EXHIBIT 99.(b)
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CREDIT AGREEMENT
dated as of
July 23, 2003
among
▇▇▇▇ DELAWARE, INC.,
▇▇▇▇ CORPORATION,
DDCC, INC., and
TXDC, L.P., as
Borrowers
The LENDERS Party Hereto,
FLEET NATIONAL BANK
as Administrative Agent and Issuing Bank
FLEET RETAIL FINANCE, INC.
as Collateral Agent
and
FLEET SECURITIES INC.
as Arranger
and
BANK ONE, NA
CONGRESS FINANCIAL CORPORATION (SOUTHWEST)
as Co-Syndication Agents
and
JPMORGAN CHASE BANK
BANK OF AMERICA, N.A.
as Co-Documentation Agents
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS............................................................................................ 1
SECTION 1.1. Defined Terms..................................................................... 1
SECTION 1.2. Terms Generally................................................................... 23
SECTION 1.3. Accounting Terms; GAAP............................................................ 24
ARTICLE II AMOUNT AND TERMS OF CREDIT............................................................................ 24
SECTION 2.1. Commitment of the Lenders......................................................... 24
SECTION 2.2. Reserves; Changes to Reserves..................................................... 25
SECTION 2.3. Making of Loans................................................................... 25
SECTION 2.4. Overadvances...................................................................... 26
SECTION 2.5. Swingline Loans................................................................... 26
SECTION 2.6. Letters of Credit................................................................. 27
SECTION 2.7. Settlements Amongst Lenders....................................................... 31
SECTION 2.8. Notes; Repayment of Loans......................................................... 32
SECTION 2.9. Interest on Loans................................................................. 32
SECTION 2.10. Default Interest.................................................................. 32
SECTION 2.11. Certain Fees...................................................................... 33
SECTION 2.12. Unused Commitment Fee............................................................. 33
SECTION 2.13. Letter of Credit Fees............................................................. 33
SECTION 2.14. Nature of Fees.................................................................... 34
SECTION 2.15. Termination or Reduction of Commitments........................................... 34
SECTION 2.16. Alternate Rate of Interest........................................................ 34
SECTION 2.17. Conversion and Continuation of Loans.............................................. 35
SECTION 2.18. Mandatory Prepayment; Cash Collateral............................................. 36
SECTION 2.19. Optional Prepayment of Loans; Reimbursement of Lenders............................ 36
SECTION 2.20. Maintenance of Loan Account; Statements of Account................................ 38
SECTION 2.21. Cash Receipts..................................................................... 38
SECTION 2.22. Application of Payments........................................................... 40
SECTION 2.23. Increased Costs................................................................... 41
SECTION 2.24. Change in Legality................................................................ 42
SECTION 2.25. Payments; Sharing of Setoff....................................................... 43
SECTION 2.26. Taxes............................................................................. 44
SECTION 2.27. Security Interests in Collateral.................................................. 45
SECTION 2.28. Mitigation Obligations; Replacement of Lenders.................................... 46
ARTICLE III REPRESENTATIONS AND WARRANTIES....................................................................... 47
SECTION 3.1. Organization; Powers.............................................................. 47
SECTION 3.2. Authorization; Enforceability..................................................... 47
SECTION 3.3. Governmental Approvals; No Conflicts.............................................. 47
SECTION 3.4. Financial Condition............................................................... 47
SECTION 3.5. Properties........................................................................ 48
TABLE OF CONTENTS
(CONTINUED)
Page
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SECTION 3.6. Litigation and Environmental Matters.............................................. 48
SECTION 3.7. Compliance with Laws and Agreements............................................... 49
SECTION 3.8. Investment and Holding Company Status............................................. 49
SECTION 3.9. Taxes............................................................................. 49
SECTION 3.10. ERISA............................................................................. 49
SECTION 3.11. Disclosure........................................................................ 50
SECTION 3.12. Subsidiaries...................................................................... 50
SECTION 3.13. Insurance......................................................................... 51
SECTION 3.14. Accounts; Credit Cards............................................................ 51
SECTION 3.15. Labor Matters..................................................................... 51
SECTION 3.16. Security Documents................................................................ 51
SECTION 3.17. Federal Reserve Regulations....................................................... 51
SECTION 3.18. Solvency.......................................................................... 51
SECTION 3.19. Foreign Assets Control Regulations, Etc........................................... 52
ARTICLE IV CONDITIONS............................................................................................ 52
SECTION 4.1. Closing Date...................................................................... 52
SECTION 4.2. Conditions Precedent to Each Loan and Each Letter of Credit....................... 55
ARTICLE V AFFIRMATIVE COVENANTS.................................................................................. 55
SECTION 5.1. Financial Statements and Other Information........................................ 55
SECTION 5.2. Notices of Material Events........................................................ 57
SECTION 5.3. Information Regarding Collateral.................................................. 58
SECTION 5.4. Existence; Conduct of Business.................................................... 58
SECTION 5.5. Payment of Obligations............................................................ 58
SECTION 5.6. Maintenance of Properties......................................................... 59
SECTION 5.7. Insurance......................................................................... 59
SECTION 5.8. Casualty and Condemnation......................................................... 60
SECTION 5.9. Books and Records; Inspection and Audit Rights; Appraisals........................ 60
SECTION 5.10. Compliance with Laws.............................................................. 60
SECTION 5.11. Employee Benefit Plans............................................................ 60
SECTION 5.12. Use of Proceeds and Letters of Credit............................................. 61
SECTION 5.13. New Subsidiaries.................................................................. 61
SECTION 5.14. Further Assurances................................................................ 61
ARTICLE VI NEGATIVE COVENANTS.................................................................................... 61
SECTION 6.1. Indebtedness and Other Obligations................................................ 62
SECTION 6.2. Liens............................................................................. 62
SECTION 6.3. Fundamental Changes............................................................... 64
SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions......................... 64
SECTION 6.5. Asset Sales....................................................................... 65
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TABLE OF CONTENTS
(CONTINUED)
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SECTION 6.6. Restricted Payments; Certain Payments of Indebtedness............................. 66
SECTION 6.7. Transactions with Affiliates...................................................... 67
SECTION 6.8. Fixed Charge Coverage Ratio....................................................... 67
SECTION 6.9. Hedging Agreements................................................................ 67
ARTICLE VII EVENTS OF DEFAULT.................................................................................... 68
SECTION 7.1. Events of Default................................................................. 68
SECTION 7.2. When Continuing................................................................... 71
SECTION 7.3. Remedies on Default............................................................... 71
SECTION 7.4. Application of Proceeds........................................................... 71
ARTICLE VIII THE AGENTS.......................................................................................... 72
SECTION 8.1. Administration by the Agents...................................................... 72
SECTION 8.2. The Collateral Agent.............................................................. 72
SECTION 8.3. Sharing of Excess Payments........................................................ 72
SECTION 8.4. Agreement of Required Lenders..................................................... 73
SECTION 8.5. Liability of Agents............................................................... 73
SECTION 8.6. Reimbursement and Indemnification................................................. 74
SECTION 8.7. Rights of Agents.................................................................. 74
SECTION 8.8. Independent Lenders and Issuing Bank.............................................. 75
SECTION 8.9. Notice of Transfer................................................................ 75
SECTION 8.10. Successor Agent................................................................... 75
SECTION 8.11. Reports and Financial Statements.................................................. 75
SECTION 8.12. Syndication Agent, Documentation Agent, and Arranger.............................. 75
ARTICLE IX MISCELLANEOUS......................................................................................... 76
SECTION 9.1. Notices........................................................................... 76
SECTION 9.2. Waivers; Amendments............................................................... 76
SECTION 9.3. Expenses; Indemnity; Damage Waiver................................................ 78
SECTION 9.4. Successors and Assigns............................................................ 80
SECTION 9.5. Accession......................................................................... 82
SECTION 9.6. Survival.......................................................................... 82
SECTION 9.7. Counterparts; Integration; Effectiveness.......................................... 83
SECTION 9.8. Severability...................................................................... 83
SECTION 9.9. Right of Setoff................................................................... 83
SECTION 9.10. Governing Law; Jurisdiction; Consent to Service of Process........................ 83
SECTION 9.11. Waiver of Jury Trial.............................................................. 84
SECTION 9.12. Headings.......................................................................... 84
SECTION 9.13. Interest Rate Limitation.......................................................... 84
SECTION 9.14. Confidentiality................................................................... 85
SECTION 9.15. Additional Waivers................................................................ 86
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TABLE OF CONTENTS
(CONTINUED)
EXHIBITS
A. Assignment and Acceptance
B-1. Revolving Note
B-2. Swingline Note
C. Security Agreement
D. Opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
E. Borrowing Base Certificate
F. Instrument of Accession
SCHEDULES
1.1 Lenders and Commitments
1.1(a) Existing Letters of Credit
2.21(a)(i) DDAs and Concentration Accounts
2.21(a)(ii) Credit Card Arrangements
3.6 Litigation and Environmental Matters
3.12 Subsidiaries
3.13 Insurance
5.1(i) Financial Reporting Requirements
6.1 Indebtedness
6.2 Liens
6.4 Investments
6.7 Transactions with Affiliates
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CREDIT AGREEMENT dated as of July __, 2003 (this "Agreement") among
▇▇▇▇ DELAWARE, INC., a corporation organized under the laws of the
State of Delaware having a place of business at ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("▇▇▇▇ Delaware"),
▇▇▇▇ CORPORATION, a corporation organized under the laws of the State
of Delaware having a place of business at ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Zale"),
DDCC, INC., a corporation organized under the laws of the State of
Delaware having a place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("DDCC"), and
TXDC, L.P., a limited partnership organized under the laws of the State
of Texas, having a place of business at ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("TXDC"), as BORROWERS; and
the LENDERS party hereto; and
FLEET NATIONAL BANK, as Administrative Agent and Issuing Bank, a
national banking association having a place of business at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and
FLEET RETAIL FINANCE, INC., as Collateral Agent for the Lenders, a
Delaware corporation, having a place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and
BANK ONE, NA and CONGRESS FINANCIAL CORPORATION (SOUTHWEST) as
Co-Syndication Agents; and
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ BANK and BANK OF AMERICA, N.A. as Co-Documentation
Agents
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"Account" means any right to payment for goods sold or leased or for
services rendered, whether or not earned by performance, or any right to payment
for credit extended for goods sold or leased or services rendered.
"ACH" means automated clearing house transfers.
1
"Activation Notice" has the meaning set forth in Section 2.21(b).
"Adjusted LIBO Rate" means, with respect to any LIBOR Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Fleet, in its capacity as administrative
agent for the Lenders hereunder.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agents" means collectively, the Administrative Agent and the
Collateral Agent.
"Agreement" has the meaning set forth in the preamble.
"Alternate Base Rate" means, for any day, the higher of (a) the annual
rate of interest then most recently announced by Fleet at its head office in
Boston, Massachusetts as its "Base Rate" and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1% (0.50%) per annum. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability of the
Administrative Agent to obtain sufficient quotations thereof in accordance with
the terms hereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in Fleet's Base Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in Fleet's Base Rate or
the Federal Funds Effective Rate, respectively.
"Applicable Lending Office" means with respect to each Lender, its
domestic lending office in the case of a Loan that is a Base Rate Loan and its
LIBOR lending office in the case of a LIBOR Loan.
2
"Applicable Margin" means the rates for Base Rate Loans and LIBOR Loans
set forth below:
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LEVEL PERFORMANCE CRITERIA BASE RATE LIBOR LOANS
LOANS
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I Excess Availability greater 0% 1.50%
than $325,000,000
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II Excess Availability greater 0% 1.75%
than $100,000,000 but less
than or equal to $325,000,000
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III Excess Availability less than 0% 2.00%
or equal to $100,000,000
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Initially, the Applicable Margin shall be at Level II (notwithstanding that the
Excess Availability requirements for another Level may have been satisfied). The
Applicable Margin shall be adjusted quarterly as of the first day of each fiscal
quarter of the Borrowers, commencing February 1, 2004, based upon the average
Excess Availability for the immediately preceding fiscal quarter.
"Appraised Inventory Liquidation Value" means the product of (a) the
Cost of Eligible Inventory, minus the Shrink Reserve multiplied by (b) that
percentage determined from the then most recent appraisal of the Borrowers'
Inventory undertaken at the request of the Administrative Agent, to reflect the
appraiser's estimate of the net recovery on the Borrowers' Inventory in the
event of an in-store net orderly liquidation of that Inventory.
"Arranger" means FSI.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of each party whose consent
is required by Section 9.4), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"Base Rate Loan" means any Loan to the Borrowers bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Blocked Account Agreements" has the meaning set forth in Section
2.21(b).
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrowers" means ▇▇▇▇, ▇▇▇▇ Delaware, DDCC, TXDC and any other
Subsidiary of Zale which becomes party to this Agreement by signing a joinder
agreement to this Agreement and the Loan Documents, as applicable, with the
other parties hereto and thereto, in form and substance satisfactory to the
Administrative Agent.
3
"Borrowing" means (a) the incurrence of Loans of a single Type, on a
single date and having, in the case of LIBOR Loans, a single Interest Period, or
(b) a Swingline Loan.
"Borrowing Base" means at any time of calculation, an amount equal to
(a) the lesser of
(i) the Inventory Advance Rate multiplied by the
difference between the Cost of Eligible Inventory and the Shrink
Reserve
or
(ii) eighty-five percent (85%) of the Appraised Inventory
Liquidation Value
plus
(b) eighty-five percent (85%) of the Borrowers' Eligible Credit
Card Receivables
minus
(c) the Reserves (other than the Shrink Reserve).
"Borrowing Base Certificate" has the meaning set forth in Section
5.1(f).
"Breakage Costs" has the meaning set forth in Section 2.19(b).
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in Boston, Massachusetts, New York, New York or
Dallas, Texas are authorized or required by law to remain closed, provided,
that, when used in connection with a LIBOR Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar deposits
in the London interbank market.
"Capital Expenditures" means, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of the Borrowers
that are (or would be) set forth in a consolidated statement of cash flows of
the Borrowers for such period prepared in accordance with GAAP and (b) Capital
Lease Obligations incurred by the Borrowers during such period.
"Capital Lease Obligations" means of any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Collateral Account" means an interest-bearing account established
by the Borrowers with the Collateral Agent at Fleet under the sole and exclusive
dominion and control of the Collateral Agent designated as the "▇▇▇▇ ▇▇▇▇
Collateral Account".
4
"Cash Control Event" means that Excess Availability is less than
$50,000,000 for five (5) consecutive days. For purposes of Section 2.21(f), the
occurrence of a Cash Control Event shall be deemed continuing, notwithstanding
that Excess Availability may after the Cash Control Event exceed $50,000,000,
unless and until Excess Availability exceeds $50,000,000 for five (5)
consecutive days, in which case a Cash Control Event shall no longer be deemed
to be continuing for purposes of Section 2.21(f).
"Cash Receipts" has the meaning set forth in Section 2.21(b).
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 et seq.
"Change in Control" means, at any time, (a) occupation of a majority of
the seats (other than vacant seats) on the board of directors of Zale by Persons
who were neither (i) nominated by the board of directors of Zale or (ii)
appointed by directors so nominated; or (b) the acquisition of fifty percent
(50%) or more of the capital stock of Zale by any Person or group of Persons, or
(c) the failure of Zale or another Borrower to own directly 100% of the capital
stock or other ownership interest of ▇▇▇▇ Delaware, DDCC, and TXDC.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.23(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Charges" has the meaning set forth in Section 9.13.
"Closing Date" means the date on which the conditions specified in
Section 4.1 are satisfied (or waived by the Agents).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means any and all "Collateral" as defined in any
applicable Security Document.
"Collateral Agent" means FRF, in its capacity as collateral agent under
the Security Documents.
"Commercial Letter of Credit" means any Letter of Credit issued for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by a Borrower in the ordinary
course of business of such Borrower.
"Commitments" means, with respect to each Lender, the commitment of
such Lender hereunder in the amount set forth opposite its name on Schedule 1.1
or as may subsequently
5
be set forth in the Register from time to time, as the same may be reduced from
time to time pursuant to Section 2.15.
"Commitment Percentage" means, with respect to each Lender, the
percentage of the Commitments of all Lenders hereunder in the amount set forth
opposite its name on Schedule 1.1 or as may subsequently be set forth in the
Register from time to time, as the same may be reduced pursuant to Section 2.15.
"Commitment Fee" has the meaning set forth in Section 2.12.
"Concentration Accounts" has the meaning set forth in Section 2.21(a).
"Consignment A/R Reserve" means an amount equal to six percent (6%) of
the Borrowers' Eligible Credit Card Receivables.
"Consolidated EBITDA" means Consolidated Net Income for any period plus
(a) without duplication, the sum of the following expenses of Zale and its
Subsidiaries for such period, in each case to the extent included in determining
said Consolidated Net Income: (i) depreciation expense, (ii) amortization
expense, (iii) interest expense, (iv) total U.S. and foreign federal, state,
provincial and local income tax expense, (v) charges relating to the valuation
of inventory by application of the LIFO (last in/first out) method of inventory
valuation, (vi) non-cash compensation expense arising out of the grant or
exercise of stock options or other equity based compensation, (vii) expense
arising from the write-off of excess goodwill and (viii) all other non-cash
charges less (b) without duplication, the sum of (i) income earned during such
period relating to the valuation of inventory by the application of the LIFO
method of inventory valuation, (ii) interest income for such period, (iii)
non-cash gains for such period and (iv) total U.S. and foreign federal, state,
provincial and local income tax benefits provided during such period.
"Consolidated Net Income" means the consolidated net income (or loss)
of Zale and its Subsidiaries, determined in accordance with GAAP, after
eliminating therefrom all extraordinary items of income or loss.
"Consolidated Tangible Net Worth" means the difference between
Consolidated Total Assets and Consolidated Total Liabilities, and less the sum
of: (a) the total book value of all assets of Zale and its Subsidiaries properly
classified as intangible assets under GAAP, including such items as goodwill,
the purchase price of acquired assets in excess of the fair market value
thereof, trademarks, trade names, service marks, brand names, copyrights,
patents and licenses, and rights with respect to the foregoing; plus (b) all
amounts representing any write-up in the book value of any assets of ▇▇▇▇ or its
Subsidiaries resulting from a revaluation thereof subsequent to April 30, 2003.
"Consolidated Total Assets" means all assets of ▇▇▇▇ and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Interest Expense" means for any period, the
aggregate amount of interest required to be paid or accrued by ▇▇▇▇ and its
Subsidiaries during such period on all Indebtedness of ▇▇▇▇ and its Subsidiaries
outstanding during all or any part of such
6
period in accordance with GAAP (including payments consisting of interest in
respect of Capital Lease Obligations or Synthetic Leases).
"Consolidated Total Liabilities" means all liabilities of ▇▇▇▇ and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.
"Cost" means the cost of Inventory as reported on the Borrowers'
financial stock ledger using the retail method of accounting based on practices
which are in effect on the date of this Agreement.
"Credit Card Notifications" has the meaning set forth in Section
2.21(b)(ii).
"Credit Extensions" means as of any day, the sum of (a) the principal
balance of all Loans then outstanding, and (b) the then amount of the Letter of
Credit Outstandings.
"Customer Credit Reserve" means 50% of the aggregate face value at such
time of (a) outstanding gift certificates and gift cards of the Borrowers
entitling the holder thereof to use all or a portion of the certificate to pay
all or a portion of the purchase price for any Inventory, and (b) outstanding
merchandise credits of the Borrowers.
"DDCC" has the meaning set forth in the preamble.
"DDAs" means any checking or other demand deposit account maintained by
the Borrowers.
"Default" means any event or condition that constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Distribution Minimum Excess Availability Amount" means Excess
Availability of $75,000,000 or more.
"Documentation Agents" means JPMorgan Chase Bank and Bank of America,
N.A.
"Dollars" or "$" means lawful money of the United States of America.
"Dutch Auction Tender Offer" means the offer by ▇▇▇▇ to purchase up to
6,400,000 shares of its common stock, or such lesser number of shares as are to
be tendered, at a price per share not greater than $48 nor less than $42 as such
offer may be amended, modified, supplemented or extended from time to time
(including, but not limited to, any increase in size thereof permitted by Rule
13e-4(f)(1)(ii)) pursuant to the Dutch Auction Tender Offer Documents.
7
"Dutch Auction Tender Offer Documents" means, collectively, the Tender
Offer Statement on Schedule TO, dated July 1, 2003, and the exhibits thereto, as
the same may be amended, modified, supplemented or extended from time to time in
a manner acceptable to the Administrative Agent.
"Eligible Credit Card Receivables" means (a) Accounts of the Borrowers
due in four (4) Business Days or less on a non-recourse basis from major credit
card processors and (b) Eligible Private Label Credit Card Receivables, in each
case to the extent that it constitutes Collateral.
"Eligible Inventory" means, as of the date of determination thereof,
items of Inventory of the Borrowers that are finished goods (including, but not
limited to, unmounted gemstones and ▇▇▇▇▇▇ or mounts for which no stone has been
mounted to the extent such goods are listed in the stock ledger or inventory
systems), merchantable and readily saleable to the public in the ordinary course
deemed by the Administrative Agent in accordance with its customary credit and
collateral considerations and policies to be eligible for inclusion in the
calculation of the Borrowing Base. Without limiting the foregoing, unless
otherwise approved in writing by the Administrative Agent, none of the following
shall be deemed to be Eligible Inventory:
(a) Inventory that is not owned solely by the Borrowers,
or is leased or on consignment or such Borrowers do not have good and
valid title thereto;
(b) Inventory that is not located at a warehouse facility
or store that is owned or leased by a Borrower unless it is in-transit
between warehouse facilities and stores leased or owned by a Borrower;
(c) Inventory that represents (i) goods damaged,
defective or otherwise unmerchantable, except in the case of each of
the foregoing to the extent that the Administrative Agent has
determined a recoverable value and (ii) goods that do not conform in
all material respects to the representations and warranties contained
in this Agreement or any of the Security Documents;
(d) Inventory that is not located in the United States of
America (excluding, except as otherwise specifically provided,
territories and possessions thereof), Puerto Rico or the Dominion of
Canada;
(e) Inventory that is not subject to a perfected
first-priority security interest in favor of the Collateral Agent for
the benefit of the Secured Parties;
(f) Inventory which consists of samples, labels, bags,
packaging, and other similar non-merchandise categories;
(g) Inventory as to which insurance in compliance with
the provisions of Section 5.7 hereof is not in effect;
(h) Inventory, other than layaway inventory, which has
been sold but not yet delivered or as to which any Borrower has
accepted a deposit;
8
(i) Inventory acquired in permitted acquisitions in
compliance with the provisions of Section 6.4, unless and until the
Administrative Agent shall have received (i) the results of appraisals
of the Inventory acquired in such acquisition and (ii) such other due
diligence related to such acquisition by the Administrative Agent that
the Administrative Agent may require, all of the results of the
foregoing to be reasonably satisfactory to the Administrative Agent;
(j) Inventory of a Subsidiary that becomes a Borrower
hereunder in compliance with the provisions of Section 2.1(c), unless
and until the Administrative Agent shall have received (i) the results
of appraisals of the Inventory of such Subsidiary and (ii) such other
due diligence related to such Subsidiary by the Administrative Agent
that the Administrative Agent may require, all of the result of the
foregoing to be reasonably satisfactory to the Administrative Agent.
