Maturity Date.
Borrowers may at any time prepay all or a portion of the Term Loan B without
penalty or premium. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan B shall be due and payable on the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan B shall constitute
Obligations. Any principal amount of the Term Loan B repaid or prepaid may not
be reborrowed.
(c) Subject to the terms and conditions of this Agreement, on
the Closing Date, each Lender with a Term Loan C Commitment agrees (severally,
not jointly or jointly and severally) to make term loans (collectively, the
"Term Loan C") to Borrowers in an amount equal to such Lender's Pro Rata Share
of the Term Loan C Amount. With the prior written consent of the Agent,
Borrowers may, within 10 Business Days of delivery to Agent of each of the
audited annual financial statements pursuant to Section 6.3(b), voluntarily
prepay all or a portion of the Term Loan C without penalty or premium, if (i)
Excess Cash Flow for the Fiscal Year of the Parent covered by such audited
annual financial statements is greater than $3,000,000, (ii) after giving effect
to such prepayment, Excess Availability is not less than $2,000,000, and (iii)
immediately before and immediately after giving effect to such prepayment,
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no Event of Default shall have occurred and be continuing. The outstanding
unpaid principal balance (including the outstanding Term Loan C PIK Amount) and
all accrued and unpaid interest under the Term Loan C (including the Term Loan C
PIK Amount) shall be due and payable on the date of termination of this
Agreement, whether by its terms, by prepayment, or by acceleration. All amounts
outstanding under the Term Loan C (including the Term Loan C PIK Amount) shall
constitute Obligations. Any principal amount of the Term Loan C repaid or
prepaid may not be reborrowed.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the date that is the requested Funding Date in the
case of a request for an Advance or a Term Loan specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day; provided, however, that in the case of a request for Swing Loan in an
amount of $1,000,000, or less, such notice will be timely received if it is
received by Agent no later than 10:00 a.m. (California time) on the Business Day
that is the requested Funding Date). At Agent's election, in lieu of delivering
the above-described written request, any Authorized Person may give Agent
telephonic notice of such request by the required time, with such telephonic
notice to be confirmed in writing within 24 hours of the giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request for
a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of Section 2.3(c) apply to such requested Borrowing, or
(ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing
Loan pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the
terms of this Section 2.3(c) apply to a requested Borrowing as described
in Section 2.3(b), then promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders, not
later than 1:00 p.m. (California time) on the Business Day immediately
preceding the Funding Date applicable thereto, by telecopy, telephone, or
other similar form of transmission, of the requested Borrowing. Each
Lender shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to Agent in immediately available funds, to
Agent's Account, not later than 10:00 a.m. (California time) on the
Funding Date applicable thereto. After Agent's receipt of the proceeds of
such Advances (or a Term Loan, as applicable), upon satisfaction of the
applicable conditions precedent set forth in Section 3 hereof, Agent shall
make the proceeds thereof available to Administrative Borrower on the
applicable Funding Date by transferring immediately available funds equal
to such proceeds received by Agent to Administrative Borrower's Designated
Account; provided, however, that, subject to the provisions of Section
2.3(i), Agent shall not request any Lender to make, and no Lender
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shall have the obligation to make, any Advance (or its portion of the Term
Loans) if Agent shall have actual knowledge that (1) one or more of the
applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least 1 Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required hereunder to
Agent for the account of Borrowers the amount of that Lender's Pro Rata
Share of the Borrowing, Agent may assume that each Lender has made or will
make such amount available to Agent in immediately available funds on the
Funding Date and Agent may (but shall not be so required), in reliance
upon such assumption, make available to Borrowers on such date a
corresponding amount. If and to the extent any Lender shall not have made
its full amount available to Agent in immediately available funds and
Agent in such circumstances has made available to Borrowers such amount,
that Lender shall on the Business Day following such Funding Date make
such amount available to Agent, together with interest at the Defaulting
Lender Rate for each day during such period. A notice submitted by Agent
to any Lender with respect to amounts owing under this subsection shall be
conclusive, absent manifest error. If such amount is so made available,
such payment to Agent shall constitute such Lender's Advance on the date
of Borrowing for all purposes of this Agreement. If such amount is not
made available to Agent on the Business Day following the Funding Date,
Agent will notify Administrative Borrower of such failure to fund and,
upon demand by Agent, Borrowers shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall not
relieve any other Lender of any obligation hereunder to make an Advance on
such Funding Date, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on
any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance
with their Commitments (but only to the extent that such Defaulting
Lender's Advance was funded by the other members of the Lender Group) or,
if so directed by Administrative Borrower and if no Default or Event of
Default had occurred and is continuing (and to the extent such Defaulting
Lender's Advance was not funded by the Lender Group), retain same to be
re-advanced to Borrowers as if such Defaulting Lender had made Advances to
Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such Defaulting Lender
the amount of all such payments received and retained by it for the
account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting
Lender shall be deemed not to be a "Lender" and such Lender's Commitment
shall be deemed to be zero. This Section shall
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remain effective with respect to such Lender until (x) the Obligations
under this Agreement shall have been declared or shall have become
immediately due and payable, (y) the non-Defaulting Lenders, Agent, and
Administrative Borrower shall have waived such Defaulting Lender's default
in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by Defaulting
Lender in respect thereof. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder, or to relieve or excuse
the performance by Borrowers of their duties and obligations hereunder to
Agent or to the Lenders other than such Defaulting Lender. Any such
failure to fund by any Defaulting Lender shall constitute a material
breach by such Defaulting Lender of this Agreement and shall entitle
Administrative Borrower at its option, upon written notice to Agent, to
arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be reasonably acceptable to
Agent. In connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced hereunder,
and agrees to execute and deliver a completed form of Assignment and
Acceptance Agreement in favor of the substitute Lender (and agrees that it
shall be deemed to have executed and delivered such document if it fails
to do so) subject only to being repaid its share of the outstanding
Obligations (other than Bank Product Obligations) (including an assumption
of its Pro Rata Share of the Risk Participation Liability) without any
premium or penalty of any kind whatsoever; provided further, however, that
any such assumption of the Commitment of such Defaulting Lender shall not
be deemed to constitute a waiver of any of the Lender Groups' or
Borrowers' rights or remedies against any such Defaulting Lender arising
out of or in relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of
Swing Lender, as a Lender, to have the terms of this Section 2.3(d) apply
to a requested Borrowing as described in Section 2.3(b), Swing Lender as a
Lender shall make such Advance in the amount of such Borrowing (any such
Advance made solely by Swing Lender as a Lender pursuant to this Section
2.3(d) being referred to as a "Swing Loan" and such Advances being
referred to collectively as "Swing Loans") available to Borrowers on the
Funding Date applicable thereto by transferring immediately available
funds to Administrative Borrower's Designated Account. Each Swing Loan is
an Advance hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that all payments on any Swing Loan
shall be payable to Swing Lender as a Lender solely for its own account
(and for the account of the holder of any participation interest with
respect to such Swing Loan). Subject to the provisions of Section 2.3(i),
Agent shall not request Swing Lender as a Lender to make, and Swing Lender
as a Lender shall not make, any Swing Loan if Agent has actual knowledge
that (i) one or more of the applicable conditions precedent set forth in
Section 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (ii) the
requested Borrowing would exceed the Availability on such Funding Date.
Swing Lender as a Lender shall not otherwise be required to determine
whether the applicable conditions precedent set forth in Section 3 have
been satisfied on the Funding Date applicable thereto prior to making, in
its sole discretion, any Swing Loan.
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(ii) The Swing Loans shall be secured by the Agent's
Liens, shall constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and the
Lenders, from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of Default,
or (2) at any time that any of the other applicable conditions precedent
set forth in Section 3 have not been satisfied, to make Advances to
Borrowers on behalf of the Lenders that Agent, in its Permitted Discretion
deems necessary or desirable (A) to preserve or protect the Collateral, or
any portion thereof, (B) to enhance the likelihood of repayment of the
Obligations (other than the Bank Product Obligations), or (C) to pay any
other amount chargeable to Borrowers pursuant to the terms of this
Agreement, including Lender Group Expenses and the costs, fees, and
expenses described in Section 10 (any of the Advances described in this
Section 2.3(e) shall be referred to as "Agent Advances"); provided, that
notwithstanding anything to the contrary contained in this Section 2.3(e),
the aggregate principal amount of Advances outstanding at any time, when
taken together with the aggregate principal amount of Overadvances made in
accordance with Section 2.3(i) hereof outstanding at any time, shall not
exceed an amount equal to the lesser of (x) 10% of the Borrowing Base then
in effect and (y) $5,000,000. Each Agent Advance is an Advance hereunder
and shall be subject to all the terms and conditions applicable to other
Advances, except that no such Agent Advance shall be eligible for the
LIBOR Option and all payments thereon shall be payable to Agent solely for
its own account (and for the account of the holder of any participation
interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable by Borrowers
on demand and secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder, and shall
bear interest at the rate applicable from time to time to Advances that
are Base Rate Loans.
(f) SETTLEMENT. It is agreed that each Lender's funded portion
of the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with
the Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to each
outstanding Swing Loan, (2) for itself, with respect to each Agent
Advance, and (3) with respect to Collections received, as to each
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by notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m.
(California time) on the Business Day immediately prior to the date of
such requested Settlement (the date of such requested Settlement being the
"Settlement Date"). Such notice of a Settlement Date shall include a
summary statement of the amount of outstanding Advances, Swing Loans, and
Agent Advances for the period since the prior Settlement Date. Subject to
the terms and conditions contained herein (including Section 2.3(c)(iii)):
(y) if a Lender's balance of the Advances, Swing Loans, and Agent Advances
exceeds such Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, then Agent shall, by no later than
12:00 p.m. (California time) on the Settlement Date, transfer in
immediately available funds to the account of such Lender as such Lender
may designate, an amount such that each such Lender shall, upon receipt of
such amount, have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans, and Agent Advances, and (z) if a Lender's balance
of the Advances, Swing Loans, and Agent Advances is less than such
Lender's Pro Rata Share of the Advances, Swing Loans, and Agent Advances
as of a Settlement Date, such Lender shall no later than 12:00 p.m.
(California time) on the Settlement Date transfer in immediately available
funds to the Agent's Account, an amount such that each such Lender shall,
upon transfer of such amount, have as of the Settlement Date, its Pro Rata
Share of the Advances, Swing Loans, and Agent Advances. Such amounts made
available to Agent under clause (z) of the immediately preceding sentence
shall be applied against the amounts of the applicable Swing Loan or Agent
Advance and, together with the portion of such Swing Loan or Agent Advance
representing Swing Lender's Pro Rata Share thereof, shall constitute
Advances of such Lenders. If any such amount is not made available to
Agent by any Lender on the Settlement Date applicable thereto to the
extent required by the terms hereof, Agent shall be entitled to recover
for its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing Loans,
and Agent Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments
actually received in good funds by Agent with respect to principal,
interest and fees payable by Borrowers and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a net amount is
owed to any such Lender after such application, such net amount shall be
distributed by Agent to that Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no
Agent Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with the terms
of this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as of
any Settlement Date, Collections received since the then immediately
preceding Settlement Date have been applied to Swing Lender's Pro Rata
Share of the Advances other than to Swing Loans, as provided for in the
previous sentence, Swing Lender shall pay to Agent for the accounts of the
Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that
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each Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent
with respect to Agent Advances, and each Lender (subject to the effect of
letter agreements between Agent and individual Lenders) with respect to
the Advances other than Swing Loans and Agent Advances, shall be entitled
to interest at the applicable rate or rates payable under this Agreement
on the daily amount of funds employed by Swing Lender, Agent, or the
Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. (i) Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby
would be created, so long as (A) after giving effect to such Advances (including
a Swing Loan), the Revolver Usage does not exceed the Borrowing Base less the
aggregate amount of the Inventory Reserves by more than an amount equal to the
lesser of (x) 10% of the Borrowing Base then in effect and (y) $5,000,000, (B)
after giving effect to such Advances (including a Swing Loan), the outstanding
Revolver Usage (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) plus the aggregate principal amount of
the Term Loan A then outstanding plus the aggregate principal amount of the Term
Loan B then outstanding does not exceed the Maximum Revolver Amount, (C) the
aggregate principal amount of Overadvances made pursuant to this Section 2.3(i)
when taken together with the aggregate principal amount of Agent Advances made
pursuant to Section 2.3(e) does not exceed at any time an amount equal to the
lesser of (x) 10% of the Borrowing Base then in effect and (y) $ 5,000,000, and
(D) at the time of the making of any such Advance (including a Swing Loan),
Agent does not believe, in good faith, that the Overadvance created by such
Advance will be outstanding for more than 90 days. The foregoing provisions are
for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not
intended to benefit Borrowers in any way. The Advances and Swing Loans, as
applicable, that are made pursuant to this Section 2.3(i) shall be subject to
the same terms and conditions as any other Advance or Swing Loan, as applicable,
except that they shall not be
- 43 -
eligible for the LIBOR Option and the rate of interest applicable thereto shall
be the rate applicable to Advances that are Base Rate Loans under Section 2.6(c)
hereof without regard to the presence or absence of a Default or Event of
Default.
(ii) In the event Agent obtains actual knowledge that
the Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess, Agent
shall notify Lenders as soon as practicable (and prior to making any (or
any additional) intentional Overadvances (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses)
unless Agent determines that prior notice would result in imminent harm to
the Collateral or its value), and the Lenders with Revolver Commitments
thereupon shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers intended to reduce,
within a reasonable time, the outstanding principal amount of the Advances
to Borrowers to an amount permitted by the preceding paragraph. In the
event Agent or any Lender disagrees over the terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof
shall be implemented according to the determination of the Required
Lenders.
(iii) Each Lender with a Revolver Commitment shall be
obligated to settle with Agent as provided in Section 2.3(f) for the
amount of such Lender's Pro Rata Share of any unintentional Overadvances
by Agent reported to such Lender, any intentional Overadvances made as
permitted under this Section 2.3(i), and any Overadvances resulting from
the charging to the Loan Account of interest, fees, or Lender Group
Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the account of
the Lender Group and shall be made in immediately available funds, no
later than 11:00 a.m. (California time) on the date specified herein. Any
payment received by Agent later than 11:00 a.m. (California time), shall
be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such following
Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the Lenders that
Borrowers will not make such payment in full as and when required, Agent
may assume that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such
Lender. If and to the extent Borrowers do not make such payment in full to
Agent on the date when due, each Lender severally shall repay to Agent on
demand such amount distributed to such Lender, together with interest
thereon at the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
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(iii) Immediately upon any sale or disposition by a Loan
Party or any of its Subsidiaries of property or assets described in
clauses (a) and (f) of the definition of Permitted Dispositions or upon
the receipt of any insurance proceeds with respect to any assets other
than Inventory in accordance with Section 6.8(b), Borrowers shall, subject
to the provisions of clause (iv) of this Section 2.4(a), remit to Agent an
amount equal to 100% of the Net Cash Proceeds received by such Person in
connection with such sale or disposition or 100% of such insurance
proceeds, as the case may be, for application by Agent, first, to the
principal installments of the Term Loan A in the inverse order of
maturity, second, to the principal installments of the Term Loan B in the
inverse order of maturity and, third, to the principal of the Advances.
(iv) Upon delivery of a certificate of an Authorized
Person of Borrowers to the Agent stating that all proceeds that, in the
absence of this paragraph (iv), would otherwise be required to be applied
to the Term Loans and the Advances as provided in clause (iii) of this
Section 2.4(a) (such proceeds, the "Sale/Casualty Proceeds") shall be used
to replace, repair or otherwise restore the Collateral subject to a sale,
disposition, casualty, loss or condemnation and identifying whether such
Sale/Casualty Proceeds shall be deposited in a Cash Collateral Account
pursuant to subparagraph (A) below or used to repay the Advances pursuant
to subparagraph (B) below and in the absence of a continuing Default or
Event of Default, the Borrowers may direct Agent to either:
A. deposit all such Sale/Casualty Proceeds into a Cash
Collateral Account, in which case all such Sale/Casualty Proceeds when so
deposited (w) shall constitute Collateral for the Obligations then
outstanding, (x) may be withdrawn by the Borrowers solely to replace,
repair or restore any Collateral sold or otherwise disposed of, or the
subject of casualty, loss or condemnation with other Collateral of the
same type that is useful in the business of the Borrowers, provided that
(1) such withdrawal must be made and such Collateral replaced, repaired or
restored within 90 days after the date of the applicable sale,
disposition, loss, casualty or condemnation, (2) the amount withdrawn may
not exceed the amount of Sale/Casualty Proceeds deposited in connection
with any such any sale, disposition, loss, casualty or condemnation, and
(3) no Default or Event of Default shall have occurred and be continuing
at the time of such withdrawal, and (y) upon the occurrence and during the
continuance of a Default or an Event of Default or after such 90 day
period shall have expired, shall be applied by Agent to the Obligations in
accordance with clause (iii) of this Section 2.4(b), or
B. apply all such Sale/Casualty Proceeds to repay the
Advances, the proceeds of which were used to purchase Equipment of the
same type within 90 days prior to the date of the applicable sale or other
disposition of the Equipment replaced thereby.
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Notwithstanding anything to the contrary contained in this clause (iv), the
maximum amount that may be deposited in the Cash Collateral Account pursuant to
subparagraph (A) above together with the maximum amount of proceeds that may be
applied to the Advances pursuant to subparagraph (B) above may not exceed
$250,000 in the aggregate at any time.