"Eligible Private Label Credit Card Receivables" means Accounts of the
Borrowers due in four (4) Business Days or less on (a) private label credit
cards issued by Citibank USA, N.A. on substantially the terms as in effect on
the Closing Date or as otherwise modified in a manner reasonably acceptable to
the Administrative Agent and (b) other private label credit cards issued by
other Persons reasonably acceptable to the Administrative Agent.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, handling, treatment, storage, disposal, Release or
threatened Release of any Hazardous Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties or
indemnities), of any Borrower directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrowers, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
9
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrowers or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrowers or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrowers or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrowers or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrowers or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Event of Default" has the meaning set forth in Section 7.1.
"Excess Availability" means, as of any date of determination, the
excess, if any, of (a) the lesser of the Borrowing Base or the Total Commitment,
minus (b) the outstanding Credit Extensions.
"Excluded Subsidiaries" means ▇▇▇▇ Puerto Rico, Inc. and ▇▇▇▇ Canada
Co.
"Excluded Taxes" means, with respect to the Agents, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrowers hereunder, (a) income or franchise taxes
imposed on (or measured by) its gross or net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its Applicable Lending Office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which any Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by a Borrower
under Section 2.28(b)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.26(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to
Section 2.26(a).
"Existing Lenders" means Fleet National Bank, as Agent, and the other
lending institutions party to that certain Amended and Restated Revolving Credit
Agreement, dated as of March 30, 2000.
10
"Existing Letters of Credit" means those letters of credit issued and
outstanding under the Prior Loan Agreement which are identified on Schedule
1.1(a).
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by Fleet from three Federal funds brokers of recognized
standing selected by it.
"Fee Letter" means the letter entitled "Fee Letter" among the
Borrowers, the Administrative Agent and the Arranger dated as of July 1, 2003,
as such letter may from time to time be amended.
"Financial Officer" means, with respect to any Borrower, the chief
financial officer, controller or treasurer of such Borrower.
"Fixed Charge Coverage Ratio" means for any Reference Period the ratio
of (a)(i) Consolidated EBITDA for such period less (ii) the sum of (A) Capital
Expenditures for such period and (B) federal income tax paid in cash during such
period to (b) the sum of (i) Consolidated Total Interest Expense for such
period, (ii) the sum of all scheduled payments of principal on Indebtedness of
▇▇▇▇ and its Subsidiaries (including without limitation, the principal component
of amounts paid on account of Capitalized Lease Obligations) made or required to
be made during such period, and (iii) Restricted Payments consisting of
dividends made during such period.
"Fleet" means Fleet National Bank, a national banking association.
"Fleet Concentration Account" has the meaning set forth in Section
2.21(b).
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or the
District of Columbia.
"FRF" means Fleet Retail Finance, Inc., a Delaware corporation.
"FSI" means Fleet Securities, Inc., a Massachusetts corporation.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
11
"Guarantee" means, of or by any Person (the "guarantor"), any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and including
any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or of the payment
thereof, (c) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or (d) as an account party in respect
of any letter of credit or letter of guaranty issued to support such
Indebtedness, provided, that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business.
"Guaranteed Pension Plan" means any employee pension benefit plan
within the meaning of Section 3(2) of ERISA maintained or contributed to by any
of the Borrowers or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement, or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" means, of any Person, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person
of Indebtedness of others (including, without limitation, under any Synthetic
Leases), (h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty and (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's
12
ownership interest in or other relationship with such entity, except to the
extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Interest Payment Date" means (a) with respect to any Base Rate Loan
(including a Swingline Loan), the last day of each calendar quarter, and (b)
with respect to any LIBOR Loan, the last day of each Interest Period and, in the
case of any Interest Period longer than three months, on each successive date
three months after the first day of such Interest Period.
"Interest Period" means, with respect to any LIBOR Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as any Borrower may elect, provided, that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period, and (c) any Interest Period which would otherwise
end after the Maturity Date shall end on the Maturity Date. For purposes hereof,
the date of a Borrowing initially shall be the date on which such Borrowing is
made and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Inventory" has the meaning set forth in the Security Agreement.
"Inventory Advance Rate" means (i) 65.5% for the months of January
through September and (ii) 69% for the months of October through December.
"Issuing Bank" means Fleet, in its capacity as the issuer of Letters of
Credit hereunder, and any successor to Fleet in such capacity (which may only be
a Lender selected by the Administrative Agent in its reasonable discretion). The
Issuing Bank may, in its reasonable discretion, arrange for one or more Letters
of Credit to be issued by Affiliates of the Issuing Bank, in which case the term
"Issuing Bank" shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate. Each Issuing Bank shall act commercially
reasonably and otherwise in accordance with the standard of care set forth in
Section 2.6(i).
"Landlord Lien Reserve" means one month's base rent for each of the
Borrowers' facilities located in the States of Washington, Pennsylvania and
Virginia at which inventory is stored, calculated quarterly.
13
"Layaway Reserve" means 100% of the aggregate amount deposited by
customers with the Borrowers including, without limitation, amounts deposited on
account of layaway or similar programs.
"L/C Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"Lenders" means the Persons identified on Schedule 1.1 and each
assignee that becomes a party to this Agreement as set forth in Section 9.4.
"Letter of Credit" means a letter of credit that is (i) issued pursuant
to this Agreement for the account of any Borrower, (ii) a Standby Letter of
Credit or Commercial Letter of Credit, (iii) issued in connection with the
purchase of Inventory by any Borrower or for any other purpose that is
reasonably acceptable to the Administrative Agent, and (iv) in form and
substance reasonably satisfactory to the Issuing Bank.
"Letter of Credit Fees" means the fees payable in respect of Letters of
Credit pursuant to Section 2.13.
"Letter of Credit Outstandings" means, at any time, the sum of (a) with
respect to Letters of Credit outstanding at such time, the aggregate maximum
amount that then is or at any time thereafter may become available for drawing
or payment thereunder plus (b) all amounts theretofore drawn or paid under
Letters of Credit for which the Issuing Bank has not then been reimbursed.
"LIBOR Borrowing" means a Borrowing comprised of LIBOR Loans.
"LIBOR Loan" means any Loan bearing interest at a rate determined by
reference to the Adjusted LIBO Rate in accordance with the provisions of Article
II.
"LIBOR Rate" means, with respect to any LIBOR Borrowing for any
Interest Period, the rate of interest (rounded upwards, if necessary to the next
1/16 of 1%) determined by the Administrative Agent to be the prevailing rate per
annum at which deposits in dollars are offered by banks in the London interbank
market based on information presented on Reuters Screen FRBD or Telerate at
11:00 a.m. (London time) not less than two Business Days before the first day of
the Interest Period for the subject LIBOR Borrowing, for a deposit approximately
in the amount of the subject Borrowing and for a period of time approximately
equal to such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Line Fee" means a fee equal to 0.375% per annum (on the basis of
actual days elapsed in a year of 360 days) of the average daily balance of the
difference between
14
(x) such Lender's Commitment and (y) the sum of (i) such Lender's Commitment
Percentage of the principal amount of Loans then outstanding, and (ii) such
Lender's Commitment Percentage of the then Letter of Credit Outstandings for
each day commencing on the date hereof and ending on but excluding the
Termination Date.
"Loan Account" has the meaning set forth in Section 2.20(a).
"Loan Agreement Obligations" means (a) the payment by the Borrowers of
(i) the principal of, and interest on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrowers under this
Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (excluding obligations under clauses (b)
and (c) of the definition of "Obligations"), of the Borrowers to the Secured
Parties under this Agreement and the other Loan Documents and (b) the payment
and performance of all the covenants, agreements, obligations and liabilities of
each Borrower under or pursuant to this Agreement, and the other Loan Documents,
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit, the Fee Letter, all Borrowing Base Certificates, the Blocked Account
Agreements, the Credit Card Notifications, the Security Documents, and any other
instrument or agreement executed and delivered in connection herewith or
therewith.
"Loans" means all loans (including, without limitation, Revolving Loans
and Swingline Loans) at any time made to the Borrowers or for account of the
Borrowers pursuant to this Agreement.
"Margin Stock" has the meaning set forth in Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, assets, or financial condition of the Borrowers
and their Subsidiaries taken as a whole, or (b) the validity or enforceability
of this Agreement or any of the other Loan Documents or any of the material
rights or remedies of the Administrative Agent, the Collateral Agent or the
Lenders hereunder or thereunder; provided, however, that no Material Adverse
Effect shall be deemed to exist with respect to the Borrowers solely as a result
of (i) the loss by any Borrower of its investment in an Unrestricted Subsidiary;
(ii) the loss of that portion of Consolidated EBITDA generated by any
Unrestricted Subsidiary; or (iii) any liability of an Unrestricted Subsidiary
that is not, on an unconsolidated basis, a liability of a Borrower.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) of any one or more of the Borrowers in an aggregate principal
amount exceeding $25,000,000.
"Maturity Date" means August 11, 2008.
15
"Maximum Rate" has the meaning set forth in Section 9.13.
"Minority Lenders" has the meaning set forth in Section 9.2(d).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Noncompliance Notice" has the meaning set forth in Section 2.5(b).
"Note Indenture" means that certain Indenture dated as of September 20,
1997 for $100,000,000 of 8.50% Senior Notes due 2007 among ▇▇▇▇, as Issuer, ▇▇▇▇
Delaware, as Guarantor and Bank One, NA.
"Notes" means (i) the promissory notes of the Borrowers substantially
in the form of Exhibit B-1, each payable to the order of a Lender, evidencing
the Revolving Loans, and (ii) the promissory note of the Borrowers substantially
in the form of Exhibit B-2, payable to the Swingline Lender, evidencing the
Swingline Loans.
"Obligations" means (a) Loan Agreement Obligations, (b) the payment and
performance of any transaction with FRF as Collateral Agent, or Fleet as
Administrative Agent, or any of their respective Affiliates, which arises out of
any cash management, depository, investment, letter of credit, interest rate
protection or other Hedging Agreement, or other banking or financial services
provided by any such Person, in each case, in connection with this Agreement or
the other Loan Documents, as each may be amended from time to time and (c) the
payment and performance of any transaction with any Lender, or any of their
respective Affiliates, which arises out of any interest rate protection or other
Hedging Agreement.
"Other Taxes" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Overadvance" means, at any time of calculation, a circumstance in
which the Credit Extensions exceed the lesser of (a) the Total Commitment or (b)
the Borrowing Base.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Asset Sales" means sales and dispositions of assets that are
deemed appropriate by the Borrowers for fair market value not to exceed
$100,000,000 in any fiscal year.
16
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due
or are being contested in compliance with Section 5.5;
(b) carriers', warehousemen's, landlord's, mechanics',
materialmen's, repairmen's and other like Liens, arising in the
ordinary course of business and securing obligations that are not
overdue by more than ninety (90) days or are being contested in
compliance with Section 5.5;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance, old-age pension and other social security laws or
regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, contracts (other than for the repayment of borrowed
money), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the
ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under Section 7.1(k); and
(f) easements, zoning restrictions, rights-of-way and
similar encumbrances (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created,
assumed or permitted to exist and arising by, through or under or
asserted by a landlord or owner of leased property, with or without the
consent of the lessee) on real property imposed by law or arising in
the ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of
the Borrowers.
provided, that except as provided in any one or more of clauses (a) through (f)
above, the term "Permitted Encumbrances" shall not include any Lien securing
Indebtedness.
"Permitted Investments" means each of the following:
(a) marketable direct or guaranteed obligations of the
United States of America that mature within two (2) years from the date
of purchase by such Borrower or such Subsidiary;
(b) demand deposits, certificates of deposit, Eurodollar
deposits, time deposits and bankers acceptances issued by banking
institutions provided, that such banks have a long-term credit rating
of at least "AA" (or its then equivalent) if rated by S&P or any
successor service thereto having a substantially similar rating system
or "Aa" (or its then equivalent) if rated by Moody's or any successor
service thereto having a substantially similar rating system, or an
equivalent rating from either Dominion Bond Rating Services Limited or
CBRS, Inc.; provided, however, the Borrowers' investment in any one
bank shall not exceed 5% of the primary capital of such bank;
17
(c) securities commonly known as "commercial paper"
issued by the Administrative Agent, or a corporation or any other
financial institution that at the time of purchase have been rated and
the ratings for which are not less than "P1" (or its then equivalent)
if rated by Moody's or any successor service thereto having a
substantially similar rating system, or not less than "A1" (or its then
equivalent) if rated by S&P or any successor service thereto having a
substantially similar rating system, or an equivalent rating from
either Dominion Bond Rating Services Limited or CBRS, Inc.; provided,
however, the Borrowers may invest up to 20% of their Permitted
Investments measured at the time of investment made pursuant to
paragraphs (a)-(i) hereof in commercial paper with a combined rating of
"A-2/P-2" (or its then equivalent);
(d) demand notes issued by a corporation organized and
existing under the laws of the United States of America or any state
thereof that at that time of purchase have a rating of at least "AA"
(or its then equivalent) if rated by S&P or any successor service
thereto having a substantially similar rating system, or its equivalent
by at least two (2) nationally recognized rating services, or an
equivalent rating from either Dominion Bond Rating Services Limited or
CBRS, Inc., and have a maturity date that does not exceed one (1) year
beyond the date of purchase; provided, however, such investments will
be limited to the greater of $20 million per obligor or 20% of
investments made pursuant to paragraphs (a)-(i) hereof measured at the
time of investment;
(e) repurchase agreements, purchased through the
Administrative Agent, or a corporation organized and existing under the
laws of the United States of America or any state thereof that at the
time of purchase have been rated and the ratings for which are not less
than "P1" (or its then equivalent) if rated by Moody's or any successor
service thereto having a substantially similar rating system, or not
less than "A1" (or its then equivalent) if rated by S&P or any
successor service thereto having a substantially similar rating system,
or an equivalent rating from either Dominion Bond Rating Services
Limited or CBRS, Inc., which repurchase agreements are collateralized
by securities of the United States of America or any agency thereof in
an amount equal to at least 102% of the amount of such investment;
(f) shares of any so-called "money market fund" advised,
serviced or sold by any of the Lenders or by any other financial
institution provided, that such fund is registered under the Investment
Company Act of 1940, has net assets of at least $250,000,000, has an
investment portfolio with an average maturity of 365 days or less and
is not considered to be a "high-yield" fund;
(g) municipal fixed and variable rate short-term
securities that mature within one (1) year from the date of purchase by
any Borrower or such Subsidiary that at the time of purchase have been
rated and the ratings for which are not less than "MIG-1/VMIG-1" (or
its then equivalent) if rated by Moody's or any successor service
thereto having a substantially similar rating system or not less than
"SP-1+/A-1" (or its then equivalent) if rated by S&P or any successor
service thereto having a substantially similar rating system, or an
equivalent rating from either Dominion Bond Rating Services Limited or
CBRS, Inc.;
18
(h) municipal fixed and variable rate medium-term
securities that mature between one (1) and two (2) years from the date
of purchase by such Borrower or such Subsidiary that at the time of
purchase have been rated and the ratings for which are not less than
"Aa" (or its then equivalent) if rated by Moody's or any successor
service thereto having a substantially similar rating system or not
less than "AA" (or its then equivalent) if rated by S&P or any
successor service thereto having a substantially similar rating system,
or an equivalent rating from either Dominion Bond Rating Services
Limited or CBRS, Inc.;
(i) other investments not to exceed ten percent (10%) of
Consolidated Tangible Net Worth at the time any such investment is
made; and
(j) marketable direct obligations of the State of Texas
or its agencies and instrumentalities that at the time of purchase have
been rated and the ratings for which are not less than "P" (or its then
equivalent) if rated by Moody's or any successor service thereto having
a substantially similar rating system or not less than "A" (or its then
equivalent) if rated by S&P or any successor service thereto having a
substantially similar rating system.
"Permitted Overadvance" means an Overadvance determined by the
Administrative Agent, in its reasonable discretion, (a) which is made to
maintain, protect or preserve the Collateral and/or the Lenders' rights under
the Loan Documents, or (b) which is otherwise in the Lenders' interests;
provided, that Permitted Overadvances shall not (i) exceed five percent (5%) of
the lesser of the then Borrowing Base or the then Total Commitment, in the
aggregate outstanding at any time or (ii) remain outstanding for more than
thirty consecutive Business Days, unless in case of clause (ii), the Required
Supermajority Lenders otherwise agree; and provided, further, that the foregoing
shall not (1) modify or abrogate any of the provisions of Section 2.6(g)
regarding the Lenders' obligations with respect to L/C Disbursements, or (2)
result in any claim or liability against the Administrative Agent (regardless of
the amount of any Overadvance) for "inadvertent Overadvances" (i.e. where an
Overadvance results from changed circumstances beyond the control of the
Administrative Agent (such as a reduction in the collateral value)), and further
provided, that in no event shall the Administrative Agent make an Overadvance,
if after giving effect thereto, the principal amount of the Credit Extensions
would exceed the Total Commitment.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrowers
or any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prior Lenders" means Fleet National Bank, as agent, and the other
lenders party to the Prior Loan Agreement.
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"Prior Loan Agreement" means that certain Amended and Restated
Revolving Credit Agreement, dated as of March 30, 2000, as amended, among the
▇▇▇▇, ▇▇▇▇ Delaware, TXDC, DDCC and ▇▇▇▇ Canada Co., as borrowers, and the Prior
Lenders.
"Rabbi Trust" means any trust established for the satisfaction of
obligations of any of ▇▇▇▇ or its Subsidiaries for deferred compensation, the
terms of which trust will not, at any time, result in such obligations being
treated as funded under applicable Department of Labor and Internal Revenue
Service guidelines as of the date hereof.
"Real Estate" means all land, together with the buildings, structures,
fixtures, parking areas, and other improvements thereon, now or hereafter owned
by any Borrower, including all easements, rights-of-way, and similar rights
relating thereto and all leases, tenancies, and occupancies thereof.
"Reference Period" means as of any date of determination, the period of
twelve (12) consecutive fiscal months of ▇▇▇▇ and its Subsidiaries ending on
such date, or if such date is not a fiscal month end date, the period of twelve
(12) consecutive fiscal months most recently ended (in each case treated as a
single accounting period).
"Record" means the grid attached to a Note, or the continuation of such
grid, or any other similar record, including computer records, maintained by a
Lender with respect to any Loan, whether referred to in such Note or otherwise.
"Register" has the meaning set forth in Section 9.4(c).
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" has the meaning set forth in Section 101(22) of CERCLA.
"Required Lenders" means, at any time, Lenders having Commitments equal
to 51% of the Total Commitments, or if the Commitments have been terminated,
Lenders whose percentage of the Credit Extensions (after settlement and
repayment of all Swingline Loans by the Lenders) aggregate not less than 51% of
all such Credit Extensions.
"Required Supermajority Lenders" means, at any time, Lenders having
Commitments equal to 75% of the Total Commitments, or if the Commitments have
been terminated, Lenders whose percentage of the Credit Extensions (after
settlement and repayment of all Swingline Loans by the Lenders) aggregate not
less than 75% of all such Credit Extensions.
20
"Reserves" means the Shrink Reserve, Layaway Reserve, Customer Credit
Reserve, the Landlord Lien Reserve, Consignment A/R Reserve and such other
reserves established from time to time in accordance with Section 2.2(b).
"Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of any Borrower other than dividends payable solely in shares
of common stock of such Borrower, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such shares of capital stock of any Borrower or any option, warrant or
other right to acquire any such shares of capital stock of any Borrower, other
than any such payment made solely in share of common stock of such Borrower.
"Revolving Loans" means all Loans at any time made by a Lender pursuant
to Section 2.1.
"S&P" means Standard & Poor's Rating Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Secured Parties" has the meaning set forth in the Security Agreement.
"Security Agreement" means the Security Agreement, in the form of
Exhibit C attached hereto and incorporated herein, among the Borrowers and the
Collateral Agent for the benefit of the Secured Parties, as amended and in
effect from time to time.
"Security Documents" means the Security Agreement and each other
security agreement or other instrument or document executed and delivered
pursuant to Section 5.14 to secure any of the Obligations.
"Settlement Date" has the meaning set forth in Section 2.7(b).
"Shrink" means Inventory which has been lost, misplaced, stolen, or is
otherwise unaccounted for.
"Shrink Reserve" means from time to time the Borrowers' then current
general ledger reserve for Shrink provided that the determination of such
current general ledger reserve is consistent with the methodologies used in the
Borrowers' most recent physical Inventory results delivered to the
Administrative Agent on or about June 21, 2003.
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such
21
Person is not engaged in a business or a transaction, and is not about to engage
in a business or transaction, for which such Person's properties and assets
would constitute unreasonably small capital after giving due consideration to
the prevailing practices in the industry in which such Person is engaged.
"Standby Letter of Credit" means any Letter of Credit other than a
Commercial Letter of Credit.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D. LIBOR
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for pro ration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held.
"Swingline Lender" means Fleet, in its capacity as lender of Swingline
Loans hereunder.
"Swingline Loan" means a Loan made by the Swingline Lender to the
Borrowers pursuant to Section 2.5.
"Syndication Agents" means Bank One, NA and Congress Financial
Corporation (Southwest).
"Synthetic Lease" means any lease or other agreement for the use or
possession of property creating obligations which do not appear as Indebtedness
on the balance sheet of the lessee thereunder but which, upon the insolvency or
bankruptcy of such Person, would be characterized as Indebtedness of such lessee
without regard to the accounting treatment.
"Taxes" means any and all current or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
22
"Termination Date" means the earliest to occur of (i) the Maturity
Date, (ii) the date on which the maturity of the Loans is accelerated and the
Commitments are terminated in accordance with Section 7.1, or (iii) the date of
the occurrence of any Event of Default pursuant to Section 7.1(h) or (i).
"Total Commitment" means, at any time, the sum of the Commitments at
such time as reduced by the Borrowers pursuant to Section 2.15.
"TXDC" has the meaning set forth in the preamble.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Uniform Customs" means with respect to any Letter of Credit, the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 or any successor version
thereto adopted by the Administrative Agent in the ordinary course of its
business as a letter of credit issuer and in effect at the time of issuance of
such Letter of Credit.
"Unrestricted Subsidiaries" means each of the Subsidiaries of the
Borrowers which are not Borrowers under this Agreement.
"Unused Commitment" means, on any day, (a) the then Total Commitments
minus (b) the sum of (i) the principal amount of Loans then outstanding and (ii)
the then Letter of Credit Outstandings.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"▇▇▇▇" has the meaning set forth in the preamble.
"▇▇▇▇ Delaware" has the meaning set forth in the preamble.
SECTION 1.2. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and
23
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
SECTION 1.3. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time, provided that
if any Borrower notifies the Administrative Agent that the Borrowers request an
amendment to any provision hereof to reflect the effect of any change occurring
after the date hereof in GAAP or in the application thereof on the operation of
such provision (or if the Administrative Agent notifies the Borrowers that the
Required Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such provision shall have been amended in accordance
herewith.
ARTICLE II
AMOUNT AND TERMS OF CREDIT
SECTION 2.1. Commitment of the Lenders.
(a) Each Lender severally and not jointly with any other Lender,
agrees, upon the terms and subject to the conditions herein set forth, to extend
credit to the Borrowers, or any of them, on a revolving basis, in the form of
Revolving Loans and Letters of Credit and in an amount not to exceed the lesser
of such Lender's Commitment or such Lender's Commitment Percentage of the
Borrowing Base, subject to the following limitations:
(i) The aggregate outstanding amount of the
Credit Extensions shall not at any time exceed the lower of
(i) the Total Commitment, or (ii) the then amount of the
Borrowing Base.
(ii) No Lender shall be obligated to issue any
Letter of Credit, and Letters of Credit shall be available
from the Issuing Bank, subject to the ratable participation of
all Lenders, as set forth in Section 2.6. The Borrowers will
not at any time permit the aggregate Letter of Credit
Outstandings to exceed $20,000,000.
(iii) Subject to all of the other provisions of
this Agreement, Revolving Loans that are repaid may be
reborrowed prior to the Termination Date. No new Credit
Extension, however, shall be made to the Borrowers after the
Termination Date.
(b) Each Borrowing of Revolving Loans shall be made by the Lenders
ratably in accordance with their respective Commitment Percentages. The failure
of any Lender to make
24
any Loan shall neither relieve any other Lender of its obligation to fund its
Loan in accordance with the provisions of this Agreement nor increase the
obligation of any such other Lender.
(c) Any Excluded Subsidiary may become a Borrower under this
Agreement, provided such Excluded Subsidiary signs a joinder agreement to this
Agreement and the Loan Documents, as applicable, with the other parties hereto
and thereto, in form and substance satisfactory to the Administrative Agent.
SECTION 2.2. Reserves; Changes to Reserves.
(a) The initial Reserves as of the date of this Agreement are the
(i) Shrink Reserve, (ii) Customer Credit Reserve, (iii) Layaway Reserve, (iv)
Landlord Lien Reserve and (v) Consignment A/R Reserve.
(b) The Administrative Agent may in consultation with the
Borrowers hereafter establish additional Reserves or change any of the foregoing
Reserves, on five (5) Business Days' notice to the Borrowers based on appraisals
and/or changes in the value of the Collateral which the Administrative Agent,
based on its customary credit and collateral considerations and policies,
believes may impede its ability to realize on the Collateral. All appraisals
shall be done by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or its Affiliates or appraisers reasonably
satisfactory to the Administrative Agent and the Borrowers and shall be done
using a consistent methodology.
SECTION 2.3. Making of Loans.
(a) Except as set forth in Section 2.16 and Section 2.24, Loans
(other than Swingline Loans) by the Lenders shall be either Base Rate Loans or
LIBOR Loans as the relevant Borrower may request subject to and in accordance
with this Section 2.3, provided, that all Swingline Loans shall be only Base
Rate Loans. All Loans made pursuant to the same Borrowing shall, unless
otherwise specifically provided herein, be Loans of the same Type. Each Lender
may fulfill its Commitment with respect to any Loan by causing any lending
office of such Lender to make such Loan; but any such use of a lending office
shall not affect the obligation of the Borrowers to repay such Loan in
accordance with the terms of the applicable Note. Subject to the other
provisions of this Section 2.3 and the provisions of Section 2.24, Borrowings of
Loans of more than one Type may be incurred at the same time, but no more than
ten (10) Borrowings of LIBOR Loans may be outstanding at any time.
(b) The Borrowers requesting a Borrowing shall give the
Administrative Agent telephonic notice (thereafter confirmed in writing) of each
Borrowing of (i) LIBOR Loans not later than 12:00 p.m., Boston time, on the
third Business Day prior to the date on which such Borrowing is to be made and
(ii) Base Rate Loans not later than 12:00 p.m., Boston time, on the Business Day
on which such Borrowing is to be made. Such notice shall be irrevocable and
binding on each of the Borrowers and shall specify the amount of the proposed
Borrowing (which shall be in an integral multiple of $1,000,000, but not less
than $5,000,000 in the case of LIBOR Loans) and the date thereof (which shall be
a Business Day) and shall contain disbursement instructions. Such notice shall
specify whether the Borrowing then being requested is to be a Borrowing of Base
Rate Loans or LIBOR Loans and, if LIBOR Loans, the Interest Period with respect
thereto. If no election of Interest Period is specified in any such
25
notice for a Borrowing of LIBOR Loans, such notice shall be deemed a request for
an Interest Period of one month. If no election is made as to the Type of Loan,
such notice shall be deemed a request for a Borrowing of Base Rate Loans. The
Administrative Agent shall promptly notify each Lender of its proportionate
share of such Borrowing, the date of such Borrowing, the Type of Borrowing being
requested and the Interest Period or Interest Periods applicable thereto, as
appropriate. On the borrowing date specified in such notice, each Lender shall
make its share of the Borrowing available at the office of the Administrative
Agent at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, not later than 4:00
p.m., Boston time, in immediately available funds. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing of LIBOR Loans and no less than one (1) hour prior to the proposed
Borrowing of Base Rate Loans that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with this Section and may, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. In such event, if a Lender
has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrowers severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrowers to but excluding the date of payment
to the Administrative Agent, at (i) in the case of such Lender, the greater of
the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation or
(ii) in the case of the Borrowers, the interest rate applicable to Base Rate
Loans. If such Lender pays such amount to the Administrative Agent, then such
amount shall constitute such Lender's Loan included in such Borrowing. Upon
receipt of the funds made available by the Lenders to fund any Borrowing
hereunder, the Administrative Agent shall disburse such funds in the manner
specified in the notice of borrowing delivered by the Borrowers and shall use
reasonable efforts to make the funds so received from the Lenders available to
the Borrowers not later than 4:00 p.m., Boston time.
SECTION 2.4. Overadvances. The Agents and the Lenders have no
obligation to make any Loan or to provide any Letter of Credit to the extent an
Overadvance would result. The Administrative Agent may, in its discretion, make
Permitted Overadvances without the consent of the Lenders and each Lender shall
be bound thereby. Any Permitted Overadvances may constitute Swingline Loans. The
making of any Permitted Overadvance is for the benefit of the Borrowers; such
Permitted Overadvances constitute Revolving Loans and Obligations. The making of
any such Permitted Overadvances on any one occasion shall not obligate the
Administrative Agent or any Lender to make or permit any Permitted Overadvances
on any other occasion or to permit such Permitted Overadvances to remain
outstanding.
SECTION 2.5. Swingline Loans.
(a) The Swingline Lender is authorized by the Lenders and shall,
subject to the provisions of this Section, make Swingline Loans up to
$50,000,000 in the aggregate outstanding at any time, consisting only of Base
Rate Loans plus the Applicable Margin, upon a notice of Borrowing received by
the Administrative Agent and the Swingline Lender (which notice, at the
Swingline Lender's discretion, may be submitted prior to 1:00 p.m., Boston time,
on the
26
Business Day on which such Swingline Loan is requested). Swingline Loans shall
be subject to periodic settlement with the Lenders under Section 2.7 below.
(b) Swingline Loans may be made only in the following
circumstances: (A) for administrative convenience, the Swingline Lender shall,
at the Borrowers' request, make Swingline Loans in reliance upon the Borrowers'
actual or deemed representations under Section 4.2, that the applicable
conditions for borrowing are satisfied or (B) for Permitted Overadvances. If the
conditions for borrowing under Section 4.2 cannot be fulfilled, the Borrowers
shall give immediate notice thereof to the Administrative Agent and the
Swingline Lender (a "Noncompliance Notice"), and the Administrative Agent shall
promptly provide each Lender with a copy of the Noncompliance Notice. If the
conditions for borrowing under Section 4.2 cannot be fulfilled, the Required
Lenders may direct the Swingline Lender to, and the Swingline Lender thereupon
shall, cease making Swingline Loans (other than Permitted Overadvances) until
such conditions can be satisfied or are waived in accordance with Section 9.2.
Unless the Required Lenders so direct the Swingline Lender, the Swingline Lender
may, but is not obligated to, continue to make Swingline Loans beginning one
Business Day after the Noncompliance Notice is furnished to the Lenders.
Notwithstanding the foregoing, no Swingline Loans shall be made pursuant to this
Subsection (b) (other than Permitted Overadvances) if the aggregate outstanding
amount of the Credit Extensions would exceed the lower of (i) the Total
Commitment or any lesser amount to which the Total Commitment has then been
reduced by the Borrowers pursuant to Section 2.15, or (ii) the then amount of
the Borrowing Base.
SECTION 2.6. Letters of Credit.
(a) Upon the terms and subject to the conditions herein set forth,
the Borrowers may request the Issuing Bank, at any time and from time to time
after the date hereof and prior to the Termination Date, to issue, and subject
to the terms and conditions contained herein, the Issuing Bank shall issue, for
the account of the relevant Borrower one or more Letters of Credit; provided,
that no Letter of Credit shall be issued if after giving effect to such issuance
(i) the aggregate Letter of Credit Outstandings shall exceed $20,000,000, or
(ii) the aggregate Credit Extensions would exceed the limitation set forth in
Section 2.1(a)(i); and provided, further, that no Letter of Credit shall be
issued if the Issuing Bank shall have received notice from the Administrative
Agent or the Required Lenders that the conditions to such issuance have not been
met.
(b) Each Standby Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date, provided, that each Standby
Letter of Credit may, upon the request of the Borrowers, include a provision
whereby such Letter of Credit shall be renewed automatically for additional
consecutive periods of 12 months or less (but not beyond the date that is five
Business Days prior to the Maturity Date) unless the Issuing Bank notifies the
beneficiary thereof at least 30 days prior to the then-applicable expiration
date that such Letter of Credit will not be renewed.
27
(c) Each Commercial Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Commercial Letter of Credit and (ii) the date that is five
Business Days prior to the Maturity Date.
(d) Drafts drawn under any Letter of Credit shall be reimbursed by
the Borrowers in dollars on the next Business Day of any such payment thereof by
the Issuing Bank by paying to the Administrative Agent an amount equal to such
drawing not later than 3:00 p.m., Boston time, on such date, provided, that the
Borrowers may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.3 that such payment be financed with a Revolving
Loan consisting of a Base Rate Loan or Swingline Loan in an equivalent amount
and, to the extent so financed, the Borrowers' obligation to make such payment
shall be discharged and replaced by the resulting Base Rate Loan or Swingline
Loan. The Issuing Bank shall, promptly following its receipt thereof, examine
all documents purporting to represent a demand for payment under a Letter of
Credit. The Issuing Bank shall promptly notify the Administrative Agent and the
Borrowers by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make payment thereunder (which payment
shall not be made until two (2) Business Days after such notice from the Issuing
Bank to the Borrowers), provided, that any failure to give or delay in giving
such notice shall not relieve the Borrowers of their obligation to reimburse the
Issuing Bank and the Lenders with respect to any such payment.
(e) If the Issuing Bank shall make any L/C Disbursement, then,
unless the Borrowers shall reimburse the Issuing Bank in full on the date such
payment is made, the unpaid amount thereof shall bear interest, for each day
from and including the date such payment is made to but excluding the date that
the Borrowers reimburse the Issuing Bank therefor, at the rate per annum then
applicable to Base Rate Loans, provided, that if the Borrowers fail to reimburse
such Issuing Bank when due pursuant to paragraph (d) of this Section, then
Section 2.10 shall apply. Interest accrued pursuant to this paragraph shall be
for the account of the Issuing Bank, except that interest accrued on and after
the date of payment by any Lender pursuant to paragraph (g) of this Section to
reimburse the Issuing Bank shall be for the account of such Lender to the extent
of such payment.
(f) Immediately upon the issuance of any Letter of Credit by the
Issuing Bank (or the amendment of a Letter of Credit increasing the amount
thereof), and without any further action on the part of the Issuing Bank, the
Issuing Bank shall be deemed to have sold to each Lender, and each such Lender
shall be deemed unconditionally and irrevocably to have purchased from the
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Commitment Percentage, in such
Letter of Credit, each drawing thereunder and the obligations of the Borrowers
under this Agreement and the other Loan Documents with respect thereto. Upon any
change in the Commitments pursuant to Section 9.4 and Section 9.5, it is hereby
agreed that with respect to all Letter of Credit Outstandings, there shall be an
automatic adjustment to the participations hereby created to reflect the new
Commitment Percentages of the assigning and assignee Lenders. Any action taken
or omitted by the Issuing Bank under or in connection with a Letter of Credit,
if taken or omitted in the absence of gross negligence or willful misconduct,
shall not create for the Issuing Bank any resulting liability to any Lender.
28
(g) In the event that the Issuing Bank makes any L/C Disbursement
and the Borrowers shall not have reimbursed such amount in full to the Issuing
Bank pursuant to Section 2.6(d), the Issuing Bank shall promptly notify the
Administrative Agent, which shall promptly notify each Lender of such failure,
and each Lender shall promptly and unconditionally pay to the Administrative
Agent for the account of the Issuing Bank the amount of such Lender's Commitment
Percentage of such unreimbursed payment in dollars and in same day funds. If the
Issuing Bank so notifies the Administrative Agent, and the Administrative Agent
so notifies the Lenders prior to 11:00 a.m., Boston time, on any Business Day,
each such Lender shall make available to the Issuing Bank such Lender's
Commitment Percentage of the amount of such payment on such Business Day in same
day funds. If and to the extent such Lender shall not have so made its
Commitment Percentage of the amount of such payment available to the Issuing
Bank, such Lender agrees to pay to the Issuing Bank, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Administrative Agent for the account of the
Issuing Bank at the Federal Funds Effective Rate. Each Lender agrees to fund its
Commitment Percentage of such unreimbursed payment notwithstanding a failure to
satisfy any applicable lending conditions or the provisions of Section 2.1 or
Section 2.6, or the occurrence of the Termination Date. The failure of any
Lender to make available to the Issuing Bank its Commitment Percentage of any
payment under any Letter of Credit shall neither relieve any Lender of its
obligation hereunder to make available to the Issuing Bank its Commitment
Percentage of any payment under any Letter of Credit on the date required, as
specified above, nor increase the obligation of such other Lender. Whenever any
Lender has made payments to the Issuing Bank in respect of any reimbursement
obligation for any Letter of Credit, such Lender shall be entitled to share
ratably, based on its Commitment Percentage, in all payments and collections
thereafter received on account of such reimbursement obligation.
(h) Whenever a Borrower desires that the Issuing Bank issue a
Letter of Credit (or the amendment, renewal or extension of an outstanding
Letter of Credit), such Borrower shall give to the Issuing Bank and the
Administrative Agent at least two Business Days' prior written (including
telegraphic, telex, facsimile or cable communication) notice (or such shorter
period as may be agreed upon in writing by the Issuing Bank and such Borrower)
specifying the date on which the proposed Letter of Credit is to be issued,
amended, renewed or extended (which shall be a Business Day), the stated amount
of the Letter of Credit so requested, the expiration date of such Letter of
Credit, the name and address of the beneficiary thereof, and the provisions
thereof. If requested by the Issuing Bank, the Borrowers shall also submit a
letter of credit application on the Issuing Bank's standard form in connection
with any request for the issuance, amendment, renewal or extension of a Letter
of Credit.
(i) The obligations of the Borrowers to reimburse the Issuing Bank
for any L/C Disbursement shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, setoff,
defense or other right which the Borrowers may have at any time against a
beneficiary of any Letter of Credit or against any of the Lenders, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction; (iii) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (iv)
29
any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrowers' obligations hereunder; or (v) the fact that any Event of Default
shall have occurred and be continuing. None of the Administrative Agent, the
Lenders, the Issuing Bank or any of their Affiliates shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank, provided, that the foregoing
shall not be construed to excuse the Issuing Bank from liability to the
Borrowers to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrowers to the
extent permitted by applicable law) suffered by the Borrowers that are caused by
the Issuing Bank's failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of gross
negligence or willful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented that appear on their face to be in
compliance with the terms of a Letter of Credit, the Issuing Bank may, in its
reasonable discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(j) If any Event of Default shall occur and be continuing, on the
Business Day that the Borrowers receive notice from the Administrative Agent or
the Required Lenders demanding the deposit of cash collateral pursuant to this
paragraph, the Borrowers shall deposit in the Cash Collateral Account an amount
in cash equal to 103% of the Letter of Credit Outstandings as of such date plus
any accrued and unpaid interest thereon. Each such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the
Obligations of the Borrowers under this Agreement. The Collateral Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such Cash Collateral Account. Other than any interest earned on
the investment of such deposits, which investments shall be made at the option
and sole discretion of the Collateral Agent at the request of the Borrowers and
at the Borrowers' risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such Cash Collateral Account shall be applied by the
Collateral Agent to reimburse the Issuing Bank for payments on account of
drawings under Letters of Credit for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrowers for the Letter of Credit Outstandings
at such time or, if the Loans have matured or the maturity of the Loans has been
accelerated, be applied to satisfy other Obligations of the Borrowers under this
Agreement.
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(k) All Existing Letters of Credit shall, from and after the
Closing Date, be deemed for all purposes to be Letters of Credit under this
Agreement.
SECTION 2.7. Settlements Amongst Lenders.
(a) The Swingline Lender may (but shall not be obligated to), at
any time, on behalf of the Borrowers (which hereby authorize the Swingline
Lender to act in their behalf in that regard) request the Administrative Agent
to cause the Lenders to make a Revolving Loan (which shall be a Base Rate Loan)
in an amount equal to such Lender's Commitment Percentage of the outstanding
amount of Swingline Loans made in accordance with Section 2.5, which request may
be made regardless of whether the conditions set forth in Article IV have been
satisfied. Upon such request, each Lender shall make available to the
Administrative Agent the proceeds of such Revolving Loan for the account of the
Swingline Lender. If the Swingline Lender requires a Revolving Loan to be made
by the Lenders and the request therefor is received prior to 12:00 Noon, Boston
time, on a Business Day, such transfers shall be made in immediately available
funds not later than 4:00 p.m., Boston time, that day; and, if the request
therefor is received after 12:00 Noon, Boston time, then not later than 4:00
p.m., Boston time, on the next Business Day. The obligation of each Lender to
transfer such funds is irrevocable, unconditional and without recourse to or
warranty by the Administrative Agent or the Swingline Lender. If and to the
extent any Lender shall not have so made its transfer to the Administrative
Agent, such Lender agrees to pay to the Administrative Agent, forthwith on
demand such amount, together with interest thereon, for each day from such date
until the date such amount is paid to the Administrative Agent at the Federal
Funds Effective Rate.
(b) The amount of each Lender's Commitment Percentage of
outstanding Revolving Loans shall be computed weekly (or more frequently in the
Administrative Agent's discretion) and shall be adjusted upward or downward
based on all Revolving Loans and repayments of Revolving Loans received by the
Administrative Agent as of 4:00 p.m., Boston time, on the first Business Day
following the end of the period specified by the Administrative Agent (such
date, the "Settlement Date").
(c) The Administrative Agent shall deliver to each of the Lenders
promptly after the Settlement Date a summary statement of the amount of
outstanding Revolving Loans for the period and the amount of repayments received
for the period. As reflected on the summary statement: (x) the Administrative
Agent shall transfer to each Lender its applicable Commitment Percentage of
repayments, and (y) each Lender shall transfer to the Administrative Agent (as
provided below), or the Administrative Agent shall transfer to each Lender, such
amounts as are necessary to insure that, after giving effect to all such
transfers, the amount of Revolving Loans made by each Lender with respect to
Revolving Loans shall be equal to such Lender's applicable Commitment Percentage
of Revolving Loans outstanding as of such Settlement Date. If the summary
statement requires transfers to be made to the Administrative Agent by the
Lenders and is received prior to 12:00 Noon, Boston time, on a Business Day,
such transfers shall be made in immediately available funds not later than 4:00
p.m., Boston time, that day; and, if received after 12:00 Noon, Boston time,
then not later than 4:00 p.m., Boston time, on the next Business Day. The
obligation of each Lender to transfer such funds is irrevocable, unconditional
and without recourse to or warranty by the Administrative Agent. If and to the
extent any Lender shall not have so made its transfer to the Administrative
Agent, such Lender agrees to pay to the
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Administrative Agent, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Administrative Agent at the Federal Funds Effective Rate.
SECTION 2.8. Notes; Repayment of Loans.
(a) The Loans made by each Lender (and by the Swingline Lender,
with respect to Swingline Loans) shall be evidenced by a Note duly executed by
the Borrowers, dated the Closing Date, in substantially the form attached hereto
as Exhibit B-1 or B-2, as applicable, payable to the order of each such Lender
(or the Swingline Lender, as applicable) in an aggregate principal amount equal
to such Lender's Commitment (or, in the case of the Note evidencing the
Swingline Loans, $50,000,000).
(b) The outstanding principal balance of all Swingline Loans shall
be repaid on the earlier of the Termination Date or, on the date otherwise
requested by the Swingline Lender in accordance with the provisions of Section
2.5(a). The outstanding principal balance of all other Obligations shall be
payable on the Termination Date (subject to earlier repayment as provided
below). Each Note shall bear interest from the date thereof on the outstanding
principal balance thereof as set forth in this Article II. Each Lender is hereby
authorized by the Borrowers to endorse on a schedule attached to each Note
delivered to such Lender (or on a continuation of such schedule attached to such
Note and made a part thereof), or otherwise to record in such Lender's internal
records, an appropriate notation evidencing the date and amount of each Loan
from such Lender, each payment and prepayment of principal of any such Loan,
each payment of interest on any such Loan and the other information provided for
on such schedule; provided, however, that the failure of any Lender to make such
a notation or any error therein shall not affect the obligation of the Borrowers
to repay the Loans made by such Lender in accordance with the terms of this
Agreement and the applicable Notes.
SECTION 2.9. Interest on Loans.
(a) Subject to Section 2.10, each Base Rate Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as applicable) at a rate per annum that shall be equal to
the then Alternate Base Rate, plus the Applicable Margin for Base Rate Loans.
(b) Subject to Section 2.10, each LIBOR Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal, during each Interest Period applicable thereto,
to the Adjusted LIBO Rate for such Interest Period, plus the Applicable Margin
for LIBOR Loans.
(c) Accrued interest on all Loans shall be payable in arrears on
each Interest Payment Date applicable thereto, on the Termination Date, after
the Termination Date on demand and (with respect to LIBOR Loans) upon any
repayment or prepayment thereof (on the amount prepaid).
SECTION 2.10. Default Interest. Effective upon the occurrence of any
Event of Default and at all times thereafter while such Event of Default is
continuing, at the option of the Administrative Agent or upon the direction of
the Required Lenders, interest shall accrue on all
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outstanding Loans (including Swingline Loans) (after as well as before judgment,
as and to the extent permitted by law) at a rate per annum equal to the rate
(including the Applicable Margin for Loans) in effect from time to time plus
2.00% per annum, and such interest shall be payable on demand.