(b) APPORTIONMENT AND APPLICATION OF PAYMENTS.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan Documents
(including in letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned ratably
among the Lenders (according to the unpaid principal balance of the
Obligations to which such payments relate held by each Lender) and
payments of fees and expenses (other than fees or expenses that are for
Agent's separate account, after giving effect to any letter agreements
between Agent and individual Lenders) shall be apportioned ratably among
the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee relates. Except as otherwise
specifically provided in Section 2.1(g) and paragraph (b)(iii) below, all
payments shall be remitted to Agent and all such payments (other than
payments received while no Default or Event of Default has occurred and is
continuing and which relate to the payment of principal or interest of
specific Obligations or which relate to the payment of specific fees or
other amounts), and all proceeds of Accounts or other Collateral received
by Agent, shall be applied as follows:
A. first, to pay any Lender Group Expenses then due to
Agent under the Loan Documents, until paid in full,
B. second, to pay any Lender Group Expenses then due to
the Lenders under the Loan Documents, on a ratable basis, until paid in
full, provided, that, if an Event of a Default has occurred and is
continuing, the priority of the payment of any Lender Group Expenses
payable to each Lender in respect of its Term Loan C Commitment or its
Term Loan C shall, unless Agent agrees in its sole discretion to forgo
deferring such payment, be deferred to item "seventeenth" below,
C. third, to pay any fees then due to Agent, including,
without limitation, any Applicable Prepayment Premium (for its separate
account, after giving effect to any letter agreements between Agent and
the individual Lenders) under the Loan Documents until paid in full,
D. fourth, to pay any fees then due to any or all of the
Lenders (after giving effect to any letter agreements between Agent and
individual Lenders) under the Loan Documents, on a ratable basis, until
paid in full, provided that, if an Event of Default has occurred and is
continuing, the priority of the payment of any fee payable to each Lender
in respect of its Term Loan C Commitment or its Term Loan C shall, unless
Agent agrees in its sole discretion to forgo deferring such payment, be
deferred to item "eighteenth" below,
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E. fifth, to pay interest due in respect of all Agent
Advances, until paid in full,
F. sixth, ratably to pay interest due in respect of the
Advances (other than Agent Advances), the Swing Loans, the Term Loan A and
the Term Loan B until paid in full,
G. seventh, so long as no Event of Default has occurred
and is continuing or, if an Event of Default has occurred and is
continuing and Agent agrees in its sole discretion to forgo deferring such
payment, ratably to pay interest due in respect of the Term Loan C until
paid in full (if an Event of Default has occurred and is continuing, the
priority of the payment of interest on the Term Loan C, including the Term
Loan C PIK Amount, is deferred to item "nineteenth" below),
H. eighth, to pay the principal of all Agent Advances
until paid in full,
I. ninth, ratably to pay all principal amounts then due
and payable (other than as a result of an acceleration thereof) with
respect to the Term Loan A and the Term Loan B until paid in full,
J. tenth, to pay the principal of all Swing Loans until
paid in full,
K. eleventh, so long as no Event of Default has occurred
and is continuing, and at Agent's election (which election Agent agrees
will not be made if an Overadvance would be created thereby), to pay
amounts then due and owing by Parent or its Subsidiaries in respect of all
Bank Products, until paid in full,
L. twelfth, so long as no Event of Default has occurred
and is continuing, to pay the principal of all Advances until paid in full
(it being understood that the Special Term Advance shall not be paid until
all other Advances are paid in full),
M. thirteenth, if an Event of Default has occurred and
is continuing, ratably (i) to pay the principal of all Advances until paid
in full (it being understood that the Special Term Advance shall not be
paid until all other Advances are paid in full), and (ii) to Agent, to be
held by Agent, for the benefit of ▇▇▇▇▇ Fargo or its Affiliates, as
applicable, as cash collateral in an amount up to the amount of the Bank
Products Reserve established prior to the occurrence of, and not in
contemplation of, the subject Event of Default until the obligations of
Parent and its Subsidiaries in respect of the then extant Bank Products
have been paid in full or the cash collateral amount has been exhausted,
N. fourteenth, if an Event of Default has occurred and
is continuing, ratably to pay the outstanding principal balance of the
Term Loan A and the Term Loan B (in each case in the inverse order of the
maturity of the installments due thereunder) until the Term Loan A and the
Term Loan B are paid in full,
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O. fifteenth, if an Event of Default has occurred and is
continuing, to Agent, to be held by Agent, for the ratable benefit of
Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter of Credit
Usage until paid in full,
P. sixteenth, so long as no Event of Default has
occurred and is continuing or, if an Event of Default has occurred and is
continuing and Agent agrees in its sole discretion to forgo deferring such
payment, ratably to pay all principal amounts then due and payable (other
than as a result of an acceleration thereof) with respect to the Term Loan
C until paid in full (if an Event of Default has occurred and is
continuing, the priority of the payment of principal then due with respect
to the Term Loan C is deferred to item "twentieth" below),
Q. seventeenth, if an Event of Default has occurred and
is continuing, to pay Lender Group Expenses due in respect of the Term
Loan C until paid in full,
R. eighteenth, if an Event of Default has occurred and
is continuing, to pay fees due in respect of the Term Loan C until paid in
full,
S. nineteenth, if an Event of Default has occurred and
is continuing, to pay interest due in respect of the Term Loan C,
including the Term Loan C PIK Amount, until paid in full,
T. twentieth, if an Event of Default has occurred and is
continuing, to pay the outstanding principal balance of the Term Loan C
until the Term Loan C is paid in full,
U. twenty-first, to pay any other Obligations (including
Bank Product Obligations) until paid in full, and
V. twenty-second, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under applicable
law.
(ii) Agent promptly shall distribute to each Lender, pursuant
to the applicable wire instructions received from each Lender in writing,
such funds as it may be entitled to receive, subject to a Settlement delay
as provided in Section 2.3(h).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, Section 2.4(b) shall not be deemed to apply to
any payment by Borrowers specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any
provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents, including loan
fees, service fees, professional fees, interest, default interest,
interest on interest, expense reimbursements, and indemnities,
specifically including in each case any of the foregoing which would
accrue but for the commencement of any Insolvency Proceeding and whether
all or any portion thereof would be or is allowed or disallowed in any
Insolvency Proceeding.
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(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any other
Loan Document, it is the intention of the parties hereto that 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 2.4 shall
control and govern.
(c) TERM LOAN A AMOUNT. If at any time the outstanding
principal amount of the Term Loan A exceeds the Term Loan A Amount, Borrowers
shall immediately pay to Agent an amount equal to such excess, to be applied to
the principal installments of the Term Loan A in the inverse order of maturity.
Agent shall have the right to have the Eligible Equipment and Eligible Real
Property Collateral reappraised by a qualified appraisal company selected by
Agent in its Permitted Discretion from time to time after the Closing Date for
the purposes of the definition of "Term Loan A Amount" and this Section 2.4(c);
provided, that so long as no Default or Event of Default has occurred and is
continuing, Borrowers shall only be obligated to pay for fees and charges
incurred for such appraisals conducted no more frequently than once per calendar
year.
(d) TERM LOAN B AMOUNT. If at any time the outstanding
principal amount of the Term Loan B exceeds the Term Loan B Amount, Borrowers
shall immediately pay to Agent an amount equal to such excess, to be applied to
the principal installments of the Term Loan B in the inverse order of maturity.
Agent shall have the right to have the Eligible Inventory, Eligible In-Plant
Inventory and Eligible Raw Materials Inventory reappraised by a qualified
appraisal company or field auditor selected by Agent in its Permitted Discretion
from time to time after the Closing Date for the purposes of the definition of
"Term Loan B Amount" and this Section 2.4(d); provided, that so long as no
Default or Event of Default has occurred and is continuing, Borrowers shall only
be obligated to pay for fees and charges incurred for such appraisals conducted
no more frequently than 3 times per calendar year and field audits conducted no
more frequently than 3 times per calendar year.
(e) EBITDA DEFICIT. If on any day an EBITDA Deficit exists,
Borrowers shall immediately pay to Agent an amount equal to such EBITDA Deficit
to be applied, first, to the principal installments of the Term Loan B in the
inverse order of maturity, second, to the principal installments of the Term
Loan A in the inverse order of maturity and, third, to the principal of the
Advances.
(f) INDENTURE DEFICIT. If on any day an Indenture Deficit
exists, Borrowers shall immediately pay to Agent an amount equal to such
Indenture Deficit to be applied to the principal of the Advances (it being
understood that the Special Term Advance shall not be paid until all other
Advances are paid in full).
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group
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pursuant to Sections 2.1 and 2.12 is greater than either the Dollar or
percentage limitations set forth in Sections 2.1 or 2.12, (an "Overadvance"),
Borrowers immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance with
the priorities set forth in Section 2.4(b). In addition, Borrowers hereby
promise to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to the Lender Group as and when due and payable
under the terms of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit and Bank Product
Obligations) whether or not charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate from time to time in effect plus the LIBOR Rate Margin,
(ii) if the relevant Obligation is all or a portion of the Term Loan A that is a
LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate from time to time
in effect plus the LIBOR Rate Term Loan A Margin, (iii) if the relevant
Obligation is all or a portion of the Term Loan A that is a Base Rate Loan, at a
per annum rate equal to the Base Rate from time to time in effect plus the Base
Rate Term Loan A Margin, (iv) if the relevant Obligation is all or a portion of
the Term Loan B that is a LIBOR Rate Loan, at a per annum rate equal to the
LIBOR Rate from time to time in effect plus the LIBOR Rate Term Loan B Margin,
(v) if the relevant Obligation is all or a portion of the Term Loan B that is a
Base Rate Loan, at a per annum rate equal to the Base Rate from time to time in
effect plus the Base Rate Term Loan B Margin, (vi) if the relevant Obligation is
all or a portion of the Term Loan C (inclusive of any Term Loan C PIK Amount),
at a per annum rate equal to 13.25%; provided, however, that, in the case of
this clause (vi) that portion of such interest equal to 2.00 percentage points
per annum shall be paid-in-kind by being added to the outstanding principal
balance of the Term Loan C (inclusive of any Term Loan C PIK Amount theretofore
so added) on the first day of each fiscal quarter of Parent and its
Subsidiaries, and (vii) otherwise, at a per annum rate equal to the Base Rate
from time to time in effect plus the Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a per annum rate equal to 2.00% times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon written notice from Agent to
Administrative Borrower after the occurrence and during the continuation of an
Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and Bank Product Obligations) shall bear interest on the Daily
Balance thereof at a per annum rate equal to 3 percentage points above the
per annum rate otherwise applicable to such Obligations hereunder, and
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(ii) the Letter of Credit fee provided for above shall
be increased to 3 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Subject to Section 2.13(a) with respect to LIBOR
Rate Loans, interest (other than the Term Loan C PIK Amount), Letter of Credit
fees, and all other fees payable hereunder shall be due and payable, in arrears,
on the first day of each month at any time that Obligations or Commitments are
outstanding. Borrowers hereby authorize Agent, from time to time, without prior
notice to Borrowers, to charge such interest and fees, all Lender Group Expenses
(as and when incurred), the charges, commissions, fees, and costs provided for
in Section 2.12(e) (as and when accrued or incurred), the fees and costs
provided for in Section 2.11 (as and when accrued or incurred), and all other
payments as and when due and payable under any Loan Document (including the
installments due and payable with respect to the Term Loans and including any
amounts due and payable to ▇▇▇▇▇ Fargo or its Affiliates in respect of Bank
Products up to the amount of the then extant Bank Product Reserves) to
Borrowers' Loan Account, which amounts thereafter shall constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances
hereunder. Any interest not paid when due shall be compounded by being charged
to Borrowers' Loan Account and shall thereafter constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances that are Base
Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed (subject, in the case of the Canadian Security Documents,
to the Interest Act (Canada)). In the event the Base Rate is changed from time
to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Obligations to the
extent of such excess.
2.7 CASH MANAGEMENT.
(a) Parent and Borrowers shall (i) establish and maintain cash
management services of a type and on terms reasonably satisfactory to Agent at
one or more of the banks set forth on Schedule 2.7(a) (each a "Cash Management
Bank"), and shall request in writing and otherwise take such reasonable steps to
ensure that all of its Account Debtors forward payment of the amounts owed by
them directly to such Cash Management Bank, and (ii)
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deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all Collections (including
those sent directly by Account Debtors to a Cash Management Bank) into a bank
account in Agent's name (a "Cash Management Account") at one of the Cash
Management Banks.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Agent, Parent and Borrowers, in form and
substance reasonably acceptable to Agent. Each such Cash Management Agreement
shall provide, among other things, that (i) all items of payment deposited in
such Cash Management Account and proceeds thereof are held by such Cash
Management Bank as agent or bailee-in-possession for Agent, (ii) the Cash
Management Bank has no rights of setoff or recoupment or any other claim against
the applicable Cash Management Account, other than for payment of its service
fees and other charges directly related to the administration of such Cash
Management Account and for returned checks or other items of payment, and (iii)
it immediately will forward by daily sweep all amounts in the applicable Cash
Management Account to the Agent's Account.
(c) So long as no Default or Event of Default has occurred and
is continuing, Administrative Borrower may amend Schedule 2.7(a) or (b) to add
or replace a Cash Management Bank or Cash Management Account; provided, however,
that (i) such prospective Cash Management Bank shall be reasonably satisfactory
to Agent and Agent shall have consented in writing in advance to the opening of
such Cash Management Account with the prospective Cash Management Bank, and (ii)
prior to the time of the opening of such Cash Management Account, Parent,
Borrowers and such prospective Cash Management Bank shall have executed and
delivered to Agent a Cash Management Agreement. Parent and Borrowers shall close
any of their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Parent and Borrowers are
hereby deemed to have granted a Lien to Agent.
(e) Iron Age Canada shall within 60 days of the Closing Date
(i) establish, and thereafter maintain, one or more depository accounts, under
the dominion and control of Agent pursuant to a lockbox agreement among Agent,
Iron Age Canada and the applicable Canadian financial institution, in form and
substance reasonably satisfactory to Agent, in respect of its Collections and
(ii) instruct all of its Account Debtors to remit all such Collections to such
depository accounts. Iron Age Canada at all times shall deposit all Collections
into such accounts that are received by Iron Age Canada from any source
promptly, and in any event no later than the first Business Day after the date
of receipt thereof.