SECTION 2.11. Certain Fees. The Borrowers shall pay to the
Administrative Agent, for the account of the Administrative Agent, the fees set
forth in the Fee Letter as and when payment of such fees is due as therein set
forth.
SECTION 2.12. Unused Commitment Fee. The Administrative Agent shall pay
each Lender the Line Fee at the times and in the manner set forth below. The
Borrowers shall pay to the Administrative Agent for the account of the Lenders,
a commitment fee (the "Commitment Fee") equal to 0.375% per annum (on the basis
of actual days elapsed in a year of 360 days) of the average daily balance of
the Unused Commitment for each day commencing on and including the Closing Date
and ending on but excluding the Termination Date. The Commitment Fee so accrued
in any fiscal quarter shall be payable on the first Business Day of the
immediately succeeding fiscal quarter, except that all Commitment Fees so
accrued as of the Termination Date shall be payable on the Termination Date. If
the Commitment Fee actually paid by the Borrowers is insufficient to pay the
Line Fee due the Lenders, the deficiency shall be paid to the Lenders by the
Swingline Lender from its own funds (and the Borrowers shall have no liability
with respect thereto). The Administrative Agent shall pay the Line Fee (and any
amounts payable by the Swingline Lender hereunder) to the Lenders based upon
their pro rata share of the aggregate Line Fee due to all Lenders; provided,
that for purposes of calculating the pro rata share of any Person which is both
the Swingline Lender and a Lender, such Person's share shall be equal to the
difference between (i) the sum of such Person's Commitment, and (ii) the sum of
(A) such Person's Commitment Percentage of the principal amount of Revolving
Loans then outstanding (including the principal amount of Swingline Loans then
outstanding), and (B) such Person's Commitment Percentage of the then Letter of
Credit Outstandings.
SECTION 2.13. Letter of Credit Fees.
(a) The Borrowers shall pay the Administrative Agent, for the
account of the Lenders, on the last day of each calendar quarter, in arrears, a
fee (each, a "Letter of Credit Fee") equal to the following per annum
percentages of the average face amount of the following categories of Letters of
Credit outstanding during the subject quarter (each computed on the basis of the
actual number of days elapsed over a year of 360 days):
(i) Standby Letters of Credit: At the then
Applicable Margin per annum for LIBOR Loans.
(ii) Commercial Letters of Credit: At the rate
equal to fifty percent (50%) of then Applicable Margin per
annum for LIBOR Loans.
(iii) After the occurrence and during the
continuance of an Event of Default, at the option of the
Administrative Agent or upon the direction of the Required
Lenders, the Letter of Credit Fee set forth in clauses (i) and
(ii) above, shall be increased by an amount equal to two
percent (2%) per annum.
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(b) The Borrowers shall pay to the Administrative Agent, for the
account of the Issuing Bank, and in addition to all Letter of Credit Fees
otherwise provided for hereunder, such fees and charges in connection with the
issuance, negotiation, settlement, amendment and processing of each Letter of
Credit issued by the Issuing Bank as are customarily imposed by the Issuing Bank
from time to time in connection with letter of credit transactions and such
fronting fees as are agreed upon by the Borrowers and the Issuing Bank.
SECTION 2.14. Nature of Fees. All fees shall be paid on the dates due,
in immediately available funds, to the Administrative Agent, for the respective
accounts of the Administrative Agent, the Issuing Bank, and the Lenders, as
provided herein. Once paid, all fees shall be fully earned and shall not be
refundable under any circumstances.
SECTION 2.15. Termination or Reduction of Commitments. Upon at least
five (5) Business Days' prior written notice to the Administrative Agent, the
Borrowers may at any time in whole permanently terminate, or from time to time
in part permanently reduce, the Commitments. Each such reduction shall be in the
principal amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof. Each such reduction or termination shall (i) except as provided in
Section 2.28(b), be applied ratably to the Commitments of each Lender and (ii)
be irrevocable when given. At the effective time of each such reduction or
termination, the Borrowers shall pay to the Administrative Agent for application
as provided herein (i) all Commitment Fees accrued on the unused portion of the
Commitments so terminated or reduced through the date thereof, and (ii) any
amount by which the Credit Extensions outstanding on such date exceed the amount
to which the Commitments are to be reduced effective on such date, in each case
pro rata based on the amount prepaid.
SECTION 2.16. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a LIBOR Borrowing:
(a) the Administrative Agent reasonably determines (which
determination shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such
Interest Period; or
(b) the Administrative Agent is advised by the Required
Supermajority Lenders that the Adjusted LIBO Rate for such Interest Period will
not adequately and fairly reflect the cost to such Lenders (or Lender) of making
or maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter (but in
any event, within two (2) Business Days) and, until the Administrative Agent
notifies the Borrowers and the Lenders that the circumstances giving rise to
such notice no longer exist, (i) any Borrowing Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a LIBOR
Borrowing shall be ineffective and (ii) if any Borrowing Request requests a
LIBOR Borrowing, such Borrowing shall be made as a Borrowing of Base Rate Loans.
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Section 2.17. Conversion and Continuation of Loans. The Borrowers shall
have the right at any time,
(a) on three (3) Business Days' prior irrevocable notice to the
Administrative Agent (which notice, to be effective, must be received by the
Administrative Agent not later than 11:00 a.m., Boston time, on the third
Business Day preceding the date of any conversion), (x) to convert any
outstanding Borrowings of Base Rate Loans (but in no event Swingline Loans) to
Borrowings of LIBOR Loans or (y) to continue an outstanding Borrowing of LIBOR
Loans for an additional Interest Period,
(b) on one (1) Business Day's prior irrevocable notice to the
Administrative Agent (which notice, to be effective, must be received by the
Administrative Agent not later than 11:00 a.m., Boston time, on the first
Business Day preceding the date of any conversion), to convert any outstanding
Borrowings of LIBOR Loans to a Borrowing of Base Rate Loans, subject to the
following:
(i) no Borrowing of Loans may be converted into,
or continued as, LIBOR Loans at any time when an Event of
Default has occurred and is continuing;
(ii) if less than a full Borrowing of Loans is
converted, such conversion shall be made pro rata among the
Lenders, as applicable, in accordance with the respective
principal amounts of the Loans comprising such Borrowing held
by such Lenders immediately prior to such refinancing;
(iii) the aggregate principal amount of Loans
being converted into or continued as LIBOR Loans shall be in
an integral of $1,000,000 and at least $5,000,000;
(iv) the Interest Period with respect to a
Borrowing of LIBOR Loans effected by a conversion or in
respect to the Borrowing of LIBOR Loans being continued as
LIBOR Loans shall commence on the date of conversion or the
expiration of the current Interest Period applicable to such
continuing Borrowing, as the case may be;
(v) a Borrowing of LIBOR Loans may be converted
only on the last day of an Interest Period applicable thereto;
(vi) each request for a conversion or
continuation of a Borrowing of LIBOR Loans which fails to
state an applicable Interest Period shall be deemed to be a
request for an Interest Period of one month; and
(vii) no more than ten (10) Borrowings of LIBOR
Loans may be outstanding at any time.
If any of the Borrowers does not give notice to convert any Borrowing of Base
Rate Loans, or does not give notice to continue, or does not have the right to
continue, any Borrowing as LIBOR Loans, in each case as provided above, such
Borrowing shall automatically be converted
35
to, or continued as, as applicable, a Borrowing of Base Rate Loans at the
expiration of the then-current Interest Period. The Administrative Agent shall,
after it receives notice from any Borrower, promptly give each Lender notice of
any conversion, in whole or part, of any Loan made by such Lender.
SECTION 2.18. Mandatory Prepayment; Cash Collateral. The outstanding
Obligations shall be subject to mandatory prepayment as follows:
(a) If at any time the amount of the Credit Extensions exceeds the
lower of (i) the then amount of the Total Commitment, and (ii) the then amount
of the Borrowing Base, the Borrowers will immediately upon a Financial Officer
becoming aware of such occurrence (A) prepay the Loans in an amount necessary to
eliminate such excess, and (B) if, after giving effect to the prepayment in full
of all outstanding Loans such excess has not been eliminated, deposit cash into
the Cash Collateral Account in an amount equal to such excess.
(b) To the extent required pursuant to Section 2.21(b), the
Revolving Loans shall be repaid daily in accordance with the provisions of said
Section 2.21(b).
(c) Subject to the foregoing, outstanding Base Rate Loans shall be
prepaid before outstanding LIBOR Loans are prepaid. Each partial prepayment of
LIBOR Loans shall be in an integral multiple of $5,000,000. No prepayment of
LIBOR Loans shall be permitted pursuant to this Section 2.18 other than on the
last day of an Interest Period applicable thereto, unless the Borrowers
simultaneously reimburse the Lenders for all "Breakage Costs" (as defined in
Section 2.19, below) associated therewith. In order to avoid such Breakage
Costs, as long as no Event of Default has occurred and is continuing, at the
request of the Borrowers, the Administrative Agent shall hold all amounts
required to be applied to LIBOR Loans in the Cash Collateral Account and will
apply such funds to the applicable LIBOR Loans at the end of the then pending
Interest Period therefor (provided, that the foregoing shall in no way limit or
restrict the Agents' rights upon the subsequent occurrence of an Event of
Default). No partial prepayment of a Borrowing of LIBOR Loans shall result in
the aggregate principal amount of the LIBOR Loans remaining outstanding pursuant
to such Borrowing being less than $5,000,000 (unless all such outstanding LIBOR
Loans are being prepaid in full). Any prepayment of the Revolving Loans shall
not permanently reduce the Commitments.
(d) All amounts required to be applied to all Loans hereunder
(other than Swingline Loans) shall be applied ratably in accordance with each
Lender's Commitment Percentage.
(e) Upon the Termination Date, the Commitments and the credit
facility provided hereunder shall be terminated in full and the Borrowers shall
pay, in full and in cash, all outstanding Loans and all other outstanding
Obligations.
SECTION 2.19. Optional Prepayment of Loans; Reimbursement of Lenders.
(a) The Borrowers shall have the right at any time and from time
to time to prepay outstanding Loans in whole or in part, (x) with respect to
LIBOR Loans, upon at least two Business Days' prior written or facsimile notice
to the Administrative Agent prior to 11:00 a.m., Boston time, and (y) with
respect to Base Rate Loans, on the same Business Day if written, telex
36
or facsimile notice is received by the Administrative Agent prior to 1:00 p.m.,
Boston time, subject to the following limitations:
(i) Subject to Section 2.18, all prepayments
shall be paid to the Administrative Agent for application,
first, to the prepayment of outstanding Swingline Loans,
second, to the prepayment of other outstanding Loans ratably
in accordance with each Lender's Commitment Percentage, and
third, to the funding of a cash collateral deposit in the Cash
Collateral Account in an amount equal to 103% of all Letter of
Credit Outstandings.
(ii) Subject to the foregoing, outstanding Base
Rate Loans shall be prepaid before outstanding LIBOR Loans are
prepaid. Each partial prepayment of LIBOR Loans shall be in an
integral multiple of $5,000,000. No prepayment of LIBOR Loans
shall be permitted pursuant to this Section 2.19 other than on
the last day of an Interest Period applicable thereto, unless
the Borrowers simultaneously reimburse the Lenders for all
"Breakage Costs" (as defined below) associated therewith. No
partial prepayment of a Borrowing of LIBOR Loans shall result
in the aggregate principal amount of the LIBOR Loans remaining
outstanding pursuant to such Borrowing being less than
$5,000,000 (unless all such outstanding LIBOR Loans are being
prepaid in full).
(iii) Each notice of prepayment shall specify the
prepayment date, the principal amount and Type of the Loans to
be prepaid and, in the case of LIBOR Loans, the Borrowing or
Borrowings pursuant to which such Loans were made. The
Administrative Agent shall, promptly after receiving notice
from the Borrowers hereunder, notify each Lender of the
principal amount and Type of the Loans held by such Lender
which are to be prepaid, the prepayment date and the manner of
application of the prepayment.
(b) The Borrowers shall reimburse each Lender on demand for any
loss incurred or to be incurred by it in the reemployment of the funds released
(i) resulting from any prepayment (for any reason whatsoever, including, without
limitation, conversion to Base Rate Loans or acceleration by virtue of, and
after, the occurrence of an Event of Default) of any LIBOR Loan required or
permitted under this Agreement, if such Loan is prepaid other than on the last
day of the Interest Period for such Loan or (ii) in the event that after the
Borrowers deliver a notice of borrowing under Section 2.3 in respect of LIBOR
Loans, such Loans are not borrowed on the first day of the Interest Period
specified in such notice of borrowing for any reason. Such loss shall be the
amount as reasonably determined by such Lender as the excess, if any, of (A) the
amount of interest which would have accrued to such Lender on the amount so paid
or not borrowed at a rate of interest equal to the Adjusted LIBO Rate for such
Loan, for the period from the date of such payment or failure to borrow to the
last day (x) in the case of a payment or refinancing of a LIBOR Loan other than
on the last day of the Interest Period for such Loan, of the then current
Interest Period for such Loan or (y) in the case of such failure to borrow, of
the Interest Period for such LIBOR Loan which would have commenced on the date
of such failure to borrow, over (B) the amount of interest which would have
accrued to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the London interbank market
(collectively, "Breakage Costs"). Any Lender demanding
37
reimbursement for such loss shall deliver to the Borrowers simultaneously with
such demand one or more certificates setting forth the amount of such loss as
determined by such Lender and setting forth in reasonable detail the manner in
which such amount was determined.
(c) In the event the Borrowers fail to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.19(a), the
Borrowers on demand by any Lender shall pay to the Administrative Agent for the
account of such Lender any amounts required to compensate such Lender for any
actual loss incurred by such Lender as a result of such failure to prepay,
including, without limitation, any loss, cost or expenses incurred by reason of
the acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Any Lender demanding
such payment shall deliver to the Borrowers simultaneously with such demand one
or more certificates setting forth the amount of such loss as determined by such
Lender and setting forth in reasonable detail the manner in which such amount
was determined.
(d) Whenever any partial prepayment of Loans is to be applied to
LIBOR Loans, such LIBOR Loans shall, unless the Borrowers otherwise direct, be
prepaid in the chronological order of their Interest Payment Dates.
SECTION 2.20. Maintenance of Loan Account; Statements of Account.
(a) The Administrative Agent shall maintain an account on its
books in the name of the Borrowers (the "Loan Account") which will reflect (i)
all Loans made by the Lenders to the Borrowers or for the Borrowers' account,
(ii) all L/C Disbursements, fees and interest that have become payable as herein
set forth, and (iii) any and all other monetary Obligations that have become
payable.
(b) The Loan Account will be credited with all amounts received by
the Administrative Agent from the Borrowers, including all amounts received in
the Fleet Concentration Account from any Concentration Account, on the date such
amounts are received and the amounts so credited shall be applied as set forth
in Section 2.22(a) and (b). After the end of each month, the Administrative
Agent shall send to the Borrowers a statement accounting for the charges, loans,
advances and other transactions occurring among and between the Administrative
Agent, the Lenders and the Borrowers during that month. The monthly statements
shall, absent manifest error, be an account stated, which is final, conclusive
and binding on the Borrowers.
SECTION 2.21. Cash Receipts.
(a) (i) Annexed hereto as Schedule 2.21(a)(i) is a list of all
DDAs and accounts maintained by the Borrowers into which more than one DDA
deposits or transfers funds (the "Concentration Accounts") as of the date
hereof, which Schedule includes, with respect to each Concentration Account
depository (1) the name and address of that depository; (2) the account
number(s) maintained with such depository; and (3) to the extent known, a
contact person at such depository.
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(ii) Annexed hereto as Schedule 2.21(a)(ii) is a list
describing all arrangements to which any Borrower is a party with
respect to the payment to any Borrower of the proceeds of all credit
card charges for sales by any Borrower.
(b) (i) On the Closing Date, the Borrowers shall have entered into
agency agreements with the banks maintaining the Concentration Accounts, which
agreements (the "Blocked Account Agreements") shall be in form and substance
reasonably satisfactory to the Administrative Agent.
(ii) On the Closing Date, the Borrowers shall deliver to the
Administrative Agent notifications (the "Credit Card Notifications")
executed on behalf of the Borrowers to each of their major credit
card processors instructing such credit card processors to remit all
proceeds of all credit card charges to a Concentration Account.
(iii) The Blocked Account Agreements shall provide that, after
the occurrence and during the continuance of an Event of Default or
Cash Control Event, the Administrative Agent may, or at the request
of the Required Lenders shall, provide a notice to each bank (with a
copy to the Borrowers) maintaining a Concentration Account (an
"Activation Notice") requiring the sweep on each Business Day of all
available cash receipts and other proceeds from the sale of
Inventory, including, without limitation, the proceeds of all credit
card charges (all such cash receipts and proceeds, "Cash Receipts"),
to a Concentration Account maintained by the Collateral Agent at
Fleet (the "Fleet Concentration Account"). At such time as such
Event of Default has been cured or waived or such Cash Control Event
no longer exists, the Activation Notice shall cease to be effective
and the Administrative Agent shall give notice thereof to each bank
maintaining a Concentration Account rescinding such Activation Notice
previously given to such bank.
(c) The Borrowers may close Concentration Accounts and/or open new
Concentration Accounts, subject to the execution and delivery to the
Administrative Agent of appropriate Blocked Account Agreements consistent with
the provisions of this Section 2.21. The Borrowers may close DDAs and/or open
new DDAs, subject to the Borrowers updating Schedule 2.21(a)(i) and otherwise
complying with the terms of this Agreement. The Borrowers may not enter into any
agreement with any credit card processors unless contemporaneously therewith, a
Credit Card Notification is executed and delivered to the Administrative Agent.
The Borrowers shall each cause each of their credit card processors to remit all
proceeds of all credit card charges to a Concentration Account.
(d) The Fleet Concentration Account is, and shall remain, under
the sole dominion and control of the Collateral Agent. Each Borrower
acknowledges and agrees that (i) such Borrower has no right of withdrawal from
the Fleet Concentration Account, (ii) the funds on deposit in the Fleet
Concentration Account, if any, shall continue to be collateral security for all
of the Obligations and (iii) the funds on deposit in the Fleet Concentration
Account shall be applied as provided in Section 2.22(a).
(e) The Borrowers shall cause the ACH or wire transfer to a
Concentration Account, no less frequently then daily, of the then contents of
each DDA, each such transfer to be net of
39
any minimum balance, not to exceed $10,000, as may be required to be maintained
in the subject DDA by the bank at which such DDA is maintained.
(f) So long as (i) no Event of Default has occurred and is
continuing, and (ii) no Activation Notice shall have been given and remain in
effect, the Borrowers may direct, and shall have sole control over, the manner
of disposition of the funds in the Concentration Accounts. After the delivery of
an Activation Notice and during the effectiveness thereof, the Borrowers shall
cause the ACH or wire transfer to the Fleet Concentration Account, no less
frequently than daily of the then contents of each Concentration Account, each
such transfer to be net of any minimum balance, not to exceed $10,000, as may be
required to be maintained in the subject Concentration Account by the bank at
which such Concentration Account is maintained, and, in connection with each
such transfer, the Borrowers shall also provide the Administrative Agent with an
accounting of the contents of each Concentration Account.
In the event that, notwithstanding the provisions of this Section 2.21,
after the delivery of an Activation Notice and during the effectiveness thereof,
the Borrowers receive or otherwise have dominion and control of any such
proceeds or collections, such proceeds and collections shall be held in trust by
the Borrowers for the Administrative Agent and shall not be commingled with any
of the Borrowers' other funds or deposited in any account of any Borrower other
than as instructed by the Administrative Agent.
Effective upon delivery of an Activation Notice to the Borrowers from
the Collateral Agent, after the occurrence and during the continuation of an
Event of Default (including, without limitation, the failure of the Borrowers to
comply with the provisions of this Section 2.21(f)) (which notice may be given
by telephone if promptly confirmed in writing) or a Cash Control Event, (i) the
Administrative Agent may, at any time thereafter, deliver the Credit Card
Notifications to the addressees thereof, and (ii) the Concentration Accounts
will, without any further action on the part of any Borrower or the Collateral
Agent convert into a closed account under the exclusive dominion and control of
the Collateral Agent in which funds are held subject to the rights of the
Collateral Agent hereunder. In such event, all amounts in the Fleet
Concentration Account from time to time may be applied to the Obligations in
such order and manner as provided in Section 2.22 hereof.
SECTION 2.22. Application of Payments.
(a) Subject to the provisions of Section 2.21, as long as no Event
of Default then exists, all amounts received in the Fleet Concentration Account
from any source, including the Concentration Accounts, shall be applied, on the
day of receipt, in the following order: first, to pay interest due and payable
on Credit Extensions and to pay fees and expense reimbursements and
indemnification then due and payable to the Administrative Agent, FSI, the
Issuing Bank, the Collateral Agent, and the Lenders; second, to repay
outstanding Swingline Loans; third, to repay other outstanding Revolving Loans
that are Base Rate Loans and all outstanding reimbursement obligations under
Letters of Credit; fourth, to repay outstanding Revolving Loans that are LIBOR
Loans and all Breakage Costs due in respect of such repayment pursuant to
Section 2.19(b) or, at the Borrowers' option, to fund a cash collateral deposit
to the Cash Collateral Account sufficient to pay, and with direction to pay, all
such outstanding LIBOR Loans on the last day of the then-pending Interest Period
therefor; fifth, to pay Fleet or an
40
Affiliate of Fleet in connection with cash management and other similar banking
or financial services provided by such Person, sixth, to pay Indebtedness under
any Hedging Agreement with a Lender or an Affiliate of a Lender, seventh, to pay
all other Obligations that are then outstanding and then due and payable (it
being understood that undrawn Letters of Credit shall not be required to be cash
collateralized if no Event of Default has occurred and is continuing). If all
amounts set forth in clauses first through and including seventh above are paid,
any excess amounts shall be deposited in a separate cash collateral account, and
shall promptly be released to the Borrowers upon the request of any Borrower.
Any other amounts received by the Administrative Agent, the Issuing Bank, the
Collateral Agent, or any Lender as contemplated by Section 2.21 shall also be
applied in the order set forth above in this Section 2.22.
(b) All credits against the Obligations shall be effective on the
day of receipt thereof, and shall be conditioned upon final payment to the
Administrative Agent of the items giving rise to such credits. If any item
deposited to the Fleet Concentration Account and credited to the Loan Account is
dishonored or returned unpaid for any reason, whether or not such return is
rightful or timely, the Administrative Agent shall have the right to reverse
such credit and charge the amount of such item to the Loan Account and the
Borrowers shall indemnify the Administrative Agent, the Collateral Agent, the
Issuing Bank and the Lenders against all claims and losses resulting from such
dishonor or return.