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(f) So long as no Event of Default shall have occurred and be
continuing, Iron Age Canada may use the funds on deposit in its foreign bank
accounts for its working capital purposes, provided that all funds not so used
shall be wired (and in the case of non-Dollar denominated funds, converted into
Dollars (at Borrowers' sole expense)) at the end of each Fiscal Month into a
Cash Management Account. During the continuance of an Event of Default, Agent
shall have the right to convert all non-Dollar denominated balances in Iron Age
Canada's foreign bank accounts into Dollars (at Borrowers' sole expense) and
cause all amounts in such accounts to be wired into a DDA or other account
subject to a Control Agreement and then wired from such DDA to a Cash Management
Account. The arrangements contemplated in Section 2.7(e) and this Section 2.7(f)
shall not be modified by Iron Age Canada without the prior written consent of
Agent.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment
item by Agent (whether from transfers to Agent by the Cash Management Banks
pursuant to the Cash Management Agreements or otherwise) shall not be considered
a payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day. All payments
made to the Agent's Account shall be applied to the Obligations in accordance
with this Agreement. From and after the Closing Date, Agent shall be entitled to
charge Borrowers for one (1) Business Day of 'clearance' or 'float' at the rate
applicable to Base Rate Loans under Section 2.6 on all Collections (regardless
of whether forwarded by the Cash Management Banks to Agent). This
across-the-board one (1) Business Day clearance or float charge on all
Collections is acknowledged by the parties to constitute an integral aspect of
the pricing of the financing of Borrowers and shall apply irrespective of
whether or not there are any outstanding monetary Obligations; the effect of
such clearance or float charge being the equivalent of charging one (1) Business
Day of interest on such Collections. The parties acknowledge and agree that the
economic benefit of the foregoing provisions of this Section 2.8 shall be for
the exclusive benefit of Agent.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances
and the Term Loans, and Issuing Lender is authorized to issue the Letters of
Credit, under this Agreement based upon telephonic or other instructions
received from anyone purporting to be an Authorized Person, or without
instructions if pursuant to Section 2.6(d). Administrative Borrower agrees to
establish and maintain the Designated Account with the Designated Account Bank
for the purpose of receiving the proceeds of the Advances requested by Borrowers
and made by Agent or the Lenders hereunder. So long as no Event of Default has
occurred and is continuing, Administrative Borrower may add or replace, the
Designated Account Bank or the Designated Account on 30 days prior written
notice to Agent; provided, however, that (i) such prospective Designated Account
Bank shall be reasonably satisfactory to Agent and Agent shall have consented in
writing in advance to the opening of such Designated Account with the
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prospective Designated Account Bank, and (ii) prior to the time of the opening
of such Designated Account, Borrowers and such prospective Designated Account
Bank shall have executed and delivered to Agent a Control Agreement. Unless
otherwise agreed by Agent and Administrative Borrower, any Advance, Agent
Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders
hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with the Term Loans, all Advances
(including Agent Advances and Swing Loans) made by Agent, Swing Lender, or the
Lenders to Borrowers or for Borrowers' account, the Letters of Credit issued by
Issuing Lender for Borrowers' account, and with all other payment Obligations
hereunder or under the other Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with Section 2.8, the Loan Account will be credited with
all payments received by Agent from Borrowers or for Borrowers' account,
including all amounts received in the Agent's Account from any Cash Management
Bank. Agent shall render statements regarding the Loan Account to Administrative
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Administrative Borrower, Administrative
Borrower shall deliver to Agent written objection thereto describing the error
or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is terminated thereafter) and shall be apportioned
among the Lenders in accordance with the terms of letter agreements between
Agent and individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in the amount equal to 0.375% per
annum times the result of (i) the Maximum Revolver Amount, less (ii) the sum of
(A) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (B) the average Daily Balance of the Letter of
Credit Usage during the immediately preceding month, plus (C) the outstanding
principal amount of the Term Loan A, plus (D) the outstanding principal amount
of the Term Loan B,
(b) FEE LETTER FEES. As and when due and payable under the
terms of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the
Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows:
(i) a fee of $850 per day, per auditor, plus reasonable out-of-pocket expenses
for each financial audit of a Loan Party performed by personnel employed by
Agent; (ii) if implemented, a one time charge of $5,000 plus reasonable
out-of-pocket expenses for expenses for the establishment of electronic
collateral reporting systems; (iii) a fee of $1,500 per day per appraiser, plus
reasonable out-of-pocket expenses, for each appraisal of the Collateral
performed by personnel employed by Agent; and (iv) subject to the limitations
set forth in Section 2.1(b) and Sections 2.4(c) and (d),
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the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third Persons to perform financial audits of the Loan Parties, to
appraise the Collateral, or any portion thereof, or to assess a Loan Party's
business valuation.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or
L/C Undertaking to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary thereof (or of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender,
Borrowers also shall be an applicant under the application with respect to any
Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The
Issuing Lender shall have no obligation to issue a Letter of Credit if any of
the following would result after giving effect to the requested Letter of
Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the then extant amount of outstanding Advances and the
aggregate amount of the Inventory Reserves, or
(ii) the Letter of Credit Usage would exceed $2,000,000,
or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less (A) the then extant amount of outstanding
Advances and (B) the then extant aggregate principal amount of the Term
Loan A and the Term Loan B outstanding.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
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notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, or (ii) if such notice
is received after 10:00 a.m., California time, the Business Day immediately
succeeding the date Administrative Borrower receives such notice, and, in the
absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in clause (a) of
this Section, or of any reimbursement payment required to be refunded to
Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges
and agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share pursuant to
this Section 2.12(b) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in Section
3 hereof. If any such Lender fails to make available to Agent the amount of such
Lender's Pro Rata Share of any payments made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Each Borrower hereby agrees to indemnify, save, defend,
and hold the Lender Group harmless from any loss, cost, expense, or liability,
and reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit;
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provided, however, that no Borrower shall be obligated hereunder to indemnify
for any loss, cost, expense, or liability that is caused by the gross negligence
or willful misconduct of the Issuing Lender or any other member of the Lender
Group. Each Borrower agrees to be bound by the Underlying Issuer's regulations
and interpretations of any Underlying Letter of Credit or by Issuing Lender's
interpretations of any L/C issued by Issuing Lender to or for such Borrower's
account, even though this interpretation may be different from such Borrower's
own, and each Borrower understands and agrees that the Lender Group shall not be
liable for any error, negligence, or mistake, whether of omission or commission
(other than errors or mistakes resulting from the gross negligence or willful
misconduct of a member of the Lender Group as finally determined by a court of
competent jurisdiction), in following Borrowers' instructions or those contained
in the Letter of Credit or any modifications, amendments, or supplements
thereto. Each Borrower understands that the L/C Undertakings may require Issuing
Lender to indemnify the Underlying Issuer for certain costs or liabilities
arising out of claims by Borrowers against such Underlying Issuer. Each Borrower
hereby agrees to indemnify, save, defend, and hold the Lender Group harmless
with respect to any loss, cost, expense (including reasonable attorneys fees),
or liability incurred by the Lender Group under any L/C Undertaking as a result
of the Lender Group's indemnification of any Underlying Issuer; provided,
however, that no Borrower shall be obligated hereunder to indemnify for any
loss, cost, expense, or liability that is caused by the gross negligence or
willful misconduct of the Issuing Lender or any other member of the Lender
Group.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change after the Closing Date in the
interpretation or application thereof by any Governmental Authority, or (ii)
compliance by the Underlying Issuer or the Lender Group with any direction,
request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority issued after the Closing Date,
including, without limitation, Regulation D of the Federal Reserve Board as from
time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or
shall be imposed or modified in respect of any Letter of Credit issued
hereunder, or
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(ii) there shall be imposed on the Underlying Issuer or
the Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
error, be final and conclusive and binding on all of the parties hereto.
(g) Each Borrower acknowledges and agrees that certain of the
Letters of Credit may provide for the presentation of time drafts to the
Underlying Issuer. If an Underlying Issuer accepts such a time draft that is
presented under an Underlying Letter of Credit, it is acknowledged and agreed
that (i) the Letter of Credit will require the Issuing Lender to reimburse the
Underlying Issuer for amounts paid on account of such time draft on or after the
maturity date thereof, (ii)the pricing provisions hereof (including Sections
2.6(b) and 2.12(e)) shall continue to apply, until payment of such time draft on
or after the maturity date thereof, as if the Underlying Letter of Credit were
still outstanding, and (iii) on the date on which Issuing Lender makes payment
to the Underlying Issuer of the amounts paid on account of such time draft,
Borrowers immediately shall reimburse such amount to Issuing Lender and such
amount shall constitute an L/C Disbursement hereunder.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrowers shall have the
option (the "LIBOR Option") to have interest on all or a portion of the
Advances, the Term Loan A or the Term Loan B be charged at a rate of interest
based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the
earliest of (i) the last day of the Interest Period applicable thereto, (ii) the
occurrence of an Event of Default in consequence of which the Required Lenders
or Agent on behalf thereof elect to accelerate the maturity of all or any
portion of the Obligations, or (iii) termination of this Agreement pursuant to
the terms hereof. On the last day of each applicable Interest Period, unless
Administrative Borrower properly has exercised or continued the LIBOR Option
with respect thereto, the interest rate applicable to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to Base Rate
Loans of the same type hereunder. At any time that an Event of Default has
occurred and is continuing, Borrowers no longer shall have the option to request
that Advances, the Term Loan A or the Term Loan B bear interest at the LIBOR
Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder on the last day of the Interest Period applicable thereto.
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(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and from
time to time, so long as no Event of Default has occurred and is
continuing, elect to exercise the LIBOR Option by notifying Agent prior to
11:00 a.m. (California time) at least 3 Business Days prior to the
commencement of the proposed Interest Period (the "LIBOR Deadline").
Notice of Administrative Borrower's election of the LIBOR Option for a
permitted portion of the Advances, the Term Loan A or the Term Loan B and
an Interest Period pursuant to this Section shall be made by delivery to
Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by
telephonic notice received by Agent before the LIBOR Deadline (to be
confirmed by delivery to Agent of a LIBOR Notice received by Agent prior
to 5:00 p.m. (California time) on the same day). Promptly upon its receipt
of each such LIBOR Notice, Agent shall provide a copy thereof to each of
the Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding
on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any
loss, cost, or expense incurred by Agent or any Lender as a result of (a)
the payment of any principal of any LIBOR Rate Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an
Event of Default), (b) the conversion of any LIBOR Rate Loan other than on
the last day of the Interest Period applicable thereto, or (c) the failure
to borrow, convert, continue or prepay any LIBOR Rate Loan on the date
specified in any LIBOR Notice delivered pursuant hereto (such losses,
costs, and expenses, collectively, "Funding Losses"). Funding Losses
shall, with respect to Agent or any Lender, be deemed to equal the amount
determined by Agent or such Lender to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount of such
LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would
have been applicable thereto, for the period from the date of such event
to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period therefor), minus (ii) the amount of
interest that would accrue on such principal amount for such period at the
interest rate which Agent or such Lender would be offered were it to be
offered, at the commencement of such period, Dollar deposits of a
comparable amount and period in the London interbank market. A certificate
of Agent or a Lender delivered to Administrative Borrower setting forth
any amount or amounts that Agent or such Lender is entitled to receive
pursuant to this Section shall be conclusive absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate
Loans in effect at any given time. Borrowers only may exercise the LIBOR
Option for LIBOR Rate Loans of at least $1,000,000 and integral multiples
of $500,000 in excess thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
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Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with clause (b) above. The Agent and the Lenders shall apply all
Collections that are applied to the Advances or Term Loans, first, to Base Rate
Loans and, second, to LIBOR Rate Loans.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with respect
to any Lender on a prospective basis to take into account any additional
or increased costs to such Lender of maintaining or obtaining any
eurodollar deposits or increased costs due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest
Period, including changes in tax laws (except changes of general
applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve
System (or any successor), excluding the Reserve Percentage, which
additional or increased costs would increase the cost of funding loans
bearing interest at the LIBOR Rate. In any such event, the affected Lender
shall give Administrative Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the notice
to each other Lender and, upon its receipt of the notice from the affected
Lender, Administrative Borrower may, by notice to such affected Lender (y)
require such Lender to furnish to Administrative Borrower a statement
setting forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate
Loans with respect to which such adjustment is made (together with any
amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions
or any law, regulation, treaty, or directive, or any change therein or in
the interpretation of application thereof, shall at any time after the
date hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Advances or to
continue such funding or maintaining, or to determine or charge interest
rates at the LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Administrative Borrower and Agent promptly
shall transmit the notice to each other Lender and (y) in the case of any
LIBOR Rate Loans of such Lender that are outstanding, the date specified
in such Lender's notice shall be deemed to be the last day of the Interest
Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of
such Lender thereafter shall accrue interest at the rate then applicable
to Base Rate Loans, and (z) Borrowers shall not be entitled to elect the
LIBOR Option from such Lender until such Lender determines that it would
no longer be unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
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2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline after the Closing Date regarding capital requirements for banks or
bank holding companies, or any change in the interpretation or application
thereof by any Governmental Authority charged with the administration thereof,
or (ii) compliance by such Lender or its parent bank holding company with any
guideline, request or directive of any such entity regarding capital adequacy
(whether or not having the force of law) issued after the Closing Date, will
have the effect of reducing the return on such Lender's or such holding
company's capital as a consequence of such Lender's Commitments hereunder to a
level below that which such Lender or such holding company could have achieved
but for such adoption, change, or compliance (taking into consideration such
Lender's or such holding company's then existing policies with respect to
capital adequacy and assuming the full utilization of such entity's capital) by
any amount deemed by such Lender to be material, then such Lender may notify
Administrative Borrower and Agent thereof. Following receipt of such notice,
Borrowers agree to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error); provided, however, that the Borrowers shall not
be required to pay any Lender reimbursement with regard to any such reduced
return, unless such Lender notifies the Agent and the Administrative Borrower of
such reduced return within 180 days after the first date on which such Lender
has actual knowledge of such adoption, change or compliance requirement which
results in such reduced return. In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting 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,
for the mutual benefit, directly and indirectly, of each Borrower and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each Borrower, 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 performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of 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 Persons composing Borrowers will make such payment
with respect to, or perform, such Obligation.
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(d) The Obligations of each Person composing Borrowers under
the provisions of this Section 2.15 constitute the absolute and unconditional,
full recourse Obligations of each Person composing 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 or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Person composing Borrowers hereby waives notice of acceptance of its joint
and several liability, notice of any Advances or Letters of Credit issued under
or pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any other Person composing Borrowers in the
performance or satisfaction of any term, covenant, condition or provision of
this Agreement, any and all other indulgences whatsoever by Agent or Lenders in
respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any Person composing Borrowers. Without limiting the generality of the
foregoing, each Borrower assents to any other action or delay in acting or
failure to act on the part of any Agent or Lender with respect to the failure by
any Person composing Borrowers to comply with any of its respective Obligations,
including, without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder, which might, but for the provisions of this Section 2.15
afford grounds for terminating, discharging or relieving any Person composing
Borrowers, in whole or in part, from any of its Obligations under this Section
2.15, it being the intention of each Person composing Borrowers that, so long as
any of the Obligations hereunder remain unsatisfied, the Obligations of such
Person composing Borrowers under this Section 2.15 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Person composing Borrowers under this Section 2.15 shall not
be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Person composing Borrowers or any Agent or Lender. The joint and several
liability of the Persons composing Borrowers hereunder shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, constitution or place of formation of any
of the Persons composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to
Agent and Lenders that such Borrower is currently informed of the financial
condition of Borrowers and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Obligations. Each
Person composing Borrowers further represents and warrants to Agent and Lenders
that such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing Borrowers hereby
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covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) The provisions of this Section 2.15 are made for the
benefit of the Agent, the Lenders and their respective successors and assigns,
and may be enforced by it or them from time to time against any or all of the
Persons composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing 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 2.15 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any of the Persons composing Borrowers, or
otherwise, the provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.
(h) Each of the Persons composing Borrowers hereby agrees that
it will not enforce any of its rights of contribution or subrogation against the
other Persons composing 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 security therefor 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 any Agent or Lender 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 and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(i) Each of the Persons composing Borrowers hereby agrees
that, after the occurrence and during the continuance of any Event of Default,
the payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Event of Default, such Borrower
will not demand, ▇▇▇ for or otherwise attempt to collect any indebtedness of any
other Borrower owing to such Borrower until the Obligations shall have been paid
in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for the Lender Group, and such Borrower shall deliver any such amounts to Agent
for application to the Obligations in accordance with Section 2.4(b).
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3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any initial credit provided for hereunder), is
subject to the fulfillment, to the reasonable satisfaction of Agent, of each of
the conditions precedent set forth below:
(a) the Closing Date shall occur on or before September 30,
2002;
(b) Agent shall have received the UCC/PPSA Filing
Authorization Letter duly executed by each Loan Party and Agent shall have
received satisfactory evidence of the filing of all financing statements on Form
UCC-1 and all PPSA registration statements in such office or offices as may be
necessary or, in the opinion of Agent, desirable to perfect the security
interests purported to be created by each applicable Loan Document;
(c) Agent shall have received each of the following documents,
in form and substance reasonably satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Canadian Guarantee,
(ii) the Canadian Security Agreement,
(iii) the Cash Management Agreements,
(iv) the Contribution Agreement,
(v) the Control Agreements,
(vi) the Disbursement Letter,
(vii) the Due Diligence Letter,
(viii) the Fee Letter,
(ix) the Guarantor Security Agreement,
(x) the Guaranty,
(xi) the Mortgages,
(xii) the Officers' Certificate,
(xiii)the Pay-Off Letter, together with UCC termination
statements and other documentation evidencing the termination by Existing
Lender of its Liens in and to the assets of the Loan Parties,
(xiv) the Patent Security Agreement,
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(xv) the Pledge Agreement, together with (A) all
certificates representing the shares of Stock pledged thereunder, as well
as Stock powers with respect thereto endorsed in blank, and (B) all
promissory notes pledged thereunder, as well as allonges thereto or other
appropriate transfer certificates endorsed in blank,
(xvi) the Trademark Security Agreement,
(xvii) the Intercompany Subordination Agreement,
(d) Agent shall have received a certificate from the Secretary
of each Borrower (i) attesting to the resolutions of such Borrower's board of
directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Borrower is a party and authorizing
specific officers of such Borrower to execute the same and (ii) certifying the
names and true signatures of the officers of such Borrower authorized to sign
each Loan Document to which such Borrower is a party;
(e) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower and, as of a recent date, by an
appropriate official of the state of organization of such Borrower;
(f) Agent shall have received a recent certificate of status
with respect to each Borrower, such certificate to be issued by the appropriate
officer of the jurisdiction of organization of such Borrower, which certificate
shall indicate that such Borrower is in good standing in such jurisdiction;
(g) Agent shall have received recent certificates of status
with respect to each Borrower, such certificates to be issued by the appropriate
officer of the jurisdictions (other than the jurisdiction of organization of
such Borrower) in which its failure to be duly qualified or licensed would
constitute a Material Adverse Change, which certificates shall indicate that
such Borrower is in good standing in such jurisdictions;
(h) Agent shall have received a certificate from the Secretary
of each Guarantor (i) attesting to the resolutions of such Guarantor's Board of
Directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party and authorizing specific officers
of such Guarantor to execute the same and (ii) certifying the names and true
signatures of the officers of such Guarantor authorized to sign each Loan
Document to which such Guarantor is a party;
(i) Agent shall have received copies of each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor and, as of a recent date, by an
appropriate official of the state of organization of such Guarantor;
(j) Agent shall have received a recent certificate of status
with respect to each Guarantor, such certificate to be issued by the appropriate
officer of the jurisdiction of organization of such Guarantor, which certificate
shall indicate that such Guarantor is in good standing in such jurisdiction;
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(k) Agent shall have received recent certificates of status
with respect to each Guarantor, such certificates to be issued by the
appropriate officer of the jurisdictions (other than the jurisdiction of
organization of such Guarantor) in which its failure to be duly qualified or
licensed would constitute a Material Adverse Change, which certificates shall
indicate that such Guarantor is in good standing in such jurisdictions;
(l) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be reasonably satisfactory to Agent;
(m) Agent shall have received a certificate from the chief
financial officer of Parent certifying as to (i) the optional and mandatory
payments and prepayments made by the Loan Parties, and the reductions of the
commitments, under the loan documents between the Loan Parties and the Existing
Lender and (ii) such other matters regarding the Indenture Documents as Agent
may reasonably request;
(n) Agent shall have received opinions of counsel to the Loan
Parties in form and substance reasonably satisfactory to Agent;
(o) Agent shall have received reasonably satisfactory evidence
(including a certificate of the chief financial officer of Parent) that all tax
returns required to be filed by Parent and its Subsidiaries have been timely
filed and all taxes upon Parent and its Subsidiaries or their properties,
assets, income, and franchises (including Real Property taxes and payroll taxes)
have been paid prior to delinquency, except such taxes that are the subject of
Permitted Protests;
(p) Agent shall have received a certificate from the chief
financial officer of each Loan Party certifying (i) in the case of each
Borrower, as to (A) the truth and accuracy of the representations and warranties
of Borrowers contained in Article 5, (B) the absence of any Defaults or Events
of Default and (C) compliance with Section 7.20(b) after giving effect to the
incurrence of Indebtedness under this Agreement and (ii) in the case of each
Loan Party, that after giving effect to the incurrence of Indebtedness under
this Agreement, each Loan Party is Solvent;
(q) Borrowers shall have the Required Availability after
giving effect to the initial extensions of credit hereunder and the payment of
all fees and expenses required to be paid by Borrowers on the Closing Date under
this Agreement and the other Loan Documents;
(r) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of the
Loan Parties' books and records and verification of the Loan Parties'
representations and warranties to the Lender Group, (ii) a test count of
Inventory located at Iron Age's Crafton, PA location, (iii) a review of Parent's
unaudited financial statements for its Fiscal Month and fiscal quarter ended
July 27, 2002, and (iv) receipt and review of a "takeover audit" of Parent and
its Subsidiaries;
(s) Agent shall have received completed reference checks with
respect to the Loan Parties' senior management, the results of which are
satisfactory to Agent in its reasonable discretion;
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(t) Agent shall have received an appraisal of the Net
Liquidation Percentage applicable to Borrowers' Inventory and Loan Parties'
Equipment, the results of which shall be reasonably satisfactory to Agent;
(u) Agent shall have received the Closing Date Business Plan;
(v) Borrowers shall have paid all Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
(w) Agent shall have received mortgagee title insurance
policies (or marked commitments to issue the same) for the Real Property
Collateral listed on Schedule 3.1(w) (the "Appraised Real Property") issued by a
title insurance company reasonably satisfactory to Agent (each a "Mortgage
Policy" and, collectively, the "Mortgage Policies") in amounts reasonably
satisfactory to Agent assuring Agent for the benefit of Lenders that the
Mortgages on such Appraised Real Property are valid and enforceable first
priority mortgage Liens on such Appraised Real Property free and clear of all
defects and encumbrances except Permitted Liens, and the Mortgage Policies
otherwise shall be in form and substance reasonably satisfactory to Agent;
(x) Agent shall have received a phase-I environmental report
with respect to each parcel composing the Appraised Real Property; the
environmental consultants retained for such reports, the scope of the reports,
the consultant's certification with respect to such reports and the substantive
information reflected in such reports shall be acceptable to Agent in its
Permitted Discretion;
(y) Agent shall have received copies of each of the Material
Contracts, together with a certificate of the Secretary of the Parent certifying
each such document as being a true, correct, and complete copy thereof;
(z) Agent shall have received (i) fully executed copies of
each of the Indenture Documents, together with a certificate of the Secretary of
Parent certifying each such document as being a true, correct, and complete copy
thereof and that such agreements remain in full force and effect and that none
of the Loan Parties has breached or defaulted in any of its obligations under
such agreements and (ii) a letter agreement between Parent and Agent, pursuant
to which Parent agrees to use its best efforts to repurchase its Parent Notes in
a face amount separately agreed in writing between the Agent and the
Administrative Borrower (subject to the conditions set forth in this Agreement);
(aa) The Loan Parties shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by the Loan Parties of this Agreement
or any other Loan Document or with the consummation of the transactions
contemplated hereby and thereby; and
(bb) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance reasonably satisfactory
to Agent.
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3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 60 days of the Closing Date, deliver to Agent
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
be reasonably satisfactory to Agent and its counsel;
(b) within 60 days of the Closing Date, deliver to Agent all
documents or other instruments duly executed by the applicable Loan Party, in
form and substance reasonably satisfactory to Agent, that are necessary to
enable Agent to perfect its security interest in the Rolling Stock described in
Schedule 3.2(b), which Schedule shall include for each piece of Rolling Stock
information with respect to the manufacturer, the year made, the model, the
vehicle identification number, the state in which it is licensed, the license
number, the owner, the state in which it is titled and the certificate of title
or ownership identification number (it being understood that until such
certificates of title or ownership are delivered to Agent, Agent shall establish
reserves with respect thereto in accordance with Section 2.1(b)(iv));
(c) within 60 days of the Closing Date, implement a system of
electronic collateral reporting in order to provide electronic reporting of each
of the items set forth in Section 6.2 (other than Section 6.2(a));
(d) within 60 days of the Closing Date, (i) furnish Agent with
an "Absolute Assignment," in form and substance reasonably satisfactory to
Agent, of the key man life insurance policy in the amount of $4,000,000 on the
life of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (ii) record such "Absolute Assignment" with the issuer
of such key man life insurance policy, and (iii) furnish proof of such issuer's
acceptance of such assignment (it being understood that all proceeds payable
under such key man life insurance policy shall be payable to Agent to be applied
on account of the Obligations in accordance with Section 2.4(b));
(e) within 45 days of the Closing Date, deliver to Agent the
Collateral Access Agreements with respect to the locations listed on Part 1 of
Schedule 3.2(e) (it being understood that until such Collateral Access
Agreements are delivered to Agent, Agent shall establish a reserve equal to the
rental costs under the applicable lease with respect to each such location for a
3 month period); and
(f) on or before October 15, 2002, deliver to Agent an ALTA
survey with respect to each parcel composing the Appraised Real Property; the
surveyors retained for such surveys, the scope of the surveys, the surveyor's
certification with respect to such surveys and the substantive information
reflected in such surveys to be acceptable to Agent in its Permitted Discretion
(it being understood that until such survey is delivered to Agent and the title
insurance company removes from the Mortgage Policy on the Appraised Real
Property any and all exceptions arising out of such survey, Agent shall
establish a reserve with respect thereto in the amount of $500,000 in accordance
with Section 2.1(b)(v));
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3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make any Advances (or
to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
any Loan Party, Agent or any Lender; and
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall become effective upon the execution
and delivery hereof by Parent, Borrowers, Agent, and the Lenders and shall
continue in full force and effect for a term ending on September 23, 2007 (the
"Maturity Date"). The foregoing notwithstanding, the Lender Group, upon the
election of the Required Lenders, shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to any outstanding Letters of Credit and including all
Bank Product Obligations) immediately shall become due and payable without
notice or demand (including (a) either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Revolver Commitment in an
amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to the Issuing Lender, and (b)
providing cash collateral to be held by Agent for the benefit of ▇▇▇▇▇ Fargo or
its Affiliates with respect to the then extant Bank Product Obligations). No
termination of this Agreement, however, shall relieve or discharge Borrowers of
their duties, Obligations, or covenants hereunder and the Agent's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has been terminated
and all of the Obligations have been fully and finally discharged and the Lender
Group's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
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3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at
any time upon 45 days prior written notice by Administrative Borrower to Agent,
to terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including (a) either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender, and (b) providing cash collateral to be held by Agent for the benefit of
▇▇▇▇▇ Fargo or its Affiliates with respect to the then extant Bank Product
Obligations), in full, together with the Applicable Prepayment Premium (to be
allocated based upon letter agreements between Agent and individual Lenders). If
Administrative Borrower has sent a notice of termination pursuant to the
provisions of this Section, then the Commitments shall terminate and Borrowers
shall be obligated to repay the Obligations (including (a) either (i) providing
cash collateral to be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the then extant Letter of
Credit Usage, or (ii) causing the original Letters of Credit to be returned to
the Issuing Lender, and (b) providing cash collateral to be held by Agent for
the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect to the then extant
Bank Product Obligations), in full, together with the Applicable Prepayment
Premium, on the date set forth as the date of termination of this Agreement in
such notice. In the event of the termination of this Agreement and repayment of
the Obligations at any time prior to the Maturity Date, for any other reason,
including (a) termination upon the election of the Required Lenders to terminate
after the occurrence of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (d)
restructure, reorganization or compromise of the Obligations by the confirmation
of a plan of reorganization, or any other plan of compromise, restructure, or
arrangement in any Insolvency Proceeding, then, in view of the impracticability
and extreme difficulty of ascertaining the actual amount of damages to the
Lender Group or profits lost by the Lender Group as a result of such early
termination, and by mutual agreement of the parties as to a reasonable
estimation and calculation of the lost profits or damages of the Lender Group,
Borrowers shall pay the Applicable Prepayment Premium to Agent (to be allocated
based upon letter agreements between Agent and individual Lenders), measured as
of the date of such termination. Notwithstanding anything to the contrary
contained herein, (a) Borrowers shall not be obligated to pay any Applicable
Prepayment Premium if this Agreement is terminated as a direct result of a
refinancing of this Agreement by ▇▇▇▇▇ Fargo (or any of its Affiliates), (b) the
Applicable Prepayment Premium shall not be payable in connection with any
prepayment of the Term Loan C and (c) the Applicable Prepayment Premium shall be
reduced by 50% of the then applicable amount in connection with any prepayment
and termination resulting from a Change of Control.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Parent and each Borrower hereby
grants to Agent, for the benefit of the Lender Group, a continuing security
interest in all of its right, title, and interest in all of its currently
existing and hereafter acquired or arising Personal Property Collateral in order
to secure prompt repayment of any and all of the Obligations in accordance with
the terms and conditions of the Loan Documents and in order to secure prompt
performance by Parent and Borrowers of each of their covenants and duties under
the Loan Documents. The Agent's Liens in and to Parent's and Borrowers' Personal
Property Collateral shall attach to all such Personal Property Collateral
without further act on the part of Agent, Parent or Borrowers.
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Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, neither Parent nor Borrowers
have any authority, express or implied, to dispose of any item or portion of the
Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that perfection or priority of Agent's security interest is
dependent on or enhanced by possession, Parent or the applicable Borrower,
immediately upon (but in any event within 1 Business Day after) the request of
Agent, shall endorse and deliver physical possession of such Negotiable
Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Parent and Borrowers that the Accounts, chattel paper, or General Intangibles
have been assigned to Agent or that Agent has a security interest therein, or
(b) collect the Accounts, chattel paper, or General Intangibles directly and
charge the collection costs and expenses to the Loan Account. Parent and each
Borrower agrees that it will hold in trust for the Lender Group, as the Lender
Group's trustee, any Collections that it receives and immediately will deliver
said Collections to Agent or a Cash Management Bank in their original form as
received by the applicable Loan Party.
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS;
DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.
(a) Parent and each Borrower authorizes Agent to file any
financing statement required hereunder, and any continuation statement or
amendment with respect thereto, in any appropriate filing office without the
signature of such Person where permitted by applicable law. Parent and each
Borrower hereby ratifies the filing of any financing statement, and any
continuation statement or amendment with respect thereto, filed without the
signature of such Person prior to the date hereof.
(b) If Parent or any Borrower acquires any commercial tort
claims after the date hereof, such Person shall immediately (but in any event
within 5 Business Days after such acquisition) deliver to Agent a written
description of such commercial tort claim and shall deliver a written agreement,
in form and substance reasonably satisfactory to Agent, pursuant to which such
Person shall pledge and collaterally assign all of its right, title and interest
in and to such commercial tort claim to Agent, for the benefit of the Lender
Group, as security for the Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the request of Agent, Parent and
Borrowers shall execute and deliver to Agent, and cause their Subsidiaries to
execute and deliver to Agent, any and all financing statements, original
financing statements in lieu of continuation statements, amendments to financing
statements, fixture filings, security agreements, pledges, assignments,
Commercial Tort Claim Assignments, endorsements of certificates of title, and
all other documents (collectively, the "Additional Documents") that Agent may
request in its Permitted Discretion, in form and substance reasonably
satisfactory to Agent, to create and perfect and continue perfected or better
perfect the Agent's Liens in the Collateral (whether now owned or
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hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Agent in any Owned Real Property with a
fair market value in excess of $500,000 acquired after the Closing Date, and in
order to fully consummate all of the transactions contemplated hereby and under
the other Loan Documents, including any Mortgages. To the maximum extent
permitted by applicable law, Parent and each Borrower authorizes Agent to
execute any such Additional Documents in the applicable Person's name and
authorize Agent to file such executed Additional Documents in any appropriate
filing office. To the maximum extent permitted by applicable law, Parent and
each Borrower authorizes the filing of any such Additional Documents without the
signature of such Person in any appropriate filing office. In addition, on such
periodic basis as Agent shall require, Parent and Borrowers shall (i) provide
Agent with a report of all new patentable, copyrightable, or trademarkable
materials acquired or generated by such Persons that are necessary in the
business of, or are otherwise material to, such Persons during the prior period,
(ii) cause all patents, copyrights, and trademarks acquired or generated by such
Persons and that are necessary in the business of, or are otherwise material to,
such Persons that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Parent's and Borrowers' ownership thereof, and
(iii) cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.
4.5 POWER OF ATTORNEY. Parent and each Borrower hereby irrevocably
makes, constitutes, and appoints Agent (and any of Agent's officers, employees,
or agents designated by Agent) as such Person's true and lawful attorney, with
power to (a) if such Person refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Person on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Person's name on any invoice
or ▇▇▇▇ of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse such Person's name on any Collection item that may come into the Lender
Group's possession, (e) subject to Section 6.8, at any time that an Event of
Default has occurred and is continuing, make, settle, and adjust all claims
under such Person's policies of insurance and make all determinations and
decisions with respect to such policies of insurance, and (f) at any time that
an Event of Default has occurred and is continuing, settle and adjust disputes
and claims respecting the Accounts, chattel paper, or General Intangibles
directly with Account Debtors, for amounts and upon terms that Agent determines
to be reasonable, and Agent may cause to be executed and delivered any documents
and releases that Agent determines to be necessary. The appointment of Agent as
each such Person's attorney, and each and every one of its rights and powers,
being coupled with an interest, is irrevocable until all of the Obligations have
been fully and finally repaid and performed and the Lender Group's obligations
to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter but, absent a continuing Event of Default, upon reasonable notice
and during normal business hours, to inspect the Books and to check, test, and
appraise the Collateral in order to verify Parent's and Borrowers' financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral.
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4.7 CONTROL AGREEMENTS. Except as otherwise permitted under
Sections 7.13 and 7.19 or in the applicable Control Agreement, Parent and each
Borrower agrees that it will not transfer any Collateral or any other assets out
of any Securities Accounts or deposit accounts and, if to another securities
intermediary or depository, unless each of the applicable Persons, Agent, and
the substitute securities intermediary or depository have entered into a Control
Agreement. Upon the occurrence and during the continuance of an Event of
Default, Agent may notify any securities intermediary or depository to liquidate
the applicable Securities Account or depository account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Agent's Account. Parent and each Borrower hereby agrees to take any or all
action that Agent requests in order for Agent to obtain control in accordance
with Sections 9-104, 9-105, 9-106 and 9-107 of the Code with respect to any
Collateral constituting Securities Accounts, deposit accounts, electronic
chattel paper, Investment Property and letter-of-credit rights. No arrangement
contemplated hereby or by an Control Agreement in respect of any Securities
Accounts or other Investment Property, or any deposit accounts, electronic paper
or letter-of-credit rights, shall be modified by Parent or any Borrower without
the prior written consent of Agent.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, the Parent and each Borrower makes the following representations and
warranties to the Lender Group which shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Each Loan Party has good and indefeasible
title to its Collateral and its Owned Real Property, free and clear of Liens
except for Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide
existing payment obligations of Account Debtors created by the sale and delivery
of Inventory or the rendition of services to such Account Debtors in the
ordinary course of Borrowers' and Iron Age Canada's business, owed to such
Persons without defenses, disputes, offsets, counterclaims, or rights of return
or cancellation. As to each Account that is identified by Administrative
Borrower as an Eligible Account, in a borrowing base report submitted to Agent,
such Account is not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Accounts.
5.3 ELIGIBLE INVENTORY AND ELIGIBLE RAW INVENTORY. All Eligible
Inventory, Eligible In-Plant Inventory and Eligible Raw Materials Inventory is
of good and merchantable quality, free from defects. As to each item of
Inventory that is identified by Administrative Borrower as Eligible Inventory,
Eligible In-Plant Inventory or Eligible Raw Materials Inventory in the borrowing
base report most recently submitted to Agent, such Inventory is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Inventory, Eligible In-Plant Inventory or Eligible Raw
Materials Inventory, as applicable.
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5.4 ELIGIBLE EQUIPMENT. All of the Eligible Equipment is used or
held for use in Loan Parties' business and is fit for such purposes. As to each
item of Equipment that is identified from time to time by Administrative
Borrower as Eligible Equipment, such equipment is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Equipment.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. Except as set forth on
Schedule 5.5, the Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party and are located only at, or are in-transit
(including on shoemobiles) from or to, the locations identified on Schedule 5.5,
or any local repair facility.
5.6 INVENTORY RECORDS. Each Loan Party keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
FEIN; ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of incorporation of each Loan Party is
set forth in Schedule 5.7(a).
(b) As of the Closing Date, the chief executive office of each
Loan Party is located at the address indicated in Schedule 5.7(b).
(c) Each Loan Party's FEIN and organizational identification
number, if any, are identified in Schedule 5.7(c).
(d) As of the Closing Date, none of the Loan Parties holds any
commercial tort claims as of the date hereof, except as set forth in Schedule
5.7(d).
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Loan Party is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Loan Party other than the
Parent, by class, and, as of the Closing Date, a description of the number of
shares of each such class that are issued and outstanding. Other than as
described on Schedule 5.8(b), there are no subscriptions, options, warrants, or
calls relating to any shares of each such Person's capital Stock, including any
right of conversion or exchange under any outstanding security or other
instrument. No Loan Party is subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of its capital Stock or
any security convertible into or exchangeable for any of its capital Stock.
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(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of each Loan Party's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization; (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by the applicable Loan Party. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any Loan
Party's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Loan Party or
any of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any Loan
Party's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to Parent and each Borrower, the execution, delivery,
and performance by such Person of this Agreement and the Loan Documents to which
it is a party (including, without limitation, the notation of the Lien in favor
of Agent on the certificates of title or ownership of the Rolling Stock of such
Person) have been duly authorized by all necessary action on the part of such
Person.