SECTION 2.23. Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended
by, any Lender or any holding company of any Lender (except
any such reserve requirement reflected in the Adjusted LIBO
Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or
the London interbank market any other condition affecting this
Agreement or LIBOR Loans made by such Lender or any Letter of
Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Loan (or of maintaining its obligation
to make any such Loan) or to increase the cost to such Lender or the Issuing
Bank of participating in, issuing or maintaining any Letter of Credit or to
reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise) other than
Taxes, which shall be governed by Section 2.26 hereof, then the Borrowers will
pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change
in Law regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender's or the Issuing Bank's capital or on the
capital of such Lender's or the Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in
41
Letters of Credit held by, such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level below that which such Lender or the Issuing Bank or
such Lender's or the Issuing Bank's holding company could have achieved but for
such Change in Law (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's holding
company with respect to capital adequacy), then from time to time the Borrowers
will pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth
the amount or amounts necessary to compensate such Lender or the Issuing Bank or
its holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section and setting forth in reasonable detail the manner in which such
amount or amounts were determined shall be delivered to the Borrowers and shall
be conclusive absent manifest error. The Borrowers shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within ten (10) Business Days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation pursuant to this Section within sixty (60) days of the
effective date of the relevant Change in Law shall constitute a waiver of such
Lender's or the Issuing Bank's right to demand such compensation.
SECTION 2.24. Change in Legality.
(a) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, if (x) any Change in Law shall make it unlawful for a Lender
to make or maintain a LIBOR Loan or to give effect to its obligations as
contemplated hereby with respect to a LIBOR Loan or (y) at any time any Lender
determines that the making or continuance of any of its LIBOR Loans has become
impracticable as a result of a contingency occurring after the date hereof which
adversely affects the London interbank market or the position of such Lender in
the London interbank market, then, by written notice to the Borrowers, such
Lender may (i) declare that LIBOR Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrowers for a LIBOR Borrowing
shall, as to such Lender only, be deemed a request for a Base Rate Loan unless
such declaration shall be subsequently withdrawn; and (ii) require that all
outstanding LIBOR Loans made by it be converted to Base Rate Loans, in which
event all such LIBOR Loans shall be automatically converted to Base Rate Loans
as of the effective date of such notice as provided in paragraph (b) below. In
the event any Lender shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to repay the LIBOR Loans that would have been made by such
Lender or the converted LIBOR Loans of such Lender shall instead be applied to
repay the Base Rate Loans made by such Lender in lieu of, or resulting from the
conversion of, such LIBOR Loans.
(b) For purposes of this Section 2.24, a notice to the Borrowers
by any Lender pursuant to paragraph (a) above shall be effective, if lawful, and
if any LIBOR Loans shall then be outstanding, on the last day of the
then-current Interest Period; and otherwise such notice shall be effective on
the date of receipt by the Borrowers.
42
SECTION 2.25. Payments; Sharing of Setoff.
(a) The Borrowers shall make each payment required to be made by
it hereunder or under any other Loan Document (whether of principal, interest,
fees or reimbursement of drawings under Letters of Credit, or of amounts payable
under Section 2.19(b), Section 2.23 or Section 2.26, or otherwise) prior to
12:00 noon, Boston time, on the date when due, in immediately available funds,
without setoff or counterclaim. Any amounts received after such time on any date
may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, except payments to be
made directly to the Issuing Bank or Swingline Lender as expressly provided
herein and except that payments pursuant to Section 2.19(b), Section 2.23,
Section 2.26 and Section 9.3 shall be made directly to the Persons entitled
thereto and payments pursuant to other Loan Documents shall be made to the
Persons specified therein. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment under any Loan
Document (other than payments with respect to LIBOR Borrowings) shall be due on
a day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed drawings under Letters of Credit, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed drawings under
Letters of Credit then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of principal and unreimbursed drawings under
Letters of Credit then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in drawings under Letters of
Credit or Swingline Loans resulting in such Lender's receiving payment of a
greater proportion of the aggregate amount of its Loans and participations in
drawings under Letters of Credit and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in drawings under Letters of
Credit and Swingline Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in drawings under Letters of Credit
and Swingline Loans, provided, that (i) if any such participations are purchased
and all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrowers pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the
43
assignment of or sale of a participation in any of its Loans or participations
in drawings under Letters of Credit to any assignee or participant, other than
to the Borrowers or any Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrowers consent to the foregoing and agree, to the
extent they may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrowers rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrowers
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrowers prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrowers have not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be
made by it pursuant to this Agreement, then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for the account of such Lender
to satisfy such Lender's obligations under this Agreement until all such
unsatisfied obligations are fully paid.
SECTION 2.26. Taxes.
(a) Any and all payments by or on account of any obligation of the
Borrowers hereunder or under any other Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes,
provided, that if the Borrowers shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrowers shall make such deductions and (iii) the Borrowers shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Administrative Agent, each
Lender and the Issuing Bank, within 10 Business Days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or the Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation
44
of the Borrowers hereunder or under any other Loan Document (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrowers by a Lender or the Issuing Bank,
or by the Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Bank setting forth in reasonable detail the manner in which such amount
was determined, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by the Borrowers to a Governmental Authority, the Borrowers shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction in withholding tax shall deliver to the Borrowers and the
Administrative Agent two copies of either United States Internal Revenue Service
Form W-8BEN or Form W-8ECI, or, in the case of a Foreign Lender's claiming
exemption from or reduction in U.S. Federal withholding tax under Section 871(h)
or 881(c) of the Code with respect to payments of "portfolio interest", a Form
W-8BEN, or any subsequent versions thereof or successors thereto (and, if such
Foreign Lender delivers a Form W-8BEN, a certificate representing that such
Foreign Lender is not a bank for purposes of Section 881(c) of the Code, is not
a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Borrowers and is not a controlled foreign corporation related to
the Borrowers (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Foreign Lender claiming complete exemption
from or reduced rate of, U.S. Federal withholding tax on payments by the
Borrowers under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Foreign Lender on or before the date it becomes a party to
this Agreement (or, in the case of a transferee that is a participation holder,
on or before the date such participation holder becomes a transferee hereunder)
and on or before the date, if any, such Foreign Lender changes its Applicable
Lending Office by designating a different lending office. In addition, each
Foreign Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Foreign Lender.
Notwithstanding any other provision of this Section 2.26(e), a Foreign Lender
shall not be required to deliver any form pursuant to this Section 2.26(e) that
such Foreign Lender is not legally able to deliver.
(f) The Borrowers shall not be required to indemnify any Foreign
Lender or to pay any additional amounts to any Foreign Lender in respect of U.S.
Federal withholding tax pursuant to paragraph (a) or (c) above to the extent
that the obligation to pay such additional amounts would not have arisen but for
a failure by such Foreign Lender to comply with the provisions of paragraph (e)
above. Should a Lender become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrowers shall, at such Lender's expense, take
such steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
SECTION 2.27. Security Interests in Collateral. To secure their
Obligations under this Agreement and the other Loan Documents, the Borrowers
shall grant to the Collateral Agent, for
45
its benefit and the ratable benefit of the other Secured Parties, a
first-priority security interest in all of the Collateral pursuant hereto and to
the Security Documents.
SECTION 2.28. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.23, or if
any Lender is not required to make LIBOR Loans under Section 2.24 or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.26,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.23 or Section 2.26 or
would permit such Lender to make LIBOR Loans, as the case may be, in the future
and (ii) would not subject such Lender to any material unreimbursed cost or
expense and would not otherwise be materially disadvantageous to such Lender.
The Borrowers hereby agree to pay all reasonable costs and expenses incurred by
any Lender in connection with any such designation or assignment; provided,
however, that the Borrowers shall not be liable for such costs and expenses of a
Lender requesting compensation if (i) such Lender becomes a party to this
Agreement on a date after the Closing Date and (ii) the relevant Change in Law
occurs on a date prior to the date such Lender becomes a party hereto.
(b) If any Lender requests compensation under Section 2.23 or if
any Lender is not required to make LIBOR Loans under Section 2.24, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.26,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrowers may upon notice to such Lender and the Administrative Agent either (i)
terminate the Commitment of such Lender or (ii) require such Lender to assign
and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 9.4), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided, that (A) except in the case of an assignment to another
Lender, the Borrowers shall have received the prior written consent of the
Administrative Agent, the Issuing Bank and Swingline Lender, which consent shall
not unreasonably be withheld, (B) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in
unreimbursed drawings under Letters of Credit and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrowers (in the case of all other amounts) and (C)
in the case of any such assignment resulting from a claim for compensation under
Section 2.23 or payments required to be made pursuant to Section 2.26, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrowers to require such assignment and delegation cease to
apply.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower, represents and warrants to the Agents and the Lenders
that:
SECTION 3.1. Organization; Powers. Each Borrower is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, and each such Person has all requisite power and authority to
carry on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 3.2. Authorization; Enforceability. The transactions
contemplated hereby and by the other Loan Documents to be entered into by each
Borrower are within such Borrower's corporate or partnership powers and have
been duly authorized by all necessary corporate or partnership, and, if
required, stockholder action. This Agreement has been duly executed and
delivered by each Borrower that is a party hereto and constitutes, and each
other Loan Document to which any Borrower is a party, when executed and
delivered by such Borrower will constitute, a legal, valid and binding
obligation of such Borrower (as the case may be), enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
SECTION 3.3. Governmental Approvals; No Conflicts. The transactions to
be entered into contemplated by the Loan Documents (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except (i) for such as have been obtained or made and
are in full force and effect, (ii) for those which could not reasonably be
expected to have a Material Adverse Effect, and (iii) for filings and recordings
necessary to perfect Liens created under the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any Borrower or any order of any Governmental
Authority, except for such violation which could not reasonably be expected to
have a Material Adverse Effect, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon any Borrower or
any of its Subsidiaries or their respective assets, except for such violation or
default which could not reasonably be expected to have a Material Adverse
Effect, or give rise to a right thereunder to require any payment to be made by
any Borrower, and (d) will not result in the creation or imposition of any Lien
on any asset of any Borrower, except Liens created under the Loan Documents or
otherwise permitted hereby or thereby.
SECTION 3.4. Financial Condition. (a) There have been furnished to each
of the Lenders (i) consolidated balance sheets of ▇▇▇▇ and its Subsidiaries as
of July 31, 2002, and a consolidated statement of operations and consolidated
statement of cash flow of ▇▇▇▇ and its Subsidiaries for the fiscal year then
ended, certified by KPMG LLP and (ii) an unaudited consolidated and
consolidating balance sheet of ▇▇▇▇ and its Subsidiaries as of April 30, 2003,
and an unaudited consolidated statement of operations and consolidated statement
of cash flow of ▇▇▇▇ and its Subsidiaries for the period of three fiscal
quarters then ended. Such balance sheets, statements of operations and
statements of cash flow have been prepared in accordance
47
with GAAP and fairly present in all material respects the financial condition of
▇▇▇▇ and its Subsidiaries as at the close of business on the dates thereof and
the results of operations for the periods then ended, subject, in the case of
such unaudited consolidated balance sheet, unaudited consolidated statement of
operations and unaudited consolidated statement of cash flow, to year-end
adjustments, and except that there are no notes to such financial statements.
Other than the obligations incurred in connection with the Dutch Auction Tender
Offer there are no contingent liabilities that are likely to become fixed
obligations of ▇▇▇▇ or any of its Subsidiaries as of such dates involving
material amounts, known to the Financial Officers of the Borrowers, which were
not disclosed in such balance sheets and the notes related thereto.
(b) The projected consolidated balance sheets and cash flow
statements of ▇▇▇▇ and its Subsidiaries for the 2003 to 2004 fiscal years,
copies of which have been delivered to each Lender, have been prepared in good
faith, are based upon estimates and assumptions which the Borrowers deem
reasonable as of the date hereof, have been prepared on the basis of the
assumptions stated therein and reflect the reasonable estimates of ▇▇▇▇ and its
Subsidiaries of the results of operations and other information projected
therein.
(c) During the period from July 31, 2002 through the date of this
Agreement there has been no event or occurrence which has had a Material Adverse
Effect.
SECTION 3.5. Properties
(a) As of the date hereof, the Borrowers and their Subsidiaries
own all of the material assets reflected in the consolidated balance sheet of
▇▇▇▇ and its Subsidiaries as of April 30, 2003 or acquired since that date
(except property or assets sold or otherwise disposed of in the ordinary course
of business and other property sold as permitted by Section 6.5 hereof since
that date), subject to no Liens except Permitted Encumbrances.
(b) Each Borrower owns, or is licensed to use, all trademarks,
trade names, copyrights, patents and other intellectual property material to its
business, and the use thereof by such Person does not infringe upon the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.6. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Borrower or any of its
Subsidiaries, threatened against or affecting any such Person (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than those set forth on
Schedule 3.6) or (ii) that involve any of the Loan Documents.
(b) Except for the matters set forth on Schedule 3.6, and except
as could not reasonably be expected to have a Material Adverse Effect, no
Borrower (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental
48
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in
the status of the matters set forth on Schedule 3.6 that, individually or in the
aggregate, has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.
SECTION 3.7. Compliance with Laws and Agreements. Each Borrower is in
compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, material agreements and
other instruments binding upon it or its property, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
SECTION 3.8. Investment and Holding Company Status. None of the
Borrowers nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.9. Taxes. Each Borrower, and each of its Subsidiaries, has
timely filed or caused to be filed all tax returns and reports required to have
been filed by it and has paid or caused to be paid all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings, for which such Person has set aside on its books
adequate reserves, and as to which no Lien has arisen, or (b) to the extent that
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.10. ERISA. (a) Each Plan and each Guaranteed Pension Plan has
been maintained and operated in compliance with the provisions of ERISA and, to
the extent applicable, the Code, including but not limited to the provisions
thereunder respecting prohibited transactions and the bonding of fiduciaries and
other persons handling plan funds as required by Section 412 of ERISA, except
where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect. The Borrowers have heretofore delivered to the
Administrative Agent the most recently completed, prior to the date hereof,
annual report, Form 5500, with all required attachments, and actuarial statement
required to be submitted under ss.103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
(b) Under each Plan which is an employee welfare benefit plan
within the meaning of Section 3(1) or Section 3(2)(B) of ERISA, no benefits are
due unless the event giving rise to the benefit entitlement occurs prior to plan
termination (except as required by Title I, Part 6 of ERISA). One of the
Borrowers or an ERISA Affiliate, as appropriate, may terminate each such Plan at
any time (or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of such Borrower or such ERISA Affiliate
without liability to any Person, except for benefit entitlements which have
accrued prior to such termination.
(c) Each contribution required to be made to a Guaranteed Pension
Plan, whether required to be made to avoid the incurrence of an accumulated
funding deficiency, the notice or lien provisions of Section 302(f) of ERISA, or
otherwise, has been timely made. No waiver of an
49
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan, and none of the Borrowers
nor any ERISA Affiliate is obligated to or has posted security in connection
with an amendment to a Guaranteed Pension Plan pursuant to Section 307 of ERISA
or Section 401(a)(29) of the Code. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by the
Borrowers or any ERISA Affiliate with respect to any Guaranteed Pension Plan and
there has not been any ERISA Event (other than an ERISA Event as to which the
requirement of thirty (30) days notice has been waived), or any other event or
condition which presents a material risk of termination of any Guaranteed
Pension Plan by the PBGC. Based on the latest valuation of each Guaranteed
Pension Plan (which in each case occurred within twelve months of the date of
this representation), and on the actuarial methods and assumptions employed for
that valuation, the aggregate benefit liabilities of all such Guaranteed Pension
Plans within the meaning of Section 4001 of ERISA did not exceed the aggregate
value of the assets of all such Guaranteed Pension Plans, disregarding for this
purpose the benefit liabilities and assets of any Guaranteed Pension Plan with
assets in excess of benefit liabilities, by more than $1,000,000.
(d) None of the Borrowers nor any ERISA Affiliate has incurred any
material liability (including secondary liability) to any Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan under
Section 4201 of ERISA or as a result of a sale of assets described in Section
4204 of ERISA. None of the Borrowers nor any ERISA Affiliate has been notified
that any Multiemployer Plan is in reorganization or insolvent under and within
the meaning of Section 4241 or Section 4245 of ERISA or is at risk of entering
reorganization or becoming insolvent, or that any Multiemployer Plan intends to
terminate or has been terminated under Section 4041A of ERISA.
SECTION 3.11. Disclosure. The Borrowers have disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which any
Borrower is subject, and all other matters known to any of them, that,
individually or in the aggregate, in each case, could reasonably be expected to
result in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of any Borrower to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or any other Loan Document or delivered hereunder or thereunder
(other than projections), taken as a whole, contains any material misstatement
of fact or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
materially misleading.
SECTION 3.12. Subsidiaries. Schedule 3.12 (as the same may be
supplemented from time to time pursuant to the provisions of this Agreement)
sets forth the name of, and the ownership interest of each Borrower in each
Subsidiary as of the Closing Date. No other Subsidiaries of ▇▇▇▇ own Inventory
generally consisting of watches, gemstones, jewelry, and giftware other than the
Excluded Subsidiaries and the Subsidiaries which are Borrowers hereunder. Except
as set forth on Schedule 3.12 (as the same may be supplemented from time to time
pursuant to the provisions of this Agreement), the Borrowers are not and each of
their respective Subsidiaries is not party to any joint venture, general or
limited partnership, or limited liability company, agreements or any other
business ventures or entities.
50
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
policies of insurance which covers the Collateral maintained by or on behalf of
the Borrowers as of the Closing Date. As of the Closing Date, all premiums in
respect of such insurance that are due and payable have been paid.
SECTION 3.14. Accounts; Credit Cards. (a) Schedule 2.21(a)(i) lists all
DDAs and Concentration Accounts maintained by any of the Borrowers as of the
Closing Date, and such Schedule correctly identifies the name and address of
each depository, the account number(s) maintained with such depository, and to
the extent known, a contact person at such depository.
(b) Schedule 2.21(a)(ii) lists all arrangements to which any
Borrower is a party with respect to the payment to any Borrower of the proceeds
of all credit card charges for sales by any Borrower, as of the Closing Date.
SECTION 3.15. Labor Matters. As of the Closing Date, there are no
strikes, lockouts or slowdowns against any Borrower pending or, to the knowledge
of the Borrowers, threatened. The hours worked by and payments made to employees
of the Borrowers have not been in violation of the Fair Labor Standards Act or
any other applicable federal, state, local or foreign law dealing with such
matters to the extent that any such violation could reasonably be expected to
have a Material Adverse Effect. All payments due from any Borrower, or for which
any claim may be made against any such Person, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of such member. The consummation of the transactions
contemplated by the Loan Documents will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Borrower is bound.
SECTION 3.16. Security Documents. The Security Documents create in
favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral, and the
Security Documents constitute, or will upon the filing of financing statements
and the obtaining of "control", in each case with respect to the relevant
Collateral as required under the applicable Uniform Commercial Code, the
creation of a fully perfected first priority Lien on, and security interest in,
all right, title and interest of the Borrowers thereunder in such Collateral, in
each case prior and superior in right to any other Person, except as permitted
hereunder or under any other Loan Document or as provided by applicable law.
SECTION 3.17. Federal Reserve Regulations. Neither the Borrowers nor
any of their respective Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock. No part of the proceeds of any Loan or any
Letter of Credit will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, (i) to buy or carry Margin Stock or to
extend credit to others for the purpose of buying or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose or (ii) for any purpose
that entails a violation of, or that is inconsistent with, the provisions of the
Regulations of the Board, including Regulations U or X.
SECTION 3.18. Solvency. Each of the Borrowers is Solvent. No transfer
of property is being made by any Borrower and no obligation is being incurred by
any Borrower in
51
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 Borrower.
SECTION 3.19. Foreign Assets Control Regulations, Etc. None of the
requesting or borrowing of the Loans, the requesting or issuance, extension or
renewal of any Letters of Credit or the use of the proceeds of any thereof will
violate the Trading With the Enemy Act (50 U.S.C. Section 1 et seq., as amended)
(the "Trading With the Enemy Act") or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) (the "Foreign Assets Control Regulations") or any
enabling legislation or executive order relating thereto (which for the
avoidance of doubt shall include, but shall not be limited to (a) Executive
Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) (the "Executive Order") and (b) the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56)). Furthermore, none of the Borrowers
nor any of their respective Subsidiaries or other Affiliates (a) is or will
become a "blocked person" as described in the Executive Order, the Trading With
the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will
engage in any dealings or transactions, or be otherwise associated, with any
such "blocked person".
ARTICLE IV
CONDITIONS
SECTION 4.1. Closing Date. The obligation of the Lenders to make the
initial Loans and of the Issuing Bank to issue the initial Letters of Credit is
subject to the following conditions precedent:
(a) The Agents (or their counsel) shall have received from each
party hereto other than the Lenders either (i) a counterpart of this Agreement
and all other Loan Documents signed on behalf of such party or (ii) written
evidence satisfactory to the Agents (which may include telecopy transmission of
a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement and all other Loan Documents.
(b) The Agents shall have received a favorable written opinion
(addressed to each Agent and the Lenders on the Closing Date and dated the
Closing Date) of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, counsel for the Borrowers, in the form
attached hereto as Exhibit D. The Borrowers hereby request such counsel to
deliver such opinion.
(c) The Agents shall have received such documents and certificates
as the Agents or their counsel may reasonably request relating to the
organization, existence and good standing of each Borrower, the authorization of
the transactions contemplated by the Loan Documents and any other legal matters
relating to the Borrowers, the Loan Documents or the transactions contemplated
thereby, all in form and substance reasonably satisfactory to the Agents and
their counsel.
52
(d) After giving effect to the first funding under the Loans; any
charges to the Loan Account made in connection with the establishment of the
credit facility contemplated hereby; and all Letters of Credit to be issued at,
or immediately subsequent to, such establishment; Excess Availability shall be
not less than $75,000,000. The Agents shall have received a Borrowing Base
Certificate dated the Closing Date, relating to the month ended on June 30,
2003, and executed by a Financial Officer of ▇▇▇▇.
(e) The Agents shall have received a certificate from a Financial
Officer of ▇▇▇▇, reasonably satisfactory in form and substance to the Agents,
with respect to the solvency of (i) ▇▇▇▇ and its Subsidiaries on a consolidated
basis, and (ii) each Borrower, individually, as of the Closing Date.
(f) All necessary consents and approvals to the transactions
contemplated hereby shall have been obtained and shall be reasonably
satisfactory to the Agents.
(g) The Agents shall be reasonably satisfied that any financial
statements delivered to them fairly present the business and financial condition
of Zale and its Subsidiaries, and that there has been no material adverse change
in the assets, business, financial condition, or income of Zale and its
Subsidiaries since the date of the most recent financial information delivered
to the Agents.
(h) The Administrative Agent shall have received and be satisfied
with (i) the audited financial statements for Zale and its Subsidiaries for the
fiscal year ending July 31, 2002, and (ii) monthly detailed one-year financial
projections and business assumptions for Zale and its Subsidiaries for their
fiscal year ending July, 2004.
(i) There shall not be pending any litigation or other proceeding,
the result of which could reasonably be expected to have a Material Adverse
Effect.
(j) No event shall exist which is, or solely with the passage of
time, the giving of notice or both, would be a default under any material
agreement of any Borrower.