(b) As to Parent and each Borrower, the execution, delivery,
and performance by such Person of this Agreement and the Loan Documents to which
it is a party do not and will not (i) violate any provision of federal, state,
or local law or regulation applicable to such Person, the Governing Documents of
such Person, or any order, judgment, or decree of any court or other
Governmental Authority binding on such Person, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any Material Contract of such Person, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of such Person, other than Permitted Liens, or (iv) require any
approval of any such Person's interestholders or any approval or consent of any
Person under any Material Contract of such Person.
(c) Other than the filing of financing statements, fixture
filings, and Mortgages, the execution, delivery, and performance by Parent and
each Borrower of this Agreement and the Loan Documents to which such Person is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority or
other Person.
(d) As to Parent and each Borrower, this Agreement and the
other Loan Documents to which such Person is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Person will
be the legally valid and binding obligations of such Person, enforceable against
such Person in accordance with their respective terms, except as enforcement may
be limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
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(e) The Agent's Liens are validly created, duly perfected, and
first priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party (including, without limitation, the
notation of the Lien in favor of Agent on the certificates of title or ownership
of the Rolling Stock of such Guarantor) have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract of such Guarantor,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Guarantor, other than Permitted
Liens, or (iv) require any approval of such Guarantor's interestholders or any
approval or consent of any Person under any Material Contract of such Guarantor.
(h) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which such Guarantor is a party do not and will not
require any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority or other Person.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on Schedule
5.10, there are no actions, suits, or proceedings pending or, to the best
knowledge of Parent and Borrowers, threatened against any Loan Party, or any of
its Subsidiaries, as applicable, except for (a) matters that are fully covered
by insurance (subject to customary deductibles), and (b) matters arising after
the Closing Date that, if decided adversely to such Loan Party, or any of its
Subsidiaries, as applicable, reasonably could not be expected to result in a
Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating
to the Loan Parties that have been delivered by any Loan Party to the Lender
Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects, Loan
Parties' financial condition as of the date thereof and results of operations
for the period then ended. There has not been a Material Adverse Change with
respect to the Loan Parties since the date of the latest financial statements
submitted to the Lender Group on or before the Closing Date.
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5.12 FRAUDULENT TRANSFER.
(a) Each Loan Party is Solvent.
(b) No transfer of property is being made by any Loan Party
and no obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of any
Loan Party.
5.13 EMPLOYEE BENEFITS. None of the Loan Parties, or any of their
ERISA Affiliates maintains or contributes to any Benefit Plan, other than those
listed on Schedule 5.13. Each Loan Party and each ERISA Affiliate has satisfied
the minimum funding standards of ERISA, the IRC and the Canadian Employee
Benefit Laws with respect to each Benefit Plan to which it is obligated to
contribute. No ERISA Event has occurred nor has any other event occurred that
may result in an ERISA Event that reasonably could be expected to result in a
Material Adverse Change. No Loan Party or any ERISA Affiliate is required to
provide security to any Benefit Plan under Section 401(a)(29) of the IRC or
under Canadian Employee Benefit Laws.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14,
(a) to Parent's and Borrowers' knowledge, none of the Loan Parties' properties
or assets has ever been used by the Loan Parties' or by previous owners or
operators in the disposal of, or to produce, store, handle, treat, release, or
transport, any Hazardous Materials, where such production, storage, handling,
treatment, release or transport was in violation, in any material respect, of
applicable Environmental Law, (b) to Parent's and Borrowers' knowledge, none of
the Loan Parties' properties or assets has ever been designated or identified in
any manner pursuant to any environmental protection statute as a Hazardous
Materials disposal site, (c) none of the Loan Parties have received notice that
a Lien arising under any Environmental Law has attached to any revenues or to
any Real Property owned or operated by the Loan Parties, and (d) none of the
Loan Parties have received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by any Loan Party resulting in the
releasing or disposing of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Except as set forth on Schedule 5.15, neither
Parent nor Borrowers have utilized the services of any broker or finder in
connection with Borrowers' obtaining financing from the Lender Group under this
Agreement and no brokerage commission or finders fee is payable by Parent or
Borrowers in connection herewith.
5.16 INTELLECTUAL PROPERTY. Each Loan Party owns, or holds valid
licenses in, all Intellectual Property that is necessary to the conduct of its
business as currently conducted. Attached hereto as Schedule 5.16 is a true,
correct, and complete listing of all registered or otherwise material patents,
trademarks, and copyrights as to which each Loan Party is the owner or is an
exclusive licensee.
5.17 LEASES. The Loan Parties enjoy peaceful and undisturbed
possession under all leases material to the business of the Loan Parties and to
which the Loan Parties are a
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party or under which the Loan Parties are operating. All of such leases are
valid and subsisting and no material default by the Loan Parties exists under
any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of each
Loan Party, including, with respect to each depository (i) the name and address
of that depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a
whole) furnished by or on behalf of the Loan Parties in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement, the
other Loan Documents or any transaction contemplated herein or therein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of any Loan Party in writing to the Agent or any Lender will be, true
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided. On the Closing Date, the Closing Date Projections represent, and
as of the date on which any other Projections are delivered to Agent, such
additional Projections represent Parent and Borrowers' good faith best estimate
of the future performance of Parent and its Subsidiaries for the periods covered
thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and
complete list of all Indebtedness of each Loan Party outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date
and such Schedule accurately reflects the aggregate principal amount of such
Indebtedness and the principal terms thereof.
5.21 REGULATION U. None of the Loan Parties is nor will be engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T, U or X of the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance 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.
5.22 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 and the Real Property currently owned,
leased, managed or operated, or to be acquired, by such Person except for such
permits, licenses, authorizations, approvals, entitlements and accreditations
the absence of which could not reasonably be expected to result in a Material
Adverse Change. To Parent's and Borrowers' knowledge, 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 to Parent's and Borrowers' knowledge, there is no claim
that any thereof is not in full force and effect.
5.23 MATERIAL CONTRACTS. Set forth on Schedule 5.23 is a complete
and accurate list as of the Closing Date of all Material Contracts of the Loan
Parties, showing the parties and subject matter thereof and amendments and
modifications thereto. Each such
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Material Contract (i) is in full force and effect and is binding upon and
enforceable against each Loan Party that is a party thereto and, to Parent's and
Borrowers' knowledge, all other parties thereto in accordance with its terms,
(ii) has not been otherwise amended or modified, and (iii) is not in default due
to the action of any Loan Party or, to Parent's and Borrowers' knowledge, any
other party thereto, except for such defaults that could not reasonably be
expected to result in a Material Adverse Change.
5.24 EMPLOYEE AND LABOR MATTERS. Except as set forth on Schedule
5.24, there is (a) to the best knowledge of Parent and Borrowers, no unfair
labor practice complaint pending or, to Parent's and Borrowers' knowledge,
threatened against any Loan Party before any Governmental Authority and no
grievance or arbitration proceeding pending or threatened against any Loan Party
which arises out of or under any collective bargaining agreement, (b) no strike,
labor dispute, slowdown, stoppage or similar action or grievance pending or, to
the best knowledge of Parent and Borrowers, threatened against any Loan Party
and (c) to the best knowledge of Parent and Borrowers, no union representation
question existing with respect to the employees of any Loan Party and no union
organizing activity taking place with respect to any of the employees of any of
them. Neither any Loan Party nor any ERISA Affiliate of any Loan Party has
incurred any liability or obligation under the Worker Adjustment and Retraining
Notification Act ("WARN") or similar state or provincial law, which remains
unpaid or unsatisfied. The hours worked and payments made to employees of each
Loan Party have not been in violation of the Fair Labor Standards Act or any
other applicable legal requirements. All material payments due from any Loan
Party on account of workers compensation, wages and employee health and welfare
insurance and other benefits have been paid or accrued as a liability on the
books of such Loan Party.
5.25 CUSTOMERS AND SUPPLIERS. There exists no actual or, to
Parent's and Borrowers' knowledge, threatened termination, cancellation or
limitation of, or modification to or change in, the business relationship
between (a) any Loan Party, on the one hand, and any municipality, customer or
any group thereof, on the other hand or (b) any Loan Party, on the one hand, and
any supplier thereof or distributor therefor, on the other hand, which
termination, cancellation, limitation, modification or change in any such case
could, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Change.
5.26 PROPERTIES. (a) Each Loan Party has good and marketable title
to, or valid leasehold interests in, all property and assets material to its
business (collectively, the "Properties"), free and clear of all Liens except
Permitted Liens. To the actual knowledge of Parent's and Borrowers' executive
officers, no material default by any Loan Party exists under any lease with
respect to the Leased Real Properties. The Properties are in good working order
and condition, ordinary wear and tear excepted.
(b) Schedule 5.26 sets forth a complete and accurate list of
the location, by state and street address, of all Real Property.
(c) All Rolling Stock of the Loan Parties which, under
applicable law (including, without limitation, any Motor Vehicle Law), is
required to be registered is registered in the name of a Loan Party, and all
Rolling Stock of the Loan Parties, the ownership of which, under applicable law
(including, without limitation, any Motor Vehicle Law), is evidenced by a
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certificate of title or ownership, is properly titled in the name of a Loan
Party. The Rolling Stock listed on Schedule 3.2(b) constitutes all of the
Rolling Stock owned by the Loan Parties on the Closing Date and the Rolling
Stock not subject to a certificate of title or ownership under applicable law
(including, without limitation, any Motor Vehicle Law) is noted therein.
5.27 INDENTURE DOCUMENTS. The Borrowers incurring Indebtedness from
(i) the Advances and Term Loans made by the Lenders to the Borrowers on and
after the Closing Date and (ii) the issuance of Letters of Credit, in each case,
subject to the limitations set forth in this Agreement, does not conflict with
or result in a default under any Indenture Document.
6. AFFIRMATIVE COVENANTS.
Parent and each Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final payment of the
Obligations and the termination of this Agreement, Parent and Borrowers shall
and shall cause each of their respective Subsidiaries to do all of the
following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that
enables Parent and its Subsidiaries to produce financial statements in
accordance with GAAP and maintain records pertaining to the Collateral that
contain information as from time to time reasonably may be requested by Agent.
Parent and its Subsidiaries also shall keep an inventory reporting system that
shows all additions, sales, claims, returns, and allowances with respect to the
Inventory.
6.2 COLLATERAL REPORTING. Provide Agent (with copies for each
Lender) with the following documents at the following times in form reasonably
satisfactory to Agent:
================================================================================
Daily (a) a sales journal, collection journal, and
credit register since the last such schedule
and a calculation of the Borrowing Base as of
such date.
--------------------------------------------------------------------------------
Weekly (b) Inventory reports specifying each Loan
Party's cost of its Inventory, by category
and location, and
(c) Inventory reports with respect to in-transit
Inventory described in clause (b)(z) of the
definition of Eligible Inventory specifying
the cost and the estimated arrival date of
such Inventory at a location set forth on
Schedule E-1.
--------------------------------------------------------------------------------
Monthly (not later than the (d) a detailed calculation of the Borrowing Base
10th day of each month) (including detail regarding those Accounts
that are not Eligible Accounts),
(e) a detailed aging, by total, of the Accounts,
together with a reconciliation to the
detailed calculation of the Borrowing Base
previously provided to Agent,
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(f) a summary aging, by vendor, of each Loan
Party's accounts payable and any book
overdraft,
(g) a calculation of Dilution for the 12 month
period ended at the end of the prior month,
(h) any Investments (including any Investments
in the form of Indebtedness) by any Loan
Party in any Non-Loan Party, and
(i) an inventory mix report in form and
substance reasonably satisfactory to Agent.
---------------------------------------------------------------------------------
Annually (j) a physical inventory of the Loan Parties'
Inventory and Equipment, conducted by a
third party service reasonably acceptable to
Agent, the results of which shall be
reasonably satisfactory to Agent and be
reflected by appropriate adjustments to the
Borrowing Base, the Term Loan A Amount and
the Term Loan B Amount.
---------------------------------------------------------------------------------
Upon reasonable request by (k) a detailed list of each Loan Party's
Agent customers,
(l) a report regarding each Loan Party's
accrued, but unpaid, ad valorem taxes,
(m) copies of invoices in connection with the
Accounts, credit memos, remittance advices,
deposit slips, shipping and delivery
documents in connection with the Accounts
and, for Inventory and Equipment acquired by
any Loan Party, purchase orders and invoices,
and
(n) such other reports as to the Collateral, or
the financial condition of any Loan Party, as
Agent may reasonably request.
=================================================================================
In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting within 60
days of the Closing Date in order to provide electronic reporting of each of the
items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent,
with copies to each Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of a fiscal quarter) after the end
of each month during each Fiscal Year,
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(i) a company prepared consolidated balance sheet,
income statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer
of Parent to the effect that:
A. the financial statements delivered hereunder
have been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of Parent and its
Subsidiaries,
B. the representations and warranties of the Loan
Parties contained in this Agreement and the other Loan Documents are true
and correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier
date), and
C. there does not exist any condition or event
that constitutes a Default or Event of Default (or, to the extent of any
non-compliance, describing such non-compliance as to which he or she may
have knowledge and what action Borrowers have taken, are taking, or
propose to take with respect thereto), and
(iii) for each month that is the date on which a
financial covenant in Section 7.20 is to be tested, a Compliance
Certificate demonstrating, in reasonable detail, compliance at the end of
such period with the applicable financial covenants contained in Section
7.20, and
(b) as soon as available, but in any event within 90 days
after the end of each Fiscal Year,
(i) consolidated financial statements of Parent and its
Subsidiaries for each such Fiscal Year, audited by independent certified
public accountants reasonably acceptable to Agent and certified, without
any qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
consolidated balance sheet, income statement, and statement of cash flow
and, if prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to
Agent and the Lenders stating that such accountants do not have knowledge
of the existence of any Default or Event of Default under Section 7.20
(other than under Section 7.20(d)),
(c) as soon as available, but in any event within 30 days
prior to the start of each Fiscal Year,
(i) copies of Parent's Projections, in form and
substance (including as to scope and underlying assumptions) satisfactory
to Agent, in its sole reasonable discretion, for the forthcoming 3 years,
year by year, and for the forthcoming
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Fiscal Year, month by month, certified by the chief financial officer of
Parent as being such officer's good faith best estimate of the financial
performance of Parent and its Subsidiaries during the period covered
thereby,
(d) if and when filed by any Loan party,
(i) 10-Q quarterly reports, Form 10-K annual reports,
and Form 8-K current reports,
(ii) any other filings made by such Loan Party with the
SEC,
(iii) copies of such Loan Party's federal income tax
returns, and any amendments thereto, filed with the Internal Revenue
Service, and
(iv) any other information that is provided by such Loan
Party to its shareholders generally,
(e) if and when filed by any Loan Party and as requested by
Agent, reasonably satisfactory evidence of payment of applicable excise taxes in
each jurisdictions in which (i) any Loan Party conducts business or is required
to pay any such excise tax, (ii) where any Loan Party's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Loan Party, or (iii) where any Loan Party's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) promptly after the commencement thereof, but in any event
within 5 days after the service of process with respect thereto on any Loan
Party, notice of all actions, suits or proceedings brought by or against any
Loan Party before any Governmental Authority which, if determined adversely to
such Loan Party, could reasonably be expected to result in a Material Adverse
Change,
(g) (i) promptly after receipt or delivery thereof, copies of
any material notices that any Loan Party receives from or sends to any Person in
connection with the Indenture Documents, and (ii) within 2 days of the effective
date thereof, any amendments, modifications, waivers or other changes to any of
the Indenture Documents,
(h) as soon as any Loan Party has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that the Loan Parties propose to take with
respect thereto,
(i) (i) promptly and in any event (A) within 10 Business Days
after any Loan Party or any ERISA Affiliate thereof knows or has reason to know
that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Benefit Plan has occurred, (B) within 10
Business Days after any Loan Party or any ERISA Affiliate thereof knows or has
reason to know that any other Termination Event with respect to any Benefit Plan
has occurred, or (C) within 10 Business Days after any Loan Party or any ERISA
Affiliate thereof knows or has reason to know that an accumulated funding
deficiency has been incurred or an application has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including installment payments) or an
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extension of any amortization period under Section 412 of the IRC or the
equivalent provision under Canadian Employee Benefit Laws with respect to a
Benefit Plan, a statement of an Authorized Person setting forth the details of
such occurrence and the action, if any, which such Loan Party or such ERISA
Affiliate propose to take with respect thereto, (ii) promptly and in any event
within 3 Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate thereof from the PBGC, copies of each notice received by any Loan
Party or any ERISA Affiliate thereof of the PBGC's intention to terminate any
Plan or to have a trustee appointed to administer any Plan, (iii) promptly and
in any event within 10 Business Days after the filing thereof with the Internal
Revenue Service if requested by Agent, copies of each Schedule B (Actuarial
Information) or the Canadian equivalent thereof to the annual report (Form 5500
Series) or the Canadian equivalent thereof with respect to each Benefit Plan and
Multiemployer Plan, (iv) promptly and in any event within 10 Business Days after
any Loan Party or any ERISA Affiliate thereof knows or has reason to know that a
required installment within the meaning of Section 412 of the IRC or the
equivalent provision under Canadian Employee Benefit Laws has not been made when
due with respect to a Benefit Plan, (v) promptly and in any event within 3 days
after receipt thereof by any Loan Party or any ERISA Affiliate thereof from a
sponsor of a Multiemployer Plan or from the PBGC, a copy of each notice received
by any Loan Party or any ERISA Affiliate thereof concerning the imposition or
amount of withdrawal liability under Section 4202 of ERISA or the equivalent
provision under Canadian Employee Benefit Laws or indicating that such
Multiemployer Plan may enter reorganization status under Section 4241 of ERISA
or the equivalent provision under Canadian Employee Benefit Laws, and (vi)
promptly and in any event within 10 Business Days after any Loan Party or any
ERISA Affiliate thereof send notice of a plant closing or mass layoff (as
defined in the Worker Adjustment and Retraining Notification Act) to employees,
copies of each such notice sent by any Loan Party or any ERISA Affiliate
thereof,
(j) as soon as available and in any event within 45 days after
the end of each fiscal quarter during each Fiscal Year,
(i) reports in form and detail reasonably satisfactory
to Agent and certified by the chief financial officer of the
Administrative Borrower as being accurate and complete with respect to the
Rolling Stock of the Loan Parties, together with a certificate setting
forth, as of the end of the previous fiscal quarter and for the portion of
the Fiscal Year then ended, (A) a summary report of the Rolling Stock of
the Loan Parties, indicating changes in value and depreciation amounts,
(B) a list of Rolling Stock of the Loan Parties purchased or otherwise
acquired during such period, setting forth the following information: the
date of acquisition, the manufacturer, the year made, the model, the
vehicle identification number, the state in which it is licensed, the
license number, the owner, the state in which it is titled and the
certificate of title or ownership identification number, together with a
copy of the invoice, purchase order, registration or other document
setting forth the vehicle identification number of such vehicle, which
list shall supplement and update Schedule 3.2(b), (C) a list of Rolling
Stock of the Loan Parties sold or contracted for sale during such period,
(D) the Dollar amount spent on such purchases or acquisitions during such
period, and (E) any other information relating to the Rolling Stock as
Agent may reasonably request, and
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(ii) the originals of all certificates of title or
ownership of Rolling Stock of the Loan Parties purchased, acquired or
otherwise obtained during such period, together with duly executed and
completed title or ownership applications with appropriate state agencies
to enable such Rolling Stock to be retitled with Agent listed as a
lienholder thereof; and
(k) promptly, but in any event within 10 Business Days after
the occurrence thereof, notice of (i) any sale by any Loan Party of any overdue
Accounts for collection purposes, (ii) any disposition by any Loan Party
constituting a Permitted Disposition under clause (f) of the definition thereof,
(iii) any Investment by any Loan Party constituting a Permitted Investment under
clause (g) of the definition thereof, (iv) any incurrence by any Loan Party of
Permitted Purchase Money Indebtedness, (v) any incurrence by any Loan Party of
Indebtedness permitted by Section 7.1(i), and (vi) any repurchase by any Loan
Party of Parent's Stock pursuant to Section 7.11(c)(ii).