(k) The Collateral Agent shall have received results of searches
or other evidence reasonably satisfactory to the Collateral Agent (in each case
dated as of a date reasonably satisfactory to the Collateral Agent) indicating
the absence of Liens on the Borrowers' Inventory and proceeds thereof, including
without limitation, receivables from credit card processors, except for Liens
for which termination statements and releases reasonably satisfactory to the
Collateral Agent are being tendered concurrently with such extension of credit.
(l) The Collateral Agent shall have received all documents and
instruments, including Uniform Commercial Code financing statements and Blocked
Account Agreements with respect to the Concentration Accounts required by law or
reasonably requested by the Collateral Agent to be filed, registered or recorded
to create or perfect the first priority Liens intended to be created under the
Loan Documents and all such financing statements shall have been so filed,
registered or recorded to the satisfaction of the Collateral Agent.
(m) All fees due at or immediately after the Closing Date and all
reasonable costs and expenses incurred by the Agents in connection with the
establishment of the credit facility
53
contemplated hereby (including the reasonable fees and expenses of counsel to
the Agents) shall have been paid in full.
(n) The consummation of the transactions contemplated hereby shall
not (a) violate any applicable law, statute, rule or regulation, or (b) conflict
with, or result in a default or event of default under, any material agreement
of any Borrower (and the Agents and the Lenders shall receive a satisfactory
opinion of Borrowers' counsel to that effect).
(o) No material changes in governmental regulations or policies
affecting the Borrowers, the Agents, the Arranger or any Lender involved in this
transaction shall have occurred prior to the Closing Date which could,
individually or in the aggregate, materially adversely affect the transaction
contemplated by this Agreement.
(p) The Agents shall have received a certificate of Zale stating
that the representations and warranties made by the Borrowers to the Agents and
the Lenders in the Loan Documents are true and correct in all material respects
as of the date of such Certificate, and that no event has occurred which is or
which, solely with the giving of notice or passage of time (or both) would be an
Event of Default.
(q) There shall be no Default or Event of Default on the Closing
Date.
(r) The Agents shall have received a payoff letter or evidence
otherwise reasonably satisfactory in form and substance to the Agents from the
Existing Lenders confirming the termination of such credit facility upon receipt
of payment of the amounts due, if any, thereunder. All obligations to the
Existing Lenders, if any, shall be repaid with the proceeds of the initial Loans
hereunder.
(s) The Administrative Agent shall have received a landlord's
agreement from the lessor of the distribution center located in Irving, Texas,
which agreement shall contain a waiver or subordination of all Liens or claims
that the landlord may assert against the Collateral at that location, and shall
otherwise be reasonably satisfactory in form and substance to the Administrative
Agent.
(t) The Administrative Agent shall have received evidence, in form
and substance satisfactory to the Administrative Agent, that either (i) all
Indebtedness under the notes issued pursuant to the Note Indenture has been paid
in full or (ii) such notes have been irrevocably called for redemption and
sufficient funds to pay the redemption price for such notes have been
irrevocably deposited with the trustee under the Note Indenture.
(u) There shall have been delivered to the Administrative Agent
such additional instruments and documents as the Administrative Agent or counsel
to the Administrative Agent may reasonably require or request including, without
limitation, the Dutch Auction Tender Offer Documents.
The Administrative Agent shall notify the Borrowers and the Lenders of the
Closing Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to
54
Section 9.2) at or prior to 5:00 p.m., Boston time, on September 15, 2003, (and,
in the event such conditions are not so satisfied or waived, this Agreement
shall terminate at such time).
SECTION 4.2. Conditions Precedent to Each Loan and Each Letter of
Credit. In addition to those conditions described in Section 4.1, the obligation
of the Lenders to make any Loan, including the initial Loan and of the Issuing
Bank to issue each Letter of Credit, is subject to the following conditions
precedent:
(a) Notice. The Administrative Agent shall have received a notice
with respect to such Borrowing or issuance, as the case may be, as required by
Article II.
(b) Representations and Warranties. All representations and
warranties contained in this Agreement and the other Loan Documents or otherwise
made in writing in connection herewith or therewith shall be true and correct in
all material respects on and as of the date of each Borrowing or the issuance of
a Letter of Credit hereunder with the same effect as if made on and as of such
date, other than representations and warranties that relate solely to an earlier
date and except for changes thereto which are not prohibited by the other terms
of this Agreement or the other Loan Documents.
(c) No Default. On the date of each Borrowing hereunder and the
issuance of each Letter of Credit, no Default or Event of Default shall have
occurred and be continuing.
(d) Borrowing Base Certificate. The Administrative Agent shall
have received the most recently required Borrowing Base Certificate.
The request by the Borrowers for, and the acceptance by the Borrowers of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this Section 4.2 have
been satisfied at that time and that after giving effect to such extension of
credit the aggregate of all Credit Extensions shall not exceed the amounts set
forth in Section 2.1(a) hereof. The conditions set forth in this Section 4.2 are
for the sole benefit of the Administrative Agent and each Lender and may be
waived by the Administrative Agent in whole or in part without prejudice to the
Administrative Agent or any Lender.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all L/C
Disbursements shall have been reimbursed, each Borrower covenants and agrees
with the Agents and the Lenders that:
SECTION 5.1. Financial Statements and Other Information. The Borrowers
will furnish to the Agents:
(a) as soon as practicable, but in any event not later than
ninety-five (95) days after the end of each fiscal year of Zale, (i) the
consolidated balance sheet of Zale and its Subsidiaries
55
as at the end of such year, and the related consolidated statements of
operations, stockholders' equity and cash flows for such year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
audited and reported on by KPMG LLP or by another independent public accountants
of recognized national standing (without a "going concern" or like qualification
or exception and without a qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
Zale and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, and (ii) the annual 10-K reports of Zale filed
with the Securities and Exchange Commission;
(b) as soon as practicable, but in any event not later than fifty
(50) days after the end of each of the first three fiscal quarters of each
fiscal year of Zale, (i) copies of the unaudited consolidated balance sheet of
Zale and its Subsidiaries as at the end of such quarter, and the related
consolidated statement of operations for such quarter and for the portion of
Zale's fiscal year then elapsed, and the related consolidated statement of cash
flow for the portion of Zale's fiscal year then elapsed, all in reasonable
detail and prepared in accordance with GAAP (subject to year-end adjustments and
except for the absence of notes), and (ii) the quarterly 10-Q reports of Zale
filed with the Securities and Exchange Commission;
(c) as soon as practicable, but in any event not later than thirty
(30) days after the end of each month (which is not a fiscal quarter end) when a
Cash Control Event is in effect, copies of the unaudited consolidated balance
sheet of Zale and its Subsidiaries as at the end of such month, and the related
consolidated statement of operations for such month and for the Reference Period
then ended, and the related consolidated statement of cash flow for the
Reference Period then ended, all in reasonable detail and prepared in accordance
with GAAP (subject to year-end adjustments and except for the absence of notes);
(d) (i) concurrently with any delivery of financial statements
under clause (a) or (b) above a certificate of a Financial Officer of Zale (A)
certifying as to whether a Default or Event of Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (B) stating whether any change in
GAAP or in the application thereof has occurred since the date of Zale's audited
financial statements referred to in Section 3.4 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate and (C) when a Cash Control Event is in effect, a
compliance certificate, certified by a Financial Officer of Zale, setting forth
in reasonable detail the computation evidencing compliance with Section 6.8,
(ii) concurrently with any delivery of financial statements under clause (c)
above, a compliance certificate, certified by a Financial Officer of Zale,
setting forth in reasonable detail the computation evidencing compliance with
Section 6.8 and (iii) within three (3) Business Days after the occurrence of a
Cash Control Event, a compliance certificate, certified by a Financial Officer
of Zale, setting forth in reasonable detail the computation evidencing
compliance with Section 6.8 based upon the most recent quarterly financial
statements delivered in accordance with clause (b) above.
(e) within sixty (60) days following the commencement of each
fiscal year of Zale, (i) a detailed consolidated budget by quarter for such
fiscal year (including a projected consolidated balance sheet and related
statements of projected operations and cash flow as of the
56
end of and for such fiscal year) and (ii) a monthly detail of projected
Inventory levels and Credit Extensions for such fiscal year; and, promptly when
available, any significant revisions to the budget and the projections;
(f) within fifteen (15) days after the end of each month, a
certificate in the form of Exhibit E (a "Borrowing Base Certificate") showing
the Borrowing Base as of the close of business on the last day of the
immediately preceding month, each such Certificate to be certified as complete
and correct on behalf of the Borrowers by a Financial Officer of Zale, provided,
however, (i) if the Borrowing Base minus the Credit Extensions is less than
$50,000,000 or (ii) an Event of Default exists, such Borrowing Base Certificate
(showing the Borrowing Base as of the close of business on the last day of the
immediately preceding week) shall be furnished weekly on Wednesday of each week;
(g) within seven (7) Business Days after the end of the month of
December of each calendar year, a modified Borrowing Base Certificate evidencing
a roll-forward of Inventory from the preceding month's end;
(h) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed by
Zale or any of its Subsidiaries with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, as the case may be;
(i) promptly upon receipt thereof, copies of all reports submitted
to Zale by independent certified public accountants in connection with each
annual, interim or special audit of the books of Zale and its Subsidiaries made
by such accountants, including any management letter commenting on the
Borrowers' internal controls submitted by such accountants to management in
connection with their annual audit;
(j) the financial and collateral reports described on Schedule
5.1(i), at the times set forth in such Schedule; and
(k) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of any Borrower, or compliance with the terms of any Loan Document, as the
Agents or any Lender may reasonably request.
SECTION 5.2. Notices of Material Events. The Borrowers will furnish to
the Administrative Agent, the Issuing Bank, the Collateral Agent, and each
Lender prompt written notice of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting any
Borrower thereof that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect;
(c) the occurrence of any material violation of any applicable
Environmental Law that any of the Borrowers reports in writing or is reportable
by such Person in writing (or for
57
which any written report supplemental to any oral report is made) to any U.S.
and any foreign federal, state or local environmental agency which violation
could reasonably be expected to result in a Material Adverse Effect;
(d) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect; and
(f) the discharge by any Borrower of its present independent
accountants or any withdrawal or resignation by such independent accountants.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of Zale setting forth the details
of the event or development requiring such notice and, if applicable, any action
taken or proposed to be taken with respect thereto.
SECTION 5.3. Information Regarding Collateral. The Borrowers will
furnish to the Agents (a) prompt written notice of any change in (i) any
Borrower's trade name used to identify it in the conduct of its business or in
the ownership of its properties or (ii) any office in which it maintains books
or records relating to Collateral owned by it and having a value in excess of
$10,000,000 or any office or facility at which Collateral owned by it and having
a value in excess of $10,000,000 is located (including the establishment of any
such new office or facility) and (b) prior written notice of any change in (i)
any Borrower's corporate name or the location of any Borrower's chief executive
office or its principal place of business, (ii) any Borrower's identity or
corporate structure or (iii) any Borrower's jurisdiction of incorporation,
Federal Taxpayer Identification Number or state organizational number. Zale also
agrees promptly to notify the Agents if any material portion of the Collateral
is damaged, destroyed, or lost, stolen or otherwise unaccounted for.
SECTION 5.4. Existence; Conduct of Business. Except as otherwise
permitted by this Agreement, each Borrower will do or cause to be done all
things necessary to comply with its respective charter, certificate of
incorporation, articles of organization, and/or other organizational documents,
as applicable; and by-laws and/or other instruments which deal with corporate
governance, and to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business.
SECTION 5.5. Payment of Obligations.Each Borrower will pay its Material
Indebtedness, obligations in connection with Hedging Agreements, and Tax
liabilities, before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) such Borrower has set aside on its books adequate
reserves with respect thereto in accordance with GAAP, (c) such contest
effectively suspends collection of the contested obligation, (d) no Lien secures
such obligation and (e) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect; provided that
any payment made by a Borrower in good faith
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with respect to any of its Tax liabilities which is subsequently determined by a
Governmental Authority to be less than the payment deemed to be owed by such
Governmental Authority shall not constitute a breach of this Section 5.5,
provided such Governmental Authority has not levied any Lien to secure such
obligation. The Borrowers will cause each of their respective Subsidiaries to
pay its Tax liabilities, except to the extent that the failure to do so could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.6. Maintenance of Properties.Each Borrower will keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted and with the exception of
asset dispositions permitted hereunder.
SECTION 5.7. Insurance.
(a) Each Borrower will maintain the following insurance under this
Agreement (or, to the extent consistent with prudent business practice, a
program of self insurance): (i) worker's compensation and employer's liability
insurance affording (A) protection under the workers' compensation laws of the
state(s) in which the service is to be provided and (B) employers' liability
protection subject to a limit of not less than $500,000; (ii) comprehensive
automobile liability insurance providing limits of not less than $2,000,000 each
occurrence for bodily injury and property damage combined; (iii) commercial
general liability insurance providing not less than $2,000,000 each occurrence
for bodily injury and property damage combined; and (iv) umbrella liability
insurance in amounts not less than $3 million in excess of primary liability
coverage. All such insurance policies required to be maintained under this
Agreement shall be procured from insurance companies rated at least A-VIII or
better by the then current edition of Best's Insurance Reports published by A.M.
Best Co. The Borrowers shall provide Administrative Agent with certificates of
insurance evidencing the required coverage concurrently with the execution of
this Agreement and upon each renewal of such policies thereafter, including a
clause that obligates the Borrowers to give at least thirty (30) days prior
written notice of any material change or cancellation of such policies. Each of
the Borrowers will maintain with financially sound and reputable insurers
insurance with respect to the Collateral and its other properties against such
casualties as shall be consistent with past practices and in accordance with the
general practices of businesses engaged in similar activities in similar
geographic areas and in amounts, containing such terms, in such forms and for
such periods as may be reasonable and prudent.
(b) Fire and extended coverage policies maintained with respect to
any Collateral shall be endorsed or otherwise amended to include (i) a provision
to the effect that none of the Borrowers, the Administrative Agent, the
Collateral Agent, or any other party shall be a coinsurer and (ii) such other
provisions as the Collateral Agent may reasonably require from time to time to
protect the interests of the Lenders. Each such policy referred to in this
paragraph also shall provide that it shall not be canceled, modified or not
renewed (i) by reason of nonpayment of premium except upon not less than ten
(10) days' prior written notice thereof by the insurer to the Collateral Agent
(giving the Collateral Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than thirty (30)
days' prior written notice thereof by the insurer to the Collateral Agent. The
Borrowers shall deliver to the Collateral Agent, prior to the cancellation,
modification or nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy
59
previously delivered to the Collateral Agent) together with evidence
satisfactory to the Collateral Agent of payment of the premium therefor.
SECTION 5.8. Casualty and Condemnation. Each Borrower will furnish to
the Agents and the Lenders prompt written notice of any casualty or other
insured damage to any material portion of the Collateral having a value in
excess of $10,000,000 or the commencement of any action or proceeding for the
taking of any material portion of the Collateral having a value in excess of
$10,000,000 under power of eminent domain or by condemnation or similar
proceeding.
SECTION 5.9. Books and Records; Inspection and Audit Rights;
Appraisals.
(a) Each Borrower will keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities. Each Borrower will permit any
representatives designated by any Agent, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.
(b) Each Borrower will from time to time upon the reasonable request of the
Collateral Agent or the Required Lenders through the Administrative Agent,
permit any Agent or professionals (including investment bankers, consultants,
accountants, lawyers and appraisers) retained by the Agents to conduct
appraisals, commercial finance examinations and other evaluations, including,
without limitation, of (i) the Borrowers' practices in the computation of the
Borrowing Base and (ii) the assets included in the Borrowing Base and related
financial information such as, but not limited to, sales, gross margins,
payables, accruals and reserves, and pay the reasonable fees and expenses of the
Agents or such professionals with respect to such evaluations and appraisals;
provided, however, so long as there exists no Event of Default and no Cash
Control Event, the Borrowers shall not be required to pay for more than one (1)
Inventory appraisal and one (1) commercial finance examination during any period
of twelve (12) consecutive fiscal months. No more frequently than once during
any period of twelve (12) consecutive fiscal months, or more frequently as
determined by the Collateral Agent if an Event of Default or Cash Control Event
shall have occurred and be continuing, the Collateral Agent shall conduct at
least one (1) commercial finance examination and one (1) Inventory appraisal,
provided, the Collateral Agent shall have discretion to do commercial finance
exams and Inventory appraisals less frequently than once each consecutive twelve
(12) month period should average Credit Extensions for the prior twelve (12)
fiscal month period be less than $75,000,000.
SECTION 5.10. Compliance with Laws. Each of the Borrowers will, comply
with all laws, rules, regulations, and orders of any Governmental Authority
applicable to it or its property except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.11. Employee Benefit Plans. The Borrowers will (a) promptly
upon any request of the Administrative Agent therefor, furnish to the
Administrative Agent a copy of the most recent actuarial statement required to
be submitted under Section 103(d) of ERISA and Annual Report, Form 5500, with
all required attachments, in respect of each Guaranteed Pension Plan,
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(b) within ten (10) days of receipt or dispatch, furnish to the Administrative
Agent any notice, report or demand sent or received in respect of a Guaranteed
Pension Plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of
ERISA, or in respect of a Multiemployer Plan under Sections 4041A, 4202, 4219,
4242 or 4245 of ERISA.
SECTION 5.12. Use of Proceeds and Letters of Credit. The proceeds of
Loans made hereunder and Letters of Credit issued hereunder will be used only
(a) to refinance Indebtedness due to the Existing Lenders, (b) to finance the
acquisition of working capital assets of the Borrowers and their respective
Subsidiaries, including the purchase of inventory and equipment, in each case in
the ordinary course of business, (c) to finance Capital Expenditures of the
Borrowers and their respective Subsidiaries, and (d) for general corporate
purposes, including to effectuate redemption of the Senior Notes under the Note
Indenture and of the capital stock of Zale pursuant to the Dutch Auction Tender
Offer, all to the extent permitted herein. No part of the proceeds of any Loan
will be used, whether directly or indirectly, for any purpose that entails a
violation of the Regulations of the Board, including Regulations U and X.
SECTION 5.13. New Subsidiaries. The Borrowers shall each cause any
Subsidiary of the Borrowers, other than Excluded Subsidiaries, which owns
Inventory generally consisting of watches, gemstones, jewelry and giftware to
immediately become a Borrower hereunder by signing a joinder agreement to this
Agreement and the Loan Documents, as applicable, with the other parties hereto
and thereto, in form and substance satisfactory to the Administrative Agent.
None of the Excluded Subsidiaries shall have or engage in any business in the
United States of America, other than in Puerto Rico.
SECTION 5.14. Further Assurances. Each Borrower will execute any and
all further documents, agreements and instruments, and take all such further
actions (including the filing and recording of financing statements and other
documents), that may be required under any applicable law, or which any Agent or
the Required Lenders may reasonably request, to effectuate the transactions
contemplated by the Loan Documents or to grant, preserve, protect or perfect the
Liens created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the Borrowers. The
Borrowers also agree to provide to the Agents, from time to time upon request,
evidence reasonably satisfactory to the Agents as to the perfection and priority
of the Liens created or intended to be created by the Security Documents.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all L/C Disbursements
shall have been reimbursed, each Borrower covenants and agrees with the Agents
and the Lenders that:
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SECTION 6.1. Indebtedness and Other Obligations. The Borrowers will not
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness created under the Loan Documents;
(b) Indebtedness set forth in Schedule 6.1 and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity date or
decreased weighted average life thereof;
(c) Indebtedness of any Borrower to any other Borrower otherwise
permitted hereunder,
(d) Indebtedness of any of the Borrowers to any Subsidiary in an
aggregate amount of all such Indebtedness not to exceed $50,000,000;
(e) Guaranties of Indebtedness of ▇▇▇▇ Canada Co. in an aggregate
amount not to exceed $12,000,000;
(f) Indebtedness of any Borrower to finance the acquisition of any
fixed or capital assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof or result in an earlier
maturity date or decreased weighted average life thereof, provided, that the
aggregate principal amount of Indebtedness permitted by this clause (f) shall
not exceed $50,000,000 at any time outstanding;
(g) Indebtedness consisting of Capital Lease Obligations and
guaranties thereof by the Borrowers, or any of them;
(h) Indebtedness incurred to purchase or refinance any Real Estate
owned or being acquired by any Borrower; and
(i) other unsecured Indebtedness in an aggregate principal amount
not exceeding $150,000,000 at any time outstanding, provided, that the terms of
such Indebtedness do not contain any covenants or events of default which may be
interpreted to be or are deemed to be in, the reasonable discretion of the
Administrative Agent, more restrictive than the covenants and Events of Default
contained in this Agreement.
SECTION 6.2. Liens. The Borrowers will not create, incur, assume or
permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
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(c) any Lien on any property or asset of any Borrower set forth in
Schedule 6.2, provided, that (i) such Lien shall not apply to any other property
or asset of any Borrower and (ii) such Lien shall secure only those obligations
that it secures as of the Closing Date, and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
(d) Liens on fixed or capital assets acquired by any Borrower,
provided, that (i) such Liens secure Indebtedness permitted by clause (f) of
Section 6.1, (ii) such Liens and the Indebtedness secured thereby are incurred
prior to or within one hundred eighty (180) days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness secured
thereby does not exceed 100% of the cost of acquiring such fixed or capital
assets and (iv) such Liens shall not apply to any other property or assets of
the Borrowers;
(e) Liens to secure Indebtedness permitted by clause (h) of
Section 6.1 provided, that such Liens shall not apply to any property or assets
of the Borrowers other than the Real Estate so refinanced or which is the
subject of a sale-leaseback transaction;
(f) Liens on Inventory and proceeds thereof (up to the Cost to
such Borrower of such Inventory) held on consignment from trade vendors securing
obligations to return or pay the purchase price of such Inventory;
(g) Voluntary options in favor of any of the Borrowers and their
respective Subsidiaries to purchase real property subject to operating leases;
(h) transfers to any Rabbi Trust, or other similar trust or
similar arrangement or to any account established for the benefit of the
employees of any of ▇▇▇▇ and its Subsidiaries in an aggregate amount not to
exceed $10,000,000 at any time outstanding;
(i) Sales, assignments or transfers of assets to the extent
permitted by Section 6.5 hereof; and
(j) Other Liens on assets of the Borrowers (other than Inventory
or accounts receivable) to the extent not otherwise included in paragraphs (a)
through (i) of this Section securing Indebtedness and other liabilities in an
aggregate amount not to exceed $10,000,000 at any time outstanding.
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SECTION 6.3. Fundamental Changes
(a) The Borrowers will not merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing, (i) any Subsidiary may merge into a Borrower in a transaction
in which the Borrower is the surviving corporation, (ii) any Borrower may merge
with any other Person as long as such Borrower is the surviving corporation, and
(iii) any Subsidiary that is not a Borrower may merge into any other Subsidiary
that is not a Borrower, provided, that any such merger involving a Person that
is not a wholly owned Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 6.4.