(l) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Parent and its Subsidiaries.
In addition to the financial statements referred to above, Parent and Borrowers
agree to deliver annual unaudited financial statements prepared on both a
consolidated and consolidating basis and agree that no Subsidiary of the Parent,
will have a fiscal year different from that of Parent. Parent and Borrowers
agree that their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning the Loan Parties that Agent reasonably may request. Parent and each
Borrower waives the right to assert a confidential relationship, if any, it may
have with any accounting firm or service bureau in connection with any
information requested by Agent pursuant to or in accordance with this Agreement,
and agree that Agent may contact directly any such accounting firm or service
bureau in order to obtain such information.
6.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Parent's financial statements, and copies
of all federal income tax returns as soon as the same are available and in any
event no later than 30 days after the same are required to be filed by law.
6.5 RETURN. Cause returns and allowances as between Loan Parties
and their Account Debtors, to be on the same basis and in accordance with the
usual customary practices of the Loan Parties, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to any
Loan Party, the applicable Loan Party promptly shall determine the reason for
such return and, if the applicable Loan Party accepts such return and, in the
case of Inventory returned by an Account Debtor to any Loan Party with an
aggregate value in excess of $75,000, Agent consents (which consent shall not be
unreasonably withheld), issue a credit memorandum (with a copy to be sent to
Agent) in the appropriate amount to such Account Debtor. If, at a time when an
Event of Default has occurred and is continuing, any Account Debtor returns any
Inventory to any Loan Party, the applicable Loan Party promptly shall determine
the reason for such return and, if Agent consents (which consent shall not be
unreasonably withheld), issue a credit memorandum (with a copy to be sent to
Agent) in the appropriate amount to such Account Debtor.
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6.6 MAINTENANCE OF PROPERTIES. Subject to Section 7.4, maintain
and preserve all of their properties which are necessary or useful in the proper
conduct of their business in good working order and condition, ordinary wear and
tear and casualty excepted, and comply at all times with the provisions of all
leases to which it is a party as lessee, so as to prevent any loss or forfeiture
thereof or thereunder which could reasonably be expected to result in a Material
Adverse Change.
6.7 TAXES. Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against the Loan Parties or any of their assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Parent and Borrowers will make timely payment or deposit of
all tax payments and withholding taxes required of it by applicable laws,
including those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, provincial and federal income taxes, and will, upon request, furnish
Agent with proof reasonably satisfactory to Agent indicating that they have made
such payments or deposits. Parent and Borrowers shall deliver reasonably
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which any Loan Party is required to pay any such excise tax.
6.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance respecting the
Loan Parties' property and assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses. The
Loan Parties also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with a
reasonably satisfactory lender's loss payable endorsement naming Agent as sole
loss payee or additional insured, as appropriate. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Agent in the event of cancellation of the policy
for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of
any loss covered by such insurance. Agent shall have the exclusive right to
adjust any losses payable under any such insurance policies in excess of
$250,000 (or in any amount after the occurrence and during the continuance of an
Event of Default), without any liability to the Loan Parties whatsoever in
respect of such adjustments. Except as provided in the proviso at the end of
this sentence, any monies in excess of $250,000 received as payment for any loss
under any insurance policy mentioned above (other than liability insurance
policies) or as payment of any award or compensation for condemnation or taking
by eminent domain, shall be paid over to Agent to be applied at the option of
the Required Lenders either to the prepayment of the Obligations or shall be
disbursed to Administrative Borrower under staged payment terms reasonably
satisfactory to the Required Lenders for application to the cost of repairs,
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replacements, or restorations; provided that, so long as no Default or Event of
Default shall have occurred and be continuing, monies received as payment for
any such loss under any insurance policy or any such condemnation or taking in
an amount not exceeding $250,000 in the aggregate for all such occurrences may
be used to replace, repair or restore Collateral if such payments are deposited
in a Cash Collateral Account and used in accordance with Section 2.04(a)(iv).
Any such repairs, replacements, or restorations shall be effected with
reasonable promptness and shall be of a value at least equal to the value of the
items or property destroyed prior to such damage or destruction.
(c) The Loan Parties shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 6.8, unless Agent is included thereon as named
insured with the loss payable to Agent under a lender's loss payable endorsement
or its equivalent. Administrative Borrower immediately shall notify Agent
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment only at, or in-transit (including on shoemobiles) from or to, the
locations identified on Schedule 5.5 or at local repair facilities; provided,
however, that Administrative Borrower may amend Schedule 5.5 so long as such
amendment occurs by written notice to Agent not less than 20 days prior to the
date on which the Inventory or Equipment is moved to such new location, so long
as such new location is within the continental United States, and so long as, at
the time of such written notification, the applicable Loan Party provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets and, if such new location is located
in a state listed on Part 2 of Schedule 3.2(e), also provides to Agent a
Collateral Access Agreement if required by Agent.
6.10 COMPLIANCE WITH LAWS. (a) Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
(b) Subject to Section 3.2(b), cause all Rolling Stock now
owned or hereafter acquired by any Loan Party, which, under applicable law, is
required to be registered, to be properly registered (including, without
limitation, the payment of all necessary taxes and receipt of any applicable
permits) in the name of such Loan Party and cause all Rolling Stock now owned or
hereafter acquired by any Loan Party, the ownership of which, under applicable
law (including, without limitation, any Motor Vehicle Law), is evidenced by a
certificate of title or ownership, to be properly titled in the name of such
Loan Party, with Agent's Lien noted thereon.
6.11 LEASES. Pay when due all rents and other amounts payable under
any leases to which any Loan Party is a party or by which any Loan Party's
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.
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6.12 CUSTOMS BROKERS. Pay when due all amounts payable to customs
brokers, unless such payments are the subject of a Permitted Protest.
6.13 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers, and each Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers' obtaining financing from the
Lender Group under this Agreement.
6.14 EXISTENCE. Subject to Section 7.3, at all times preserve and
keep in full force and effect each Loan Party's valid existence and good
standing and any rights and franchises material to any Loan Party's business.
6.15 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any Loan
Party free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity, from or onto property owned or operated by
any Loan Party and take any Remedial Actions required to ▇▇▇▇▇ said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly, but in any event within 10 days of receipt thereof, provide Agent with
written notice of the following: (i) notice that an Environmental Lien has been
filed against any of the real or personal property of any Loan Party, (ii)
notice of commencement of any Environmental Action or that an Environmental
Action will be filed against any Loan Party, and (iii) notice of a violation,
citation, or other administrative order with respect to an Environmental Action
which reasonably could be expected to result in a Material Adverse Change.
6.16 COMMERCIAL TORT CLAIMS; ORGANIZATIONAL ID NUMBER. Immediately,
but in any event within 5 Business Days, upon obtaining any commercial tort
claim, deliver an updated Schedule 5.7(d) and the other documents required under
Section 4.4. Immediately, but in any event within 5 Business Days, upon
obtaining an organizational identification number (to the extent that any Loan
Party has not been issued such number on or prior to the Closing Date), notify
Agent in writing and deliver an updated Schedule 5.7(c).
6.17 OTHER DISCLOSURE UPDATES. Promptly and in no event later than
5 Business Days after obtaining knowledge thereof, (a) notify Agent if any
written information, exhibit, or report furnished to the Lender Group contained
any untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
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7. NEGATIVE COVENANTS.
Parent and each Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final payment of the
Obligations and the termination of this Agreement, Parent and Borrowers will not
and will not permit any of their respective Subsidiaries to do any of the
following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) Indebtedness under the Indenture Documents;
(e) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c) and (d) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Agent's
reasonable judgment, materially impair the prospects of repayment of the
Obligations by the Loan Parties or materially impair the Loan Parties'
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended, (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are materially more burdensome or
restrictive to the applicable Loan Party, and (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness;
(f) Indebtedness under foreign currency Hedge Agreements
incurred in the ordinary course of business of Parent and its Subsidiaries
consistent with prudent business practice and not for speculative purposes;
(g) Indebtedness permitted under Section 7.6;
(h) Indebtedness owing by a Loan Party or Non-Loan Party to
another Loan Party or Non-Loan Party to the extent such Indebtedness constitutes
a Permitted Investment and other Indebtedness composing Permitted Investments;
(i) Indebtedness incurred by the Loan Parties for the
repurchase of Parent Stock from current or former employees in an amount not to
exceed $250,000 in the
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aggregate from and after the Closing Date, provided that the amount of
Indebtedness incurred under this clause (i) together with the amount of payments
made by Iron Age or Parent in respect of repurchases of Parent's Stock from
current or former employees of any Loan Party pursuant to Section 7.11(c)(ii)
shall not exceed $250,000 in the aggregate from and after the Closing Date; and
(j) Indebtedness owing by Non-Loan Parties in an aggregate
amount not to exceed $500,000.
Notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, the Loan Parties shall not create, incur, assume, permit,
guarantee, or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness (as defined in the Indenture Documents) permitted
under Section 4.03(b)(16) of the Parent Note Indenture and the Iron Age Note
Indenture in an amount in excess of $2,000,000, other than in respect of the
Obligations.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(e) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
Clauses (a), (b) and (c) of this Section 7.3 shall not apply to the merger,
liquidation or consolidation of (i) Falcon with and into Iron Age (so long as
Iron Age is the surviving entity), (ii) a Guarantor (other than Parent) with and
into another Guarantor or a Borrower (so long as such Borrower is the surviving
entity), or (iii) a Non-Loan Party with and into another Non-Loan Party, each of
which shall be permitted hereunder.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of the
assets of any Loan Party.
7.5 CHANGE NAME. Change any Loan Party's name, FEIN,
organizational identification number, state of incorporation, corporate
structure or identity, or add any new fictitious name; provided, however, that a
Loan Party may change its name upon at least 30 days prior written notice by
Administrative Borrower to Agent of such change and so long as, at the time of
such written notification, such Person provides any financing statements or
fixture filings necessary to perfect and continue perfected the Agent's Liens.
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7.6 GUARANTEE. Guarantee or otherwise become in any way liable
with respect to the obligations of any third Person except (i) by endorsement of
instruments or items of payment for deposit to the account of the Loan Parties
or which are transmitted or turned over to Agent, (ii) for guarantees of
Indebtedness permitted under Section 7.1 and guarantees set forth on Schedule
5.20, and (iii) any guarantee of Indebtedness or any other obligation permitted
by the terms of this Agreement.
7.7 NATURE OF BUSINESS. Make any change in the principal nature of
any Loan Party's business.
7.8 PAYMENTS, PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with (i) a refinancing permitted by
Section 7.1(e) or (ii) a prepayment of Purchase Money Indebtedness in connection
with sale of the fixed assets acquired with the proceeds thereof, prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of any Loan
Party, other than the Obligations in accordance with this Agreement; provided,
however, that notwithstanding the provisions of this clause (a), Parent shall be
permitted to repurchase its Parent Notes in accordance with the terms of this
Agreement.
(b) Except in connection with a refinancing permitted by
Section 7.1(e), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Sections 7.1(b), (c) or (d) if such amendment, modification, alteration,
increase or change 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, would increase the interest rate applicable to such
Indebtedness, would change the subordination provision, if any, of such
Indebtedness, or would otherwise be adverse to the Agent and the Lenders or the
issuer of such Indebtedness in any respect.
(c) (i) Amend, modify or otherwise change its Governing
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 Stock (including any shareholders' agreement), or
enter into any new agreement with respect to any of its Stock, or (ii) amend,
modify or otherwise change any Material Contract, except any such amendments,
modifications or changes or any such new agreements or arrangements pursuant to
this paragraph (d) that, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Change.
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory on
▇▇▇▇ and hold, sale or return, sale on approval, or other conditional terms of
sale other than at the consignment locations set forth on Schedule 5.5.
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7.11 DISTRIBUTIONS. Other than distributions or declaration and
payment of dividends by any Subsidiary of a Borrower to a Borrower, make any
distribution or declare or pay any dividends (in cash or other property, other
than common Stock) on, or purchase, acquire, redeem, or retire any of any Loan
Party's Stock, of any class, whether now or hereafter outstanding or pay any
management, consulting or similar fees; provided, that:
(a) so long as no Event of Default has occurred and is
continuing or would result therefrom, Iron Age may make distributions and pay
dividends to Parent (i) in an aggregate amount not to exceed, during each Fiscal
Year, the consolidated income tax liability of Iron Age and its Subsidiaries for
such year, but only to the extent Iron Age files a consolidated tax return with
Parent for such year, and (ii) in respect of other nominal amounts necessary to
pay the licensing expenses and franchise taxes and fees of Parent and other
customary and reasonable expenses of a holding company;
(b) so long as no Event of Default has occurred and is
continuing or would result therefrom, Iron Age may make distributions and pay
dividends to Parent:
(i) with the prior consent of Agent, in amounts
necessary to fund Parent's required interest payments in respect of its
Parent Notes due on or after November 1, 2003, provided that (A) both
before and after giving effect to such dividend or distribution, no
Default or Event of Default has occurred and is continuing, (B) during the
immediately preceding 30 consecutive day period prior to such dividend or
distribution, average Excess Availability is not less than $2,000,000, (C)
immediately after giving effect to such dividend or distribution, Excess
Availability is not less than $2,000,000, and (D), contemporaneously
therewith, Administrative Borrower delivers to Agent a certificate of the
chief executive officer or chief financial officer of Administrative
Borrower certifying that such conditions have been satisfied, and
(ii) in an aggregate amount not to exceed an amount
agreed to in writing between Parent and Agent to fund Parent's repurchase
or redemption of Parent Notes, provided that (A) both before and after
giving effect to such dividend or distribution, no Default or Event of
Default has occurred and is continuing, (B) both before and after giving
effect to such dividend or distribution, the Senior Debt Ratio does not
exceed the ratio agreed to in writing between Parent and Agent, (C) during
the immediately preceding 30 consecutive day period prior to such dividend
or distribution, average Excess Availability is not less than $2,000,000,
(D) immediately after giving effect to such dividend or distribution,
Excess Availability is not less than $2,000,000, and (E) contemporaneously
therewith, Administrative Borrower delivers to Agent a certificate of the
chief executive officer or chief financial officer of Administrative
Borrower certifying that such conditions have been satisfied; and
(c) so long as no Default or Event of Default has occurred and
is continuing or would result therefrom (i) Iron Age may directly, or by making
distributions and paying dividends to Parent, pay management and/or consulting
fees and expenses to Fenway Fund in accordance with the Fenway Management
Agreement, provided that the aggregate amount of all such payments made by Iron
Age or Parent in respect of the Fenway Management Agreement pursuant to this
clause (c)(i) shall not exceed $500,000 during any Fiscal Year or
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$125,000 during any fiscal quarter of Parent, and (ii) Iron Age may, directly or
by making distributions and paying dividends to Parent, repurchase or redeem
Parent's Stock from current or former employees of any Loan Party in an amount
not to exceed $250,000 in the aggregate from and after the Closing Date,
provided that the amount of such repurchases and redemptions together with the
amount of Indebtedness incurred by the Loan Parties under Section 7.1(i) shall
not exceed $250,000 in the aggregate from and after the Closing Date.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of the Loan Parties' accounting records without said accounting firm
or service bureau agreeing to provide Agent information regarding the Collateral
or the Loan Parties' financial condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that the Loan Parties shall not have Permitted Investments (other than
in the Cash Management Accounts) in deposit accounts or Securities Accounts in
excess of $500,000 outstanding at any one time unless the applicable Loan Party,
and the applicable securities intermediary or bank have entered into Control
Agreements or similar arrangements governing such Permitted Investments, as
Agent shall determine in its Permitted Discretion, to perfect (and further
establish) the Agent's Liens in such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Except for agreements set forth
on Schedule 7.14 or transactions among the Loan Parties, directly or indirectly
enter into or permit to exist any transaction with any Affiliate of any Loan
Party except for transactions that are in the ordinary course of the Loan
Parties' business, upon fair and reasonable terms, that are fully disclosed to
Agent, and that are no less favorable to the Loan Parties than would be obtained
in an arm's length transaction with a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 COMPENSATION. Increase the annual fee or per-meeting fees paid
to the members of its Board of Directors during any Fiscal Year by more than 15%
over the prior Fiscal Year; or pay or accrue total cash compensation, during any
Fiscal Year, to its officers and senior management employees other than in
accordance with an incentive, bonus or other compensation plan authorized in
writing by the Board of Directors (or the applicable compensation committee
appointed by such Board of Directors) of Parent.