(b) The Borrowers will not engage to any material extent in any
business other than businesses of the type conducted by the Borrowers on the
date of execution of this Agreement and businesses reasonably related thereto.
SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions.
The Borrowers will not purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly owned Subsidiary prior to such
merger) any capital stock, evidences of indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person constituting a business unit,
except for:
(a) Permitted Investments;
(b) investments existing on the Closing Date, and set forth on
Schedule 6.4, to the extent such investments would not be permitted under any
other clause of this Section;
(c) loans or advances by any Borrower to any other Borrower;
(d) loans or advances by any of the Borrowers to any of its
respective Subsidiaries in an amount not to exceed $50,000,000 in the aggregate
for all such loans or advances;
(e) loans to or other investments in an Unrestricted Subsidiary
provided that such loan or investment is either repaid in full by such
Unrestricted Subsidiary or purchased by another Unrestricted Subsidiary within
five (5) Business Days of the date such loan or other investment is made;
(f) investments consisting of transfers of stock or other
ownership interest in a Unrestricted Subsidiary to any other Unrestricted
Subsidiary, together with any note or other securities issued by such other
Unrestricted Subsidiary in consideration of such transfer;
(g) investments in registered investment companies which invest
solely in investments otherwise permitted by this Section 6.4;
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(h) investments consisting of promissory notes received as
proceeds of asset dispositions permitted by Section 6.5;
(i) investments in an amount up to the amount of funds under any
Rabbi Trust or similar trust arrangements established for the satisfaction of
any of ▇▇▇▇ and its Subsidiaries for deferred compensation, but in no event in
excess of $10,000,000 in the aggregate;
(j) investments in ▇▇▇▇ stock, whether or not permitted under
Section 6.6 in connection with the satisfaction of the Borrowers' or a
Subsidiary's obligations under a 401(k) plan and/or the ▇▇▇▇ Omnibus Stock
Incentive Plan or similar employee benefit plans maintained by the Borrowers and
their respective Subsidiaries, or any of them;
(k) investments consisting of (i) Indebtedness permitted by
Sections 6.1(c), (d), (e) and (j), and (ii) guaranties of Indebtedness permitted
by Sections 6.1(f) and (g);
(l) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(m) loans or advances to employees for the purpose of travel,
entertainment or relocation in the ordinary course of business not to exceed
$2,000,000 in the aggregate at any time outstanding;
(n) acquisitions of assets or stock (other than the stock of the
Borrowers) so long as (i) such assets or stock acquired are related to the
business of one of the Borrowers or their Subsidiaries, (ii) Excess Availability
exceeds the Distribution Minimum Excess Availability Amount after completing
such acquisition and the Borrowers deliver projections to the Administrative
Agent demonstrating the maintenance of the Distribution Minimum Excess
Availability Amount for the six (6) month period immediately following such
transaction, (iii) at the time of such acquisition, and after giving effect
thereto, there exists no Default or Event of Default, and (iv) with respect to
any such acquisitions of stock, simultaneously with the occurrence of such
acquisition, the entity so acquired shall if it owns Inventory (A) be merged or
consolidated with and into one of the Borrowers, (B) transfer all of its assets
(other than those required to satisfy liabilities) to the Borrowers, or (C)
become a Borrower under this Agreement in accordance with Section 5.13 hereof;
provided, further, that with respect to acquisitions of assets or stock which in
the aggregate do not exceed $5,000,000, the Borrowers shall not be required to
comply with clause (ii) above so long as prior to such acquisition no Cash
Control Event has occurred and no Cash Control Event shall occur after giving
effect to such acquisition;
(o) acquisitions of ▇▇▇▇ stock permitted by Section 6.4(j) or
repurchases of ▇▇▇▇ stock otherwise permitted by Section 6.6; and
(p) Guarantees of the foreign currency and hedging obligations of
▇▇▇▇ Canada Co. to meet the operating needs of the business consistent with past
practices.
SECTION 6.5. Asset Sales. (a) The Borrowers will not sell, transfer,
lease or otherwise dispose of any asset, including any capital stock, nor will
the Borrowers issue any additional shares of its capital stock or other
ownership interest in such Borrower, except:
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(i) (A) sales of Inventory in the ordinary
course of business (including in connection with the closure
of stores), or (B) used or surplus equipment, or (C) Permitted
Investments and investments permitted pursuant to Sections
6.4(g), (h), (i), and (j), in each case in the ordinary course
of business;
(ii) sales, transfers and dispositions among the
Borrowers and their respective Subsidiaries (excluding,
however, any sales, transfers and dispositions of Inventory or
proceeds thereof, from any Borrower except to another
Borrower), provided, that any such sales, transfers or
dispositions involving a Subsidiary that is not a Borrower
shall be made in compliance with Section 6.7;
(iii) sale of the Pennsylvania distribution
facilities;
(iv) sale of the 407.48 carat diamond known as
the "Incomparable Diamond" and related diamonds;
(v) issuances of shares of capital stock of any
Borrower to any other Borrower or the issuance by ▇▇▇▇ of
shares of its capital stock;
(vi) the natural expiration of intellectual
property licenses in accordance with the terms thereof;
(vii) transfers of assets permitted as investments
under Section 6.4, including, but not limited to, the transfer
of any loan or investment sold to an Unrestricted Subsidiary
as contemplated by Section 6.4(e); and
(viii) Permitted Asset Sales provided that no Event
of Default or Cash Control Event has occurred and is
continuing or would occur as a result thereof;
provided, that all sales, transfers, leases and other dispositions permitted
hereby (other than sales, transfers and other disposition permitted under clause
(ii)) shall be made at arm's length and for fair value (other than sales,
transfers and other dispositions permitted under clause (ii)); and further
provided, that the authority granted hereunder may be terminated in whole or in
part by the Agents upon the occurrence and during the continuance of any Event
of Default.
(b) The Borrowers will not sell, transfer, lease or otherwise
dispose of receipts from credit card processors of the Borrowers.
SECTION 6.6. Restricted Payments; Certain Payments of Indebtedness.
(a) The Borrowers will not declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except so long as no
Default or Event of Default occurs and is continuing or would arise therefrom,
the Borrowers may make Restricted Payments so long as Excess Availability
exceeds the Distribution Minimum Excess Availability Amount after giving effect
to the amount of any such distribution or repurchase and the Borrowers deliver
projections to the Administrative Agent demonstrating the maintenance of the
Distribution Minimum Excess Availability Amount for the six (6) month period
immediately following such distribution or repurchase; provided, however, the
Borrowers may make additional Restricted Payments, in an
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aggregate amount not to exceed $5,000,000 in any fiscal quarter, so long as no
Cash Control Event has occurred and no Cash Control Event shall occur after
giving effect to such payment.
(b) Any Borrower may make a Restricted Payment to any other
Borrower.
(c) The Borrowers shall be permitted to effectuate the Dutch
Auction Tender Offer so long as immediately following the closing of the Dutch
Auction Tender Offer, no Event of Default exists and Excess Availability shall
not be less than $50,000,000 and the Borrowers shall have delivered projections
to the Administrative Agent demonstrating the maintenance of Excess Availability
of $50,000,000 for the twelve (12) month period immediately following such
transactions.
(d) After the occurrence and during the continuation an Event of
Default under Section 7.1(h) or Section 7.1(i) hereof, the Borrowers will not at
any time, make or agree to pay or make, directly or indirectly any payment or
other distribution (whether in cash securities or other property) of or in
respect of principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness, except
payment of regularly scheduled principal and interest payments in respect of any
permitted Indebtedness and refinancings of permitted Indebtedness.
SECTION 6.7. Transactions with Affiliates. Except as set forth on
Schedule 6.7 hereto, the Borrowers will not at any time sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of their respective Affiliates, except (a) transactions in the ordinary course
of business that are at prices and on terms and conditions not less favorable to
the Borrowers than could be obtained on an arm's-length basis from unrelated
third parties, (b) transactions among the Borrowers and (c) transactions in the
ordinary course of business, consistent with past practices, between or among
the Borrowers and/or their respective Subsidiaries not involving any other
Affiliate, which would not otherwise violate the provisions of the Loan
Documents.
SECTION 6.8. Fixed Charge Coverage Ratio. At all times when a Cash
Control Event is in effect, the Borrowers will not permit the Fixed Charge
Coverage Ratio to be less than 1.1:1.0 for the most recent Reference Period then
ended for which a compliance certificate required by Section 5.1(d) has been
delivered.
SECTION 6.9. Hedging Agreements. No Borrower shall enter into any
Hedging Agreement except for Hedging Agreements used solely as a part of its
normal business operations as a risk management strategy and/or hedge against
changes resulting from market operations in accordance with its customary
policies and not as a means to speculate for investment purposes on trends and
shifts in financial or commodities markets.
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ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1. Events of Default. If any of the following events ("Events
of Default") shall occur:
(a) the Borrowers shall fail to pay any principal of any Loan or
any reimbursement obligation in respect of any L/C Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;
(b) the Borrowers shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Loan Document, within
five (5) Business Days of the date when the same shall become due and payable;
(c) any representation or warranty made or deemed made by or on
behalf of any Borrower in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) the Borrowers shall fail to observe or perform any covenant,
condition or agreement contained:
(i) in Section 2.21, Section 5.7, Section 5.9 or
Section 5.12, or in Article VI; and
(ii) in Section 5.1(f), and such failure shall
continue unremedied for a period of 5 Business Days after
notice thereof from the Administrative Agent to the Borrowers;
(e) any Borrower shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b), (c), or (d) of this Article), and such failure
shall continue unremedied for a period of thirty (30) days after notice thereof
from the Administrative Agent to ▇▇▇▇ (which notice will be given at the request
of any Lender);
(f) any Borrower shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness when and as the same shall become due and payable (after giving
effect to the expiration of any grace or cure period set forth therein);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any such Material Indebtedness or any trustee or agent on
its or their behalf to cause any such Material Indebtedness to become due, or
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to require the prepayment, repurchase, redemption or defeasance thereof, prior
to its scheduled maturity;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of any Borrower or its debts, or of a substantial part of its assets,
under any federal or state bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Borrower or for
a substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered and continue unstayed and in
effect for 30 days;
(i) any Borrower shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any
federal or state bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in clause
(h) of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
any Borrower or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;
(j) any Borrower shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;
(k) one or more uninsured judgments for the payment of money in an
aggregate amount in excess of $10,000,000 shall be rendered against any Borrower
or any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to attach or levy
upon any material assets of any Borrower to enforce any such judgment;
(l) (i) any challenge by or on behalf of any Borrower to the
validity of any Loan Document or the applicability or enforceability of any Loan
Document strictly in accordance with the subject Loan Document's terms or which
seeks to void, avoid, limit, or otherwise adversely affect any security interest
created by or in any Loan Document or any payment made pursuant thereto.
(ii) any challenge by or on behalf of any other Person to
the validity of any Loan Document or the applicability or
enforceability of any Loan Document strictly in accordance with the
subject Loan Document's terms or which seeks to void, avoid, limit, or
otherwise adversely affect any security interest created by or in any
Loan Document or any payment made pursuant thereto, in each case, as to
which an order or judgment has been entered adverse to the Agents and
the Lenders.
(iii) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Borrower not to
be, a valid and perfected Lien on any
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Collateral, with the priority required by the applicable Security
Document, except as a result of the sale or other disposition of the
applicable Collateral in a transaction permitted under the Loan
Documents;
(m) a Change in Control shall occur;
(n) the occurrence of any uninsured loss to the Collateral in an
amount equal to $10,000,000 or greater;
(o) the indictment of, or institution of any legal process or
proceeding against, any Borrower, under any federal, state, municipal, and other
civil or criminal statute, rule, regulation, order, or other requirement having
the force of law where the relief, penalties, or remedies sought or available
include the forfeiture of any material property of any Borrower and/or the
imposition of any stay or other order, the effect of which could reasonably be
to restrain in any material way the conduct by the Borrowers, taken as a whole,
of their business in the ordinary course;
(p) the closure of any of the Borrowers' store locations which in
the aggregate results in the Borrowers operating an aggregate number of store
locations which is less than eighty-five percent (85%) of the aggregate number
of store locations operated by the Borrowers as of the Closing Date;
(q) except as otherwise permitted hereunder, the determination by
any Borrower, whether by vote of such Borrower's board of directors or otherwise
to: generally suspend the operation of such Borrower's business in the ordinary
course, liquidate all or a material portion of such Borrower's assets or store
locations, or employ an agent or other third party to conduct any so-called
store closing, store liquidation or "Going-Out-Of-Business" sales for such
Borrower's stores generally; or
(r) any event shall occur with regard to the Unrestricted
Subsidiaries which has a Material Adverse Effect on the Borrowers, taken as a
whole;
then, and in every such event (other than an event with respect to any Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrowers, take either
or both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrowers accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrowers;
and (iii) require the Borrowers to furnish cash collateral in an amount equal to
103% of the Letter of Credit Outstandings, and in case of any event with respect
to any Borrower described in clause (h) or (i) of this Article, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
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Borrowers accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers.
SECTION 7.2. When Continuing. For all purposes under this Agreement,
each Default and Event of Default that has occurred shall be deemed to be
continuing at all times thereafter unless it either (a) is cured or corrected or
(b) is waived in writing by the Lenders in accordance with Section 9.2.
SECTION 7.3. Remedies on Default. In case any one or more of the Events
of Default shall have occurred and be continuing, and whether or not the
maturity of the Loans shall have been accelerated pursuant hereto, the
Administrative Agent may proceed to protect and enforce its rights and remedies
under this Agreement, the Notes or any of the other Loan Documents by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations are
evidenced, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Agents or the Lenders. No remedy herein is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
SECTION 7.4. Application of Proceeds. In the event that an Event of
Default exists and the Administrative Agent, Collateral Agent or any Lender, as
the case may be, receives any monies in connection with the enforcement of this
Agreement or any of the Security Documents, or otherwise with respect to the
realization upon, or disposition of, any of the Collateral, such monies shall be
distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent and the Collateral Agent for or in
respect of all reasonable costs, expenses, disbursements and losses which shall
have been incurred or sustained by the Administrative Agent or Collateral Agent
in connection with the collection of such monies by the Administrative Agent or
Collateral Agent, for the exercise, protection or enforcement by the
Administrative Agent or the Collateral Agent of all or any of the rights,
remedies, powers and privileges of the Administrative Agent or Collateral Agent
under this Agreement or any of the other Loan Documents or in respect of the
Collateral or in support of any provision of adequate indemnity to the
Administrative Agent or Collateral Agent against any taxes or liens which by law
shall have, or may have, priority over the rights of the Administrative Agent or
the Collateral Agent to such monies;
(b) Second, to all Loan Agreement Obligations owing to the Lenders
and the Administrative Agent and Collateral Agent (including the allowance to
take into account for any Loan Agreement Obligations not then due and payable
(i.e., to cash collateralize up to 103% of Letter of Credit Outstandings)), in
such order or preference as the Required Lenders may determine; provided,
however, that (i) distributions shall be made (A) pari passu among Loan
Agreement Obligations with respect to fees owed to the Administrative Agent and
Collateral Agent and all other Loan Agreement Obligations owed to the Lenders
and (B) with respect to each type of Loan Agreement Obligation owing to the
Lenders, such
71
as interest, principal, reasonable fees and expenses, among the Lenders pro
rata, and (ii) the Administrative Agent and the Collateral Agent may in its
reasonable discretion make proper allowance to take into account any Loan
Agreement Obligations not then due and payable;
(c) Third, to all other Obligations owing to the Lenders pro rata;
and
(d) Fourth, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lenders and the
Administrative Agent and the Collateral Agent of all of the Obligations, to the
payment of any obligations required to be paid pursuant to Section
9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the State of New
York; and
(e) Fifth, the excess, if any, shall be returned to the Borrowers
or to such other Persons as are entitled thereto.
ARTICLE VIII
THE AGENTS
SECTION 8.1. Administration by the Agents. The general administration
of the Loan Documents shall be by the Administrative Agent. The Lenders, the
Collateral Agent and the Issuing Bank each hereby irrevocably authorizes the
Administrative Agent (i) to enter into the Loan Documents to which it is a party
and (ii) at its discretion, to take or refrain from taking such actions as agent
on its behalf and to exercise or refrain from exercising such powers under the
Loan Documents and the Notes as are delegated by the terms hereof or thereof, as
appropriate, together with all powers reasonably incidental thereto. The
Administrative Agent shall have no duties or responsibilities except as set
forth in this Agreement and the remaining Loan Documents.
SECTION 8.2. The Collateral Agent. Each Lender, the Administrative
Agent and the Issuing Bank hereby irrevocably (a) designate FRF as Collateral
Agent under this Agreement and the other Loan Documents, (b) authorize the
Collateral Agent to enter into the other Loan Documents to which it is a party
and to perform its duties and obligations thereunder and (c) agree and consent
to all of the provisions of the Security Documents. All Collateral shall be held
or administered by the Collateral Agent (or its duly-appointed agent) for its
benefit and for the ratable benefit of the other Secured Parties. Any proceeds
received by the Collateral Agent from the foreclosure, sale, lease or other
disposition of any of the Collateral and any other proceeds received pursuant to
the terms of the Security Documents or the other Loan Documents shall be paid
over to the Administrative Agent for application as provided in Section 2.18,
Section 2.22, or Section 7.4, as applicable.
SECTION 8.3. Sharing of Excess Payments. Each of the Lenders, the
Agents and the Issuing Bank agrees that if it shall, through the exercise of a
right of banker's lien, setoff or counterclaim against the Borrowers, including,
but not limited to, a secured claim under Section 506 of the Bankruptcy Code or
other security or interest arising from, or in lieu of, such secured claim and
received by such Lender, any Agent or the Issuing Bank under any applicable
bankruptcy, insolvency or other similar law, or otherwise, obtain payment in
respect of the Obligations owed it (an "excess payment") as a result of which
such Lender, such Agent or the
72
Issuing Bank has received payment of any Loans or other Obligations outstanding
to it in excess of the amount that it would have received if all payments at any
time applied to the Loans and other Obligations had been applied in the order of
priority set forth in Section 2.22, then such Lender, Agent or the Issuing Bank
shall promptly purchase at par (and shall be deemed to have thereupon purchased)
from the other Lenders, such Agent and the Issuing Bank, as applicable, a
participation in the Loans and Obligations outstanding to such other Persons, in
an amount determined by the Administrative Agent in good faith as the amount
necessary to ensure that the economic benefit of such excess payment is
reallocated in such manner as to cause such excess payment and all other
payments at any time applied to the Loans and other Obligations to be
effectively applied in the order of priority set forth in Section 2.22 pro rata
in proportion to its Commitment; provided, that if any such excess payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be correspondingly rescinded (without interest). The Borrowers expressly
consent to the foregoing arrangements and agree that any Lender, any Agent or
the Issuing Bank holding (or deemed to be holding) a participation in any Loan
or other Obligation may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by such Borrower to such
Lender, such Agent or the Issuing Bank as fully as if such Lender, Agent or the
Issuing Bank held a Note and was the original obligee thereon, in the amount of
such participation.
SECTION 8.4. Agreement of Required Lenders.
(a) Upon any occasion requiring or permitting an approval,
consent, waiver, election or other action on the part of only the Required
Lenders, action shall be taken by the Agents for and on behalf or for the
benefit of all Lenders upon the direction of the Required Lenders, and any such
action shall be binding on all Lenders. No amendment, modification, consent, or
waiver shall be effective except in accordance with the provisions of Section
9.2.
(b) Upon the occurrence of an Event of Default, the Agents shall
(subject to the provisions of Section 9.2) take such action with respect thereto
as may be reasonably directed by the Required Lenders; provided, that unless and
until the Agents shall have received such directions, the Agents may (but shall
not be obligated to) take such action as they shall deem advisable in the best
interests of the Lenders. In no event shall the Agents be required to comply
with any such directions to the extent that the Agents believe that the Agents'
compliance with such directions would be unlawful.
SECTION 8.5. Liability of Agents.
(a) Each of the Agents, when acting on behalf of the Lenders and
the Issuing Bank, may execute any of its respective duties under this Agreement
by or through any of its respective officers, agents and employees, and none of
the Agents nor their respective directors, officers, agents or employees shall
be liable to the Lenders or the Issuing Bank or any of them for any action taken
or omitted to be taken in good faith, or be responsible to the Lenders or the
Issuing Bank or to any of them for the consequences of any oversight or error of
judgment, or for any loss, except to the extent of any liability imposed by law
by reason of such Agent's own gross negligence or willful misconduct. The Agents
and their respective directors, officers, agents and employees shall in no event
be liable to the Lenders or the Issuing Bank or to any of them for any action
taken or omitted to be taken by them pursuant to instructions received by them
from
73
the Required Lenders, or in reliance upon the advice of counsel selected by it.
Without limiting the foregoing, none of the Agents, nor any of their respective
directors, officers, employees, or agents shall be responsible to any Lender or
the Issuing Bank for the due execution, validity, genuineness, effectiveness,
sufficiency, or enforceability of, or for any statement, warranty or
representation in, this Agreement, any Loan Document or any related agreement,
document or order, or shall be required to ascertain or to make any inquiry
concerning the performance or observance by any Borrower of any of the terms,
conditions, covenants, or agreements of this Agreement or any of the Loan
Documents.
(b) None of the Agents nor any of their respective directors,
officers, employees, or agents shall have any responsibility to the Borrowers on
account of the failure or delay in performance or breach by any Lender (other
than by the Agent in its capacity as a Lender) or the Issuing Bank of any of
their respective obligations under this Agreement or the Notes or any of the
Loan Documents or in connection herewith or therewith.
(c) The Administrative Agent and the Collateral Agent, in such
capacities hereunder, shall be entitled to rely on any communication,
instrument, or document reasonably believed by such Person to be genuine or
correct and to have been signed or sent by a person or persons believed by such
Person to be the proper Person or Persons, and, such Person shall be entitled to
rely on advice of legal counsel, independent public accountants, and other
professional advisers and experts selected by such Person.
SECTION 8.6. Reimbursement and Indemnification. Each Lender agrees (a)
to reimburse (x) each Agent for such Lender's Commitment Percentage of any
expenses and fees incurred by such Agent for the benefit of the Lenders or the
Issuing Bank under this Agreement, the Notes and any of the Loan Documents,
including, without limitation, counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders or the Issuing
Bank, and any other expense incurred in connection with the operations or
enforcement thereof in each case not reimbursed by the Borrowers and (y) each
Agent for such Lender's Commitment Percentage of any expenses of such Agent
incurred for the benefit of the Lenders or the Issuing Bank that the Borrowers
have agreed to reimburse pursuant to Section 9.3 and have failed to so reimburse
and (b) to indemnify and hold harmless the Agents and any of their directors,
officers, employees, or agents, on demand, in the amount of such Lender's
Commitment Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against it or any of them in any way relating to or arising out
of this Agreement, the Notes or any of the Loan Documents or any action taken or
omitted by it or any of them under this Agreement, the Notes or any of the Loan
Documents to the extent not reimbursed by the Borrowers (except such as shall
result from their respective gross negligence or willful misconduct).
SECTION 8.7. Rights of Agents. It is understood and agreed that Fleet
and FRF shall have the same rights and powers hereunder (including the right to
give such instructions) as the other Lenders and may exercise such rights and
powers, as well as its rights and powers under other agreements and instruments
to which it is or may be party, and engage in other transactions with the
Borrowers, as though it were not the Administrative Agent or the Collateral
Agent, respectively, of the Lenders under this Agreement.
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SECTION 8.8. Independent Lenders and Issuing Bank. The Lenders and the
Issuing Bank each acknowledge that they have decided to enter into this
Agreement and to make the Loans or issue the Letters of Credit hereunder based
on their own analysis of the transactions contemplated hereby and of the
creditworthiness of the Borrowers and agrees that the Agents shall bear no
responsibility therefor.
SECTION 8.9. Notice of Transfer. The Agents may deem and treat a Lender
party to this Agreement as the owner of such Lender's portion of the Loans for
all purposes, unless and until, and except to the extent, an Assignment and
Acceptance shall have become effective as set forth in Section 9.4(b).
SECTION 8.10. Successor Agent. Any Agent may resign at any time by
giving five (5) Business Days' written notice thereof to the Lenders, the
Issuing Bank, the other Agents and the Borrowers. Upon any such resignation of
any Agent, the Required Lenders shall have the right to appoint a successor
Agent, which so long as there is no Event of Default shall be reasonably
satisfactory to the Borrowers (whose consent shall not be unreasonably withheld
or delayed). If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation, the retiring Agent may, on
behalf of the Lenders, the other Agents and the Issuing Bank, appoint a
successor Agent which shall be (a) a financial institution having a rating of
not less than A or its equivalent by S&P or, (b) a Lender capable of complying
with all of the duties of such Agent (and the Issuing Bank), hereunder (in the
opinion of the retiring Agent and as certified to the Lenders in writing by such
successor Agent) which, in the case of (a) and (b) above, so long as there is no
Event of Default shall be reasonably satisfactory to the Borrowers (whose
consent shall not be unreasonably withheld or delayed). Upon the acceptance of
any appointment as Agent by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent and the retiring Agent shall be discharged from
its duties and obligations under this Agreement. After any retiring Agent's
resignation hereunder as such Agent, the provisions of this Article VIII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was such Agent under this Agreement.
SECTION 8.11. Reports and Financial Statements. Promptly after receipt
thereof from the Borrowers, the Administrative Agent shall remit to each Lender
and the Collateral Agent copies of (a) all financial statements, compliance
certificates and Borrowing Base Certificates, as required to be delivered by the
Borrowers hereunder, (b) all commercial finance examinations and appraisals of
the Collateral received by the Administrative Agent and (c) such other
information regarding the operations, business affairs and financial condition
of any Borrower, or compliance with the terms of any Loan Document, as any
Lender may reasonably request.
SECTION 8.12. Syndication Agent, Documentation Agent, and Arranger.
Notwithstanding the provisions of this Agreement or any of the other Loan
Documents, the Syndication Agents, the Documentation Agents, and, except as
provided in the term sheet for this transaction, the Arranger shall have no
powers, rights, duties, responsibilities or liabilities with respect to this
Agreement and the other Loan Documents.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to any Borrower, to such Borrower at ▇▇▇▇ Corporation, ▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: General Counsel
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇) with copies to (i) ▇▇▇▇ Corporation, ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: Treasurer (Telecopy No. (972)
580-5547) and (ii) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. (Telecopy No.
(▇▇▇) ▇▇▇-▇▇▇▇) and ▇▇▇▇ ▇. ▇▇▇▇▇, Esq. (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) If to the Administrative Agent or Swingline Lender to Fleet
National Bank, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇,
Esq. (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(c) if to the Collateral Agent to Fleet Retail Finance Inc., ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇ (Telecopy No.
(▇▇▇) ▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇, Esq. (Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇);
(d) if to any other Lender, to it at its address (or telecopy
number) set forth on the signature pages hereto or on any Assignment and
Acceptance for such Lender.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.2. Waivers; Amendments.
(a) No failure or delay by the Agents, the Issuing Bank or any
Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Agents, the Issuing Bank and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of any Loan Document or
consent to any departure by any Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of
76
whether the Agents, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Agents and the Borrowers that are parties thereto, in each case with
the consent of the Required Lenders, provided, that no such agreement shall (i)
increase the Commitment of any Lender without the written consent of each Lender
affected, (ii) reduce the rate of interest on any Loan or L/C Disbursement, or
reduce any fees payable hereunder, without the written consent of each Lender
affected thereby, (iii) postpone the scheduled date of payment of the principal
amount of any Loan or L/C Disbursement, or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of the Commitments or the Maturity
Date, without the written consent of each Lender affected thereby, (iv) change
any of the provisions of this Section 9.2 or the definition of the term
"Required Lenders", "Required Supermajority Lenders" or any other provision of
any Loan Document specifying the number or percentage of Lenders required to
waive, amend or modify any rights thereunder or make any determination or grant
any consent thereunder, without the written consent of each Lender, (v) except
for sales described in Section 6.5 or as permitted in the Security Documents,
release any material portion of the Collateral from the Liens of the Security
Documents, without the written consent of each Lender; provided, that the
foregoing shall not limit the discretion of the Required Supermajority Lenders
to change the definition of the term "Permitted Asset Sales", (vi) change the
definition of the term "Borrowing Base" or any component definition thereof
(other than changes to the Inventory Advance Rate) if as a result thereof the
amounts available to be borrowed by the Borrowers would be increased, without
the written consent of each Lender, provided, that the foregoing shall not limit
the discretion of the Administrative Agent to change, establish or eliminate any
Reserves in accordance with Section 2.2 or to determine whether Inventory or
Accounts are Eligible Inventory or Eligible Credit Card Receivables,
respectively, (vii) increase the Permitted Overadvance, without the written
consent of each Lender, and provided, further, that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Agents or the
Issuing Bank without the prior written consent of the Agents or the Issuing
Bank, as the case may be, and (viii) increase the principal amount of the
Swingline Loan, without the written consent of the Required Supermajority
Lenders.
(c) Notwithstanding anything to the contrary contained herein, no
modification, amendment or waiver which increases the maximum amount of the
Swingline Loans to an amount in excess of $50,000,000 (or such greater amount to
which such limit has been previously increased in accordance with the provisions
of this Section 9.2(c)) shall be made without the written consent of the
Required Lenders.
(d) Notwithstanding anything to the contrary contained in this
Section 9.2, in the event that the Borrowers request that this Agreement or any
other Loan Document be modified, amended or waived in a manner which would
require the consent of the Lenders pursuant to Section 9.2(b) or 9.2(c) and such
amendment is approved by the Required Lenders, but not by the requisite
percentage of the Lenders, the Borrowers, and the Required Lenders shall be
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permitted to amend this Agreement without the consent of the Lender or Lenders
which did not agree to the modification or amendment requested by the Borrowers
(such Lender or Lenders, collectively the "Minority Lenders") to provide for (w)
the termination of the Commitment of each of the Minority Lenders, (x) the
addition to this Agreement of one or more other financial institutions, or an
increase in the Commitment of one or more of the Required Lenders, so that the
aggregate Commitments after giving effect to such amendment shall be in the same
amount as the aggregate Commitments immediately before giving effect to such
amendment, (y) if any Loans are outstanding at the time of such amendment, the
making of such additional Loans by such new or increasing Lender or Lenders, as
the case may be, as may be necessary to repay in full the outstanding Loans
(including principal, interest, and fees) of the Minority Lenders immediately
before giving effect to such amendment and (z) such other modifications to this
Agreement or the Loan Documents as may be appropriate and incidental to the
foregoing.
(e) No notice to or demand on any Borrower shall entitle any
Borrower to any other or further notice or demand in the same, similar or other
circumstances. Each holder of a Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not a
Note shall have been marked to indicate such amendment, modification, waiver or
consent and any consent by a Lender, or any holder of a Note, shall bind any
Person subsequently acquiring a Note, whether or not a Note is so marked. No
amendment to this Agreement shall be effective against the Borrowers unless
signed by the Borrowers.
SECTION 9.3. Expenses; Indemnity; Damage Waiver.
(a) The Borrowers shall jointly and severally pay (i) all
reasonable and documented third-party out-of-pocket expenses incurred by the
Agents and their Affiliates, including the reasonable and documented fees,
charges and disbursements of counsel for the Agents, outside consultants for the
Agents, appraisers, and for commercial finance examinations, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of the Loan Documents or any amendments, modifications or
waivers of the provisions thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable and documented
third-party out-of-pocket expenses incurred by the Issuing Bank in connection
with any demand for payment under any Letter of Credit, and (iii) all reasonable
and documented third-party out-of-pocket expenses incurred by the Agents, the
Issuing Bank or any Lender, including the reasonable fees, charges and
disbursements of any counsel and any outside consultants for the Agents, the
Issuing Bank or any Lender, for appraisers, commercial finance examinations, and
environmental site assessments, in connection with the enforcement or protection
of its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such reasonable and documented third-party
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit; provided, that the
Lenders who are not the Agents or the Issuing Bank shall be entitled to
reimbursement for no more than one counsel representing all such Lenders (absent
a conflict of interest in which case the Lenders may engage and be reimbursed
for additional counsel). Notwithstanding anything to the contrary herein, the
Borrowers shall be responsible for all reasonable costs of no more than one (1)
commercial financial examination and no more than one (1) inventory appraisal
during any period of twelve (12) consecutive months unless an Event of Default
has occurred and is
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continuing or a Cash Control Event has occurred and is continuing, in which case
the Borrowers shall be responsible for reasonable costs of all such examinations
and appraisals.
(b) The Borrowers shall, jointly and severally, indemnify the
Agents, the Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the reasonable and documented fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the transactions contemplated by the Loan Documents or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by the Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property currently or formerly owned or operated by any
Borrower or any of the Subsidiaries, or any Environmental Liability related in
any way to any Borrower or any of the Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, provided, that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence, willful misconduct, bad faith or breach of contractual obligations
of such Indemnitee or with respect to a claim by one Indemnitee against another
Indemnitee.
(c) If, for any reason, the indemnification under paragraph (b) of
this Section is unenforceable as a matter of law or with respect to a claim by
one Indemnitee against another Indemnitee, then the Borrowers shall contribute
to the amount paid or payable by such Indemnitee as a result of such loss,
claim, damage or liability to the maximum amount legally permissible. The
Borrowers also agree that no Indemnitee shall have any liability to the
Borrowers, any Person asserting claims on behalf of or in right of the Borrowers
or any other Person in connection with or as a result of this Agreement or any
agreement or instrument contemplated hereby, the transactions contemplated by
the Loan Documents, any Loan or Letter of Credit or the use of the proceeds
thereof, except to the extent that the losses, claims, damages, liabilities or
expenses incurred by the Borrowers resulted from the gross negligence, willful
misconduct, bad faith or breach of contractual obligations of such Indemnitee.
(d) To the extent that any Borrower fails to pay any amount
required to be paid by it to the Agents or the Issuing Bank under paragraph (a)
or (b) of this Section, each Lender severally agrees to pay to the Agents or the
Issuing Bank, as the case may be, such Lender's Commitment Percentage of such
unpaid amount, provided, that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Agents or the Issuing Bank.
(e) To the extent permitted by applicable law, no Borrower shall
assert, and each hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect,
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consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the transactions contemplated by
the Loan Documents, any Loan or Letter of Credit or the use of the proceeds
thereof.
(f) All amounts due under this Section shall be payable promptly
after written demand therefor.
(g) The covenants contained in this Section 9.3 shall survive
payment or satisfaction in full of all other Obligations.
SECTION 9.4. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit), except that no Borrower may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any such attempted assignment or transfer without
such consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each of the Agents,
the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it), provided, that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender,
(1) the Agents and the Issuing Bank must give their prior written consent to
such assignment (which consent shall not be unreasonably withheld or delayed)
and (2) so long as no Default or Event of Default has occurred and is
continuing, the Borrowers shall give their prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed), (ii)
except in the case of an assignment to a Lender or an Affiliate of a Lender or
an assignment of the entire remaining amount of the assigning Lender's
Commitment or Loans, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless the
Administrative Agent and the Borrowers otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations, (iv) the parties to each assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, and, after completion of the syndication of the Loans, together with
a processing and recordation fee of $3,500 (which shall not be payable or
reimbursable by the Borrowers). Subject to acceptance and recording thereof
pursuant to paragraph (d) of this Section, from and after the effective date
specified in each Assignment and Acceptance the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned
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by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Section 9.3). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent
of the Borrowers, shall maintain at one of its offices in Boston, Massachusetts
a copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and L/C Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive absent manifest error and the Borrowers, the
Administrative Agent, the Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrowers, the
Issuing Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the processing and recordation
fee referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(e) Any Lender may sell participations to one or more banks or
other entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it), provided, that (i) so long as no Default or Event of
Default has occurred and is continuing, the Borrowers give their prior written
consent to such participation (which consent shall not be unreasonably be
withheld or delayed), (ii) such Lender's obligations under this Agreement shall
remain unchanged, (iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iv) the Borrowers,
the Agents, the Issuing Bank and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation in the Commitments, the Loans and the
Letters of Credit Outstandings shall provide that such Lender shall retain the
sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents, provided, that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.2(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrowers agree that each
Participant shall be entitled to the benefits of Section 2.23, Section 2.25 and
Section 2.26 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.9 as
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though it were a Lender, provided, such Participant agrees to be subject to
Section 2.25(c) and Section 2.28 as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.23 or Section 2.26 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrowers' prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.26
unless (i) the Borrowers are notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrowers, to
comply with Section 2.26(e) as though it were a Lender and (ii) such Participant
is eligible for complete exemption from the withholding tax referred to therein,
following compliance with Section 2.26(e).
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest, provided, that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
SECTION 9.5. Accession. Except as otherwise provided herein, the
Borrowers may solicit certain lending institutions (an "Acceding Bank") to
become party to this Agreement by entering into an Instrument of Accession in
substantially the form of Exhibit C hereto (an "Instrument of Accession") with
the Borrowers and the Administrative Agent and assuming thereunder a Commitment
in an amount to be agreed upon by the Borrowers, such Acceding Bank or the
Administrative Agent, to make Loans and participate in the risk relating to the
Letters of Credit pursuant to the terms hereof, and the Total Commitment shall
thereupon be increased by the amount of such Acceding Bank's Commitment;
provided, however, that (a) the Administrative Agent shall have given its prior
written consent to such accession, which consent shall not be unreasonably
conditioned, delayed or withheld and (b) in no event shall the Total Commitment
be increased under any one or more of such Instruments of Accession so as to
exceed, in the aggregate, $500,000,000 (measured on the date of such increase).
On the effective date specified in any Instrument of Accession, Schedule 1.1
hereto shall be deemed to be amended to reflect (c) the name, address,
Commitment and Commitment Percentage of such Acceding Bank, (d) the Total
Commitment as increased by such Acceding Bank's Commitment, and (e) the changes
to the other Lenders' respective Commitment Percentages, and any changes to the
other Lenders' respective Commitments (in the event such Lender is also the
Acceding Bank) resulting from such assumption and such increased Total
Commitment.
SECTION 9.6. Survival. All covenants, agreements, representations and
warranties made by the Borrowers in the Loan Documents and in the certificates
or other instruments delivered in connection with or pursuant to this Agreement
or any other Loan Document shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Agents, the Issuing Bank or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is
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extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Section 2.23, Section 2.26 and Section 9.3 and Article VIII
shall survive and remain in full force and effect regardless of the consummation
of the transactions contemplated hereby, the repayment of the Loans, the
expiration or termination of the Letters of Credit and the Commitments or the
termination of this Agreement or any provision hereof.
SECTION 9.7. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Agents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.1, this Agreement shall become effective when it shall
have been executed by the Agents and the Lenders and when the Administrative
Agent shall have received counterparts hereof that, when taken together, bear
the signatures of each of the other parties hereto, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.8. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.9. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrowers against any of and all the obligations of the Borrowers now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender may have.
SECTION 9.10. Governing Law; Jurisdiction; Consent to Service of
Process.
(a) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND EACH OTHER LOAN DOCUMENTS AND THE OBLIGATIONS
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE
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OF NEW YORK INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
(b) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.1. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
(c) EACH OF THE BORROWERS, EACH OF THE AGENTS AND EACH LENDER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
SECTION 9.11. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.12. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts that are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
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with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14. Confidentiality. Each of the Lenders and the Agents
agrees, on behalf of itself and each of its affiliates, directors, officers,
employees and representatives, to use reasonable precautions to keep
confidential, in accordance with their customary procedures for handling
confidential information of the same nature and in accordance with safe and
sound practices, any non-public information supplied to it by the Borrowers or
of their Subsidiaries pursuant to this Agreement that is identified by such
Person as being confidential at the time the same is delivered to such Lender,
or such Agent, provided that nothing herein shall limit the disclosure of any
such information (a) after such information shall have become public other than
through a violation of this Section 9.14 (b) to the extent required by statute,
rule, regulation or judicial process, (c) to counsel for any of the Lenders, or
the Administrative Agent or the Collateral Agent, (d) to bank examiners, the
National Association of Insurance Commissioners or any other U.S. federal or
foreign regulatory authority having jurisdiction over any Lender, the
Administrative Agent or the Collateral Agent, or to auditors or accountants, (e)
to the Administrative Agent, the Collateral Agent or any other Lender, (f) in
connection with any litigation to which the Administrative Agent, the Collateral
Agent or any Lender is a party, or in connection with the enforcement of rights
or remedies hereunder or under any other Loan Document, or (g) to any assignee
or participant (or prospective assignee or participant) so long as such assignee
or participant agrees to be bound by the provisions of this Section 9.14.
Notwithstanding anything to the contrary set forth herein, each of the
Lenders and the Agents may disclose to any and all Governmental Authority having
jurisdiction over tax or similar matters, without limitation of any kind, the
tax treatment and tax structure of the transactions contemplated herein and all
materials of any kind (including opinions or other tax analyses) that are
provided to such Lender or Agent relating to such tax treatment and tax
structure, provided that, any such disclosure shall not be made to the extent
prohibited by applicable securities law. This authorization of tax disclosure is
retroactively effective to the commencement of the first discussions between the
parties regarding the financial transactions contemplated herein. (The "tax
treatment, structure or tax aspects" shall refer to that phrase as used in
Section 1.6011-4T(a)(3) (or any successor provision) of the Treasury Regulations
(the "Confidentiality Regulation") promulgated under Section 6011 of the Code or
any similar regulation which may otherwise require any Lender or Agent to file
Form 8886.)
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SECTION 9.15. Additional Waivers. (a) The Obligations are the joint and
several obligations of each Borrower. To the fullest extent permitted by
applicable law, the obligations of each Borrower hereunder shall not be affected
by (i) the failure of any Agent or any other Secured Party to assert any claim
or demand or to enforce or exercise any right or remedy against any other
Borrower under the provisions of this Agreement, any other Loan Document or
otherwise, (ii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, this Agreement, any other Loan
Document, or any other agreement, including with respect to any other Borrower
of the Obligations under this Agreement, or (iii) the failure to perfect any
security interest in, or the release of, any of the security held by or on
behalf of the Collateral Agent or any other Secured Party.
(b) The obligations of each Borrower hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than the indefeasible payment in full in cash of the Obligations),
including any claim of waiver, release, surrender, alteration or compromise of
any of the Obligations, and shall not be subject to any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Borrower hereunder
shall not be discharged or impaired or otherwise affected by the failure of any
Agent or any other Secured Party to assert any claim or demand or to enforce any
remedy under this Agreement, any other Loan Document or any other agreement, by
any waiver or modification of any provision of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Obligations,
or by any other act or omission that may or might in any manner or to any extent
vary the risk of any Borrower or that would otherwise operate as a discharge of
any Borrower as a matter of law or equity (other than the indefeasible payment
in full in cash of all the Obligations).
(c) To the fullest extent permitted by applicable law, each
Borrower waives any defense based on or arising out of any defense of any other
Borrower or the unenforceability of the Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any other Borrower,
other than the indefeasible payment in full in cash of all the Obligations. The
Collateral Agent and the other Secured Parties may, at their election, foreclose
on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any other Borrower, or exercise any other right or remedy
available to them against any other Borrower, without affecting or impairing in
any way the liability of any Borrower hereunder except to the extent that all
the Obligations have been indefeasibly paid in full in cash. Pursuant to
applicable law, each Borrower waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Borrower against any other Borrower, as the case may be, or
any security.
(d) Upon payment by any Borrower of any Obligations, all rights of
such Borrower against any other Borrower arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations. In addition, any
indebtedness of any Borrower now or hereafter held by any other Borrower is
86
hereby subordinated in right of payment to the prior payment in full of the
Obligations. None of the Borrowers will demand, ▇▇▇ for, or otherwise attempt to
collect any such indebtedness. If any amount shall erroneously be paid to any
Borrower on account of (a) such subrogation, contribution, reimbursement,
indemnity or similar right or (b) any such indebtedness of any Borrower, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Collateral Agent to be credited against the payment of
the Obligations, whether matured or unmatured, in accordance with the terms of
the Loan Documents.
[balance of page left intentionally blank; signature pages follow]
87
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as a sealed instrument as
of the day and year first above written.
▇▇▇▇ DELAWARE, INC.
as Borrower
By:
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Group Senior Vice President and Chief
Financial Officer
▇▇▇▇ CORPORATION
as Borrower
By:
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Group Senior Vice President and Chief
Financial Officer
DDCC, Inc.
as Borrower
By:
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Financial Officer
TXDC, L.P.
as Borrower
By: ▇▇▇▇ DELAWARE, INC.
Its General Partner
By:
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Group Senior Vice President and Chief
Financial Officer
SIGNATURE PAGE TO ▇▇▇▇ CREDIT AGREEMENT
FLEET NATIONAL BANK, as Administrative
Agent, Issuing Bank and as a Lender
By:
----------------------------
Name: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
Title: Managing Director
SIGNATURE PAGE TO ▇▇▇▇ CREDIT AGREEMENT
FLEET RETAIL FINANCE, INC., as Collateral
Agent and as a Lender
By:
----------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
SIGNATURE PAGE TO ▇▇▇▇ CREDIT AGREEMENT
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST), as Syndication Agent and as a
Lender
By:
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
SIGNATURE PAGE TO ▇▇▇▇ CREDIT AGREEMENT
BANK ONE, NA, as Syndication Agent and as a
Lender
By:
-------------------------------------
Name:
Title:
SIGNATURE PAGE TO ▇▇▇▇ CREDIT AGREEMENT
BANK OF AMERICA, N.A., as Documentation
Agent and as a Lender
By:
----------------------------
Name:
Title:
SIGNATURE PAGE TO ▇▇▇▇ CREDIT AGREEMENT
JPMORGAN CHASE BANK, as Documentation
Agent and as a Lender
By:
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
SIGNATURE PAGE TO ▇▇▇▇ CREDIT AGREEMENT