7.17 USE OF PROCEEDS. Use the proceeds of the Advances and the Term
Loans for any purpose other than (a) on the Closing Date, (i) to repay in full
the outstanding principal, accrued interest, and accrued fees and expenses owing
to Existing Lender, and (ii) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, and (b) thereafter, consistent
with the terms and conditions hereof, for its lawful and permitted purposes,
including (i) to repurchase up to the face amount of Parent Notes agreed to in
writing between Parent and
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Agent, provided that only the amount of the proceeds of the Advances and the
Term Loans agreed to in writing between Parent and Agent may be used to make
such repurchases, and (ii) subject to the prior consent of Agent and to the
extent that not all Parent Notes have been repurchased prior to such date, to
make required interest payments on the Parent Notes due on or after November 1,
2003. Notwithstanding anything to the contrary contained herein, Iron Age may
not use the proceeds of any Advance or Term Loan to repurchase any Iron Age
Notes without the prior written consent of Agent (which consent may not be
unreasonably withheld).
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without Administrative Borrower providing 20 days prior written notification
thereof to Agent and so long as, at the time of such written notification, the
applicable Loan Party provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens and, if such new
location is leased by such Loan Party, provides to Agent a Collateral Access
Agreement with respect to such new location. The Inventory and Equipment shall
not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Agent's prior written consent unless such bailee,
warehouseman or similar party has executed a Collateral Access Agreement.
7.19 SECURITIES ACCOUNTS. Subject to Section 7.13, establish or
maintain any Securities Account unless Agent shall have received a Control
Agreement in respect of such Securities Account. Parent and Borrowers agree to
not transfer assets out of any Securities Account; provided, however, that, so
long as no Event of Default has occurred and is continuing or would result
therefrom, Borrowers may use such assets (and the proceeds thereof) to the
extent not prohibited by this Agreement.
7.20 FINANCIAL COVENANTS.
(a) FIXED CHARGE COVERAGE RATIO. Fail to maintain a Fixed
Charge Coverage Ratio:
(i) prior to the first date on which average Excess
Availability for the immediately preceding 30 consecutive day period is
less than $2,000,000, at the end of each fiscal quarter of Parent set
forth below of not less than the applicable ratio set forth below:
---------------------------------------------------------
Fiscal Quarter Ended Ratio
---------------------------------------------------------
October 26, 2002 0.90 : 1.00
---------------------------------------------------------
January 25, 2003 0.90 : 1.00
---------------------------------------------------------
April 26, 2003 0.83 : 1.00
---------------------------------------------------------
July 26, 2003 0.91 : 1.00
---------------------------------------------------------
October 25, 2003 0.92 : 1.00
---------------------------------------------------------
January 31, 2004 0.95 : 1.00
---------------------------------------------------------
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or
(ii) after the first date on which average Excess
Availability for the immediately preceding 30 consecutive day period is
less than $2,000,000, at the end of each Fiscal Month of Parent set forth
below of not less than the applicable ratio set forth below:
---------------------------------------------------------
Fiscal Month Ended Ratio
---------------------------------------------------------
September 28, 2002 0.90 : 1.00
---------------------------------------------------------
October 26, 2002 0.90 : 1.00
---------------------------------------------------------
November 30, 2002 0.90 : 1.00
---------------------------------------------------------
December 28, 2002 0.90 : 1.00
---------------------------------------------------------
January 25, 2003 0.90 : 1.00
---------------------------------------------------------
February 22, 2003 0.93 : 1.00
---------------------------------------------------------
March 29, 2003 0.91 : 1.00
---------------------------------------------------------
April 26, 2003 0.83 : 1.00
---------------------------------------------------------
May 31, 2003 0.88 : 1.00
---------------------------------------------------------
June 28, 2003 0.87 : 1.00
---------------------------------------------------------
July 26, 2003 0.91 : 1.00
---------------------------------------------------------
August 30, 2003 0.91 : 1.00
---------------------------------------------------------
September 27, 2003 0.92 : 1.00
---------------------------------------------------------
October 25, 2003 0.92 : 1.00
---------------------------------------------------------
November 29, 2003 0.92 : 1.00
---------------------------------------------------------
December 27, 2003 0.93 : 1.00
---------------------------------------------------------
January 31, 2004 0.95 : 1.00
---------------------------------------------------------
The minimum Fixed Charge Coverage Ratio for each fiscal quarter or Fiscal Month,
as the case may be, ended after January 31, 2004, shall be not be less than 80%
of the projected Fixed Charge Coverage Ratio for each 12 month period then
ended, based on the Projections delivered to Agent in accordance with Section
6.3(c), which Projections shall be in form and substance reasonably acceptable
to Agent; provided, that if Agent and Administrative Borrower cannot agree on
such Projections, for purposes of this Section 7.20(a), the minimum Fixed Charge
Coverage Ratio for each such 12 month period then ended shall not be less than
1.00 : 1.00.
(b) SENIOR DEBT RATIO. Except as otherwise agreed to in
writing between Agent and Administrative Borrower, fail to maintain a Senior
Debt Ratio at the end of each Fiscal Month of Parent for the trailing 12 month
period ending at the end of such Fiscal Month of not more than 3.25 : 1.00.
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(c) CAPITAL EXPENDITURES. Make Capital Expenditures in any
Fiscal Year in excess of $3,000,000 (excluding the aggregate amount of cash
proceeds of sales, dispositions or insurance proceeds permitted to be reinvested
and being held for reinvestment and/or actually reinvested by Borrowers in
accordance with Section 2.4(a)(iii) during such period).
(d) EXCESS AVAILABILITY. Maintain Excess Availability of not
less than $2,000,000 at all times during the immediately succeeding 30
consecutive day period following (i) any required interest payment made by
Parent in respect of its Parent Notes permitted by Section 7.8(a) and (ii) any
repurchase by Parent of its Parent Notes permitted by Section 7.8(b).
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1. If Borrowers fail to pay when due and payable or when declared
due and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees, expenses and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations) and, in the case of any Obligations constituting
interest, fees, expenses, charges or reimbursements only, such failure shall
continue for 3 Business Days;
8.2. If any Loan Party (i) fails to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in Section 6.1,
6.4, 6.5, 6.7 or 6.11 of this Agreement, or any comparable provision of the
other Loan Documents, and such failure continues for 15 Business Days, (ii)
fails to perform, keep, or observe any term, provision, condition, covenant, or
agreement contained in Section 6.14, 6.15, 6.16 or 6.17 of this Agreement, or
any comparable provision of the other Loan Documents, and such failure continues
for 10 Business Days, (iii) fails to perform, keep, or observe any term,
provision, condition, covenant or agreement contained in Section 6.2 (but only
up to 6 times during any 12-month period), 6.3, 6.9 or 6.12 of this Agreement,
or any comparable provision of the other Loan Documents, and such failure
continues for 5 Business Days, or (iv) otherwise fails to perform, keep, or
observe any other term, provision, condition, covenant, or agreement contained
in this Agreement or in any of the other Loan Documents;
8.3. If any material portion of any Loan Party's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
8.4. If an Insolvency Proceeding is commenced by any Loan Party or
any of its Subsidiaries;
8.5. If an Insolvency Proceeding is commenced against any Loan
Party, or any of its Subsidiaries, and any of the following events occur: (a)
the applicable Loan Party or the Subsidiary consents to the institution of the
Insolvency Proceeding against it, (b) the petition
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commencing the Insolvency Proceeding is not timely controverted, (c) the
petition commencing the Insolvency Proceeding is not dismissed within 45
calendar days of the date of the filing thereof; provided, however, that, during
the pendency of such period, Agent (including any successor agent) and each
other member of the Lender Group shall be relieved of their obligation to extend
credit hereunder, (d) an interim trustee is appointed to take possession of all
or any substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, any Loan Party or any of its
Subsidiaries, or (e) an order for relief shall have been entered therein;
8.6. If any Loan Party or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7. If a notice of Lien, levy, or assessment is filed of record
with respect to any Loan Party's or any of its Subsidiaries' assets by the
United States, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien,
whether ▇▇▇▇▇▇ or otherwise, upon any Borrower's or any of its Subsidiaries'
assets to secure an aggregate amount in excess of $100,000 and the same is not
paid before such payment is delinquent;
8.8. If a judgment or other claim for an amount in excess of
$100,000 becomes a Lien or encumbrance upon any material portion of any Loan
Party's or any of its Subsidiaries' properties or assets;
8.9. If there is a default under any Indenture Document or any
Material Contract to which any Loan Party or any of its Subsidiaries is a party
and such default (a) occurs at the final maturity of the obligations thereunder,
or (b) results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of the applicable Loan Party's or its
Subsidiaries' obligations thereunder, to terminate such agreement, or to refuse
to renew such agreement pursuant to an automatic renewal right therein;
8.10. If any Loan Party or any of its Subsidiaries makes any payment
on account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11. If any material misstatement or material misrepresentation
exists now or hereafter in any warranty, representation, statement, or Record
made to the Lender Group by any Loan Party, its Subsidiaries, or any officer,
employee, agent, or director of any Loan Party or any of its Subsidiaries;
8.12. If the obligation of any Guarantor under its Guaranty is
limited or terminated by operation of law or by such Guarantor thereunder;
8.13. If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby;
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8.14. If any Loan Party or any of its Subsidiaries or any of their
ERISA Affiliates shall have made a complete or partial withdrawal from a
Multiemployer Plan, and, as a result of such complete or partial withdrawal,
such Loan Party or any of its Subsidiaries or such ERISA Affiliate incurs a
withdrawal liability in an annual amount exceeding $100,000; or a Multiemployer
Plan enters reorganization status under Section 4241 of ERISA, and, as a result
thereof, a Loan Party's or such Subsidiary's, or such ERISA Affiliate's annual
contribution requirement with respect to such Multiemployer Plan increases in an
annual amount exceeding $100,000;
8.15. Any Termination Event with respect to any Benefit Plan shall
have occurred, and, 30 days thereafter, (i) such Termination Event (if
correctable) shall not have been corrected, and (ii) the then current value of
such Benefit Plan's vested benefits exceeds the then current value of assets
allocable to such benefits in such Benefit Plan by more than $100,000 (or, in
the case of a Termination Event involving liability under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971
or 4975 of the Code, the liability is in excess of such amount); or
8.16. Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Loan Party, or a proceeding shall be commenced
by any Loan Party, or by any Governmental Authority having jurisdiction over any
Loan Party, seeking to establish the invalidity or unenforceability thereof, or
any Loan Party shall deny that any Loan Party has any liability or obligation
purported to be created under any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all or any portion of the Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
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(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit the Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all Lender Group
Expenses incurred or expended in connection therewith;
(e) Cause the Loan Parties to hold all returned Inventory that
cannot be resold as finished goods "as is" in the condition that they are
returned in trust for the Lender Group, segregate all such returned Inventory
from all other assets of the Loan Parties or in the Loan Parties' possession and
conspicuously label said returned Inventory as the property of the Lender Group
for collateral purposes hereunder;
(f) Without notice to or demand upon any Loan Party, make such
payments and do such acts as Agent considers necessary or reasonable to protect
its security interests in the Collateral. Each Borrower agrees to assemble the
Personal Property Collateral if Agent so requires, and to make the Personal
Property Collateral available to Agent at a place that Agent may designate which
is reasonably convenient to both parties. Each Borrower authorizes Agent to
enter the premises where the Personal Property Collateral is located, to take
and maintain possession of the Personal Property Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Agent's
determination appears to conflict with the Agent's Liens and to pay all expenses
incurred in connection therewith and to charge the Loan Account therefor. With
respect to any of Borrowers' owned or leased premises, each Borrower hereby
grants Agent a license to enter into possession of such premises and to occupy
the same, without charge, in order to exercise any of the Lender Group's rights
or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Loan Party (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Loan Party
held by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of any Loan Party held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and
deposits of any Loan Party held by the Lender Group, and any amounts received in
the Cash Management Accounts, to secure the full and final repayment of all of
the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Agent is hereby granted a license or
other right to use, without charge, for the benefit of the Lender Group, each
Borrower's labels, patents, copyrights, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Personal Property Collateral, in completing production of,
advertising for sale, and selling any Personal Property Collateral and each
Borrower's rights under all licenses and all franchise agreements shall inure to
the Lender Group's benefit;
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(j) Sell the Personal Property Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including any Loan Party's
premises) as Agent determines is commercially reasonable. It is not necessary
that the Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Agent shall give Administrative Borrower (for the
benefit of the Loan Parties) a notice in writing of the time and place of
public sale, or, if the sale is a private sale or some other disposition
other than a public sale is to be made of the Personal Property
Collateral, the time on or after which the private sale or other
disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in Section 12, at
least 10 days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any
portion of the Personal Property Collateral that is perishable or
threatens to decline speedily in value or that is of a type customarily
sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit bid and
purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate same and,
to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(n) Agent, on behalf of the Lender Group, may foreclose any or
all of the Mortgages and sell the Real Property or cause the Real Property to be
sold in accordance with the provisions of the Mortgages and applicable law, and
exercise any and all other rights or remedies available to Agent, on behalf of
the Lender Group, under the Mortgages, any of the other Loan Documents, at law
or in equity with respect to the Collateral encumbered by the Mortgages;
(o) The Lender Group shall have all other rights and remedies
available to it at law or in equity or pursuant to any other Loan Document; and
(p) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by the
Loan Parties. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Administrative Borrower (for the benefit of
the Loan Parties).
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender
Group under this Agreement, the other Loan Documents, and all other agreements
shall be cumulative. The Lender Group shall have all other rights and remedies
not inconsistent herewith as provided
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under the Code, by law, or in equity. No exercise by the Lender Group of one
right or remedy shall be deemed an election, and no waiver by the Lender Group
of any Event of Default shall be deemed a continuing waiver. No delay by the
Lender Group shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
the Loan Account as Agent deems necessary to protect the Lender Group from the
exposure created by such failure, or (c) in the case of the failure to comply
with Section 6.8 hereof, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Each Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which each such Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each Borrower
hereby agrees that: (a) so long as the Lender Group complies with its
obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by
Borrowers.
11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend,
and hold the Agent-Related Persons, the Lender-Related Persons with respect to
each Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other reasonable costs and
expenses actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them
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(a) in connection with or as a result of or related to the execution,
delivery, enforcement, performance, or administration of this Agreement, any of
the other Loan Documents, or the transactions contemplated hereby or thereby,
and (b) with respect to any investigation, litigation, or proceeding related to
this Agreement, any other Loan Document, or the use of the proceeds of the
credit provided hereunder (irrespective of whether any Indemnified Person is a
party thereto), or any act, omission, event, or circumstance in any manner
related thereto (all the foregoing, collectively, the "Indemnified
Liabilities"). The foregoing to the contrary notwithstanding, Borrowers shall
have no obligation to any Indemnified Person under this Section 11.3 with
respect to any Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or willful
misconduct of such Indemnified Person (or any of its officers, directors,
employees, agents, or attorneys-in-fact). This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as the Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative IRON AGE CORPORATION
Borrower: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ROPES & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
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If to Agent: FOOTHILL CAPITAL CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Agent and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY AND
PERFECTION OR THE PERFECTION AND EFFECT OF PERFECTION OR NON-PERFECTION OF THE
SECURITY INTEREST CREATED HEREBY OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
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BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS
TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWERS AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 13(b).
BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each an "Assignee") all, or any ratable part
of all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum amount
of $2,500,000; provided, however, that Borrowers and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Administrative Borrower and Agent by such Lender
and the Assignee, (ii) such Lender and its Assignee have delivered to
Administrative Borrower and Agent an Assignment and Acceptance in form and
substance reasonably satisfactory to Agent and (iii) the assignor Lender or
Assignee has paid to Agent for Agent's separate account a processing fee in the
amount of $5,000. Anything contained herein to the contrary notwithstanding, the
consent of Agent shall not be required (and payment of any fees shall not be
required) if such assignment is in connection with any merger, consolidation,
sale, transfer, or other disposition of all or any substantial portion of the
business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a
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Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 11.3 hereof) 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 and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such 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 the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interest by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
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hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Originating Lender shall
transfer or grant any participating interest under which the Participant has the
right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations hereunder
in which such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant, or (E) change the amount or due
dates of scheduled principal repayments or prepayments or premiums; and (v) all
amounts payable by Borrowers hereunder shall be determined as if such Lender had
not sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves. The provisions of this Section
14.1(e) (other than clause (v) of this Section) are solely for the benefit of
the Lender Group, and none of the Borrowers shall have any rights as a third
party beneficiary of such provisions.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose on a confidential
basis all documents and information which it now or hereafter may have relating
to Borrowers or Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties; provided,
however, that Borrowers may not assign this Agreement or any rights or duties
hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to
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assignment by the Lenders shall release any Borrower from its Obligations. A
Lender may assign this Agreement and the other Loan Documents and its rights and
duties hereunder and thereunder pursuant to Section 14.1 hereof and, except as
expressly required pursuant to Section 14.1 hereof, no consent or approval by
any Borrower is required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Borrowers therefrom, shall be effective unless the
same shall be in writing and signed by the Required Lenders (or by Agent at the
written request of the Required Lenders) and Administrative Borrower (on behalf
of all Borrowers) and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required
to take any action hereunder,
(e) amend, modify or waive this Section or any provision of
the Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section
16.12,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or Guarantor from any obligation for
the payment of money,
(j) change the definitions of Borrowing Base, Eligible
Accounts, Eligible Inventory, Eligible In-Plant Inventory, Eligible Raw
Materials Inventory or Net Liquidation Percentage in a manner that would result
in an increase in the Borrowing Base (or in any definition contained in this
Agreement used in connection with the definition of the foregoing terms that
would result in an increase in the Borrowing Base),
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(k) change the definitions of Eligible Equipment, Eligible
Real Property Collateral, Maximum Revolver Amount, Term Loan A Amount, Term Loan
B Amount or Term Loan C Amount in a manner that would result in an increase in
the Term Loan A Amount, the Term Loan B Amount or the Term Loan C Amount (or in
any definition contained in this Agreement used in connection with the
definition of the foregoing terms that would result in an increase in the Term
Loan A Amount, the Term Loan B Amount or the Term Loan C Amount), or
(l) amend, modify or waive any of the provisions of Section 16
or Section 2.1(a), Section 2.3(e), Section 2.3(i) or Section 2.4(b);
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 REPLACEMENT OF HOLDOUT LENDER. If any action to be taken by
the Lender Group or Agent hereunder requires the unanimous consent,
authorization, or agreement of all Lenders, and a Lender ("Holdout Lender")
fails to give its consent, authorization, or agreement, then Agent, upon at
least 5 Business Days prior irrevocable notice to the Holdout Lender, may
permanently replace the Holdout Lender with one or more substitute Lenders
(each, a "Replacement Lender"), and the Holdout Lender shall have no right to
refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall
specify an effective date for such replacement, which date shall not be later
than 15 Business Days after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement or, any
other Loan Document, or
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delay by Agent or any Lender in exercising the same, will operate as a waiver
thereof. No waiver by Agent or any Lender will be effective unless it is in
writing, and then only to the extent specifically stated. No waiver by Agent or
any Lender on any occasion shall affect or diminish Agent's and each Lender's
rights thereafter to require strict performance by Borrowers of any provision of
this Agreement. Agent's and each Lender's rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and the Loan Parties shall have no rights as a third party beneficiary
of any of the provisions contained herein. Any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent; it being
expressly understood and agreed that the use of the word "Agent" is for
convenience only, that Foothill is merely the representative of the Lenders, and
only has the contractual duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect: (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Obligations, the Collateral, the Collections, and related matters, (b)
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 the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management accounts as Agent deems necessary and appropriate in accordance
with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to the Loan Parties,
the Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.
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16.2 DELEGATION OF DUTIES. Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Loan Party or any
Subsidiary or Affiliate of any Loan Party, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the Books or properties of
any Loan Party or the books or records or properties of any Loan Party's
Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the Loan
Parties or counsel to any Lender), independent accountants and other experts
selected by Agent. Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless Agent shall
first receive such advice or concurrence of the Lenders as it deems appropriate
and until such instructions are received, Agent shall act, or refrain from
acting, as it deems advisable. If Agent so requests, it shall first be
indemnified to its reasonable satisfaction by Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Defaults and Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Administrative Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of default." Agent
promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual
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knowledge. If any Lender obtains actual knowledge of any Event of Default, such
Lender promptly shall notify the other Lenders and Agent of such Event of
Default. Each Lender shall be solely responsible for giving any notices to its
Participants, if any. Subject to Section 16.4, Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with Section 9; provided, however, that unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of the Loan
Parties and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and any other Person (other than the Lender
Group) party to a Loan Document, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Loan Parties. Each Lender
also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Loan Parties and any other
Person (other than the Lender Group) party to a Loan Document. Except for
notices, reports, and other documents expressly herein required to be furnished
to the Lenders by Agent, Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Loan Parties and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrowers
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and without limiting the obligation of Borrowers to do so), according to their
Pro Rata Shares, from and against any and all Indemnified Liabilities; provided,
however, that no Lender shall be liable for the payment to any Agent-Related
Person of any portion of such Indemnified Liabilities resulting solely from such
Person's gross negligence or willful misconduct nor shall any Lender be liable
for the obligations of any Defaulting Lender in failing to make an Advance or
other extension of credit hereunder. Without limitation of the foregoing, each
Lender shall reimburse Agent upon demand for such Lender's ratable share of any
costs or out-of-pocket expenses (including attorneys fees and expenses) incurred
by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking,
lending, trust, financial advisory, underwriting, or other business with the
Loan Parties and their Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though Foothill were not Agent hereunder, and, in each
case, without notice to or consent of the other members of the Lender Group. The
other members of the Lender Group acknowledge that, pursuant to such activities,
Agent or its Affiliates may receive information regarding the Loan Parties or
their Affiliates and any other Person (other than the Lender Group) party to any
Loan Documents that is subject to confidentiality obligations in favor of the
Loan Parties or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice
to the Lenders. If Agent resigns under this Agreement, the Required Lenders
shall appoint a successor Agent for the Lenders, which successor Agent shall, so
long as no Default or Event of Default shall have occurred and be continuing, be
reasonably acceptable to Borrowers. If no successor Agent is appointed prior to
the effective date of the resignation of Agent, Agent may appoint, after
consulting with the Lenders and, if applicable, Borrowers, a successor Agent. If
Agent has materially breached or failed to perform any material provision of
this Agreement or of applicable law, the Required Lenders may agree in writing
to remove and replace Agent with a successor Agent from among the Lenders. In
any such event, upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers, and
duties of the retiring Agent and the term "Agent" shall mean such successor
Agent and the retiring Agent's appointment, powers, and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 16 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is 45 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall
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nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the Loan
Parties and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding the Loan Parties or their Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of the Loan Parties or such other Person and that prohibit
the disclosure of such information to the Lenders, and the Lenders acknowledge
that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of the Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Administrative Borrower:
(i) if such Lender claims an exemption from withholding
tax pursuant to its portfolio interest exception, (A) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank" as
described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder
(within the meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section 881(c)(3)(C) of the
IRC, and (B) a properly completed IRS Form W-8BEN, before the first
payment of any interest under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower;
(ii) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, properly
completed IRS Form W-8BEN before the first payment of any interest under
this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement and
at any other time reasonably requested by Agent or Administrative
Borrower;
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(iv) such other form or forms as may be required under
the IRC or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative
Borrower of any change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any note
or other Loan Document will be made without setoff, counterclaim, or other
defense, except as required by applicable law other than for Taxes (as defined
below). All such payments will be made free and clear of, and without deduction
or withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender,
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or (ii) to the extent that such tax results from a change in the circumstances
of the Lender, including a change in the residence, place of organization, or
principal place of business of the Lender, or a change in the branch or lending
office of the Lender participating in the transactions set forth herein) and all
interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "Taxes"). If any Taxes are so levied or
imposed, each Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any note, including any amount paid pursuant to
this Section 16.11(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrowers shall not be required to increase any such amounts payable to
Agent or any Lender (i) that is not organized under the laws of the United
States, if such Person fails to comply with the other requirements of this
Section 16.11, or (ii) if the increase in such amount payable results from
Agent's or such Lender's own willful misconduct or gross negligence.
Administrative Borrower will furnish to Agent as promptly as possible after the
date the payment of any Taxes is due pursuant to applicable law certified copies
of tax receipts evidencing such payment by Borrowers.
(f) If Agent or any Lender shall determine that it has
received a refund in respect of any Taxes as to which it has been indemnified by
Borrowers pursuant to this Section 16.11, it shall notify Administrative
Borrower of such refund and shall, within 30 days after receipt of a request by
Administrative Borrower, repay such refund to Borrowers (to the extent of
amounts that have been paid by Borrowers under this Section 16.11 with respect
to such refund plus interest that is actually received by Agent or such Lender
as part of the refund), net of all expenses of Agent or such Lender and without
any additional interest thereon; provided, that Borrowers, upon request by Agent
or such Lender agree to return such refund (plus penalties, interest and other
charges) to Agent or such Lender in the event Agent or such Lender is required
to repay such refund. Nothing contained in this Section 16.11(f) shall require
Agent or any Lender to make available to any Borrower or any other Person any of
its tax returns (or any other information relating to its taxes that it deems to
be confidential).
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Loan Party owned any interest at the
time the security interest was granted or at any time thereafter, or (iv)
constituting property leased to a Loan Party under a lease that has expired or
is terminated in a transaction permitted under this Agreement. Except as
provided above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders will confirm in writing Agent's authority to
release any such
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Liens on particular types or items of Collateral pursuant to this Section 16.12;
provided, however, that (1) Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or
warranty, and (2) such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of a Loan Party in respect of) all interests retained by a
Loan Party, including, the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by a Loan Party or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are 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 Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to the Loan Parties or any deposit accounts of
the Loan Parties now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
by Agent, take or cause to be taken any action, including, the commencement of
any legal or equitable proceedings, to foreclose any Lien on, or otherwise
enforce any security interest in, any of the Collateral the purpose of which is,
or could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases
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of participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender
as its agent (and each Lender hereby accepts such appointment) for the purpose
of perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by or
at the request of Agent, and Agent shall so furnish each Lender with such
Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding the Loan
Parties and will rely significantly upon the Books, as well as on
representations of the Loan Parties' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding the Loan Parties and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Parent and Borrowers that
in any event such Lender may make disclosures (a) on a
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confidential basis to counsel for and other advisors, accountants, and auditors
to such Lender, (b) on a confidential basis reasonably required by any bona fide
potential or actual Assignee or Participant in connection with any contemplated
or actual assignment or transfer by such Lender of an interest herein or any
participation interest in such Lender's rights hereunder, (c) of information
that has become public by disclosures made by Persons other than such Lender,
its Affiliates, assignees, transferees, or Participants, or (d) as required or
requested by any court, governmental or administrative agency, pursuant to any
subpoena or other legal process, or by any law, statute, regulation, or court
order; provided, however, that, unless prohibited by applicable law, statute,
regulation, or court order, such Lender shall notify Administrative Borrower of
any request by any court, governmental or administrative agency, or pursuant to
any subpoena or other legal process for disclosure of any such non-public
material information concurrent with, or where practicable, prior to the
disclosure thereof, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time
request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by a Loan Party to Agent that has not been
contemporaneously provided by such Loan Party to such Lender, and, upon receipt
of such request, Agent shall provide a copy of same to such Lender, (y) to the
extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from a Loan Party, any Lender may,
from time to time, reasonably request Agent to exercise such right as specified
in such Lender's notice to Agent, whereupon Agent promptly shall request of such
Loan Party the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from such Loan Party, Agent promptly shall
provide a copy of same to such Lender, and (z) any time that Agent renders to a
Loan Party a statement regarding the Loan Account, Agent shall send a copy of
such statement to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such, and not by or in favor of
the Lenders, any and all obligations on the part of Lenders to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
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responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender Group. No Lender shall
be responsible to any Loan Party or any other Person for any failure by any
other Lender to fulfill its obligations to make credit available hereunder, nor
to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Parent, Borrowers, Agent, and each Lender whose
signature is provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group, Parent
or Borrowers, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by all parties and shall be construed
and interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile 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 telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Loan Party or the transfer to the Lender Group
of any property should for any reason subsequently be declared to be void or
voidable under any state, provincial or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
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transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of each Loan Party automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been made.
17.8 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.
17.9 IRON AGE AS AGENT FOR BORROWERS. Each Borrower hereby
irrevocably appoints Iron Age as the borrowing agent and attorney-in-fact for
all Borrowers (the "Administrative Borrower") which appointment shall remain in
full force and effect unless and until Agent shall have received prior written
notice signed by each Borrower 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 Agent with all notices with respect to Advances and Letters of Credit
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 Advances and Letters of Credit 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 of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account 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 Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
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18. GUARANTY
18.1 GUARANTY; LIMITATION OF LIABILITY. The Parent 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 case, proceeding or other action relating to
bankruptcy, insolvency or reorganization of any Borrower), fees, expenses 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 Agents and the Lenders in
enforcing any rights under the guaranty set forth in this Section 18. Without
limiting the generality of the foregoing, the Parent'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 a
bankruptcy, reorganization or similar proceeding involving any Borrower.
18.2 GUARANTY ABSOLUTE. The Parent 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 the Parent under this
Section 18 are independent of the Guaranteed Obligations, and a separate action
or actions may be brought and prosecuted against the Parent to enforce such
obligations, irrespective of whether any action is brought against the Borrowers
or whether the Borrowers are joined in any such action or actions. The liability
of the Parent under this Section 18 shall be irrevocable, absolute and
unconditional irrespective of, and Parent 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 the Borrowers 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 Borrower;
or
(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, Parent, any Borrower or any other guarantor or surety.
- 121 -
This Section 18 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 a Lender or
any other Person upon the insolvency, bankruptcy or reorganization of any
Borrower or otherwise, all as though such payment had not been made.
18.3 WAIVER. Parent hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Section 18 and any requirement that the Agent or the
Lenders exhaust any right or take any action against the Borrowers or any other
Person or any Collateral. Parent acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waiver set forth in this Section 18.3 is knowingly made in contemplation of
such benefits. Parent hereby waives any right to revoke this Section 18, and
acknowledges that this Section 18 is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
18.4 CONTINUING GUARANTY; ASSIGNMENTS. This Section 18 is a
continuing guaranty and shall (a) remain in full force and effect until the
later of (i) 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 Section 18 and (ii) the Maturity Date, (b) be binding
upon Parent, 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 the Advances 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 14.1.
18.5 SUBROGATION. Parent will not exercise any rights that it may
now or hereafter acquire against any Borrower or any other insider guarantor
that arise from the existence, payment, performance or enforcement of Parent's
obligations under this Section 18, 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 Borrower or any other insider 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
Borrower or any other insider 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 Section 18 shall
have been paid in full in cash and the Commitments shall have terminated. If any
amount shall be paid to Parent 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 Section 18 and
the 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 Section 18, whether
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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 Section 18 thereafter arising. If (i) Parent 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 Section
18 shall be paid in full in cash and (iii) the Commitments shall have
terminated, the Agent and the Lenders will, at Parent's request and expense,
execute and deliver to Parent appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to Parent of an interest in the Guaranteed Obligations resulting
from such payment by Parent.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
IRON AGE HOLDINGS CORPORATION
a Delaware corporation
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President/Finance, CFO and
Treasurer
IRON AGE CORPORATION
a Delaware corporation
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President/Finance, CFO and
Treasurer
FALCON SHOE MFG. CO.
a Maine corporation
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a
Lender
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
CREDIT SUISSE FIRST BOSTON,
as a Lender
By: ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President and
Vice President
- 124 -
SCHEDULE A-1
AGENT'S ACCOUNT
An account at a bank designated by Agent from time to time as the
account into which Borrowers shall make all payments to Agent for the benefit of
the Lender Group and into which the Lender Group shall make all payments to
Agent under this Agreement and the other Loan Documents; unless and until Agent
notifies Administrative Borrower and the Lender Group in writing to the
contrary, Agent's Account shall be that certain deposit account bearing account
number 323-266193 and maintained by Agent with JPMorgan Chase Bank, ▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ABA #▇▇▇▇▇▇▇▇▇.
SCHEDULE C-1
COMMITMENTS
========================================================================================================================
TERM LOAN A TERM LOAN B
REVOLVER SUB-FACILITY SUB-FACILITY TERM LOAN C
LENDER COMMITMENT COMMITMENT* COMMITMENT* COMMITMENT TOTAL COMMITMENT
------------------------------------------------------------------------------------------------------------------------
Foothill Capital $38,000,000 $1,000,000 $3,000,000 $ 0 $38,000,000
Corporation
------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston $ 0 $ 0 $ 0 $12,000,000 $12,000,000
------------------------------------------------------------------------------------------------------------------------
All Lenders $38,000,000 $1,000,000 $3,000,000 $12,000,000 $50,000,000
========================================================================================================================
* Each of the Term Loan A Commitment and Term Loan B Commitment is a
sub-facility of the Revolver Commitment.
SCHEDULE D-1
DESIGNATED ACCOUNT
Account number 1014325994 of Administrative Borrower maintained with
Administrative Borrower's Designated Account Bank, or such other deposit account
of Administrative Borrower (located within the United States) that has been
designed as such, in writing, by Administrative Borrower to Agent.
"Designated Account Bank" means PNC Bank, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
SCHEDULE 3.2(e)
COLLATERAL ACCESS LOCATIONS
PART 1
1. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
PART 2
All leased and warehouse locations located in each of the following
states and provinces:
1. Alabama
2. Arizona
3. Delaware
4. District of Columbia
5. Florida
6. Iowa
7. Kentucky
8. Louisiana
9. Minnesota
10. New Mexico
11. Oklahoma
12. Pennsylvania
13. Texas
14. Utah
15. Virginia
16. Washington
17. West Virginia
18. Wisconsin
19 All Canadian provinces